(Yicai) Sept. 3 -- Leading molybdenum miners in China reported a surge in profits in the first half of this year amid prices of the rare metal reaching a near three-year high, with some companies setting forward plans to accelerate resource consolidation and asset acquisitions to seize the early advantage in the industry’s boom cycle

CMOC Group’s net profit soared 86 percent to CNY16.2 billion (USD2.4 billion) in the six months ended June 30 from a year earlier, while its revenue jumped 43 percent to CNY135.3 billion (USD20.1 billion), the Luoyang-based miner said in a financial report. Jinduicheng Molybdenum Group Mining reported its profit rose 26 percent to CNY1.7 billion (USD253 million) in the period, while molybdenum products accounted for about 13 percent of global sales.

Molybdenum has corrosion and high-temperature creep resistance, high electrical conductivity, and high stability. It is applied in various traditional industries, including steel, petrochemicals, automotive transportation, shipbuilding, and marine engineering in the form of molybdenum-containing alloy steel and molybdenum-based chemical products, while also expanding into national defense and military industry, aerospace, electric power and new energy, high-end equipment manufacturing, and other emerging sectors.

The price of molybdenum concentrate, an upstream ore material, surged to CNY5,180 per ton from CNY3,770 per ton (USD770.93 from USD561.08) over the first six months of this year. Prices of ferromolybdenum, a smelted and processed product, have also continued to strengthen, with the average rising 27 percent to about CNY291,000 (USD43,310) per ton in the first half of the year from the year-earlier period and holding steady at a historically high level of CNY300,000 per ton in the second quarter, CMOC pointed out.

The suspension of production at some overseas ferromolybdenum smelters in the first half caused global prices to surge, with the import window nearly shut and international raw materials barely filling China's supply gap, according to CMOC. In addition, after the outbreak of the US-Iran war, molybdenum consumption related to molybdenum-based oil and gas pipelines and molybdenum-based catalysts improved significantly, while high oil prices stimulated green energy use, driving demand growth for molybdenum-containing steel used in wind turbines.

Despite booming demand, supply constraints are intensifying, with no new capacity to be released in China over the second half of the year, while safety and environmental protection pressures during the flood season also affect some output. The tight supply-demand balance for molybdenum will likely persist through the year.

Mine Acquisitions

Jinduicheng spent CNY1.7 billion to buy a 24 percent stake in Jinsha Molybdenum in March, raising its hold to 34 percent. At the end of July, the Xi'an-based firm announced plans to contribute CNY782 million (USD116.4 million) to participate in Jinsha’s capital increase that raised its registered capital to CNY2.5 billion from CNY200 million, with the funds mainly used to support the development of the Shapinggou molybdenum mine.

On Aug. 18, Guocheng Mining said it would spend CNY2.4 billion to buy a 40 percent stake in Inner Mongolia Guocheng Industrial held by Citic Trust. Upon completion, it would fully own the target and its core asset, the Dasuji molybdenum mine, which has registered reserves of 124 million tons of ore and 144,800 tons of molybdenum, with plans to expand its capacity to eight million tons per year.

Global molybdenum output is expected to reach 272,700 tons this year, while total consumption will exceed 300,000 tons, leaving an expected supply-demand gap of about 44,300 tons, a high for recent years, according to the International Molybdenum Association.

Editor: Martin Kadiev