Molybdenum Price Rise Justifies Approval of Molybdenum Mining Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--The price of molybdenum is currently about $34 per pound, up from $2 per pound in 2002, and is nearing historic high prices set in 2005. During this period, molybdenum miners have optimized production and are looking for ways to expand capacity. Production of molybdenum at mines in the U.S. has nearly doubled since 2003. In 2003, 33,500 metric tons of molybdenum was produced at nine mines in the U.S. That figure increased to about 59,400 metric tons in 2007. More than 80% of the molybdenum mined is used as an alloying element in iron and steel. Record steel production worldwide, including from countries like China, has kept molybdenum demand up driving prices higher.

In North America, numerous grassroot projects, as well as capacity expansion projects at existing mines, are being studied. Almost all molybdenum producers are studying some form of expansion. Freeport-McMoRan Copper & Gold Incorporated (NYSE: FCX) (Golden, Colorado) has received approval to restart a molybdenum mine in Climax, Colorado. Construction on the $500 million project is scheduled to begin this spring.

In British Columbia, Thompson Creek Metals Company Incorporated (NYSE: TC) (Denver, Colorado) recently approved an expansion of the Endako molybdenum mine. Thompson Creek is also studying the feasibility of constructing a molybdenum mine near Smithers, British Columbia.

There are also a number of grassroot projects on the books. Adanac Molybdenum Corporation began site work on its grassroot Ruby Creek project in 2007, but early this year announced a slowdown in construction activity until financing is secured.

There are a number of projects under development where molybdenum will be produced as a byproduct of copper ore processing. The inclusion of molybdenum to a copper project adds to the economic value of the project. The Rosemont Copper Company, a wholly owned subsidiary of Augusta Resources Corporation (AMEX: AZC) (Denver, Colorado), is developing a copper/molybdenum/silver project in Arizona that would produce 4.5 million pounds of molybdenum over the life of the mine. This $725 million project is experiencing opposition from environmental groups because of its location in the Coronado National Forest.

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