Molybdenum - an extraordinary metal in high demand

III M O AAAINTERNATIONAL MOLYBDENUM ASSOCIATION

®

International Molybdenum AssociationRue Père Eudore Devroye 245, 1150 Brussels, BelgiumTel: +32 2 770 8878 · Fax: +32 2 770 8898e-mail: info@imoa.info · www.imoa.info

A reprint from the September 2007 issue of Stainless Steel World

By Hans Imgrund and Nicole Kinsman, International Molybdenum Association

Ferromolybdenum (left); Roasting molybdenite concentrate (right). Courtesy of Molymet, Chile

20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net20 S T A I N L E S S S T E E L W O R L D J U L Y / A U G U S T 2 0 0 7 www.stainless-steel-world.net

Molybdenum - an extraordinMolybdenum - an extraordin

The US Air Force Memorial in Arlington, Virginia,USA, was designed by James Ingo Freed. It fea-tures three curved spires of welded, 19mm-thick,type 316 stainless steel plate up to 82 metres inheight. Photo: Patrick McCafferty.

imoa 29-08-2007 15:24 Pagina 20

Materials

www.stainless-steel-world.net S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 21

IntroductoryIn the last four years demand formolybdenum soared by 35 per cent.This surge comes mainly from astrong world-wide push to invest inindustrial infrastructure: from a fac-tory building boom in China to arush to develop oilfields, many proj-ects rely on the help of materialscontaining molybdenum.All this activity has trickled down to

an increase in demand for the metaland the transformation of a marketthat had been stagnant for nearly 20years. Molybdenum has diverse ap-peal: it is used in pipelines, to im-prove strength to transport oil andgas under high pressure; in process-ing vessels in the chemical industry,to withstand corrosion in an arrayof solutions; and even in sculptures,such as the US Air Force Memorial,which is located just across the riverfrom Washington, DC, to keep theirfinish shiny for a long time.The global interest in going “green”has also had an impact: as morecompanies reduce plant waste by re-cycling their waste streams withinfactory walls, moly-grade stainlesssteels handle the higher corrosive-ness that comes with higher concen-tration of aggressive substances. Compounds of the element that al-lows steels to resist high tempera-

tures and stainless steels to resist cor-rosive environments can also workas an effective lubricant, as a catalystfor the production of oil products oras a pigment to make orange paint.

How molybdenum metal isusedThe most important properties ofpure molybdenum metal and molyb-denum alloys are their high meltingpoint (in the order of 2600°C), hightemperature resistance, high wear re-sistance and good corrosion resist-ance. These products are often usedin applications that require highstrength at high temperature, whiletheir coefficient of expansion andthermal conductivity also makethem valuable to the electronics in-dustry. Products made of molybde-num metal and molybdenum basealloys include metal powder, wire,sheet, bar and specialised powders.

The recent nickel shortage has attracted a lot of attention. What is less known is that molyb-

denum too is in ever greater demand, with tightening supplies and soaring prices. A world-wide

boom in infrastructure projects, especially those which have critical applications, has fuelled

demand for this versatile metal. Stainless Steel World asked Nicole Kinsman and Hans Imgrund of

the International Molybdenum Association to explain the background and indicate what the future

may hold. Their findings suggest that supplies will remain tight in the short term, but that the

long-term supply prospects are looking good.

By Hans Imgrund and Nicole Kinsman, International Molybdenum Association

inary metal in high demandinary metal in high demand

The price for molybdenum has spiked recently but was at low levels for much of the last 25 years.(Source: Metals Week)

Molybdenum facts

• About 25 per cent of all molybde-

num produced is used to make

moly-grade stainless steel.

• About 50 per cent is used for oth-

er iron-based metals, such as con-

struction steel, tool and high-speed

steel and cast iron.

• Molybdenum as an alloying ele-

ment in steel is almost always used

in combination with other elements

such as chromium, nickel, vanadi-

um, tungsten or niobium.

• Steel mills add molybdenum either

as molybdenum oxide or ferro-

molybdenum.

• The remaining 25 per cent is puri-

fied and used as moly metal, as an

alloying element in nickel and other

super alloys, as catalysts, lubri-

cants, flame retardants, corrosion

inhibitors and pigments.

