Outokumpu’s Strategic Partnership with Greenland Resources for Molybdenum Supply
Outokumpu Corporation, a global leader in sustainable stainless steel production, has entered a significant partnership with Greenland Resources Inc., a Canadian mining company. The agreement is set to run for ten years and ensures a steady supply of molybdenum, a critical raw material used in the production of specialty stainless steel.
The agreement guarantees that Outokumpu will receive 8 million pounds of molybdenum annually, valued at approximately USD 160 million at current market prices, representing about half of the company’s annual needs. This move comes as part of Outokumpu's broader strategy to strengthen its supply chain for critical raw materials and further decarbonize its production processes.
The Importance of Molybdenum in Stainless Steel Production
Molybdenum plays a vital role in the production of high-performance stainless steel. It improves steel’s strength, corrosion resistance, and high-temperature stability, making it essential for industries such as aerospace, automotive, chemical, and energy. As one of the world's largest producers of stainless steel, Outokumpu needs a reliable and sustainable source of molybdenum to continue delivering high-quality products to its clients.
Currently, Europe is heavily dependent on imports for critical raw materials like molybdenum, with no domestic production to meet the rising demand. Outokumpu's partnership with Greenland Resources addresses this issue by securing a domestic and low-emission source of molybdenum in Greenland, reducing Europe's reliance on external suppliers and bolstering regional supply chain resilience.
Greenland Resources: A Key Player in Global Molybdenum Supply
Greenland Resources Inc. owns the Malmbjerg project, one of the world's largest primary molybdenum deposits, located in East Greenland. The project is set to begin commercial production within this decade, providing a reliable, sustainable, and low-emission supply of molybdenum to meet the increasing global demand.
The agreement is structured with a cap and floor mechanism, ensuring that Outokumpu can access the raw material at competitive prices, providing both parties with long-term stability and pricing predictability. The partnership with Greenland Resources is a milestone for both companies, with an estimated total contract value of USD 1.6 billion over the next 10 years.
This partnership represents a critical step toward reducing the carbon footprint of steel production, as the Malmbjerg mine operates with low-emission processing technologies, further enhancing the sustainability of the entire supply chain.
Europe’s Dependence on Critical Raw Materials
Europe's dependence on raw material imports has been a growing concern, particularly as geopolitical tensions and supply chain disruptions increase the region’s vulnerability. Outokumpu's agreement with Greenland Resources addresses this vulnerability by securing a reliable and low-emission source of molybdenum, crucial for the company’s production of specialty steels.
Molybdenum is one of the most critical raw materials used in stainless steel production, and Europe, which is the second-largest molybdenum consumer globally, has struggled with a complete lack of domestic production. The partnership with Greenland Resources strengthens Europe’s industrial supply chain resilience, positioning Outokumpu as a key player in this evolving landscape.
Outokumpu's Long-Term Sustainability Strategy
The deal is part of Outokumpu's long-term strategy to become more self-sufficient, ensuring a sustainable, cost-effective, and resilient raw material supply chain. The agreement will not only enhance the company’s competitive edge but also help in reducing Scope 3 emissions—those generated by the supply chain. By securing low-emission molybdenum from Greenland, Outokumpu aligns with its goals to decarbonize and reduce its environmental impact.
Moreover, the deal complements Outokumpu's other efforts to secure critical raw materials. In addition to the molybdenum supply from Greenland, Outokumpu operates its own chrome mine in Finland and is investing in a junior nickel mine project in Canada, diversifying its supply sources and further solidifying its position as a leader in sustainable production.
The Future of European Raw Material Supply
As the global demand for specialty steels continues to rise, securing access to key raw materials like molybdenum will be essential for companies like Outokumpu to remain competitive. The partnership with Greenland Resources demonstrates the importance of long-term supply agreements in ensuring security and stability in the raw material market.
Moreover, it highlights the growing importance of sustainable practices and low-emission supply chains in today’s global industrial landscape. With geopolitical tensions and the increasing risks of supply chain disruptions, securing domestic sources of critical materials is a strategic advantage for companies and regions seeking to maintain economic security and sustainability.
Key Takeaways:
• Outokumpu signs a ten-year off-take agreement with Greenland Resources Inc. to secure 8 million pounds of molybdenum annually, valued at approximately USD 160 million.
• The deal provides Outokumpu with low-emission molybdenum from Greenland, enhancing supply chain resilience and supporting sustainable steel production.
• Molybdenum is a critical raw material for producing specialty stainless steel, crucial for industries such as aerospace, automotive, and energy.
• Europe, the second-largest molybdenum consumer worldwide, currently lacks domestic molybdenum production, making this partnership strategically important for regional supply security.
• The cap and floor mechanism ensures that Outokumpu secures competitive prices for molybdenum over the long term.
• Greenland Resources Inc. owns the Malmbjerg project, a world-class primary molybdenum deposit in East Greenland, set to begin commercial production in the next decade.
• The agreement aligns with Outokumpu’s long-term sustainability goals, including decarbonization and securing responsible raw material sourcing.
• The total value of the agreement is estimated at USD 1.6 billion over ten years, marking a critical milestone for both companies.
• Outokumpu's sustainability strategy is further strengthened by its investments in chrome and nickel mines in Finland and Canada, diversifying its raw material sources.
