Molybdenum producer Thompson Creek Metals has not seen any weakening of demand for the metal and expects the market to remain strong going forward, chairperson and CEO Kevin Loughrey said on Friday.
Although some customers, such as ones that supplied to the automotive industry, had slowed purchases, these were more than offset by increased demand elsewhere, he commented on a conference call.
The spot market remained strong, with prices edging up slowly, which was more than could be said for other commodities, Loughrey pointed out.
“So we think the molybdenum demand relative to those other commodities is strong, and our outlook for the molybdenum continues to be good.”
The price of molybdenum has risen from around $10/lb in 2004, to a peak of around $40/lb a year later, and is currently at about $33/lb.
Global molybdenum demand rose to around 440-million pounds last year. The metal is used to strengthen high-end stainless steel, in steel pipes and drills, and other extreme high- or low-temperature applications, as well as to prevent corrosion.
About 55% of the world's molybdenum is produced as a by-product from copper mines, and the balance is produced by primary molybdenum mines, like Thompson Creek's Endako and Thompson Creek mines, in British Columbia and Idaho respectively.
The company has delayed a board decision on the C$109-million Davidson project, in British Columbia, after having submitted an environmental application for the proposed mine to the provincial authorities.
Loughrey had previously said that he expected to take the project to the board during the second quarter, but investor relations director Wayne Cheveldayoff confirmed on Friday that the decision had not yet been taken.
“There was no need to take it at this present time,” because no work could begin until government approval was received, he said in a telephone interview.
Management also wanted to see if there would be any changes to the project before taking it to the board, particularly in light of the current inflationary environment.
The company hopes to receive approval from the British Columbian regulatory authorities by the end of the year, or early next year.
In the meantime, some engineering work has begun, and the company has reserved slots for some equipment, Loughrey said.
Thompson Creek announced in April that it had completed a feasibility study for a mine at the Davidson deposit, which envisages building a four-million pounds a year underground operation.
Loughrey said earlier this year that the company was in talks with Japan's Sojitz Corporation, which owns 25% of Thompson Creek's nearby Endako mine, for the trader to take a stake in Davidson as well.
The plan is to transport ore from Davidson, touted by the company as the largest molybdenum deposit in Canada, for milling to Endako, where Thompson Creek recently approved a mill expansion.
However, because "there's not too much happening" at Davidson until the permit is received, talks with Sojitz had slowed for now, Loughrey said.