• Super alloy producers use moly

metal pellets as a high-purity alloy-

ing addition.

MA

TE

RI

AL

S

imoa 29-08-2007 15:24 Pagina 21

Materials

www.stainless-steel-world.net S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 23

Examples of the metal’s uses in-clude parts of industrial furnaces,support wire for tungsten filamentsin light bulbs, glass melting equip-ment, electronic equipment, andmetal and plastic forming equip-ment. One example of a metal-forming product is a piercing plug.It is made of TZM (a molybdenumalloy, dispersion-strengthened withtitanium carbide and zirconium ox-ide) and used for the production ofstainless steel tubing. Such piercingplugs are made of TZM becausethey must have high strength andhigh wear resistance at the highrolling temperature of stainless steel(see photo.)

Making a better stainlesssteel Molybdenum is added to stainlesssteels to increase corrosion resist-ance. About 10 per cent of stainlesssteel production contains molybde-num, of which the content averagesabout 2 per cent. Traditionally themost important moly-grade stainlesssteel is the austenitic type 316 (18%Cr, 10% Ni and 2 or 2.5% Mo),which represents about 7 per cent ofglobal stainless steel production. Inrecent years moly-grade ferriticshave grown fast. These includetypes 444 (18% Cr, 2% Mo), 436(18% Cr, 1.25% Mo) and 434 (17%Cr and 1% Mo). The combined ton-nage of moly-grade ferritics hasjumped from 47,000 metric tons in2002 to 366,000 tons in 2005, ac-cording to the InternationalStainless Steel Forum. Their percent-age of total stainless production hasgrown from 0.3 per cent to 1.7 percent in just three years. Duplexstainless steels have also been grow-ing strongly to an estimated200,000 metric tons in 2006.

Industrial sectorsThe most important uses of moly-grade stainless steel are industrial.The chemical and petrochemical, oiland gas, paper, power, water, foodand pharmaceutical industries useprocessing equipment made of moly-grade austenitic and duplex stainlesssteels. Moly-grade stainless steel is also usedin architectural applications. The cor-rect selection of stainless steel inthese applications is essential to avoidunpleasant surprises, for instancewhere a moly-free grade was usednext to the ocean (see photo).Because the stainless steel selectedhere is not corrosion-resistant enoughfor this difficult environment, thissculpture has to be cleaned from su-perficial corrosion staining every year.The US Air Force Memorial, using amoly-grade type 316 stainless steel

(which contains 2 per cent molybde-num) will most likely not have thisproblem (see photo).

Making a stronger alloy steelMolybdenum enhances hardenabili-ty, strength and toughness, and ele-vates the temperature resistance ofconstructional steels. It is often usedin combination with chromiumand/or nickel and other alloying ele-ments, with the molybdenum con-tent typically ranging from 0.2 to1.2 per cent. Moly-grade steel cate-gories include heat-treatable engi-neering steels, case-hardened steels,high-temperature steels, oil countrytubular goods and HSLA (HighStrength, Low Alloy) steels. Thesegrades are used in all kinds of engi-neered products for automotive,shipbuilding, aircraft and aerospaceindustries; drilling, mining and pro-

TZM piercing plug for the production (rolling) ofstainless steel tubes (courtesy of Plansee).

This sculpture right next to the ocean shows corrosion staining on type 304 stainless steel due toincorrect grade selection in a demanding environment.

imoa 29-08-2007 15:24 Pagina 23

Materials

www.stainless-steel-world.net S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 25

cessing industries; and energy gen-eration industries. Products includevessels, tanks and heat exchangers,gears and shafts, piping and manymore.

Making a longer-lasting toolsteelMolybdenum contributes to second-ary hardening (in combination withvanadium) in tool steels. It also sep-arates the pearlite and bainite reac-tions, and therefore allows stepquenching. Products made of toolsteels include hand tools, knivesand saws, forging dies, pressure cast-ing moulds and molding plates. Thetypical molybdenum content in toolsteels is around 0.8 per cent.Molybdenum contributes to second-ary hardening and is an importantconstituent of the primary M6C car-bide, which makes high-speed steelsmore wear-resistant. Principal usesare for cutting tools and saws forsteel, cast and non-ferrous materials,twist drills, milling cutters (see pho-to) and pushing tools. The averagemolybdenum content in high-speedsteels is around 5 per cent.

