LEADVILLE, Colo. The giant Climax Mine, the worlds largest producer of molybdenum ore, shut down in 1981, causing the layoff of nearly 3,000 people and transforming Leadville into a bedroom for Vail and Summit County.
Since then, the mine has briefly resumed operations three times when the price of molybdenum rose, only to shut down again when prices dropped. But when prices skyrocketed three years ago, the new owner, Phelps Dodge, did not reopen. Instead, it announced a more long-term strategy, with a probable reopening in 2009 and only then after erection of a new $250 million processing mill.
This news has produced hurrahs in Leadville, and Stephen Voynick believes they are justified. "It seems that Leadville is about to become one of the very few Western mining towns to ever get a second chance from the mining industry," Voynick writes in the June issue of Colorado Central Magazine.
Voynick is surely the most knowledgeable journalist about molybdenum mining in Colorado. He worked at Climax more than 30 years ago, and in the 1990s he wrote a well-regarded history of the Climax Mine.
Unlike previous owners of the mine, Phelps Dodge has deeper pockets, says Voynick. This gives it more leverage. Instead, of scrambling to reopen Climax to make a quick buck off the current high prices, it doubled production at its Henderson Mine and Mill, which is located about halfway between Silverthorne and Winter Park. With Henderson making money, Phelps Dodge can now more methodically plan renewed mining at Climax that is more efficient and lucrative. Pointedly, this mining is to resume as the Henderson deposit is depleted. In this way, Phelps Dodge discourages competitors from developing deposits, avoids glutting the market, and keeps prices high.
Those prices bottomed out at $2.50 in the post 9/11 slump, soared to $38.50 last year and have since settled at $24. Most analysts predict a long-term price of $15 to $20 per pound, which is sufficient to ensure the profitability of future moly mining -at Climax. Cash costs for production have ranged from $5 to $6 per pound for production, although perpetual water-treatment costs and end-of-mine reclamation efforts will increase the overall costs.
Where does this leave the proposal, now three decades old, to create a molybdenum mine on Mt. Emmons, adjacent to Crested Butte? Voynick points out that any company that tries to mine Mt. Emmons is going to face nasty, lengthy battles in state and federal courts and in the court of public opinion. And Phelps Dodge, he notes, cares about its image.
"Even if a mining company wins the legal battle to mine Mt. Emmons, its image will surely suffer," he says.