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Investing in the Molybdenum Industry

Molybdenum is one of the refractory metals, meaning it is incredibly resistant to heat and wear. These properties have made the molybdenum industry an important segment of the global economy.

First discovered in 1778, this silver-gray industrial metal doesn’t occur on its own in nature, and is usually extracted as a by-product of copper and tungsten. It can be found in the minerals wulfenite, powellite and molybdenite, though molybdenite is the main mineral used to produce molybdenum.

According to the International Molybdenum Association (IMOA), 80 percent of the molybdenum that is mined each year is used to make stainless steel, cast iron and superalloys. Molybdenum has a high melting point of 4,730 degrees Fahrenheit, and with the addition of just a small amount of the metal, steel becomes much harder with a high resistance to corrosion, heat and rust.

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The remaining balance of the molybdenum supply is used as a chemical, particularly in lubricants and paints. The metal is also finding more use in the oil and gas sectors, where refineries use it in catalysts to reduce the amount of sulfur in gasoline and diesel fuels.

Molybdenum industry: Supply and demand

According to the IMOA, in Q2 2021, molybdenum production fell by 3 percent to 142.8 million pounds compared to the same period in the previous year, while global consumption rose by 32 percent to 167 million pounds.

According to the 2021 US Geological Survey, world mining output of molybdenum was up in 2020 at 300,000 MT from 294,000 MT in 2019. China remains the world’s leading producer of molybdenum and produced 120,000 metric tons (MT) in 2020. South America is the second leading mining jurisdiction for the versatile metal.

Of the Latin American countries that produce molybdenum, Chile is the top producer with output of 58,000 MT last year. Peru’s mining industry produced 30,000 MT, while Mexico contributed 17,000 MT.

The US is another top-tier producer, producing 49,000 MT of molybdenum. 2020 saw a 24 percent decrease in the US import for consumption rate.

There has also been an increase in the amount of applications and products in the pipeline that utilize the affordable material.

Due to its resistance to corrosion and ability to withstand high temperatures, molybdenum offers excellent thermal conductivity and low thermal expansion, making it ideal for a number of technological applications. In addition, the metal is in a strong position to gain as the energy sector expands.

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Molybdenum industry: How to invest

As mentioned, molybdenum is often mined as a by-product of copper and other metals. However, there are also mines in the molybdenum industry that focus specifically on the metal.

For example, Freeport-McMoRan (NYSE:FCX) subsidiary Climax Molybdenum operates two molybdenum-only mining operations in Colorado. The company has the capacity to produce roughly 30 million pounds of molybdenum each year.

Centerra Gold (TSX:CG,NYSE:CGAU) has two molybdenum mines that are on care and maintenance, but could be revived once prices improve. It acquired the mines via its 2016 purchase of Thompson Creek Metals Company. In addition, some molybdenum is recovered from old mine tailings at the site. 

Taseko Mines (TSX:TKO,NYSEAMERICAN:TGB,LSE:TKO) produces molybdenum as a by-product from its 75 percent owned Gibraltar copper-molybdenum mine in Southcentral British Columbia.

Major firms that mine molybdenum as a by-product include Southern Copper (NYSE:SCCO), Rio Tinto (NYSE:RIO,LSE:RIO,ASX:RIO) and Anglo American (LSE:AAL,OTCQX:AAUKF).

It is also possible to invest in companies that are exploring or developing molybdenum mining or extraction projects. Companies with molybdenum exploration projects include Starcore International Mines (TSX:SAM), Libero Copper & Gold (TSXV:LBC), Los Andes Copper (TSXV:LA) and Latin Metals (TSXV:LMS,OTCQB:LMSQF).

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This is an updated version of an article first published by the Investing News Network in 2012. 

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Libero Copper & Gold, Los Andes Copper and Latin Metals are clients of the Investing News Network. This article is not paid-for content.

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The post Investing in the Molybdenum Industry appeared first on Investing News Network.



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