The rising international price of molybdenum, a byproduct of copper extraction used mainly to harden steel, is a major cause of record profits in Chile’s mining sector. Many companies are taking advantage of the bull market to expand their operations in Chile and abroad as experts predict the high prices should continue for the next several years.
Molymet, a Chilean molybdenum processing company, recorded a 369 percent increase in profits for 2005. After molybdenum prices rose to nearly eight times the prices of 2003, the company announced plans to expand its production capacity in Chile as well as open offices in China.
Other Chilean companies have also seen significant profit increases in 2005 as a result of the increase in molybdenum prices. Compañia de Acero del Pacifico (CAP), a company that produces mainly steel, increased its overall profits 30 percent this year even though the price of steel fell 4.5 percent.
SQM (formerly Soquimich), primarily a fertilizer and iodine producing company, has also begun to cash in on molybdenum sales. The company, which increased its profits by 55.9 percent thanks in large part to high molybdenum prices, plans to invest US$450 million over the next three years to increase its production capacity of the copper byproduct.
As prices continue to climb, many companies are starting to extract primarily the molybdenum, turning the valuable copper into the secondary product of the mines.
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