Prices for molybdenum are closely related to copper. The metal is often produced as a by-product of copper, meaning that molybdenum output tends to rise and fall depending on how much copper is being produced. Oil prices are also a good indicator of where the molybdenum market is headed.
Despite the COVID-19 pandemic, worldwide molybdenum production increased by 6,000 metric tons (MT) from 2019 to 2020, rising from 294,000 MT to come in at 300,000 MT. But which countries were the top molybdenum producers last year? Here’s a look at which nations put out the most of the metal in 2020, as per the latest data from the US Geological Survey.
Mine production: 120,000 MT
China produces the vast majority of the world’s molybdenum supply by a large margin. The country’s molybdenum output fell by 10,000 MT in 2020 to come in at 120,000 MT for the year.
The molybdenum market as a whole is closely tied to China, and not just because the country produces so much of the metal. China also has a massive industrial sector that requires huge amounts of molybdenum to make steel. The Chinese government has recently been tightening up its mining standards in an effort to meet more stringent environmental regulations. As a result, molybdenum facilities have been inspected, forcing firms to either upgrade them to meet these standards or shut down. So far, that hasn’t seemed to hurt China’s production.
Mine production: 58,000 MT
Second in the molybdenum producers lineup is Chile, whose molybdenum production rose slightly in 2020, hitting 58,000 MT; the country produced 56,000 MT in 2019.
State-owned Codelco produces the bulk of Chile’s molybdenum, and KGHM Polska Miedz (WSE:KGH) is also a producer in the country. Hot Chili (ASX:HCH,OTC Pink:HHLKF) is working on bringing its Productora copper project into production in Chile, and intends to produce molybdenum as a by-product.
3. United States
Mine production: 49,000 MT
The US bumped up its molybdenum production by 13 percent in 2020 compared to the previous year.
As mentioned, the metal is often produced as a by-product of copper and other metals, and that’s evident when looking at US output stats. In 2020, molybdenum was produced at nine mines in the country, but was a primary product at just two of them. One such primary molybdenum operation is Freeport-McMoRan’s (NYSE:FCX) Climax and Henderson mines in Colorado.
According the US Geological Survey, the rise in American molybdenum production was due in large part to a by-product mine in Utah that increased its output by more than 60 percent. The higher amount of metal coming out of the Utah operation “offset the production delays caused by the global COVID-19 pandemic at other molybdenum producers.”
Mine production: 30,000 MT
Coming in fourth on this list of molybdenum producers is Peru, which has seen rising production in the past few years, reporting 2019 output of 26,000 MT in comparison to 30,000 MT in 2020.
The Peruvian Ministry of Energy and Mines expects mining investment in the country to grow by 21 percent in 2021 over the previous year to reach US$5.2 billion, before climbing further to US$6 billion in 2022. That could be good news in disguise for molybdenum which, as noted, is often produced as a by-product of copper and other metals. One major molybdenum-producing mine in Peru is Freeport-McMoRan’s Cerro Verde mine, which is primarily a copper producer.
Mine production: 17,000 MT
Molybdenum production in Mexico has seen peaks and troughs over the last decade, Statista data indicates. However, in the past three years, the country’s output has risen by 5,000 MT to reach 17,000 MT in 2020. One major molybdenum-producing mine in the country is La Caridad, which belongs to privately owned Grupo Mexico. The mine produces molybdenum as a by-product of copper.
Mine production: 7,000 MT
Armenia’s molybdenum production has remained relatively stable over the past few years, but ticked up slightly from 6,300 MT in 2019 to 7,000 MT in 2020. CRONIMET Mining subsidiary Zangezur Copper Molybdenum Combine runs Kajaran, the country’s largest copper-molybdenum mine.
Mine production: 3,500 MT
Iran is another molybdenum producer whose output levels have remained relatively flat in the recent past, with production coming in at 3,500 MT since 2016.
Little information is available on molybdenum in Iran, and that may be because in 2012 the Iranian government banned exports of molybdenum concentrate in an effort to “support national production.” It banned exports of about 50 aluminum, petrochemical and other products at the same time.
