Article by Steve Voynick
Mining History – November 1994 – Colorado Central Magazine
Author’s note: Fourteen years ago, much of the region covered by Colorado Central stepped to the economic, social, and cultural beat of the Climax Molybdenum Mine. In 1981, the Climax Mine, one of the world’s largest, had 3,100 employees and an $8O million annual payroll. Employees commuted from places as distant as Kremmling, Denver, Saguache, Texas Creek, and Eagle, but most lived in Leadville, Buena Vista, and Salida.
In 1982, Climax unexpectedly suspended operations. creating economic and social upheaval that is still felt today along the upper Arkansas River valley.
The rise of Climax, an epic in American mineral resource development, was based upon determination, brilliant engineering and financial management, technical innovation, and calculated risks that always seemed to work.
The fall of Climax, also an American epic, was based on greed, ambition, and overextension. Its story comes next month.
The mineral deposit that prospector Charles Senter found and claimed high on Bartlett Mountain in 1879 was a real sleeper. Mineralogists needed twenty more years to correctly identify the mineral as molybdenite, the disulfide of molybdenum. Even that wasn’t good news, for molybdenum was a laboratory curiosity with neither use nor value.
But metallurgists finally learned that small amounts of molybdenum enhanced the toughness, durability, corrosion resistance, and thermal performance of steel. In World War I the Germans rolled out an arsenal of superb molybdenum-steel weaponry. Sudden wartime demand sent molybdenum prices soaring, and prospectors, promoters and speculators, few of whom could pronounce or spell “molybdenum,” stampeded to Bartlett Mountain, fourteen miles north of Leadville.
By 1917, Bartlett Mountain was covered with mining claims. But only three interests seriously intended to mine and mill molybdenite ore: the Pingrey Mines & Ore Reduction Company, represented by Otis Archie King; the Molybdenum Products Company; and the Climax syndicate, backed by the partly German-owned American Metals Company of New York City. Because of the German awareness of the uses and value of molybdenum, it was the Climax syndicate that really wanted Bartlett Mountain.
When the U.S. entered World War I in April, 1917, the American Metals Company, which was 47 percent owned by Metallgesellschaft, a powerful German metals cartel, came under close scrutiny. Under authority of the Trading With the Enemy Act, the government seized the German-owned shares of the American Metals Company. After investigation, the directors were permitted to continue managing the now-Americanized company. Operations of the Climax syndicate at Bartlett Mountain were not affected.
Fremont Pass, 11,318 feet high on the western shoulder of Bartlett Mountain, provided little elbow room for the three competitors. Claim jumping, fights, and theft of equipment were all part of a day’s work. Climax also fought the battle for Bartlett Mountain in the courts, filing dozens of lawsuits, a few justified, most nefarious. The suits successfully drained the energy and money of Otis Archie King and delayed the progress of the Molybdenum Products Company.
A crew of 250 men built the first Climax mine and mill in just seven months. Coordinated mine-mill operations, with both linked by a 700-foot-long upper aerial tramway and a 7,430-foot-long main tramway, began in February, 1918. On April 2, the first Climax shipment of twenty-five tons of molybdenite concentrate departed Fremont Pass on two special Colorado & Southern Railroad cars bound for a Pittsburgh reduction works. Because of its immediate importance to the war effort and value of $100,000, two shotgun-armed Pinkerton guards accompanied the shipment the entire way.
Since 1881, Bartlett Mountain and Fremont Pass were assumed to be in Summit County, and Breckenridge recorded the molybdenum claims and assessed the property taxes. But the legal description of the county line was vague and ambiguous. Otis Archie King, jockeying for legal advantage in his court battles with Climax, refiled all his claims in Leadville, then informed the Lake County Commissioners that they, and not Summit County, really “owned” Fremont Pass.
Although the Lake County Commissioners were reluctant to “waste good money on lawyers,” they filed suit against Summit County, kicking off the “County Line War.” Both Otis Archie King and the Molybdenum Products Company soon sold out to Climax.
During 1918, the Climax syndicate, reorganized as the Climax Molybdenum Company, produced 800 tons of concentrate worth $1.8 million. But the molybdenum market collapsed after the November Armistice. And in March, 1919, Climax shut down.
Months later, Lake County emerged victorious in the “County Line War,” and moved the county line 1.5 miles north to its present location. Many Leadville residents questioned their commissioners’ sanity for having “won” a shut-down mine and maintenance responsibility for two additional miles of highway. But time would exonerate the beleaguered commissioners. The $5,000 they “wasted” on legal fees would eventually bring Lake County — and cost Summit County — more than $120 million in property taxes.
In 1920, the Climax Molybdenum Company had a one-room office in New York City, a mountain full of low-grade molybdenite that wasn’t worth mining, a mothballed mill, 125 tons of molybdenum concentrate with no buyers, and a half-million-dollar debt.
