This article overview:
1. China's molybdenum ore reserves are 3.7 million metric tons, ranking first in the world
2. Pure molybdenum metal target, the performance has reached a new high
3. The company is committed to building the "aircraft carrier" of China's molybdenum industry and creating a world-class molybdenum industrial enterprise with global competitiveness
Reserves: China's molybdenum ore reserves are 3.7 million metric tons, ranking first in the world, accounting for 30.83% of the world's reserves. At the end of 2022, the world's molybdenum ore reserves were 3.7 million metric tons, 2.7 million metric tons, 2.4 million metric tons, 1.4 million metric tons, and 430,000 metric tons, accounting for 30.83%, 22.50%, 20%, 11.67%, and 3.58%, respectively. For many years, the proportion of molybdenum ore reserves in the mainland has been in the forefront of the world's reserves.
Output: In 2022, the global molybdenum production will be 262,100 tons, of which the continental molybdenum production will be 112,800 tons, accounting for 43.03%, the South American molybdenum production will be 75,600 tons, accounting for 28.85%, the North American molybdenum production will be 50,800 tons, accounting for 19.40%, and the molybdenum production in other regions will only account for 8.72%.
According to the data of the International Molybdenum Association, two-thirds of the world's molybdenum mines are associated minerals, and most of the molybdenum overseas mines are associated with copper ores, mainly from porphyry molybdenum ores, porphyry copper ores and other ores. From the perspective of global copper supply, the supply of copper has been relatively stable in recent years. In 2022, the global copper concentrate production was 21.811 million tons, a year-on-year increase of 3.37%. At present, a number of large molybdenum mines and associated molybdenum mines overseas have experienced the problem of declining mining volume, selected grade and recovery rate, and the production of overseas molybdenum mines has decreased, and it is expected that this situation will be difficult to change in the short term, and the output of overseas molybdenum mines will be limited.
In 2022, due to the impact of the epidemic and declining grades, overseas molybdenum production will decline. In 2022, the output of molybdenum in South America will be 75,600 tons, a year-on-year decrease of 8.07%; The output of molybdenum in North America was 50,800 tons, down 12.8% year-on-year, and the output of molybdenum in other regions was 22,900 tons, up 2.4% year-on-year. In 2022, the mainland's molybdenum production was 112,800 tons, an increase of 11.8% year-on-year.
Production by region, 2018-2022
In terms of mineral resources, molybdenum deposits in mainland China mostly exist in the form of molybdenum as the main mineral and associated with other components, accounting for 64% of the total reserves, 14% of molybdenum as a single mineral and 22% of the associated ores with molybdenum as a by-product. In terms of grade, the mainland molybdenum ore grade is low, with 65% molybdenum ore grading less than 0.1%, and only 5% molybdenum ore above 0.2%.
In terms of price, since 2006, when molybdenum prices began to fall rapidly, molybdenum prices in mainland China have continued to be sluggish, and there will be a correction trend from 2021. According to Wind data, the annual average price of domestic 1# molybdenum (≥99.95%) from 2009 to 2020 remained at the level of 180-310 yuan/kg, which was significantly lower than 887.5 yuan/kg in 2006.
In terms of future increment, taking Anhui Shapinggou Molybdenum Mine as an example, according to the "Development and Utilization Plan of Shapinggou Molybdenum Mine of Anhui Gold and Molybdenum Mining Co., Ltd.", the designed ore production capacity of Anhui Shapinggou Molybdenum Mine is 10 million tons/year, the project construction period is 4.5 years, and the total investment is expected to be 7.2 billion yuan, of which the construction investment is 6.4 billion yuan, and the average annual output of molybdenum concentrate containing 27,200 tons of molybdenum after completion and production, and the payback period is 10.4 years (including 4.5 years of construction period). The characteristics of long project construction time and high capital investment limit the future production capacity increase of the industry to a certain extent.
Molybdenum prices have been running at low levels for many years
Demand: Molybdenum has a wide range of applications in the field of steel, alloy steel contains molybdenum 3%-4% molybdenum, which can be used in transportation equipment, industrial machinery, etc., stainless steel contains molybdenum 4%-5% can be used for precision chemical instruments, and high-speed steel containing molybdenum 4%-9.5% can be used to manufacture high-speed cutting tools. In addition, molybdenum is used in alloys, high-strength steels, high-quality carbon steels, and cast iron.
In 2022, the apparent consumption of molybdenum concentrate in mainland China was 240,300 tons, a year-on-year increase of 8.93%. Engineering steel and stainless steel are the most important consumer areas of molybdenum. In terms of molybdenum excluding recovered from scrap, according to the statistics of the International Molybdenum Industry Association, the total primary consumption of molybdenum sub-industries in 2022 reached 286,400 tons, mainly concentrated in the steel field, of which 38% was used for engineering steel and 25% was used for stainless steel. Tool steels and high-speed steels account for 8% of consumption.
In July 2023, the total amount of molybdenum concentrate steel in mainland China was 13,300 tons, the highest level in the past five years. Recently, the total amount of steel recruitment has been reduced, and as of October 2023, the volume of molybdenum concentrate steel recruitment is 7,400 tons.
In recent years, steel consumption in mainland China has declined, and the apparent consumption of steel in September 2023 was 110 million tons, an increase of 5.8% year-on-year. In the past few years, the market scale of the special steel industry has expanded rapidly, and the market size will reach 555.863 billion yuan in 2021, a year-on-year increase of 7.36%.
