Over the past couple years, it’s looked like the region would see a resurgence in hardrock mining, thanks in large part to China’s booming economy. As recently as late summer, copper prices were well above $3 per pound; molybdenum hovered over $30 per pound. Towns like Leadville, Colo., which was devastated when the Climax molybdenum mine (shown below) shut down in 1982, anticipated hundreds of new jobs from new, reopened or expanded mines.
But now, with moly prices plunging below $15 and copper flagging to between $1 and $2 as the global economy sinks into recession, some of those projects are in jeopardy. Phoenix-based mining giant Freeport-McMoran, for example, has scrapped plans to reopen the massive Climax pit in 2009 and will lay off up to 100 full-time employees and cut production at its Henderson moly mine in Colorado. It has also tightened up some of its copper operations -- announcing that it will lay off more than 100 workers at mines in Arizona and New Mexico. Meanwhile, the Russian mining company Norilsk Nickel is looking to sell its 55.4 percent stake in Stillwater Mining Co., which runs two platinum mines in the mountains of south-central Montana. Stillwater is struggling with a 60 percent drop in the prices of platinum and palladium -- which are used in catalytic converters (demand is way down since no one is really rushing out to buy cars these days) -- and miners there fear the company may have to begin cutting its substantial workforce.
It’s unclear whether China’s $586 billion economic stimulus package will able to boost the metals market again soon. In any case, China is concentrating its efforts on resources within it's own borders, meaning its effect on metal prices may be significantly less in the coming years. Suddenly, it looks like this boom might be over before it even starts.