DENVER (ResourceInvestor.com) -- At the Denver Gold Forum Freeport-McMoRan Copper & Gold's President and CEO, Richard Adkerson, made it clear that there's a new mine supplying moly. Four days later RI visited the company's mine, mill, and tailings facilities. The complex will debut in a little over a year's time, producing 30 million lb per year of moly. A second phase may double output.
The company is spending some $500 million in revitalizing the venerable Climax deposit near Leadville, in Colorado's Rocky Mountains. The company says that's, "believed to be the largest, highest-grade undeveloped molybdenum ore body in the world." It will further enhance FCX's status as the world's largest moly producer, adding to the existing Henderson (Colorado) underground mine's output.
Climax process plant layout
An advantage for FCX is that, since the mine/mill complex is a brownfield site, it will be improving the overall environmental situation-a welcome development from local and regulatory perspectives. Moreover the reopening of the Climax mine will provide needed employment for the area.
Why, some might say, is there this level of interest in an old-technology metal? Well, it's not so old-tech. It's important* in the chemical, lubricant, andmetallurgical industries. Moly has uses as catalysts, paint pigments, corrosion inhibitors, smoke and flame retardants, dry lubricant (molybdenum disulfide) on space vehicles-with its resistance to high loads and temperatures, lighting, and electronics.
As the requirements for ever-cleaner petroleum-based fuels increase, moly catalysts for desulfurization will see greater use. The U.S. Geological Survey's closing comment on moly's applications, "Few of molybdenum's uses have acceptable substitutions."
And, as an example in electronics, when you see red on a flat-screen display it's likely moly-based; and moly has applications in high-definition TV as well. And one non-FCX observer during the mine visit commented that moly exports to China doubled in the 2003-2005 period.
Molybdenite (Mineral Information Institute)
Resources. The Climax mine's current reserves total 182 million tons grading 0.165% moly and predicated on a $3.50/lb moly price (Moly began 2007 at about $25/lb and was $33.50 in July 2008). Additionally, FCX estimates, "a further 466-million-tons mineralized material grading 0.17% moly, predicated on a $10 per pound long-term molybdenum price) with substantial upside." So, clearly, the company's project economics have a conservative price base.
Prior to commencing mining, the company is doing selective exploration drilling to better delineate the deposit, which is believed to have considerable upside potential. Though extensive underground workings may present a challenge, it is believed that the prior operations' mapping is thorough.
Plant construction underway
Processing. Many say that, economically speaking, the mill makes or breaks a mine complex. Here Climax will not accept less than the best current technology, employing SAG (semi-autogenous) and ball mills followed by large flotation cells. The mills are gearless, yielding 1.5X the power efficiency of traditional gear-types. And the crushing side of almost any mill consumes the greatest amount of power at most mines.
In any event, it's the net recovery of moly in the ore that counts; and recovery was estimated at 87-91% in the feasibility study. Byproduct circuits haven't yet been defined but it's likely that there'll be credits for other metals that will be recovered.
At the mine's kick-off, 1 January 2010, some 400 employees will be mining 82,000 ton/day and milling 28,000 tons/day. With current plans the open pit operation will ultimately have a 1,000 foot depth over an 18 year mine life-based on the current feasibility study. The company believes that there's considerable upside potential on the reserve side.
People are a resource too. Professional staff will approximate 25% of total site employment. And, like all other sectors in the U.S. mining industry, recruitment is challenging. This is due to the loss of a generation when the entire industry was in a downturn for that period. But the company believes that it won't present a serious problem.
Waste and sustainability. Waste (tailings) from the mill will be dealt with, in part, using a U.S. EPA award-winning bio-solids process. The work started in early 2001 and employs solids from regional municipal water-treatment that are composted with wood chips and lime. It creates a superior high-altitude (area elevation is over 10,000 feet) growth media. And the writer saw the results-vegetation that elk and deer like-greenery rather than ugly, sterile rock fines and tainted water. Any water that does accumulate will be 7.0 pH (non-acidic, non-alkaline) and non-toxic.
During the visit one individual mentioned the molybdenum deposit about three miles from Crested Butte, Colo. Based on the writer's personal experience in designing and permitting a new mine a few miles to the south (near Paonia, Colo.), it'll be an uphill battle due to regional environmentalists' activism. Additionally, from a commercial perspective, Crested Butte has developed into a significant, high-profile ski resort over the years. The proposed Mt. Hope mine in Nevada will be a sizable new entrant if it commences operations on its target of late-2010.
*Climax's molybdenum products:
- Carbon-free briquettes
- Molybdenum oxide powder
- Ammonium Heptamolybdate
- Ammonium Octamolybdate
- Ammonium Dimolybdate
- Calcined Pure Molybdic Oxide
- Sublimed Pure Molybdic Oxide
- Sodium Molybdate
- Molybdenum Disulfide
- Ammonium Perrhenate
- Rhenium pellets