Freeport McMoRan cuts molybdenum production
Molybdenum producer’s goal is to match capacity with slide in demand
By Tom Stundza -- Purchasing, 1/29/2009 3:00:00 PM
With demand for molybdenum sliding and prices falling, the world’s largest molybdenum supplier, Freeport McMoRan Copper & Gold of Phoenix, now expects its sales to slide 15% to 60 million lbs in 2009 from the 71 million lbs shipped in 2008. The new forecast is 25% lower than the 2009 estimate made last October, attributing the change to reduced-demand market conditions.
As reported earlier by Purchasing.com, investment bank Dahlman Rose & Co. in New York expects molybdenum to average $12/lb this year and $15 in 2010. (Purchasingdata.com’s forecast is similar, $13 in 2009 and $15 in 2010, because of the slowdown in North American steel production). In 2008, the steel-smelting additive cost an average $29/lb after peaking at $30 in 2007. On a monthly basis, however, molybdenum has sold for less than $10/lb for two months now.
This huge 57% decline in prices led producers such as Freeport-McMoRan, Thompson Creek Metals of Toronto and Creston Moly of Vancouver to either reduce output or shelve expansion plans. In the fourth quarter of 2008, Freeport-McMoRan had consolidated molybdenum sales from the Henderson primary mine in Colorado and byproduct mines totaled 12 million lbs, 7 million lbs lower than the fourth quarter of 2007, primarily resulting from lower demand
Now, Freeport has revised annual production plans at Henderson for 2009 at a 25% reduction. In a statement, the company says “additional reductions at Henderson may be considered if market conditions warrant.” Freeport also has made adjustments to its molybdenum production plans at certain byproduct mines, temporarily curtailed the molybdenum circuit at the Cerro Verde copper mine in Peru, which produced 3 million lb of molybdenum in 2008. The firm also has suspended construction activities associated with the restart of the Climax molybdenum mine near Leadville, Colo., previously expected to start up in 2010.
The company said it plans capital expenditures of $1.3 billion for 2009, down dramatically from $2.7 billion for fiscal 2008.
Now Playing: 