Outokumpu secures molybdenum from Greenland, strengthens supply chain

Stainless steel producer Outokumpu announced on Feb. 24 a ten-year off-take agreement with Canadian mining company Greenland Resources to secure a reliable supply of molybdenum, a critical raw material essential for producing specialty stainless steel.

Under the terms of the agreement, Outokumpu will receive approximately 8 million lb of molybdenum annually, valued at roughly $160 million based on current market prices, that is the equivalent of approximately 3.6 million mt of molybdenum, an Outokumpu spokesperson told Platts, part of S&P Global Commodity Insights.

This quantity represents about half of Outokumpu's annual molybdenum needs, which are part of the company's broader raw material procurement strategy that totals approximately Eur3 billion each year.

The strategic agreement aligns with Outokumpu's long-term vision of decarbonization and sustainable value-chain integration. Molybdenum is a crucial component in the production of specialty stainless steel, and securing a stable supply is vital for Outokumpu's operations in Europe. Europe is the second largest molybdenum user worldwide but has no production of its own.

"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," said Marc-Simon Schaar, chief financial officer at Outokumpu.

"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," Schaar added.

"This constitutes a critical milestone for our company toward achieving commercial production," said Ruben Shiffman, Greenland Resources executive chairman.

Greenland Resources owns the Malmbjerg project, a molybdenum deposit located in East Greenland. With a feasibility study already in place, the project aims to achieve commercial production within this decade.

"The high-quality molybdenum ore and low-emission processing at Malmbjerg are ideally suited to secure long-term supply for Outokumpu's specialty steel products," Shiffman said.

Furthermore, the European Institute of Innovation and Technology, the European Raw Materials Alliance and Finnvera in Finland supported the agreement highlighting its significance for the wider European industry.

According to market sources, as the industry continues to navigate geopolitical challenges and supply chain disruptions, partnerships like this are essential for maintaining local production.

The Platts Daily Dealer Molybdenum Oxide assessment was $20.925/lb Feb. 21, up from Feb. 20 at $20.675/lb.