Molybdenum miningThe main regions of molybdenummining include South America,North America and China. These re-gions accounted for 93 per cent ofglobal production in 2006, whichwas estimated to be 422 millionpounds (192,000 metric tons). Roughly 60 per cent of molybde-num is produced as a by-product ofanother mining operation, mostcommonly copper production. Theore from copper mines which alsoproduce molybdenum usually con-tains between 0.5 and 1.5 per centcopper (5 to 15 kg per metric ton ofore) and between 0.01 and 0.05 percent molybdenum (0.1 to 0.5 kg/t).Major operations mine more than50 million tons of ore per year, pro-ducing over 200,000 tons of copperand between 5,000 and 15,000 tonsof moly. For every kilo of copper,between 20 and 40 grams of moly isextracted. For these producers, it is a relativelyinexpensive step to extract molyb-denum from the ore that is alreadyground up to take out copper. Therevenues from molybdenum are

usually less than 10 per cent of to-tal sales. Therefore, the molybde-num output does not necessarilyfollow the demand for molybde-num but the demand for copper.The moly output automatically in-creases when the mine increases itscopper production and it falls whenthe mine decreases its copper pro-duction because demand for copperfalls. Mining for moly only (primary pro-duction) is much more expensive. Aprimary mine in the West, with anannual production capacity in theorder of 10,000 tons of molybde-num (22 million lbs), takes an in-vestment of several hundred mil-lion US dollars to open. Of the 40per cent molybdenum from pri-mary mines, 25 per cent is pro-duced in China and the CIS and 15per cent in the West. Ore grades in primary mines con-tain between 0.12 and 0.20 per centmoly. Thus, the production of10,000 tons of Mo requires miningand milling in excess of 5 milliontons of ore per year. The cost of thishas to be borne by the revenue

These mill cutters are made of high-speed steel with 5 per cent Mo (courtesy of Boehler Edelstahl).

imoa 29-08-2007 15:24 Pagina 25

Materials

26 S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 www.stainless-steel-world.net

from molybdenum alone. Thereforethe production of primary molyb-denum is significantly more costlythan the production of by-productmolybdenum. The primary minesare swing producers, i.e. they in-crease their production when themarket has higher demand formolybdenum and decrease theirproduction when the demand isdown.

The changing structure ofthe industryThe balance of molybdenum min-ing has shifted over the years frommainly primary production tomainly by-product production. Ascopper companies have increasedand optimized the recovery ofmolybdenum, the amount of by-product molybdenum produced hasincreased significantly in the last 15years. During that same time, pro-duction in China and the availabili-ty of Chinese molybdenum for ex-port to the rest of the world havealso increased.Because of these structural changes,the primary mines in NorthAmerica that have traditionally pro-duced the bulk of molybdenumhave decreased their productionand have become swing producers:these mines are only able to in-crease their production, or comeback on-stream, when the marketdemand requires their more costlymolybdenum. The by-productmines, on the contrary, producetheir lower-cost molybdenum alongwith copper to fill the demand forcopper and do not adjust much tothe market conditions for molybde-num. Market conditions became difficultin 2001 and 2002, when the molyb-denum price dropped even furtherafter being already low for most ofthe previous 20 years. The produc-tion of the primary mines in NorthAmerica was reduced to less than 45million pounds per year, or lessthan 15 per cent of global produc-tion. With this low production lev-el, the swing producers, the primaryNorth American mines, were nolonger able to adjust their produc-tion sufficiently to absorb changes,particularly strong increases in de-mand.

Production of Western primary mines has decreased when prices and demand were low for several years. Production from these mines was only about 40 million lb in 2001 and 2002.(Source: IMOA, Metals Week).

Global molybdenum demand has increased strongly in the last four years after being stagnant forseveral years. (Source: IMOA, Metals Week).

