Roughly one-fourth of the population of Fraser Lake has been handed layoff notices, just two weeks before Christmas.
Thompson Creek Metals Company Inc. (TSX:TCM) is shutting down its Endako molybdenum mine.
The company said half of its salaried employees (84) will be “terminated,” and its hourly employees will be temporarily laid off for 60 days, in the hope that molybdenum prices improve.
The closure will put 347 employees out of work. For a village with a population of 1,200, the mine’s closure is “devastating,” said Fraser Lake Mayor Dwayne Lindstrom.
“This is devastating news for Fraser Lake, especially just before the holiday season.”
Fraser Lake is located about halfway between Burns Lake and Vanderhoof.
Thompson Creek spokesperson Pamela Solly said the mine will be suspended December 31, but workers will continue to be paid through February 7.
Molybdenum is used to strengthen steel. And like metallurgical coal, which is also used in making steel, there is a glut of moly on the market. That has pushed prices from about $17 per pound in 2010 to the current price of $8.77 per pound in December.
“We will continue to closely monitor market conditions and re-evaluate the status of the mine as market conditions warrant,” Jacques Perron, Thomson’s Creek’s CEO, said in a press release.
In its third quarter financials, Thompson Metals reported an $11.1 million loss, compared with net income of $13.8 million for Q3 2013. Thompson’s Metals’ stock has dropped 51% in value since August, from a high of $3.34 to $1.63.
While met coal prices are expected to eventually go back up, as the glut gets whittled down, that may not be the case with molybdenum.
“It’s anticipated that there will be additional supply starting next year,” Perron said.
In addition to new sources of molybdenum expected to come into the market next year, Alloycorp Mining Inc. (TSX-V:AVT) – formerly Avanti Mining Corp. – has plans to restart the old Kitsault moly-silver mine north of Prince Rupert.
