Molybdenum: Why is the price surging and which ASX stocks have it?
Not generally mined on its own, and often overlooked, molybdenum is the latest industrial commodity to catch the attention of investors as prices reach new peaks this month.
Platts molybdenum prices quoted by the LME jumped 82.9% from US$20.72/lb on December 7, 2022, to US$37.9/lb on February 6, 2023, to a new 17-year high.
Often referred to as ‘moly’ (and not to be confused with the slang for a certain recreational drug), the commodity is produced as a by-product of porphyry copper mining, another part of the market witnessing huge gains on optimism over a post-Covid recovery in China – the world’s largest copper consumer.
Global production of molybdenum is usually around 300,000t per year, primarily destined for the steel industry and used in things like engineering steels, superalloys, chemical compounds, and lubricants.
Experts say the recent surge in prices is driven by supply, or the lack thereof.
China, one of the major molybdenum-rich countries, is the world’s biggest consumer and producer of the metal, contributing to 38% of the global supply in 2021.
However, the impact of COVID-19 and power rationing has meant that domestic supply in China for molybdenum concentrate declined in 2022, leading to a surge in prices for Asian ferromolybdenum (an alloy formed by combining iron and molybdenum).
At the beginning of February, S&P says Asian ferromolybdenum prices hit a new peak of $94 – $96/kg, the highest level since Platts Asia weekly pricing began.
South America is another top producer, but ongoing output challenges at Codelco – a Chilean state-owned copper mining company responsible for around 50% of the world’s molybdenum supply – has led to output shortages well below the five-year average.
Peak Asset Management’s Conor Daley says molybenum consumption is tipped to rise over the next decade as demand for molybdenum-containing steels grows.
“This, coupled with a supply shortage suggests that molybdenum prices are likely to trend higher through 2023-2025,” he says.
From a production standpoint, there is only one stock producing molybdenum and that is Newcrest (ASX:NCM).
In 2020, the company started developing Australia’s first molybdenum circuit at its giant Cadia gold-copper operations in New South Wales with the first shipment delivered in June 2022.
But there are several other small cap stocks looking to capitalise on the surprise molybdenum run.
This Chilean explorer announced some exciting molybdenum intersections such as 35m at 1,704ppm molybdenum (0.84% copper equivalent at its Lana Corina project in mid-January.
Further drilling is expected to follow with CPO managing director Max Tuesley saying the latest drill results opens up Lana Corina’s potential to host a multi-million tonne deposit.
“With the system remaining open in all directions, and at depth, we believe there is significant potential for further, near surface high-grade copper-molybdenum discoveries within the project area,” he said.
Caspin hit its best gold and molybdenum grades at the Duchess prospect, within the wider Mt Squires project in November 2022.
A standout molybdenum hit of 7m at 902ppm was returned, which Caspin says indicates the possibility of a new molybdenum deposit with grades increasing further to the north and east where mineralisation remains open.
“It is worth noting that the Climax and Henderson mines in the United States (the two most important molybdenum mines in the world) are large-scale, open pit operations with resource grades in the order of 1,000 to 2,000ppm Mo,” the company said.
“This provides encouragement that Duchess East may be a significant new molybdenum discovery if sufficient continuity and extensions of mineralisation can be found.”
In November 2022, Hot Chili acquired a 100% interest in Chilean copper major Antofagasta Minerals’ S.A. (AMSA) mining rights adjoining the western margin of the Cortadera copper-gold deposit within its Costa Fuego project.
AMSA’s five mining rights contain a large outcropping mineralised porphyry (Cuerpo 4 – 700m in strike length by 300m in width) with similar dimensions to Cortadera’s main porphyry.
AMSA also intersected significant copper-gold-molybdenum mineralisation at Cuerpo 4 in 2005 from four of five shallow RC drill holes completed.
One diamond drill rig and one RC rig is currently in operation, testing the potential for Cortadera to host a much larger copper porphyry cluster than currently defined.
First drill results are expected to be returned in February.
One of Havilah’s strategic assets is its ~16,000 km2 under-explored tenement holding in the Curnamona Province in northeastern South Australia which is prospective for a variety of commodities including copper, cobalt, molybdenum, sulphur, REE, tin and tungsten.
HAV says exploration for new economic discoveries leveraging off its large prospective tenement holding is a key objective going forward.
Despite hosting the giant lead-zinc-silver ore deposit at Broken Hill, much of the South Australian portion of the Curnamona Province is under-explored due to extensive sedimentary cover.
The geological similarity of the Curnamona Province to the eastern Gawler Craton and the Mount Isa-Cloncurry Block indicates similar prospectivity for major ore deposits.
Investigator Resources signed a Heads of Agreement with Thor (ASX:THR) last year to acquire up to 80% of their permitted Molyhil Tungsten Project in Northern Territory.
Molyhil is a tungsten/molybdenite deposit with a mineral resource of 4.4Mt at 0.27% tungsten (11800t), 0.1% molybdenum (4400t), 0.05% copper (2190t) and 17.75% iron.
Of this 464,000t of ore at 0.28% tungsten, 0.13% molybdenum and 0.06% copper sits in the highest measured resource category.
Caravel’s copper project forms part of a regional porphyry-style copper-molybdenum-gold mineralised belt discovered in the mid 2000’s in a previously unexplored part of Western Australia’s Southwest Yilgarn Terrane.
This belt hosts some of Australia’s most significant mineral discoveries including the Greenbushes lithium mine, Newmont’s (NYSE:NEM) gold-copper Boddington mine and Chalice’s (ASX:CHN) Julimar PGE project.
At Stockhead, we tell it like it is. While Caravel Minerals and Hot Chili are Stockhead advertisers, they did not sponsor this article.