Rising copper and molybdenum prices boost Butte metal mine

BUTTE – Montana Resources is halfway through an epic year. Copper hit an all-time high of $ 4.86 a pound on May 10 and was at $ 4.21 on Wednesday.

Meanwhile, molybdenum, the other main ore at the mine, has skyrocketed to $ 19.80 a pound after averaging $ 8.67 in 2020.

Which begs the question: what is molybdenum?

Called moly for short, the metal is able to withstand extremely high temperatures and is a powerful anticorrosive used to strengthen steel. When steel production increases for buildings and bridges, molybdenum prices rise accordingly, said Mike McGivern, vice president of human resources at MR.

“Steel production is the main driver,” McGivern said Montana Standard.

Molybdenum is also used in lubricants and in specialty items such as gun barrels, where solid steel must withstand the high heat of bullets on the fly, McGivern said.

Other uses include rocket engine components, flat-panel TVs and computer monitors, and “virtually every stage of oil and gas exploration,” from drill pipes to power plants, according to one fact sheet. information from the Canadian mineral exploration company BCM Resources

Molybdenum is even used in products intended for human consumption. It’s an essential nutrient that the body uses to process proteins and genetic material like DNA, and even breaks down toxic substances in the body, according to the National Institutes of Health.

“It’s in your morning protein shakes,” McGivern said.

MR mining is known for its copper, but molybdenum has always been critical to profitability.

“Without molybdenum, we don’t have a mine,” McGivern said. “We have to have molybdenum to make it a viable operation. “

MR is counting on an $ 8 molybdic price to remain viable, McGivern said. The average price last year was $ 8.67.

At an average of $ 31.87 in 2005 and $ 30.09 in 2007, molybdenum actually made the mine more money than copper in those years.

“It has a huge impact for us,” McGivern said.

This year the price is approaching $ 20. Combined with high production, an average molybdic price of $ 20 would roughly cover the cost of all operations for the year, McGivern said. This means that the copper would be all profit.

The company sets its budget in October. Last fall, MR predicted a price of $ 8.50 for molybdenum and $ 3 for copper. So far, molybdenum has averaged $ 12.46 for the year, and copper has remained above $ 3.50 for the first two months of the year and averaged well above $ 4 since March.

Copper was up a few cents last week after a slow decline from the May 10 peak.

“When you see $ 4.86, you want to stay at $ 4.86,” McGivern said of the peak.

Current trends are reminiscent of 2011, the last time both commodities boomed at the same time. That year, the average price was $ 3.98 for copper and $ 15.46 for molybdenum.

The mine is in good shape to take advantage of this year’s boom. MR has a high number of company employees at 380, and this year has grown to 13 haul trucks per shift.

Each employee of the mine receives a share in the profits.

“We post the price on the front gate every morning, and I’m sure all eyes are looking at this painting every day. We’re all very interested in these kinds of awards, ”said McGivern.

The price of copper is expected to remain high over the next few years.

Demand is increasing due to the priority given to electric cars, which use a lot of copper, as well as the continued needs of the biggest consumers of raw materials – the United States and China – and is also being stimulated by the development of infrastructure and the modernization of economies like India and Brazil, McGivern said.

Supply may decrease as foreign competitors face challenges.

“The copper market in South America is struggling economically as Chile plans to nationalize its copper mines. It stifles exploration and investment in the copper industry in Chile, ”said McGivern.

There are rumors of potential strikes in Peru, he added.

Chile and Peru are the world’s largest copper producers, and the United States ranks fifth.

Moly is a bit harder to predict as it’s a smaller market.

“China is a big factor,” McGivern said. “They have a lot of molybdenum and the ability to control the price, how much they want to let out, how much they want to store. They are a major player in the molybdenum market around the world.

After the pandemic, Europe is buying a lot of molybdenum for infrastructure, which is a good sign for the price, McGivern said.

MR cannot control the prices, only how they extract the ore and ship it.

With the help of traders, MR reduced the cost of shipping copper this year by sticking to the railroad instead of going overseas to China or Brazil as he sometimes did in the past. The move is particularly impactful as sea freight prices are on the rise, McGivern said.

MR copper is now shipped to smelters in Quebec, Canada and Utah, and molybdenum to Idaho.

Rising diesel prices and delays in the parts supply chain due to the pandemic are the two main negatives for MR in an otherwise mundane situation.

McGivern said MR was looking for ways beyond tax contributions and local purchases – the company accounts for $ 24 million in local purchases per year – to support the community of Butte.

This is nothing new. The last major contribution from MR and the Dennis and Phyllis Washington Foundation was a $ 10 million donation to Stodden Park. The golf course’s new clubhouse is complete and final landscaping touches are expected to be completed by October, McGivern said.

Now MR is on the lookout for the next big project.

A mining company can celebrate the good times, but success is also measured by the number of years that prices do not cooperate.

“One of the things we’ve been able to do is get through the bad times,” McGivern said.

Take 2009, when copper fell to $ 1.28. And 2016, when it dropped to $ 1.97. And the most recent fight, when, due to the pandemic, copper hit a daily low price of $ 2.10 in the spring of last year.

During all of these times, the mines closed and laid off workers. But not Mr.

“We were able to keep the lights on. Really not making a lot of money, but able to pay the bills, pay the employees and run the place, ”McGivern said.

Keeping its employees at work has remained a top priority, and now the mine employs more people – almost all of them local – than ever before.

“So that’s been our strategic business model, being able to withstand the cycles of the metal products that we mine – and they cycle,” McGivern said. “And we’re in a good situation right now.”

Production is at about the same level as last year, when the company mined 66.7 million pounds of copper and 8.7 million pounds of molybdenum.

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