LandKeepers News Archive
Endako mine expansion put on back burner
December 05 2008 | News Articles
Endako mine expansion put on back burner
Written by GORDON HOEKSTRA
Prince George Citizen
Friday, 05 December 2008
Thompson Creek Metals Co. has suspended the $374-million expansion of its Endako mine west of Prince George, one of several measures it’s taking in the face of a global economic slowdown.
Molybdenum prices have plummeted from a high in the $30 US per pound-range this year to the $12 level in the past two months.
The move to curtail capital spending, conserve its cash and keep debt down, puts the company in an excellent position to weather the world economic downturn, Thompson Creek Metals chairman and CEO Kevin Loughrey said Friday.
“While work on the Endako expansion project will be suspended, we will leave the project in a position to start up again when the molybdenum market improves,” said Loughrey.
The company is not the only miner to announce a halt to a mine project. Western Canadian Coal, operating in the Tumbler Ridge area 200 kilometres north of Prince George, announced it was stopping construction on its $100-million Willow coal mine project because of economic uncertainty.
World demand for commodities has slowed because of turmoil in financial markets and a tightening of credit.
The company’s major upgrade was meant to expand the Endako mine’s capacity from 28,000 to 50,000 tonnes of ore per day beginning in 2010, and reduce average production costs.
The Endako mine, about 175 kilometres west of Prince George, employs about 260 people. Prince George is a supply and service centre for mines in the region.
Recently, the mine announced it had estimated it had reserves to run 27 years, two decades longer than a previous estimate. The estimates were based on increased molybdenum prices. Molybdenum started a run in prices beginning in the spring of 2004 and peaked in the $40 to $50 per pound range in mid-2005.
Thompson Metals says it will complete some construction on the expansion, and purchase and store equipment on which it has already made partial payment. Thompson expects to spend about $37 million on the project this year. It’s share of the project is $280 million, with partner Japanese-based Sojitz Corp. contributing the remaining 25 per cent.
Thompson Metals earlier postponed the Davidson project near Smithers. The Davidson project involved sinking a shaft into a mountain to mine high-grade molybdenum and then transporting it to its production facility at Endako.
Molybdenum is used in the manufacture of aircraft parts, electrical contacts, industrial motor and filaments because of its ability to withstand extreme temperatures without significantly expanding or softening.
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