Production of molybdenum concentrates during the Q3 (July to September) of 2012 by major miners was 66.92 million pounds reflecting the downward trend since the beginning of 2012, following 69.28 million pounds during the Q1 (January to March) of 2012 and 67.58 million pounds during the Q2 (April to June) of 2012. Total production during the first nine months was 203.78 million pounds.
Background of the downward trend is that world crude steel production growth slowed down, making the demand for molybdenum weaker and its price dropped. The molybdenum miners have been so far hesitant about producing more.
Molybdenum oxide price in the world market dropped sharply to below USD 11 per pound in August 2012 due to short selling by traders, the lowest price level in the past three years, compelling the miners to reconsider their production plan. For reference, the averaged price during the nine months (January to September) of 2012 was USD 13.14 per pound, while the annual average of 2011 was USD 15.33 per pound.
The price recovered to USD 11 per pound soon but the recovery was to only a limited extent, on which some of the major miners took cautious attitude to increasing output. One of such miners was Freeport McMoRan who had started open pit operation at Climax mine (a primary mine for molybdenum), Arizona in USA in May 2012 whose annual production capacity is 30 million tons. The company earlier announced that it planned to produce 20 million tonnes in 2013 subject to market conditions.
On the other hand in Central South America, molybdenum output as a byproduct of copper mining has been increasing except at Codelco's Chuquicamata copper mine where molybdenum output was 44 million pounds in 2012, down 14% from 51 million pounds in 2011. Despite the decrease at Chuquicamata, molybdenum production in South America steadily grew with the increases by Southern Copper in Peru and by Antofagasta in Chile.
Current status of production by each of the major mining companies together with their plan for the future is as follows:
Kennecott: Output has been declining since the beginning of 2012 due to lower ore grade. Production during the first nine months was 18.30 million pounds compared with 24.91 million pounds produced in the same period of last year. Similarly low level of output is forecasted to continue through to 2014, only after which the production will recover the level in the past on expansion scheduled in 2015.
Freeport McMoRan: The production at Climax open-pit mine started in May 2012, recording only 1 million pounds each in the Q2 (April to June) and in the Q3 (July to September). The company said that it planned to increase production at the mine to 20 million pounds during 2013, adding modestly that the plan was totally subject to market conditions. Production at Cerro Verde mine, Peru was also controlled to put out 2 million pounds during the Q3 (July to September) of 2012, but will increase to 15 million pounds during 2016 as the output of copper increases. The company owns also several copper mines in North America such as Sierrita in USA where some molybdenum are being produced also as byproduct and its output is scheduled to increase together with copper in the future. Therefore, Freeport may have to control molybdenum output to meet changes in market conditions.
Thompson Creek: The company announced that it would stop stripping operations at No 8 pit of Thompson Creek mine, Idaho, USA so that it could save capital expenditure for the operation and cut operating costs. It is considered that its production during 2012 will be 23 million pounds including its share of the output at Endako BC Canada, substantially down from 28 million pounds in 2011.
Codelco: Production in 2012 will be 44 million pounds, down from 51 million pounds in 2011, while 57 million pounds is forecasted in 2013.
Antamina: Molybdenum production at Antamina has been slowing down due to lower ore grade and deteriorated recovery of molybdenum.
Grupo Mexico at Southern Copper's mines: Production of molybdenum during the Q3 (July to September) of 2012 was, Toquepala: down 38% from the preceding quarter, La Caridad: up 12% and Cuajone: up 8%. On total output from these three mines basis, the production during the quarter was 9.85 million pounds, down from the preceding quarter. The company forecasts 54 million pounds during 2013.
Antofagasta: Molybdenum production at its Los Pelambres copper mine during the Q3 (July to September) of 2012 was 6.61 million pounds and 20.9 million pounds during the first nine months of 2012, up 30% from the same period of 2011.
