Toronto-based Greenland Resources (CBOE:MOLY) has inked an agreement to supply European steel giant Outokumpu (HEL:OUT1V) with molybdenum from its flagship Malmbjerg Project for 10 years.
Greenland will supply 8 million pounds of molybdenum each year, which equates to about 25% of the first 10 years of production from the Malmbjerg Project.
Molybdenum oxide is trading at around US$21 ($33) per pound, valuing the total 80 million pounds of material at roughly US$1.68 billion at the current price.
As part of the agreement, Outokumpu will help Greenland to secure capex financing.
Outokumpu Chief Financial Officer Marc-Simon Schaar says Europe is heavily reliant on imports for many critical raw materials and the dependence creates vulnerabilities due to geopolitical factors and supply chain disruptions.
“Furthermore, Europe is the second largest molybdenum user worldwide and has had no production of its own,” he says.
“The cooperation with Greenland Resources allows us to get access to low-emission molybdenum from Greenland, which strengthens our supply chain of critical raw materials and reduces our scope three emissions at competitive prices, including a cap and a floor mechanism.”
Molybdenum is a critical metal used mainly in steel and chemicals. When added to steel and cast iron, it enhances strength, hardenability, weldability, toughness, temperature strength, and corrosion resistance.
According to the International Molybdenum Association and the European Commission Steel Report, around 576 million pounds of molybdenum was produced globally in 2021.
The European Union, as the second largest steel producer in the world, consumes about 24% of global molybdenum supply.
Steel-dependent industries like automotive, construction and engineering account for around 18% of the European Union’s US$16 trillion GDP.
Greenland Resources executive Chairman Ruben Shiffman says the offtake agreement is a critical milestone for the company towards reaching commercial production.
“The high-quality molybdenum ore and low-emission processing at Malmbjerg are ideally suited to secure long-term supply for Outokumpu’s specialty steel products,” he says.
Outokumpu is the largest producer of stainless steel in Europe and the second largest producer in the Americas.
Write to Angela East at Mining.com.au
Images: Greenland Resources
