- Freeport-McMoRan, the world’s biggest molybdenum producer, is revisiting plans to expand output at its Climax mine in Colorado as prices for the metal have risen more than 50% this year. “We do have some opportunities to expand primary at Climax. And so we’re kind of dusting off our old schedules,” CEO Kathleen Quirk said on Tuesday’s analyst call.
- BMO Capital Markets forecasts a sixth consecutive annual market deficit in 2027. Demand grew at an average 4.4% a year between 2020 and 2025 before jumping to 8.5% in the first half of this year, and the bank sees price risks skewed to the upside.
- About 60% of global molybdenum supply comes as a byproduct of copper mining, leaving it exposed to falling grades and project disruptions. Chilean output fell 8% in the first half of 2026, and Centerra Gold is forecasting six to eight more years of deficits as it aims to restart its Thompson Creek mine in Idaho by mid-2027.
- The rally is already lifting producers’ returns. Southern Copper’s realized molybdenum price averaged $32.93 a pound in the third quarter, up about 36% from a year earlier, implying roughly $24.21 a year ago (Lumida calculation), and the metal made up about 12% of its sales.
What Happened?
“We’re very positive on the outlook for moly,” Quirk said on Freeport’s Tuesday call with analysts, referring to molybdenum, a metal used to strengthen steel and alloys that withstand extreme heat and corrosion. It is hard to replace in oil and gas pipelines, nuclear reactors, jet engines and rocket components, and is increasingly used in semiconductors as a substitute for tungsten. Besides Climax, Freeport’s proposed expansion of the Bagdad copper mine in Arizona would add 10 million to 12 million pounds of annual molybdenum production. Quirk said boosting copper output remains the company’s priority.
Why It Matters?
Molybdenum is a small but growing earnings lever for US miners at a time when supply is tight across critical minerals. Because most supply comes from copper mines, the same problems hurting copper output, which could see its first annual decline since 2017, also limit molybdenum. China has historically lifted primary output during shortages, but BMO says resource depletion and environmental limits have reduced its ability to do so, which supports higher prices for longer and strengthens the case for US domestic supply.
What’s Next?
Investors will watch whether Freeport commits capital to a Climax expansion and how quickly it could add supply. The Bagdad expansion and Centerra’s planned restart of Thompson Creek in Idaho by mid-2027 and its eventual plan to revive Endako in British Columbia are other potential sources of new output. If BMO’s deficit forecast holds, molybdenum could make a bigger contribution to earnings at Freeport and Southern Copper, though copper remains the main driver of both stocks.
Affected Tickers and Coins: FCX, SCCO, CGAU
Source: Bloomberg
