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Thompson Creek slashing molybdenum production
January 27 2009 | News Articles | Globe and Mail
Thompson Creek slashing molybdenum production
Globe and Mail Update
January 27, 2009 at 8:06 AM EST
Thompson Creek Metals Company Inc. continued to retrench Tuesday in the face of the meltdown in molybdenum prices.
The Toronto company, billed as the world’s fifth largest pure producer of the metal, said it is cutting planned production this year to between 20 million and 24 million pounds from its previous guidance of 31.5 to 34 million pounds.
“In response to the downturn in worldwide economic activity, the Company decided in December 2008 to reduce planned capital expenditures as part of an initiative to conserve cash and we are now taking the added step of reducing production levels,” Kevin Loughrey, Thompson Creek chairman and chief executive officer said in a news release.
The company also is “currently planning” a temporary shutdown for about a month this summer in mining activity at both its Thompson Creek and Endako mines, Mr. Loughrey said. “And there will be other production changes about which we will provide details at a later date after they are decided,” he added.
The move comes a little more than a month after Thompson Creek said it was slashing its capital budget for 2009 to $69-million from $300-million and postponing expansion of the Endako mine, which is located in northern British Columbia. That, in turn, came a month after the company said it was postponing its Davidson project near Smithers, B.C.
Molybdenum’s key application is as a hardening and anti-corrosive agent in steel.
The price of the metal began rising in 2002 and peaked at about $40 a pound in mid-2005, well above the historical 5- and 10-year average of $17 and $10, respectively. However, it was clobbered in the commodity plunge last fall, falling by about 27 per cent to $23.25 a pound during October alone, and averaging only $9.63 a pound in December.
The price decline led Canadian commodities guru Eric Sprott to announce earlier this month that he was shutting down his pioneering molybdenum fund less than two years after launching it.
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