TEX reported that molybdenum oxide price dropped further to USD 13.30 per pound last week. It may well be that despite the weakness, the market will continue to be exposed to a pressure from supply side for quite some time.

Top management of Freeport McMoran, the world's biggest producer of molybdenum, revealed that it has no plan to delay start up at Climax mine, a newly developed open pit in Colorado. This could become a pressuring factor to the market in a medium and long term.

Current status of the development at the mine is as follows:
1. Construction of primary mechanical facilities will be completed by the end of 2011

2. The company spent USD 135 million as of the end of September, 2011, mainly for the plant construction, out of the budgeted USD 575 million

3. USD 200 million is to be spent for construction of a tailing dam and water treatment facilities, when molybdenum production is commenced.

The companies said that it would start production in 2012 at the mine, and expand to 20 million pound level on an annual basis by 2013, and, expand even further to 30 million pounds dependent upon market situation. This schedule was all in line with the plan the company had announced in July 2011.

Freeport McMoran also said that as to the company's policy on production, it would flexibly react to the market, as the biggest producer running Henderson mine (40 million pounds per year) with additional but sizable output of molybdenum (about 33 million pounds per year) recovered from copper mining operations in several copper mines such as Sierrita. Production from Climax of 20 to 30 million pounds will be on top of these.

Production record by the company during the Q3 (July to September) of 2011 was 23 million pounds, up from the same period of last year (19 million pounds), while sales during the quarter was 19 million pounds, also up from the same quarter in 2010.

(Sourced from TEX Report Limited)