But the Climax president, a young engineer named Brainerd Phillipson, had absolute faith in the future of molybdenum. To interest American industry in peacetime applications of molybdenum-steel alloys, he offered molybdenite concentrate free to anyone willing to experiment with it. Phillipson even advertised “Mo-lyb-den-um” alloys in such mainstream publications as the Saturday Evening Post, always hyphenating the name to assist in pronunciation of the unfamiliar metal.
PHILLIPSON PERSUADED Childe Harold Wills, a renegade automaker, to use “Mo-lyb-den-um” steel in his superbly designed, extraordinarily durable Wills-Sainte Claire. Although the over-priced Wills-Sainte Claire failed, it helped sell industry on molybdenum alloys.
The Climax Mine reopened in 1924 on slowly growing demand, with mules hauling 500 tons of ore per day from two small tunnels. But 1926 and 1927 were the darkest years for Climax. Now over $2 million in debt, the directors joked bitterly about the “Anti-Climax” Molybdenum Company on “Freeload Pass.”
The directors saw two alternatives: either sell out to the highest bidder or raise prices immediately to generate a profit. But Brainerd Phillipson wouldn’t sell out; furthermore, he insisted on reducing prices. Only volume sales at dirt-cheap prices, he argued, would save Climax.
And since there was no market for “moly,” he intended to make one, demanding additional capital to establish a research facility to develop more uses for the metal.
Phillipson understood that only mass mining could make the low-grade ore profitable. In 1929, he committed everything to development of an enormous cave-block mining system. The proposed “New Tunnel” would be the largest mine tunnel ever built; double-tracked and electrified, it would access a 30-mile-long network of rail drifts beneath the ore body. Workings driven upward at 45 degrees would permit the ore, which composed most of Bartlett Mountain, to crush itself under its own weight. Gravity and pneumatic slushers would then move the broken ore into endless lines of waiting ore cars.
Brainerd Phillipson died in 1930, but his plans were carried out by new company president Max Schott and resident superintendent Bill Coulter. Although the Depression had shut down the American steel industry, Max Schott knew where to sell molybdenum. Climax survived the worst of the Great Depression on growing exports to Germany, Japan, and the Soviet Union.
The New Tunnel, renamed the Phillipson Tunnel, was completed in 1933. Production soon reached 6,000 tons per day and cost efficiency exceeded even the wildest projections.
IN THE PHILLIPSON TRADITION, Climax again cut its molybdenum price. Although other mine sources of molybdenum now existed, none could match the Climax price. Recovering from the Depression, the steel industry clamored for molybdenum, and Climax supplied ninety percent of the booming world market.
In 1932, Climax had reinvested its first-ever operating profit, a modest $109,000, into mine development. Just three years later, Climax was debt-free with annual net earnings topping $4 million.
In 1935, Climax stock, worth $1 per share in 1928 and traded on the Leadville streets for as little as ten cents, had split three times and soared to $42 per share. The stock appreciation, together with net earnings exceeding fifty percent of gross sales, marked the best performance of any Depression-era American company.
The Climax Directors, Brainerd Phillipson’s widow, Max Schott, and the American Metals Company claimed the lion’s share of the “Climax fortune.” But the fortune trickled down to many, especially the Leadville store and saloon keepers who had hung on to all those “worthless” stock certificates from the 1920s.
One employee made a killing on Climax stock without even knowing he owned any. Art “Doc” Sloan, a loner, had worked at Climax since 1927 and lived in the mine boarding house. Too rocked up for underground work, Doc became the mine dry janitor.
For years, Doc deposited his money in the company office safe, eventually accumulating a few thousand dollars. Superintendent Bill Coulter, pressed for cash for company expenses during the lean years, quietly exchanged Doc’s cash savings for an equal value of near-worthless Climax stock. When Doc retired in 1935, he found that he, too, was a Climax stockholder. Doc Sloan, who had never earned more than thirty dollars per week in his life, retired with $120,000, most of which he contributed to the Missouri orphanage where he was raised.
CLIMAX WAS THE DARLING of Wall Street in 1936. But because of altitude, weather, wretched living conditions, and the dreary and dangerous nature of underground work, miners knew it better as “The Hellhole Near the Sky.” To combat a 300 percent annual labor turnover, the company replaced the old boarding houses with a $2.5-million company town. The “New Climax,” the highest town in North America, consisted of 100 houses of three to six rooms each, forty-three apartment units, a boarding house with a 326-seat dining room, a 171-room hotel, a recreation hall, a hospital, and a school that would go on to win state educational honors.
Superintendent Bill Coulter granted his brother, George, a franchise to establish the Fremont Trading Post across from the main Climax gate atop the pass. The Fremont Trading Post offered everything the Climax man needed — a complete general store, an auto dealership, slot machines, “chit” currency, limitless credit, and a bar that for twenty years would be known as the “Slop Chute.”