Molybdenum mine production in China has dropped in 2005 as mines were closed due to safetyconcerns (Source: IMOA)

imoa 29-08-2007 15:24 Pagina 26

Materials

28 S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 www.stainless-steel-world.net

Molybdenum demand hasincreased significantlyAs indicated already, the uses formolybdenum-containing productsare mostly industrial and include en-ergy generation, oil and gas, chemi-cal processing, transportation, min-ing, mechanical engineering, build-ing and construction and fabrication. [Demand for molybdenum]Many of these sectors have seen anup cycle in investment in the lastfew years. High oil prices have boost-ed exploration and brought new pro-duction facilities online. The newfields often are more difficult toreach and more difficult to tap.Higher temperatures, pressures andconcentrations result in a need forbetter (often molybdenum-alloyed)

materials. Five to ten years ago, forexample, refineries did not need touse much stainless steel in their pro-cessing. Today, the raw oil to beprocessed is becoming increasinglyaggressive, so stainless steel equip-ment is becoming more common. The general trend in the chemicaland petrochemical industries of in-creasing process temperatures andpressures to increase plant efficiencyalso favours the use of moly-gradematerials. Similarly, environmental-ly friendly processing, where efflu-ents are recycled in the plant in-stead of being released to the envi-ronment, increases the need formoly-containing materials that canwithstand the higher concentra-tions of aggressive compounds.

Finally, the rapid expansion of theChinese economy, creating a needfor more industrial processingplants and for investment in newinfrastructure, has multiplied theuse of moly-grade materials in thatpart of the world in just a few years.Therefore, molybdenum demandhad a compounded annual growthrate of 8 per cent between 2002 and2006. Such market conditions havenot been seen for decades. In fact,between 1990 and 2006 the growthrate was only 3.3 per cent per year.To express this in weight: in the 12years between 1990 and 2002 thedemand for molybdenum increasedby 58 million pounds. In the lastfour years, between 2002 and 2006,the demand increased by 112 mil-

CCoommppaannyy MMiinnee LLooccaattiioonn TTyyppeeEEssttiimmaatteedd aannnnuuaall

ccaappaacciittyy ((mmiilllliioonn llbb MMoo))

SSttaattuuss

Montana/Gruppo Mexico Butte USA Cu by-product 8 Reopened 2004

Quadra Mining Ltd. Robinson USA Cu by-product 1 Started 2006

Taseko Mines Gibraltar Canada Cu by-product 1 Reopened 2005

Anglo American/Falconbridge Collahausi Chile Cu by-product 7 Started 2005

Amerigo (MineraValle Central) - Chile Cu by-product 1 Started 2005

Golden PhoenixMinerals Ashdown USA Primary 0.5 Started 2006

Roxmark Mines Nortoba - Tyson Canada Primary 1 Started 2006

Table 1: Mloybdenum mines recently started or reopened (source: Adams Metals)

CCoommppaannyy MMiinnee LLooccaattiioonn TTyyppeePPllaannnneedd aannnnuuaall

ccaappaacciittyy ((mmiilllliioonn llbb MMoo))

SSttaattuuss PPrroobbaabbllee ssttaarrtt--uupp

Freeport / PD Cerro Verde Peru Cu by-product 8 Commissioning Q2 2007

Roca Mines Max Moly Canada Primary 5 Under Construction Q3 2007

Alumbrera Bajo de laAlumbrera Argentina Cu by-product 5 Under Construction Q4 2007

BHP Pinto Valley USA Cu by-product 3 Under Construction Q4 2007

Mercator Mineral Park USA Cu by-product 10 Under Construction Q2 2008

Adanac Ruby Creek Canada Primary 10 Feasability complete;contracting Q2 2009

Moly Mines Ltd. Spinfex Ridge Australia Cu by-product 20 Completing

feasability Q3 2009

Grupo Mexico Canenea Mexico Cu by-product 10 Completing feasability Q3 2009

Freeport / PD Climax USA Primary 20 to 30 Restarted - conditionally approved 2010

Idaho General Mount Hope USA Primary 30 Completing feasability 2011

Thompson Cree Davison Canada Primary 8 Starting feasabilitystudy 2012

Table 2. Likely molybdenum mine projects (source: Adams Metals)

imoa 29-08-2007 15:24 Pagina 28

Materials

www.stainless-steel-world.net S T A I N L E S S S T E E L W O R L D S E P T E M B E R 2 0 0 7 31

lion pounds, from 310 millionpounds to 422 million pounds. Thisis over 35 per cent of the total de-mand in 2002 and 2.5 times asmuch as the primary mine produc-tion in the same year. This situationhas created a major strain on thesupply of molybdenum.

