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Molybdenum: The Overlooked Critical Mineral

13 November 2023 08:55
ASX: T88

Amid the global shift towards cleaner energy sources, the forefront of mining activities is marked by a heightened focus on critical mineral exploration.

Essential components like copper, lithium, nickel, cobalt, and Rare Earth Elements (REE) play pivotal roles in the burgeoning clean energy technologies, spanning from wind turbines and electricity networks to electric vehicles (EV).

According to Taiton Resources‘ Executive Director, Noel Ong, the reason many critical minerals are dominating current discussions is closely tied to their influence in Chinese markets.

“When you look at the minerals people have been talking about, it is really all the commodities that are ‘critical’ because of the China fear factor and influence China has in the market through controlling these resources,” he says.

Australia’s mining sector, vital for the nations economic health, is intricately linked to its global commodity exports. One of the country’s most significant trade alliances is with China.

In the fiscal year 2020-21, Australia experienced a robust 6.3% growth in its total two-way trade with China, amounting to $267 billion. This interconnectedness is particularly evident in the mining industry, where Chinese demand plays a pivotal role, causing fluctuations in tandem with changes in the Chinese economy.

An example of this symbiotic relationship is the sudden softening of lithium prices, following a remarkable surge in 2020.

The price of lithium is often based upon observed prices in the Chinese market, which have experienced a significant drop, currently resting below CNY165,000 per tonne. Moreover, the assessed prices of Lithium hydroxide and carbonate in China have witnessed a notable 74 percent decline.

Consequently, understanding the dynamics of this critical mineral and its association with China becomes crucial for many explorers evaluating the enduring sustainability of a resource.

Mr Ong highlights this as one of the reasons why Taiton pursued exploration at its flagship Highway Project, with a focus on Molybdenum.

“Molybdenum is a very important component of stainless steel which obviously China has, and needs, in abundance,” he says.

“It is really one of those components that, without Molybdenum, you don’t have the stainless steel we know today.”

Stainless Steel 316: What Is It? How Is It Made? Grades

Figure 1: Metals used to produce Stainless Steel

Molybdenum: A Critical Component in Stainless Steel

While Molybdenum may not be currently in the spotlight among critical minerals in extensive green energy discussions, Mr Ong contends that the metal might have been underestimated or overlooked.

“Not many people are talking about it. But its uses are very clear,” he says.

Molybdenum (Mo) is a chemical element used to strengthen steel, without adding excessive extra weight, making it invaluable for diverse applications such as construction, defence and oil and gas industries.

Newcrest Mining (ASX:NCM; TSX:NCM; PNGX:NCM) initiated the construction of Australia’s inaugural Molybdenum processing plant in 2020.

The Cadia Processing Plant, costing Newcrest $130 million to build, is expected to produce around 4.1 million pounds of Molybdenum per year, contributing to a reduction in the life-of-mine average cost by $67/oz.

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Figure 2: The Cadia Processing Plant, owned and operated by Newcrest Mining

Mr Ong says Taiton were highly encouraged by Newcrest’s investment into Molybdenum.

“The fact that [Newcrest] thought it was that important to create the plant reinforced our beliefs at Taiton. This being that Molybdenum is a key component in the future.”

Taiton’s Highway Project

Mr Ong says that exploration at the Highway Project, located in the Gawler Craton of South Australia, is going according to plan, however, laboratories are holding up assay results.

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Figure 3: Location of Taiton South Australian projects.

The Company conducted its second drilling program earlier this month, testing a Ultrafine soil anomaly which Taiton believes indicates a fertile mineral system within the Merino Prospect.

The inaugural campaign at the Merino Prospect encompassed drilling 3,062 meters through 22 RC holes, aiming to explore molybdenum and base metal anomalies.

Taition decided to expand the drilling efforts to enhance the precision of results, concentrating on the two main molybdenum anomaly zones.

Mr Ong expresses the Company’s confidence that there is more potential to uncover at the Project.

“When we started work at Highway we said we have a unknown, unrecognized, mineral system, hence, we have a new mineral province. I think what we have now is a Polymetallic Mineral Province,” he remarks.

“In our historical drilling, we’ve had a lot of base metals like lead and zinc at 0.1% and 0.2%. What that tells us is the system is mineralising but, at this stage, we have yet to find what the main metal affinity is. Exploration will help us uncover the mystery.”

“We know there is more than Molybdenum mineralisation. That has been the encouragement for us that there is defiantly more cooking here.”

Moly & its Future

What lies ahead for the often overlooked yet critical mineral?

Although experiencing a price surge in March, Molybdenum currently hovers in the range of $54 to $60 USD per kilo—a pricing range Mr. Ong anticipates the mineral to sustain for the foreseeable future.

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Figure 3: Molybdenum price graph 2023

The irreplaceable nature of Molybdenum in its various applications lends itself to a bright future for the commodity.

“I think the demand for Molybdenum will only increase as the uses for increase,” Mr Ong says.

“Moly is the strengthening agent in stainless steel, which there isn’t really a replacement or substitute mineral for this function. Because there isn’t a substitute – you can’t replace Molybdenum, therefore, I foresee its demand and popularity will only increase in future.”

In the pursuit of greener technology, critical minerals are being adapted with new applications.

Originally recognised for its medical uses, lithium has now become a crucial component in EVs.

As the EV market expands and demand for enhanced capabilities rises, the focus of innovators has shifted to achieving instantaneous charging capacity.

Some research has indicated Molybdenum could potentially play a role in these high-capacity chargers, which if successful, would skyrocket the minerals popularity and functionality.

“Things are constantly changing. Who knows, maybe Molybdenum could be a critical component like lithium was to the lithium-ion batteries,” Mr Ong says.

T88’s Australian Stock Exchange-listed share price is currently trading at $0.16 (8.50am UTC+ 8 hours).

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