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INTERVIEW: Molybdenum To Increase Steadily - Thompson Creek
Aug 11, 2010 17:32CST

LONDON, Aug. 11 -- Mining company Thompson Creek Metals Co. (TC) is confident that molybdenum prices will eventually make a steady climb higher, despite short-term uncertainties over the pace of global recovery from recession.

The chief executive of the Toronto-listed miner, one of the world's largest molybdenum producers, told Dow Jones Newswires prices would move "gently" up even though the "recession hasn't recovered as quickly as many people thought."

Prices for the strategic metal, used in stainless steel due to its ability to withstand high temperatures and corrosion, have fallen more than $3 from above $17 a pound in the first half of the year.

Kevin Loughrey said short-term prices would be aided "a little bit" by recent floods in the Henan province of China, which caused most mines in the major molybdenum producing region to shut down.

Molybdenum oxide is currently trading in a range between $14.80 a pound and $15.00/lb, according to the latest Dow Jones Newswires pricing poll of consumers, producers and traders, up around 75 cents a pound from the previous week.

Loughrey said the opportunity of using molybdenum futures contracts on the London Metal Exchange as a reference point for trading was progressing slowly, but he would eventually be adopted industrywide.

"The LME [pricing system] hasn't been fulsomely received. I think it is still up in the air, at this point the molybdenum volume has built quite slowly and it hasn't been a roaring success."

Loughrey said Thompson Creek was continuing to monitor acquisition opportunities even after recently agreeing to buy Terrane Metals Corp. (TRX.V) for C$600 million. That deal, expected to close in September or October, would diversify the company away from pure molybdenum by adding Terrane's Mt. Milligan copper-gold project to its operations.

"We're still looking [for further acquisitions] and aren't limiting ourselves to molybdenum but the pace of that effort has slowed somewhat," Loughrey said.

The decision to diversify was made because Thompson Creek wasn't getting a premium for being a single commodity miner, and Loughrey said he felt the company had the personnel and experience to transfer its operations into other metals.


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