What Impact will Jinduicheng Mine Resumption Have on Molybdenum Market?

SHANGHAI, Aug 26 (SMM) – The equipment and road damages caused by heavy rains in the Jinduicheng molybdenum mining area in Weinan city of Shaanxi have been fully repaired as of today. Operations resumed at 7 am today, and output would be yielded at 5 pm.

The resumption in the mining area is expected to ease supply tightness. Meanwhile, molybdenum mines in Inner Mongolia and Henan have plans to move cargoes. So prices of molybdenum concentrate are likely to fall slightly in the short term. 

At the same time, such a long period of shutdown may have a certain impact on production operations and operating results.

On July 22, a sudden rainstorm in Shaanxi damaged pumping stations in the mining area and roads for external transportation, which forced mines to halt operations. The highest rainfall at night in the Jinduicheng mining area reached 400 mm/hour.  This has significantly reduced domestic molybdenum concentrate supply, bolstering prices of various molybdenum products.

Output of molybdenum concentrate in the Jinduicheng mining area was about 2,500 mt each month before the shutdown. After the resumption of production, output is expected to reach more than 2,000 mt per month. The current output of molybdenum concentrate in the molybdenum mining area in Luanchuan is about 1800 mt per month. SMM understood that the current output of molybdenum concentrates at the two mines can not meet their own needs and purchases would decrease after the resumption.