The development of the new energy industry has driven the growth of demand for molybdenum. Molybdenum has the properties of high temperature corrosion resistance, low specific impedance and environmental protection, and can be widely used in the field of new energy. In this field, molybdenum is mainly used in lithium carbonate, lithium hydroxide reactors, wind power castings and other subdivisions, with the growth of the new energy sector, molybdenum application scenarios are also growing rapidly.
In the photovoltaic sector, molybdenum can be used as an electrode layer raw material for CIGS thin-film photovoltaic cells, and the global production of thin-film solar cells continues to increase. Molybdenum sputtering target is the raw material for the preparation of thin film materials by sputtering, and molybdenum can be used as the back electrode material for thin film solar cells. Molybdenum, which is used as the back electrode in CIGS thin-film photovoltaic cells, not only acts as an electrode for solar cells, but also reflects light that is not completely absorbed to improve the conversion efficiency of solar cells. In 2022, the global production of thin-film solar cells was about 9.2GW, a year-on-year increase of 11.11%. Since 2018, global thin-film solar cell production has continued to grow.
In the field of wind power, molybdenum-containing alloy steel is widely used in wind turbine components. Among the power components of wind turbines, molybdenum-containing alloy steel is the most widely used, including drive shafts and gear components. In the trend of lightweight wind turbines, ductile iron castings and ultra-high-strength steel plates play an increasingly important role in powertrain frames and housings.
Molybdenum plays an important role in the lightweighting of heavy-duty vehicles. According to the International Molybdenum Association, a new steel development project on Continental has shown that the use of modified steel with a strength of 670 MPa has reduced the weight of the truck's trailer beam by 27 percent compared to the original 520 MPa steel. This is due to the new steel grade (0.2% molybdenum) which is stronger and thinner. The study found that this high-strength steel is used as a major component of the truck and has the best price-performance ratio. These new, lighter components do not increase in cost and are even lower than those made of conventional steel. The result is a win-win situation for both the vehicle manufacturer and the environment, with great potential for application.
Gold and molybdenum shares: pure molybdenum metal target, performance hit a new high
The company is a professional supplier of molybdenum with strong influence in the global molybdenum industry, mainly engaged in the production, sales, research and development of molybdenum series products and the trade and operation of molybdenum related products, and is committed to building the "aircraft carrier" of China's molybdenum industry, actively promoting the high-quality and sustainable development of the molybdenum industry, creating a world-class molybdenum industrial enterprise with global competitiveness, and leading the development of the global molybdenum industry. In the first three quarters of 2023, the net profit attributable to the parent company was 2.3 billion yuan, a year-on-year increase of 140%.
In terms of operating income, in 2022, the company achieved a total operating income of 9.531 billion yuan, a year-on-year growth rate of 19.53%, and the revenue growth rate continued to increase, and in 2023Q1-Q3, the company achieved a total operating income of 8.853 billion yuan, a year-on-year growth rate of 25.29%, and in terms of revenue structure, the company's molybdenum furnace business revenue accounted for the highest proportion of 60.8% in 2022. followed by molybdenum metal, molybdenum chemical industry, and others, accounting for 18.2%, 13.6%, and 7.4% of revenue, respectively.
In terms of gross profit, the company achieved a gross profit of 3.314 billion yuan and a gross profit margin of 34.77% in 2022, a gross profit of 4.243 billion yuan and a gross profit margin of 47.93% in 2023Q1-Q3, and a gross profit structure of 62.80% in 2022. followed by molybdenum metal, molybdenum chemical industry, and others, with gross profit accounting for 19.25%, 17.48%, and 0.5% respectively. Molybdenum-related businesses accounted for nearly all gross profit percentage.
The company has abundant resource reserves. At present, the company has the mining rights of Jinduicheng molybdenum mine and Ruyang Donggou molybdenum mine. Among them, Jinduicheng molybdenum mine is one of the world's six major primary molybdenum mines, with high-quality products and suitable for deep processing, with ore resources of 465 million tons, an average grade of 0.083% and a service life of 35 years, and Ruyang Donggou molybdenum ore resources of 471 million tons, an average grade of 0.12% and a service life of 57 years. Aggregate attributable molybdenum resources of approximately 1.5 million tonnes of metal.
The company's related upgrading and transformation projects have been implemented one after another. In May 2022, the company issued a plan for the non-public issuance of A-shares, and the total amount of funds raised is expected to be no more than 1.9 billion, which will be used for the overall beneficiation and upgrading project of Jinduicheng molybdenum mine, the upgrading and transformation project of molybdenum roasting low-concentration flue gas acid production, and the replenishment of working capital. In terms of the overall beneficiation and upgrading project of Jinduicheng molybdenum mine, through the implementation of the transformation project, it can not only produce 57% of high-quality molybdenum concentrate, but also partially produce 57% of high-quality molybdenum concentrate and 52% molybdenum concentrate, which is more in line with the actual needs of the company's downstream molybdenum industry. In terms of the upgrading and transformation project of molybdenum roasting low-concentration flue gas acid production, the company has greatly reduced the output of sulfuric acid, reduced the amount of exhaust gas, the amount of waste acid and the cost of terminal treatment by replacing the original production system with advanced equipment, and the output of sulfuric acid products is of higher quality and better market.
As a leading company in the molybdenum industry, the company's business is relatively segmented, based on the judgment of industry prosperity and the company's high industry status, we believe that the company is expected to enjoy a certain valuation increase.
Special statement: The content only represents personal views and does not constitute any investment guidance, according to which you buy and sell, profit and loss at your own risk, the stock market is risky, and investment needs to be cautious!