Mine production: 2,800 MT
Overtaking Canada for eighth place on this molybdenum producers list is Russia. The US Geological Survey provides only an estimate on Russian molybdenum output. For 2020, it suggests that the country put out 2,800 MT of the metal, on par with the previous year. A company called SMR that is part of EN+ Group bills itself as Russia’s only fully integrated molybdenum producer, and the largest ferromolybdenum producer in the country in terms of volume.
It’s worth noting that Russia retains much of its molybdenum for domestic projects. A report from Emerging Markets notes that Russian nuclear reactors are specifically designed to use a type of molybdenum only produced within the country.
Mine production: 2,700 MT
Canada’s molybdenum production fell significantly in 2020, coming in at 2,700 MT after the nation posted production of 3,900 MT the previous year.
The BC-based Endako mine, owned by Centerra Gold (TSX:CG,NYSE:CGAU), used to be a key molybdenum producer in the country, but is now on care and maintenance. Another Canadian source of molybdenum is Taseko Mines’ (TSX:TKO,NYSEAMERICAN:TGB) Gibraltar mine.
Mine production: 1,800 MT
Finally, Mongolia’s molybdenum production has remained roughly stagnant over the past five years.
Similar to Iran, little information on molybdenum in Mongolia is available. One company with a molybdenum project in the country is Erdene Resource Development (TSX:ERD,OTC Pink:ERDCF), which holds the Zuun Mod molybdenum-copper project in the country.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Last year, molybdenum started to see a recovery in prices and many market watchers predicted that in 2018 the metal would continue to rebound.
Molybdenum lived up to those expectations, with prices trending upwards most of the year on strong demand from the stainless steel sector.
With 2019 just around the corner, investors interested in the industrial metal are now wondering about the molybdenum outlook for next year. Here the Investing News Network looks back at the main trends in the sector and what’s ahead for molybdenum.
Molybdenum trends 2018: The year in review
Molybdenum prices recovered over the course of 2017, following two successive years of decline.
“There have been further gains in 2018, with prices rising to an average of US$30.8/kg in March of this year, but since then, prices have started to trend lower, albeit slightly,” Roskill states in its latest molybdenum report.
The ferromolybdenum price averaged about US$29 per kilogram for 2018, as per the research firm.
Similarly, General Moly (NYSEAMERICAN:GMO) says molybdenum has been a consistent standout among metals during 2018.
“We believe that industrial metal prices are coming off their lows,” said Bruce D. Hansen, CEO of General Moly. “With the strong US economy and developed countries firmly in the late-stage business cycle supportive of metal demand, we believe we have the makings of an industrial metal recovery that is the rising tide to lift all ships and further boost moly.”
Hansen added that continued strong demand from stainless steel and the oil and gas industry, especially the rapidly expanding global liquid natural gas sector, underpinned the strongest year in four years for molybdenum prices.
Most molybdenum is used in the production of steel products, with part of this consumption linked to oil and gas sector activity, where molybdenum-bearing steels are used in drilling equipment and in oil refineries.
Last year, demand for the metal was 18 percent higher than a decade previously, thanks mainly to increased use in steel applications.
“However, there have been other significant changes in molybdenum demand over the same period, namely where this molybdenum is being consumed,” Roskill says.
According to the research firm, consumption in China has increased 15 percent between 2007 and 2017.
“The increase in China’s share of consumption in the past decade has been at the expense of other industrialized countries: demand in the USA [and Europe] has shrunk over the same period.”
In 2018, consumption from the oil and gas sector should continue to have grown, but more slowly than in 2017. “[That’s because] the number of oil and gas rigs operating worldwide has continued to grow so far in 2018, but at a slower pace than last year,” Roskill explains.
In terms of supply, analysts estimate around 60 percent of global molybdenum supply comes as a by-product of copper smelting, with most of the remainder coming from primary sources.
Molybdenum output rose by 14 percent in 2017, recovering from two consecutive years of decline.
“The rise in primary output in 2017 was mainly the result of higher production in China, where some large primary mines, such as JDC Moly, increased output in response to rising demand, while primary output also climbed in the USA,” says Roskill in its molybdenum report.
Molybdenum outlook 2019: Demand to remain strong
Looking ahead, Hansen said molybdenum is tough and resilient, as proven by its steady price during a sluggish third quarter for metals and commodities.
