Second life for Climax Moly
By Tom Stundza -- Purchasing, 8/23/2006 4:17:00 PM
Although molybdenum is averaging around $24/lb this year, as compared with $32 in 2005, strong global demand and supply interruptions are possible in coming years for the steel-alloying metal. So, Phelps Dodge will be reopening the old Climax Molybdenum Mine in the Leadville, Colo., area. “This is a dramatic vote by Phelps Dodge in the future value of molybdenum, because Colorado is one of the three most difficult places in the world to get an environmental permit to remove anything from the ground or process it above ground,” reports a market report on the metal at ResourceInvestor.com.
Phelps Dodge has committed up to $250 million to bring the Climax mine back into production beginning in late 2009 or early 2010. The mine when back to full operation is projected to produce 30 million lb/year of raw contained moly at an estimated cost of $4/lb. PD estimates that the market value of processed moly from this output will be, in constant 2006 dollars, $750 million/year. In coming years, future supply of molybdenum also may occur when formerly closed gold mines are being brought back into limited operation as fast as environmental permitting will allow throughout the U.S. west, says analyst Jack Lifton at ResourceInvestor.com. Many of them produced molybdenum as a by-product that was ignored when, as recently as three years ago processed moly was worth less than $4/lb. “Note also that Phelps Dodge has historically been a receptive toll producer for other companies, so some other gold miners with molybdenum by-products will not have to construct their own smelters,” writes Lifton. “This will make permitting much easier for them.”
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