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Despite faltering economy, Climax still set to re-open

Brief by Central Staff

Mining – November 2008 – Colorado Central Magazine

The Climax Molybdenum Mine north of Leadville is still on schedule to resume production in 2010 as the $500 million renovation continues.

At least, that was the situation when we went to press. Climax is a subsidiary of Freeport McMoRan Copper and Gold, and on Oct. 14, the parent company’s CEO told Bloomsberg News Service that the company might defer some projects to conserve cash while metal prices dropped, which had people wondering whether Climax was one of those projects. But on Oct. 15, a company spokesman said the Climax project will proceed on schedule, and “in terms of our near-term plans, we are fully proceeding with Climax.”

The company is scheduled to release its earnings report during the week of Oct. 20, and there may be more details on its plans then. Molybdenum is used for many purposes, among them hardening steel.

Molybdenum prices had been rising for most of 2008, but then came the big plunges of September. One effect on moly goes like this: Petroleum prices drop, so there’s less drilling and exploration, and moly is used in oil-field equipment. So demand drops, along with price. The same pattern goes for the automotive sector — people put off buying new cars, so there’s less demand for moly, and down goes its price.

But most analysts we found said the long-term prospect for moly is good, as demand is still relatively strong.