Molybdenum's slow recovery dependent on Chinese demand

By Leia Michele Toovey- Exclusive to Moly Investing News

Government spending will spark a recovery in steel demand towards the end of the year; but its mark on the molybdenum market will be limited. Demand for molybdenum in China likely will rise 6 per cent to 53,400 tonnes this year, then slip to 52,800 tonnes in 2010 before growing again to 55,200 tonnes in 2011, according to a UBS Securities Co. Ltd. report. Growth in Chinese demand is in contrast to the expected decline in global demand; however, there is still opportunity in the market for production cuts and mergers to alter supply and demand fundamentals.

Codelco’s molybdenum concentrate production in 2008 was down 25 per cent year on year, and its sales declined 14.3 per cent. Codelco produced 21,000 tonnes of molybdenum in molybdenum concentrate in the full year of 2008, as compared to 28,000 tonnes in the preceding year of 2007.  Also, Codelco sold 24,000 tonnes of molybdenum in concentrate in 2008, down from 28,000 tonnes in 2007.  Codelco was scheduled at the beginning of 2008 to produce 50 to 55 million pounds of molybdenum in molybdenum concentrate in the year, having already anticipated a decline of molybdenum production, but actually decreased molybdenum production in 2008 to a large extent.

Company News

Thompson Creek Metals Company Inc. (NYSE:TC)  has scheduled a conference call for analysts and investors to discuss its 2008 financial results on Friday, March 20, 2009 at 8:30 EST. A news release on the results will be issued after markets close on March 19, 2009. Kevin Loughrey, Chairman and Chief Executive Officer, and Pamela Saxton, Chief Financial Officer, will be available to answer questions during the call. A live audio web cast of the conference call will be available at the company’s website.

Moly Mines (TSX: MOL) has reported positive drill results from its Spinifex Ridge project.  The company reported its maiden iron ore drill program at the Gallifrey prospect had revealed good intersections at high grades with low contaminants. The company anticipates beginning infill drilling at Gallifrey at the end of the month. The company also announced the resignation of its chairman Paul Willis, who is taking up a position in equities broking overseas. The particulars of Mr. Willis’ employment require him to cease listed company board involvement.

Thor Mining PLC (LSE: THRL) is still awaiting assay results from drilling at Molyhill in Australia’s Northern territory to identify mineralization levels. Developing the Molyhill tungsten-molybdenum project remains the company’s main focus.  The company has made excellent progress in reducing capital and operating costs for the project, however, moly’s price decline has pushed the development timetable back until product pricing is more conducive for the necessary capital raising. Since the end of the first half, Thor has continued to explore its portfolio of tenements for economic deposits of uranium and rare earth metals.

Mercator Minerals Ltd. (TSX:ML) has started shipping moly concentrates from its Mineral Park Mill, just over two years after financing was completed for construction of the mill facility. Mineral Park has produced in excess of 9,400 tonnes of copper concentrates and shipped over 6,500 tonnes to port and has commenced shipment of molybdenum concentrates. “Production of molybdenum and copper continue to increase as we get the circuit fined tuned”, said Mike Surratt, President and CEO. “The company has financed, engineered, procured equipment, and constructed one of the largest and certainly the most modern mill in North America. This is a real tribute to our operating team, that this large scale project is in operation today”, Surratt added.