Molybdenum is a key industrial metal for the global economy of today and tomorrow.
There are a number of entry points into this space depending on your investment strategy and risk profile.
First though, investors interested in gaining exposure to the upside in the molybdenum market need to understand the basic fundamentals of whatâ€
In this article
What is molybdenum?
Molybdenum is a silver-gray metal that doesn’t occur on its own in nature; it is usually extracted as a by-product of copper and tungsten. Molybdenite is the main mineral used to produce the commodity, although it can be found in the minerals wulfenite and powellite. On the periodic table, molybdenum’s chemical symbol is Mo.
As one of the refractory metals, molybdenum is incredibly resistant to heat and wear. These properties have made the molybdenum industry a critical segment of the global economy.
What is molybdenum used for?
Molybdenum is an important industrial metal mainly used in the fabrication of stainless steel, cast iron and superalloys. According to the International Molybdenum Association (IMOA), these end products account for 80 percent of the molybdenum that is mined each year. The remaining balance of molybdenum supply is used as a chemical, particularly in lubricants and paints.
As molybdenum has a high melting point of 4,730 degrees Fahrenheit, the addition of just a small amount can strengthen steel and increase its resistance to corrosion, heat and rust. Outside of the construction industry, the oil and gas sector is another major consumer of the metal in the form of high-molybdenum steel for pipelines. Refineries also use it in catalysts to reduce the amount of sulfur in gasoline and diesel fuels.
The automotive industry represents another demand segment for molybdenum, both in terms of the steel used in both internal combustion engine vehicles and electric vehicle (EV) frames, but also as a battery metal for electric vehicles. Molybdenumâ€
Besides EVs, molybdenum also has a role to play in the transition to clean energy generation via its use in wind turbines. According to the IMOA, molybdenum alloys are ideal for the powertrain components of windmills and the requirement for the metal for this use is estimated at 100 kilograms to 120 kilograms of molybdenum per rated megawatt.
Molybdenum demand trends
Understanding the demand picture is important for molybdenum investors, and the steel industry remains the one to watch for this market. As the biggest consumer of steel, China is a major driver of the molybdenum market. The country consumed 278.5 million pounds in 2023 according to IMOA figures, up 4 percent from the previous year. The Asian nation consumes more than twice as much as Europe, the second largest molybdenum consumer in 2023 at 124.8 million pounds. Molybdenum demand is growing the fastest in the US, which saw a 5 percent year-over-year rise in consumption in 2023 to 64.4 million pounds.
Investors should keep an eye on infrastructure spending and economically-stimulating central bank interest rate cuts coming out of these key regions. According to Fastmarkets, Chinaâ€
However, positive growth out of India offers a silver lining. As Bloomberg reports, Indiaâ€
The same is expected in the US, where the Federal Reserve is in the midst of a fresh rate cut cycle. US steel companies are optimistic about a turnaround for their industry in 2025.
“They see a turnaround fueled by an improving US economy, as large infrastructure projects get built and interest-rate cuts encourage consumer spending,� Bloomberg reported following the SMU Steel Summit in Atlanta in August 2024.
Molybdenum supply trends
As mentioned above, molybdenum is rarely produced as a primary metal, but rather as a by-product, mostly from copper mining. Hence, much of the worldâ€
Not surprisingly, the top molybdenum producing countries are also among the biggest copper producing nations. Worldwide molybdenum production was 260,000 MT in 2023. Last year, China, the biggest molybdenum producer, was responsible for 110,000 MT, or more than 42 percent of total global output of the metal. Chile and Peru take second and third place for molybdenum output with 46,000 MT and 37,000 MT, respectively.
Molybdenumâ€
In Chile, the world’s largest copper producing country and second largest molybdenum producer, a lack of government investment in the copper mining sector over the years has led to significant declines in output.
Lower copper prices are expected to place downward pressure on global molybdenum supply in the years ahead, according to Kevin Pritchett, director of marketing for Climax Molybdenum, a subsidiary of Freeport-McMoRan (NYSE:FCX), speaking at the SMR Stainless Steel conference in September 2024.
‘We’ve said for some time that most of the growth in supply would come from copper-molybdenum mines because the world needs to electrify and decarbonize, so it’s going to need more copper,’ Pritchett said. “But because the (London Metal Exchange) copper price has been somewhat depressed, these new projects are not coming online very quickly, so it has a knock-on effect on molybdenum.’
How to invest in molybdenum
There are a number of entry points for investing in the molybdenum market, including molybdenum stocks, molybdenum ETFs and molybdenum futures. We take a look at each of those three ways to invest in molybdenum below. All data and information was current as of November 5, 2024.
Molybdenum stocks
Molybdenum mining stocks are arguably the best place to start when investing in molybdenum.
There are a number of publicly traded mining companies with shares listed on major exchanges including the TSX, ASX and the NYSE. All stocks discussed below had market caps above $5 million at the time data was collected.
