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Climax gets another chance

Moly mine targets 2009 opening date

Roger Fillion, Rocky Mountain News

Published July 21, 2007 at midnight

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LEADVILLE - The storied Climax mine is poised to open a new chapter in its decades-long history.

Residents of this town, 13 miles southwest of Climax, eye that possibility with hope - and anxiety.

The mine's owner tentatively has agreed to reopen the mine in 2009, a move that could create 300 jobs or more. A final decision is expected in coming months.

A jump in the price of molybdenum, a metal for hardening steel, has raised the specter that Climax, dormant for a dozen years, could be profitable once more.

But reopening the molybdenum mine isn't assured. And Leadville residents are reluctant to bet their future on Climax, as this boom-and-bust town has in the past.

Reflecting the world economy's whims, Climax has opened and shut before. Thousands lost jobs in the 1980s.

"We've been anxious and disappointed before," said Patricia Berger, Lake County's clerk and recorder and a lifetime resident.

Yes, Berger said, "We hope" Climax reopens. "But we're not basing all our decisions on whether they open or not."

On a recent day at the mine, four excavators wielding large cutting shears slowly ripped apart the metal beams and structures that had held up the No. 2 crusher.

The structure, built on two acres of land in the 1930s, once pulverized boulders containing molybdenum. The smaller stones that spilled forth were processed and the "moly" was extracted.

But thanks to the excavators, working under an overcast July sky, the crusher was set to become history.

"I would call this the end game for the workhorse of Climax's crushing operations," said Bryce Romig, environmental manager for Climax Molybdenum, watching the structure's demolition.

Other structures covering several acres of land, including another crusher and a large conveyor system, also have been demolished since last summer.

But the demolition work could help set the stage for the reopening of what was once the world's largest molybdenum mine.

If Freeport-McMoRan Copper & Gold Inc. - the mine's new owner - gives the final OK, the cleared earth could make way for a state-of-the-art mill to extract molybdenum. Or another production facility.

Most Leadville residents hope the mine - which once employed about 3,000 - will get a new lease on life. But they aren't holding their breath.

"Everybody has a little bit of a jaundiced eye," said Bob Elder, 72, a longtime Leadville resident who was in charge of engineering operations at the mine before he lost his job in 1982.

Lake County Commissioner Mike Hickman said reopening Climax "would have a nice positive impact" on local businesses.

But "until they say, 'Yes, it's a full-blown go,' we have to concentrate on our No. 1 industry, which is tourism," Hickman said.

"Tourism is going to be here. It's going to stay. It's not going away. Mines open to close."

Demand rebounds

Climax has sat dormant since 1995, a victim of plunging molybdenum prices. They slid below $2.50 a pound in 2001, having changed hands at $10 back in 1977.

Molybdenum is used in everything from airplane parts - where it serves as a strengthener - to computer chips, where it helps prevent overheating.

World economic growth, fueled by China's hunger for construction materials, has sent molybdenum prices up more than tenfold to over $30.

In April 2006, the board of Phelps Dodge Corp. - the mine's owner at the time - tentatively approved the restart of the mine.

Some 300 people could be hired to work for the mine if it resumes operation, the company said. The company estimated it would have to spend $200 million to $250 million on new "state-of-the-art" facilities.

Before throwing the switch, however, Freeport-McMoRan wants to complete a final study to determine whether such a move makes economic sense.

Freeport-McMoRan bought rival Phelps Dodge for $26.3 billion in March and made it a unit of the company.

A "pre-feasibility" study suggested the open-pit mine could produce 20 million to 30 million pounds of molybdenum a year at a competitive cost. The final study is expected to be completed later this year.

"Everything is tentative until we finish that study," said Freeport-McMoRan spokesman Ken Vaughn.

Since last summer, about two dozen workers have been piloting excavators, bulldozers and dump trucks doing demolition work at Climax.

Torn down in the process were the No. 2 and No. 5 crushers, as well as a lengthy conveyor-belt system for ferrying molybdenum ore at the mine. A large drying facility that bakes the moisture from molybdenum concentrate is slated for future demolition.

All those facilities covered about eight acres, roughly half of the structures that were present at Climax two years ago.

Economic ebb and flow

Situated on a high pass beneath 13,000-foot mountain peaks, Climax sprawls across 22 square miles of private land.

Since ore shipments began emerging from the mine in 1915, more than 65,000 employees have had a hand in Climax. Miners have recovered 946,000 tons of metal worth about $4 billion.

The mine has weathered a tumultuous history.

From a peak of about 3,000 workers in 1980, employment fell to 2,800 in April 1981. Climax cut its first 600 employees in December 1981 and then shut down production in 1987.

It resumed operations in 1989 for just two years and then reopened for three months in 1995.

The Lake County economy, and the county seat of Leadville, were devastated. Miners fled in search of work elsewhere, including Nevada. "For sale" signs sprang up outside homes. Homeowners were forced into foreclosure. Marriages unraveled.

"You couldn't give a home away in Leadville after those closures took place," recalled Elder, the retired mining engineer.

The county's tax base eroded. The assessed value of commercial and residential properties stood at $248 million in 1981. By 1986 it had plunged to $78 million.

Valuations have rebounded slightly since then, as the county seeks to diversify its economy through tourism.

Waiting on the study

The mine's executives are moving cautiously. They stress that any reopening will depend on the final study gauging the mine's economic viability, as well as the company's obtaining the needed government approvals.

The demolition work, while it could pave the way for the resumption of output, also is being done to conform with the original permit the state granted the mine.

The company must remove all evidence of Climax once the mine's ore body has been "totally exhausted," said Romig, Climax's environmental manager.

Still, he added, the demolition work "very well might" set the stage for resumed mining operations.

Romig said the most time-consuming part of the work is preparing a building to be torn down. Gas, water and sewer lines must be shut down.

"You have to make sure the building is unplugged," Romig said.

Stored oils and greases also must be carted away.

Cables are then attached to the building's support beams. The remaining ends are hooked up to bulldozers and other heavy equipment that pull the building down.

Excavators fitted with the big shears then work on internal beams, ducts, platforms and the like, cutting the metal into strips that fit into a dump truck. The cut metal is hauled to a steel mill for recycling.

"What you're looking at is mostly the internal material being pulled out," Romig said, as the four excavators cut their way through the No. 2 crusher.

The more than 100 workers scurrying around the Climax site performing demolition work and other jobs have given the Leadville economy a modest boost.

Dave Norbut, general manager of the Silver King Inn, reckoned that mine-related workers occupy about a third of the hotel's 63 rooms.

He said the hotel's mine-related business "has probably doubled" since Phelps Dodge announced it would proceed with tentative plans to reopen Climax.

Bobbi Conner, 26-year-old owner of the Tennessee Pass Cafe, said the community "will get a lot of jobs out of it" if the mine reopens - but not the thousands Climax once employed.

"It will never be swinging like it was before."

Conner represents a new generation of area residents. They don't have mining ties. They're attracted to the mountainous region's attractions, including snowboarding, hiking and camping.

"We're just outdoor people in general," said Conner, standing in the kitchen of her cozy eatery.

It's just this kind of people that Lake County Commissioner Ken Olson wants to attract to the county.

"The reopening of Climax mine would be wonderful for Lake County," Olson said. "It would provide some very well-paying jobs."

But Climax isn't the long-term solution to the county's economic situation, Olson said. He ticked off recreation and tourism as holding more promise.

"We would view the Climax mine reopening as part of the whole," he said, "not the whole."

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