TORONTO (miningweekly.com) – Signs of firming in the molybdenum market have prompted miner Thompson Creek Metals to revise its production, sales and cost forecasts for 2009, the firm announced on Monday.
Thompson Creek now expects to produce and sell between 22-million and 26-million pounds of molybdenum this year from its mines in Idaho and British Columbia, up from previous guidance of 20-million to 24-million pounds.
“In response to the recent improvements in the molybdenum market, the company is making operational adjustments at its mines that will result in molybdenum production and sales in 2009 being approximately 10% higher than previously announced estimates,” CEO Kevin Loughrey said in a statement.
The company will shorten the planned shutdown period this summer to two weeks from one month for the milling operations at its two mines, he said.
For now, the miner will continue to run the mill at its Thompson Creek mine, in Idaho, at 70% of capacity, but will monitor market conditions “and we intend to remain flexible and ready to adjust our production again in the future”, Loughrey said.
Molybdenum production at the Thompson Creek mine is expected to be 16-million to 18-million pounds, compared with previous guidance of between 15-million and 17-million pounds.
Thompson Creek said its 75% share of production at the Endako mine is now estimated at between 6-million and 8-million pounds, up from an earlier forecast of 5-million to 7-million pounds.
The company now expects to report cash production costs in the range of $5,75/lb to $7/lb, compared with a previous estimate of $6,25/lb to $7,25/lb.
Molybdenum, which is used to strengthen steel, traded on the spot market above $30/lb during the first half of last year, but fell off sharply in October, bottoming at below $8/lb in April.
However, the price has improved steadily since then, and is now back above $10/lb.
Last week, analysts at New York-based Dahlman Rose & Co said that increased strong demand from China and increased steel utilisation in the Western market was increasing demand for the metal.
However, they added that any significant gains in the price would prompt producers like Thompson Creek and Freeport-McMoRan Copper & Gold to ramp up production that was curtailed because of falling prices, and that this would put a cap on molybdenum prices in the near term.
Loughrey said last month that about a quarter of Thompson Creek's sales in the first quarter were to Chinese buyers, where are seeking the metal elsewhere in the world because a large segment of China's molybdenum mines were rendered unprofitable by the lower moly price.
Until late last year, the firm had not made a single sale to the resource-hungry nation, Loughrey said.