Major mining stocks
Centerra Gold (TSX:CG,NYSE:CGAU)
Centerra Goldâ€
Climax Molybdenum
Freeport-McMoRan (NYSE:FCX) subsidiary Climax Molybdenum is the worldâ€
Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO)
Rio Tinto produces molybdenum as a by-product from a number of its significant mining operations, including the Oyu Tolgoi copper-gold mine in Mongolia. In the US, Rio Tinto produces molybdenum at its Kennecott copper mine in Utah and its Resolution copper mine in Arizona.
Southern Copper (NYSE:SCCO)
Southern Copper is another major mining company that produces molybdenum as a by-product. Its molybdenum concentrate products come from its large copper porphyry mines, specifically Buenavista and La Caridad in Mexico, and Cuajone and Toquepala in Peru.
Taseko Mines (TSX:TKO,NYSEAMERICAN:TGB,LSE:TKO)
Taseko Mines owns and operates the massive Gibraltar copper-molybdenum mine in British Columbia. The second-largest copper mine in Canada, Gibraltar is expected to continue production up through 2044. In March 2024, Taseko increased its ownership position in the mine from 87.5 percent to 100 percent.
Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK)
Teck Resources produces molybdenum concentrate from its Highland Valley Copper mine in British Columbia and the Antamina polymetallic mine in Peru. The largest copper mine in Canada, Highland Valley is also the countryâ€
Junior mining stocks
Erdene Resources (TSX:ERD)
Erdene Resources has a five-year development plan for its assets in the emerging Khundii minerals district of southwestern Mongolia. In addition to the Bayan Khundii gold-silver and the Altan Nar gold-silver-lead-zinc projects, the company is also developing the Zuun Mod molybdenum-copper project.
Latin Metals (TSXV:LMS,OTCQB:LMSQF)
Latin Metals is a project generator with a diverse asset portfolio in South America. The company holds two key exploration-stage copper-molybdenum projects in Peru’s coastal copper belt: Auquis and Lacsha.
Libero Copper (TSXV:LBC,OTCQB:LBCMF)
Libero Copperâ€
Los Andes Copper (TSXV:LA,OTCQX:LSANF)
Los Andes Copper owns the Vizcachitas copper-molybdenum porphyry project in Chile. The company completed a pre-feasibility study for the property in April 2023 demonstrating an initial mine life of 26 years producing 8.763 billion pounds of copper, 273.3 million pounds of molybdenum and 32.7 million ounces of silver, based on a mill throughput of 136,000 MT per day.
Starcore International Mines (TSX:SAM)
Starcore International Mines’ main focus is its precious metals assets. However, the gold producer is conducting exploration work on its wholly owned Ajax molybdenum project in the mineral-rich Golden Triangle of British Columbia, Canada.
Stuhini Exploration (TSXV:STU,OTCQB:STXPF)
Stuhini Exploration has an extensive portfolio of precious and base metals properties in Canada and the US. The company’s flagship asset is the Ruby Creek molybdenum deposit in British Columbia. The project has a measured and indicated resource estimate of 433 million pounds of molybdenum.
Molybdenum ETFs
For those investors not wanting to put all their eggs in one basket, exchange-traded funds with a focus on industrial metals are also a great play in the molybdenum space. Here are a few to get you started.
iShares S&P/TSX Global Base Metals Index ETF (TSX:XBM)
As the name suggests, the iShares S&P/TSX Global Base Metals Index ETF offers exposure to base metals mining stocks. Amongst the fundâ€
SPDR S&P Metals & Mining ETF (NYSEMKT:XME)
The SPDR S&P Metals & Mining is another ETF that tracks the metals mining stocks. The fundâ€
VanEck Green Metals ETF (NYSEARCA:GMET)
If investors are looking to make a play on molybdenumâ€
GMETâ€
Molybdenum futures
Another option for those looking to invest in molybdenum is molybdenum futures, a derivative instrument tied directly to the price of the actual metal. Futures are a financial contract between an investor and a seller. The investor agrees to purchase an asset from the seller at an agreed-upon price based on a date set in the future.
Rather than intending to take possession of the material asset, investors speculating in the futures market are instead making bets on whether the price of a particular commodity will rise or fall in the near future.
For example, if you buy a molybdenum futures contract believing the price of metal is set to rise, and your prediction proves correct, you could gain a return on your investment by selling the now more valuable futures contract before it expires. However, be advised that trading futures contracts is not for the novice investor.
Molybdenum futures are available for trade through the London Metals Exchange (LME) and CME Group.
Since 2010, the LME has offered Molybdenum futures contracts with prices based on the Platts Molybdenum Oxide Daily Dealer (Global) assessment as a reference point for pricing technical-grade molybdenum oxide traded in spot markets across the main global trading locations.
A new investment vehicle, the CME Group Molybdenum Oxide (Platts) futures became available to trade on-screen via CME Globex and for submission for clearing through CME ClearPort in March 2023. It also uses the Platts Molybdenum Oxide Daily Dealer (Global) assessment.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.