Sojitz Plans to Double Molybdenum Sales as Steel Demand Grows
Feb. 8 (Bloomberg) -- Sojitz Corp., Japans largest molybdenum trader, expects to double its sales in the next three years on increased demand from steelmakers, an executive said.
The company plans to increase annual sales to 20 million pounds by 2013 from 10 million to 11 million pounds now, Kazuyoshi Shioda, general manager of the ferroalloys department, said in an interview today. Molybdenum is used to strengthen steel in oil and gas pipelines and in oil drills.
Crude steel output in Japan may exceed 100 million metric tons in the year to March 31, 2011, Japan Iron and Steel Federation Chairman Shoji Muneoka said Jan. 27, an increase of more than 3 percent from predictions for the current year. Chinas production, the worlds biggest, climbed 14 percent to a record 568 million tons in 2009 as the governments stimulus spending boosted demand from builders and carmakers.
Until some new mine projects start production in 2012 and 2013, the market will see a supply shortage amid increasing steel output, Shioda said. To achieve the sales target, we are considering some investment in new mining projects in North America and Australia, he said.
Japan plans to revise legislation to help local companies acquire mining rights overseas and secure raw materials amid competition from neighboring China and South Korea.
New Law
The Ministry of Economy, Trade and Industry has prepared a bill that will allow state-owned Japan Oil, Gas and Metals National Corp. to invest in foreign mines in collaboration with private companies and to provide government guarantees to fund projects, according to Yohei Matsuda, deputy director at the ministrys natural resources and energy agency.
We want to utilize JOGMECs new law in our overseas mine investment to secure stable supplies of rare metals, Shioda said. China, a major producer of molybdenum, turned into a net importer last year, he said.
Chinas imports were an estimated 80 million pounds in 2009, up from 7 million in 2008, while its exports dropped to 19 million pounds from 55 million, according to Sojitz. Japans demand for molybdenum totaled 50 million pounds in 2009, of which the company sold 20 percent, Shioda said.
Sojitz currently has a 25 percent stake in Thompson Creek Metals Co.s Endako molybdenum mine in British Columbia, taking 3 million pounds a year, Shioda said.
Price Gain
The price for molybdenum trioxide has recovered to around $10 a pound after dipping to $7 in late 2008, Shioda said. The price may increase to $20 on tight supplies, he said, without providing a timeframe. Sojitz trades nickel and rare metals.
General Moly Inc. said in August 2008 it signed an off- take agreement with Sojitz. Under the accord, General Moly will supply 5 million pounds a year of molybdenum over five years, beginning once the mine at Mt. Hope reaches commercial production levels.
Molybdenum demand may outpace supply by 2014, Roskill Information Services Ltd. said on Jan. 27. Molybdenum is consumed mainly as oxide or ferromolybdenum in stainless and alloy steels, it said.
MOL Price at posting:
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