JUNIOR MINING SPECIAL — Molybdenum projected to recover

After four years of declining demand for molybdenum, the outlook for the rest of the 1990s is brighter for the metal, with developing economies, particularly in South East Asia, likely to show the highest rate of growth. This is the prediction made by London-based Roskill Information Services in its study, Molybdenum: Market Update, Analysis and Outlook.

The forecast for the stainless steel market, the largest single end-use for molybdenum, is positive once again; poor market conditions in 1990 led to a downturn.

In 1989, molybdenum from primary molybdenum mines accounted for 41% of gross Western world supply, while byproduct material from copper mines represented 53%. Since then, the supply from primary sources has fallen sharply to less than half its 1989 level, whereas supply from copper operations has stayed relatively steady. The result was that in 1993, copper mines accounted for 67% of Western world molybdenum supply, while the share held by primary producers fell to 24%.

A renewed demand for the mineral in 1993 outstripped supply and reduced the stock overhang, producing a recovery in molybdenum prices. This leaves the outlook for molybdenum prices in 1994 relatively healthy, with a prospected deficit of up to 4,500 tonnes between molybdenum supply and demand, according to the study.

Roskill says this year will also see the resumption of operations at the Thompson Creek molybdenum mine and the Langeloth roasting facility, now operated by Thompson Creek Minerals. These two operations were idled by Cyprus and Amax, respectively, and then sold off as part of the Cyprus-Amax merger.

Thompson Creek has a production capacity of around 7,000 tons per year, while capacity at the Langeloth facility is double that of the mine. The molybdenum produced is unlikely to make an impression on the market until late summer, but it could then have a significant impact on market conditions. The outlook for the alloy steels market, the other major end-use of molybdenum, is less encouraging, according to the study.

Stainless and alloy steels together account for more than 60% of demand for molybdenum and will therefore have a strong influence on future growth in molybdenum consumption.

High-strength steels are used mainly in pipelines and vehicles; growth in this sector seems certain as more than 42,000 miles of pipeline are already planned, more than double the pipeline construction of 1993. The use of high strength steel in cars is forecast to increase slightly in the next few years, and world car production is expected to grow at around 5% per year until 1996.

Roskill says continued recovery in 1994 will depend on three main factors: production by Thompson Creek Minerals, exports of molybdenum by China and the outlook for copper prices.

For more information, contact Roskill Information Services Ltd., 2 Clapham Road, London SW9 0JA, England.