Climax mine closer to opening
Vail, CO Colorado
SUMMIT COUNTY, Colorado – Construction at the Climax Molybdenum Mine at the top of Fremont Pass is ongoing, but it’s still unclear when market prices for the metal will make reopening the mine feasible. According to a press release from Freeport McMoRan – the global mining company that owns Climax – recent activities at the mine include “completion of concrete foundations for various equipment installations and commencement of the ball mill shell assembly.”
Eric Kinneberg, a spokesman for Freeport McMoRan, said all the old equipment in the mine has been decommissioned, and all new equipment is being installed now. Currently, there are 60 regular employees working at the site, he said, along with 450 contract employees. When the mine ramps up for full production, he said it will employ 385 employees.
When that might be, Kinneberg refused to speculate, saying it was dependent on those market conditions.
According to the press release, the Climax mine would have an initial annual design capacity of 30 million pounds with significant expansion options. The estimated remaining costs for the project to reopen is roughly $450 million.
Molybdenum – or “moly” – is an element used in the production of steel, and its price varies with steel markets as well as with production from other molybdenum mines.
According to http://www.metalprices.com, moly prices over the past five years have fluctuated from a high of $36.50 per pound in December 2007 to $17.50 per pound today. Freeport McMoRan’s press release lists its own “average realized price per pound” for year-end 2010 at $16.47 – up from $12.36 for the same period in 2009.
Recent surges in the automotive industry could mean increased demand for steel and thus moly, while moly markets in China could have significant impacts as well. According to a Jan. 5 story by Michael Montgomery in Moly Investing News: “Recent Chinese export quotas for moly have affected many markets, and those quotas remain unchanged. Reports of large inventories of the metal in China also cast a dark cloud over the market, as rumors circulate that the Asian giant may not be a net importer in 2011.”
The story goes on to say that steel demand in China is likely to be down in 2011, affecting moly prices. “The high price for the metal in 2010 topped out at $18 per pound, but receded to around the $15-dollar mark,” Montgomery wrote. “Analysts are unsure if prices will make any substantial gains in 2011, regardless many moly miners were able to post profits at this price level in 2010.”
The Climax mine has a history of openings and closings. According to the National Mining Hall of Fame and Museum, it originally started production in 1918, supplying moly for the American effort in World War I. It closed later that same year, reopening again in 1924. During World War II, the mine operated around the clock, producing virtually all of the molybdenum needed for the Allied war effort. The mine continued to produce moly, with the number of workers expanding from 1,800 in 1957 to 3,000 in the 1970s. In 1980, the moly market crashed with the recession and, in 1982, production at Climax was suspended. High moly prices in 2006 spurred plans to reopen the mine, but the metal’s price has fluctuated greatly since then.