“The Hellhole Near the Sky,” now with 1,400 employees producing 12,000 tons of ore per day, also held the worst safety record of any major U.S. mine. In 1938 alone, the hospital, fortuitously located only 100 yards from the Phillipson Tunnel portal, tended to eight fatalities, forty-six “serious” accidents (involving broken bones or amputations), and countless lesser injuries.
In 1939, President Franklin D. Roosevelt personally asked Max Schott to abide by a “moral embargo” of molybdenum to nations using aircraft to bomb civilian populations. Those nations — Germany, Japan, and the Soviet Union — were three of Schott’s biggest customers. With no choice, Schott agreed, but extracted a promise from Roosevelt to urge the War Department to take a “special” look at molybdenum alloys for armament use.
Max Schott had pulled off quite a coup: He had made a fortune supplying molybdenum to help build German and Japanese war machines; now, during World War II, he would make even more supplying molybdenum to help defeat the Axis armies. In 1942, the War Department, firmly committed to molybdenum-steel weaponry, designated Climax the highest priority mine in the U.S., ordering immediate emergency production.
But Climax miners were leaving in droves for the military and better paying defense jobs. The Army had to bolster Climax employment levels with an “assigned labor” force of borderline deserters and military misfits. Included were Mongolian refugees, experienced miners who spoke not a word of English.
TO GUARD AGAINST SABOTAGE, wooden guard towers with sweep searchlights and a 3,000-foot-long chain link fence topped with barbed wire went up around the mine and mill. With the mill blacked-out, a 28-man, military-trained, heavily armed guard force, complete with guard dogs and horses for mounted perimeter patrols, maintained tight security.
As a secure, high-altitude, armed camp, Climax became the site of a top secret U.S. Navy solar observatory. Twice each day, weather permitting, astronomers used the only suitable coronagraph in Allied hands to photograph the sun, then measured and interpreted the solar flares. The observations, which accurately projected the quality and reliability of long-range radio communications several days in advance, helped schedule every major Allied military offensive during the war.
In 1943, Climax mined and milled 23,000 tons per day, far above the 15,000 ton-per-day design limit of the Phillipson Tunnel. When permitted to “stand down” in late 1944, Climax had produced 90,000 tons of elemental molybdenum. But the highest grade ores were gone, the delicate “balance” of the cave block mining system was a shambles, maintenance was five years behind, tailings ponds were prematurely filled, and the crushers, ball mills, and drills were junk. Employment fell from 1200 in 1944 to 380 in 1945.
With a huge post-war stockpile, Climax cut production and began rebuilding the mine and increasing reserves of broken ore. The company spent $10 million to expand and upgrade the Climax town into a model community to, once and for all, reduce labor turnover.
When the Korean War spurred another round of emergency production in 1950, Climax advertised nationally to attract workers. The Saturday Evening Post didn’t help matters by running a feature article on Climax reminiscent of the “Hellhole” days, painting a lurid picture of illegal gambling, round-the- clock drinking, fights, and shot-up road signs, jagged peaks, and unmanageable snow.
Climax countered by establishing a public relations department which offered public tours, started scholarship programs, and, in 1954, even persuaded The Denver Post’s Empire Magazine to feature the mine exclusively in a forty-page special color edition.
Meanwhile, Climax metallurgists found new molybdenum uses in everything from automotive paint pigments to high-temperature components for jet aircraft engines. As demand for moly increased, the new Storke Level came on line in 1953, boosting production to 27,000 tons of ore per day.
An intensive post-war safety program had turned Climax, now the world’s largest underground mine, into one of the nation’s safest major mines. Wages were higher than the blue-collar average, and contract miners earned $11,000 a year — no pittance in the mid-1950s. Life magazine and network television news programs featured the Climax community as arguably the best company town ever built.
CLIMAX, WITH ORE RESERVES sufficient for sixty more years of mass mining, controlled three-quarters of the world molybdenum market. Its dirt cheap molybdenum prices smothered the competition, and much of the $12 million annual operating profit was reinvested into metallurgical research and further development of the mine and mill. The future of Climax, as a market analyst wrote in 1957, seemed as strong as molybdenum steel itself.
In the basic Climax philosophy, the mine was the heart and soul of the company, and any company aspirations would be commensurate with the capabilities of the mine.
Common sense said that solid management and long-term, measured planning would keep the Climax mine, and thus the Climax Molybdenum Company, going strong for another half century. Bob Henderson, Climax resident superintendent in the 1950s, never let the directors forget that point. “You fellows take care of things in New York,” Henderson would say. “I run the mine.”
But that philosophy would change, and so, too, would the fortunes of Climax.
Steven Voynick, who lives near Leadville, once earned an honest living underground at Climax. Since then he has written several books and dozens of magazine articles of mining and mineral lore.
The second installment of this article, detailing how Climax fell from its profitable heights, will run in the December edition of Colorado Central.