Freeport McMoRan Copper & Gold Inc of USA had released on July 21st 2011 their operational results for April to June quarter 2011. In this report, Freeport announced that the Climax molybdenum mine in Colorado State of the USA, in which Freeport invested USD 250 million to produce molybdenum by opencast mining, is planned to commence its production during 2012. The production will start in 2012 and has aimed to produce molybdenum on a scale of 20 million pound per annum during 2013.
Construction activities at the Climax molybdenum mine are approximately 75% complete as of June 2011. This construction is expected to be complete in early 2012 and Freeport plans to commence molybdenum production during 2012. Production from the Climax mine is expected to ramp up to a rate of 20 million pounds per year during 2013 and, depending market conditions, may be increased to 30 million pounds per year. Freeport is supposed to have intended to produce 30 million pounds per year of molybdenum.
Freeport said that Climax is one of the most attractive primary molybdenum development projects in the world, with large scale production capacity, attractive cash costs and future growth options. At present, Freeport has been operating the Henderson primary molybdenum mine and producing molybdenum on a scale of 40 million pounds per annum.
The total annual capacity of molybdenum to be produced by Freeport is 86 million pounds, consisting of 40 million pounds from the Henderson primary mine and 46 million pounds from copper molybdenum complex mines in the USA and Peru, but 20 to 30 million pounds on an annualized base to be produced at the Climax mine from 2012 will be added.
This total annual capacity of molybdenum to be produced by Freeport from 2012 will exceed by nearly 2 times in comparison with that of 46 million pounds produced in 2010 by Codelco of Chine as the second largest producer of molybdenum in the world. In this meaning, Freeport will be able to exhibit their leadership in the world market of molybdenum but, on the other hand, this structure to increase substantially molybdenum production from 2012 as planned by Freeport will be also inevitable to put a psychological pressure on the international prices of molybdenum, having inclined to weaken.
The international price of molybdenum oxide was USD 17.80 per pound of Mo in February of 2011 but fell by 20% to USD 14.50 as of July 15th 2011. This turning point, having caused a fall of molybdenum prices, is supposed to be the fact that a major supplier of molybdenum in South America aggressively disposed of their molybdenum stocks held in April to June quarter in order to adjust his position. The time to produce newly molybdenum at the Climax mine of the USA has become clear and, therefore, the international prices of molybdenum are thought to be influenced considerably hereafter.
(Sourced from TEX Report Limited)
