Greenland Resources inks 10-year offtake with Finland’s Outokumpu

Greenland Resources (Cboe CA: MOLY) has inked a long-term offtake agreement with Finland’s Outokumpu, the largest producer of stainless steel in Europe and the second largest in the Americas, for the supply molybdenum oxide produced at its flagship project.

The offtake, says Greenland Resources, positions the company with a “long-term strategy with sustainable and cost-competitive value-chain integration and facilitates access to capex.”

The Canadian miner is currently developing the Malmbjerg molybdenum project in central-east Greenland that has an estimated initial capital cost of $820 million.

Once built, the open-pit mine is expected to produce 32.8 million lb. of molybdenum metal annually, which equals roughly a quarter of the EU’s yearly consumption, over its first 10 years, a 2022 feasibility study showed. The total mine life is projected at 20 years.

The offtake agreement will cover approximately 8 million lb. of molybdenum production per year over 10 years, representing about 25% of Malmbjerg’s production during that time. The agreement contains an established price floor and cap. Outokumpu will also support efforts to arrange financing for the Malmbjerg project.

Greenland Resources has so far received letters of interest from the export credit agencies of Denmark, Sweden and Finland during the second half of 2024. Earlier this month, it was also earmarked for up to $275 million in Canadian government funding to support the project’s development and construction.

Executive chairman Ruben Shiffman said the agreement with Outokumpu “constitutes a critical milestone” towards achieving commercial production. He also highlighted that “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.”

“Europe is heavily reliant on imports for many critical raw materials and the dependence creates vulnerabilities due to geopolitical factors and supply chain disruptions. Furthermore, Europe is the second-largest molybdenum user worldwide and has had no production of its own,” said Marc-Simon Schaar, CFO at Outokumpu.

“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,” he added.

The Malmbjerg mine design is focused on reduced water usage, low aquatic disturbance and low footprint. The deposit hosts total mineral reserves of 245 million tonnes at an average grade of 0.176% MoS2 (molybdenum disulfide), containing 571 million lb. of molybdenum. The contained metal has very low impurity elements ideal for European high-performance steel products, Greenland Resources has said.

The 2022 technical study gave the project an after-tax net present value (at 6% discount) of $1.17 billion and an internal rate of return of 22.4%, using an $18/lb. molybdenum price.