“Trade tensions will still cause unease, but over time, the actual trade agreements will be better than fears of the unknown as the parties will be motivated to share benefits rather than inflict pain. Copper is already showing signs of recovery. Other metals such as moly are going to have their due,” he added.
Speaking about the future of the market earlier this year, CRU Group Consultant George Heppel said that high prices are needed to encourage primary production from top producer China.
“The trend over the next five years is one of very low supply growth from by-product sources. In the early 2020s, we will need to see primary mines reopened to keep the market balanced.”
CRU forecasts molybdenum demand at 577 million pounds in 2018, of which 16 percent will come from oil and gas. That is below the historic pre-2014 average of 20 percent, but still a notable increase over recent years.
“The oil price crash back in 2014 removed about 15 million pounds of moly demand,” Heppel said. “Demand now looks healthy.”
Looking further ahead, demand growth is expected to continue, which should spur idle capacity to come back online and new mines to start producing.
“Until those new projects do come online, however, market deficits are likely in the short term, followed by several years of surpluses as the new supply becomes more than sufficient to meet rising demand,” Roskill forecasts.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Chile is the top copper-producing country in the world by a long shot, and many of the world’s largest copper mines are located there.
In fact, copper mines in the country took two of the five top spots in terms of production last year. The other three mines are located in other countries around the world, but all of them are operated by major miner Freeport-McMoRan (NYSE:FCX).
To get more insight into the world’s largest copper mines, the Investing News Network got in touch with Karen Norton, senior analyst at Thomson Reuters GFMS. Here’s what she had to say about the world’s largest copper mines of 2017.
1. Escondida, Chile
The Escondida mine in Chile is the largest copper mine, and is majority owned by BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT). Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) and a Japanese consortium headed by Mitsubishi (TSE:8058) also have stakes in Escondida.
Once again, Escondida remained by far the world’s biggest copper mine last year. Despite a historic 44-day strike, production weighed in at 920,000 tonnes of copper; that represents a 7-percent drop compared with 2016.
Production at the mine was impacted by the strike in Q1 of last year. The strike also delayed the start of the Los Colorados extension project. Once in production, however, Los Colorados helped mitigate some of the losses produced by the strike. In 2017’s final quarter alone, the mine produced 322,000 tonnes of copper, considerably more than the 95,000 tonnes it produced in Q1.
2. Collahuasi, Chile
The Collahuasi mine, jointly owned by Anglo American (LSE:AAL) (44 percent), Glencore (LSE:GLEN) (44 percent) and Mitsui (TSE:8031) (12 percent), jumped up to second-place position last year. Its output increased from 507,000 tonnes of copper in 2016 to 524,000 tonnes in 2017.
The second of the largest copper mines in the world saw this rise come in part due to higher ore grades and “a strong plant performance,” according to Norton. The rise in production was also partially due to the fact that output was previously constrained by major maintenance on two of the three smaller SAG lines at the mine.
3. Cerro Verde, Peru
Freeport-McMoRan’s majority owned Cerro Verde mine in Peru remained in the third spot on the list with output of a little over 500,000 tonnes of copper last year. This represents a 4-percent decline from the previous year. Norton chalks this up to a settling following a large expansion the previous year that more than doubled production in 2016.
4. Grasberg, Indonesia
Right on the heels of Cerro Verde is Grasberg. After years of underperforming, dogged by industrial action and ore grade issues, among other factors, Freeport-McMoRan’s Grasberg mine in Indonesia resurfaced in 2016 in second place, and in 2017 it rolled back to become the world’s fourth-largest copper mine.
Benefiting from access to higher-grade ore, Grasberg produced around half a million tonnes of copper in 2017. Production levels were be hampered last year by a 15-week halt to production after the Indonesian government suspended the company’s export permit. Its current license will expire in February 2019, so these issues may arise again.
5. Morenci, United States
While this mine was in second place in 2015, it only produced enough copper last year to become the world’s fifth-place mine. Morenci put out just 470,000 tonnes of copper in 2017, which is 6 percent lower than 2016. The mine is majority owned by Freeport-McMoRan, while Sumitomo Metal Mining (TSE:5713) holds a 28-percent stake as well.
Now that you know about the world’s largest copper mines, what else would you like to know? Tell us in the comments below.
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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.