Molybdenum supply Mining operations take many yearsto develop and start. Feasibilitystudies, environmental impact stud-ies, negotiation with local residentsand financing are just part of theprocess needed to start a new mineor restart a mothballed one. Becauseof this, metal production cannot bequickly increased when demand in-creases sharply. Of course, there is some flexibilityto increase production in existingmines, but that flexibility is limitedto a few percentage points. Thesharp rise in demand after 2002overwhelmed the swing producers,who had seen their business shrink-ing continuously during the fivepreceding years. At the same time,molybdenum production in Chinawas not able to compensate for thislimitation. Its production actuallydecreased in 2005, mainly becausethe Chinese government had toclose some mines due to safety con-cerns.The problem was further compound-ed by limited roasting capacities.Roasting is a necessary step to refinemolybdenum. According to esti-mates by Climax Molybdenum (pre-sented at the 2005 Ryan’s Notes

Conference), the Western roasterswere running at a capacity utilizationrate of 77 per cent in 2003, whichmoved up to 94 per cent in 2004 andreached 100 per cent in 2005. This combination of circumstancesled to the current - and unexpected- tight supply of molybdenum.

High demand leads to mineand roasting expansionsThe tight supply situation and thecontinued high prices of molybde-num over the last four years haveprompted many mining companiesto develop new molybdenum min-

ing and roasting facilities. Projectshave become possible that wouldnot have been profitable at the lowmolybdenum prices previously seen. New operations that opened in theAmericas since 2003 have added anestimated annual capacity of almost20 million pounds. Production inChina also increased by some 20million pounds in 2006.Additionally, many new projects areunder consideration and in variousplanning and construction stages. Ashortlist can be found in table 2,provided by Terry Adams of AdamsMetals Ltd. The lead times for someof these projects are very long.According to Mr Adams there arearound 500 other molybdenumprojects in discussion with varyingprobabilities of completion. Roasting capacity should also begrowing soon as capacities in theWestern world are projected to in-crease from today’s 340 millionpounds to 410 million pounds by2010.For the long term, known reservesfor molybdenum amount to 19 mil-lion metric tons, according to theUS Geological Survey of 2006. Thiswould be sufficient for 100 years atpresent demand levels, providing uswith a corrosion-free future formany years to come.

China 43%

CIS & Mongolia 8%

South America 16%

North America 33%

Global molybdenum reserves total 19 million tons and are mainly situated in China and NorthAmerica (source: US Geological Survey 2006).

About the authors

Dr. Hans Imgrund

works as a part-time

consultant to IMOA.

A German national,

he studied

metallurgy at the

Clausthal Bergakademie and the

Technical University in Berlin. He

started his career in the moly

business in 1973 as a development

engineer of Climax Molybdenum

Company.

He worked as Vice President Sales

and Marketing for Climax and for

Cyprus Mines Corporation from 1981

until his retirement from Climax in

2003.

He was actively involved in the

foundation of IMOA and has served

on IMOA’s Executive Committee since

its inception in 1989.

Dr. Nicole Kinsman

is the Technical

Director of the

International

Molybdenum

Association (IMOA).

A Swiss citizen, she studied

mechanical engineering and

metallurgy at the Swiss Federal

Institute of Technology in Zurich (ETH)

and business administration at

Carnegie Mellon University in

Pittsburgh, USA. In 1995 she started

her career as a market development

manager at TMR in Pittsburgh, a

consulting company focusing on

technical consulting in stainless steel.

Since 2002 she is Technical Director

of IMOA, in charge of the market

development programme of the

association.

imoa 29-08-2007 15:24 Pagina 31