Canadian public mining company Greenland Resources has entered a ten-year offtake agreement with European stainless steel producer Outokumpu to supply molybdenum oxide.
This partnership will provide Outokumpu with approximately eight million pounds (mlb) of molybdenum annually, valued at around $160m (€152.4m) at current market prices, fulfilling nearly half of the company's yearly requirement.
This partnership not only supports Greenland Resources' long-term strategy but also facilitates access to capital expenditure (capex) financing, with Outokumpu assisting in the capex arrangements.
Greenland Resources will supply molybdenum oxide and carbon-free briquettes from its Malmbjerg project in Hostakken Mountain in east Greenland to Outokumpu, covering around 25% of Greenland Resources’ production for the first ten years.
Molybdenum is essential in manufacturing speciality stainless steel, and securing its supply is crucial for Outokumpu's advancement in the materials sector.
Greenland Resources executive chairman Ruben Shiffman said: “We are delighted to partner with Outokumpu with the long-term supply of molybdenum oxide, which at current market prices would represent a value of approximately $1.6bn over ten years.
“This constitutes a critical milestone for our company towards achieving commercial production. The high-quality molybdenum ore and low-emission processing at Malmbjerg are ideally suited to secure long-term supply for Outokumpu's speciality steel products.”
The initiation of the offtake obligation is contingent upon meeting standard terms and conditions.
Outokumpu chief financial officer Marc-Simon Schaar said: “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 3 emissions at competitive prices, including a cap and a floor mechanism.
“This further strengthens our long-term raw material availability, complementing our own chrome mine in Finland, and our investment in a junior nickel mine project in Canada.”
The Malmbjerg project, which also contains copper and magnesium, is set to be an open-pit operation designed to minimise environmental impact. It is scheduled to commence commercial production within this decade.
The project’s feasibility study by Tetra Tech in 2022 forecasts a $820m capex with a 33.8% after-tax internal rate of return (IRR) and a payback period of 2.4 years, based on a molybdenum price of $18/lb.
The proven and probable reserves stand at 245 million tonnes (mt) at 0.176% molybdenum disulfide, translating to 571mlb of contained molybdenum metal.
The project is backed by the European Raw Materials Alliance (ERMA), managed by EIT RawMaterials, part of the EU's EIT.
Greenland Resources signed a letter of intent with Outokumpu in October 2023 to supply molybdenum from its Malmbjerg project.
