Thompson Creek Metals Co Inc (TCM.TO) (TC.N) a producer of molybdenum, which is used in steelmaking, said on Wednesday it is cutting mill capacity by 30 percent and will temporarily idle two mines this year because of the current poor market.
The company had already announced a reduction in molybdenum production by as much as 40 percent this year and said it was slashing capital spending by more than 75 percent and delaying an expansion project.
Thompson Creek has taken the necessary steps to adjust production and reduce costs and capital spending in response to the lower demand for molybdenum and generally unfavorable market conditions, said Chairman and Chief Executive Officer Kevin Loughrey.
Molybdenum, which is used as a strengthening and anti-corrosion agent in steel and stainless steel, is currently selling for around $10 per pound -- less than a third of its price six months ago of about $34.
We intend to remain flexible and ready to adjust our production higher or lower if there are substantial changes in market conditions in the future, Loughrey said.
Toronto-based Thompson Creek, whose shares trade on the Toronto and New York Stock Exchange, said production adjustments include a reduction in mill operation to 70 percent of capacity at the Thompson Creek Mine in Idaho. The mine will operate on a 10-days on/4-days off schedule from mid-April.
There will also be a temporary shutdown for about a month this summer at both the Thompson Creek Mine and the Endako Mine in northern British Columbia, the company said.
Thompson Creek said on Jan. 27, that its molybdenum production is expected to be 20 million to 24 million pounds in 2009, down from its previous estimate of 31.5 million to 34 million pounds and below the 2008 level of 26 million pounds.
The company's review of mine operation plans sees Thompson Creek Mine producing 15 million to 17 million pounds in 2009 while the company's 75 percent share of Endako Mine production will be 5 million to 7 million pounds.
Production at the Thompson Creek Mine was 16.7 million pounds last year and a spokesman said this year's level would be about the same because it expected higher-grade ore.
Japan's Sojitz (2768.T) owns 25 percent of Endako, where expansion has been suspended until the market improves.
Last December, Thompson Creek said it was cutting capital expenditure to $69 million this year from it prior budget of $300 million.
Shares of Thomson Creek were up 1.1 percent at $3.60 in New York and down 9 cents in Toronto at C$4.47 in morning trading.
(Editing by Dave Zimmerman)© Thomson Reuters 2009 All rights reserved