Leadville, an old Colorado mining town, may resume mining
For more than a century, Leadville was to Western mining towns what the Rolling Stones were to rock 'n' rollers: the biggest, richest, wickedest and longest-lasting act around. It's also among the highest, nearly two miles above sea level at the headwaters of the Arkansas River in central Colorado. Now, after an absence of a dozen years, mining may return to the Cloud City in 2012, if production is resumed at Climax Molybdenum.
Mining started there in 1859, when prospector Abe Lee announced to his companions, “Boys, I've got all the gold of California in this pan.” It continued until 1999, when the ASARCO Black Cloud Mine -- which produced lead, silver, gold and zinc -- ran out of ore and closed.
Leadville boomed with silver in the 1870s and '80s, attracting three railroads and a population of more than 20,000. But the mainstay for most of its mining career has been a much more obscure metal: molybdenum, generally known as “moly," pronounced “mollie.”
Though molybdenum has a variety of uses ranging from pigment to lubricant, it mainly serves as an alloy to harden steel and make it more resistant to corrosion in uses like automotive exhaust systems and oil well stems.
The molybdenum deposit sat right on the Continental Divide next to 11,318-foot Fremont Pass, a dozen miles north of Leadville. The railroad station at the top of the pass was named Climax, and that inspired the names of the Climax Mine and the Climax Molybdenum Co. Production began during World War I.
By 1980, it was the largest underground mine in the world. The mine and mill ran around the clock with about 3,200 employees drawing union pay with good benefits. The property taxes gave Leadville public facilities like good schools, a library and recreation opportunities.
All that collapsed in the early 1980s, right after the price soared to the point where copper producers (moly is often found with copper) found it profitable to add molybdenum recovery circuits to their mills. Then the American auto industry, a big moly customer, abruptly hit the skids. The result was a tremendous over-supply of molybdenum, whose price plunged below the cost of production.
The Climax Mine halted production in 1982 and operated only sporadically thereafter. A third of Leadville's population moved away, and the struggling town became a bedroom community for resorts over the Continental Divide: Vail, Beaver Creek, Copper Mountain, Breckenridge. The work was seasonal, lacking the pay and benefits of the old union mining jobs. And as parents toiled long hours 40 miles away from town, their latchkey kids suffered high dropout rates and widespread substance abuse.
Will all that change for the better if Phoenix-based Freeport-McMoRan, the mine’s most recent corporate owner, resumes molybdenum production next year, as currently planned?
For starters, there's no guarantee the mine will re-open. “This isn't the first time they've talked about resuming production,” observed Marcia Martinek, for the past nine years the editor of the weekly Leadville Herald-Democrat. In 2008, work was under way to get production started in 2010. As a huge new ball mill was trucked through town on an October afternoon, the high-school band marched with it down Harrison Avenue, and the town turned out to cheer from the crowded sidewalks.
“People were giddy then,” Martinek said. Then the company announced it would cut back on development, citing sagging mineral prices. “This time around, a scheduled re-opening is good news -- that's about 400 jobs -- but there isn't nearly the excitement.”
Freeport has spent about $600 million to rebuild the mine and mill, with another $150 million or so to go before production can resume.
The price of moly will likely determine whether the Climax Mine resumes production next year. In late June, the mineral was selling for $15.18 a pound, down from $34 in the summer of 2008. Demand has grown; high energy prices mean more drilling and a greater demand for corrosion-resistant moly-alloy steel. And lighter cars that get better gas mileage use more moly alloys for their frames and bodies.
Further, China -- the world's leading moly producer -- has declared molybdenum a strategic metal. The government began restricting exports this year.
So the portents are promising, and not just in Leadville. In British Columbia, Thompson Creek Metals is expanding its Endako moly mine with a larger mill to raise output from 12 million pounds a year to 15 million.
At Climax, industry experts estimate the production cost at $5.50 a pound, with the company planning to produce 30 million pounds a year initially.
Like editor Martinek, Leadville Mayor Bud Elliott welcomes the return. Not only does it mean a bigger payroll in town and a boost to local enterprises, he says: “It's our identity. We're a mining town, always have been. ”
But even if production resumes as scheduled, it won't be the same as back in the “Shining Times” of the 1970s when Climax was hiring 100 men a week. (Turnover was always high among the 3,200 workers.)
“That was a union shop,” Elliott notes, “and wages and benefits were quite a bit higher, when you adjust for inflation, than they will be this time around.”
Although the Climax of yore did have some aboveground open-pit operations, most of it was underground, worked by old-fashioned miners in high boots and light-equipped helmets. When a big rock blocked a chute, it was called a “hang-up,” and the absolute king stud in any Lake County taproom was a “hangup man” -- the guy brave enough to make his way up the chute and drill and dynamite the hangup rock.
To keep production costs down, the resurrected Climax will be entirely aboveground, more like a big quarry than a mine, and all the supplies and output (concentrated molybdenum disulfide bound for a refinery in the Midwest) will move by truck, as the rail line to Leadville has been put “out of service” by the Union Pacific Railroad.
This time around, there won't be nearly as many workers – roughly 400 instead of 3,200. In recent years, Leadville has managed to get by with the help of tourism, students and faculty at its Colorado Mountain College campus, federal cleanup spending and residential construction. The town is within commuting distance of the big-league resorts, and its real estate is more reasonably priced.
As Elliott points out, “We learned to live without a mine. It should be better with one, but we'll manage one way or another.”