Freeport-McMoRan, owner-operators of Henderson Mine and Mill, have announced renewed mine development, extending the anticipated mine life from 2020 to 2026. The additional mine production will provide some temporary relief to Grand and Clear Creek Counties, which have been faced with reduced revenues due to mining reductions in 2015 and 2016 and in response to a looming mine closure.
Henderson Mine has been in operation since 1976 and is the “world’s largest primary producer of molybdenum,” a necessary component in steel production. The molybdenum is then transported, via a 15-mile conveyor belt system to the Mill, south of Parshall in Grand County. But in response to a deterioration in the molybdenum market, annual production rates were cut in late 2015 and early 2016 from 27 million pounds to 10 million pounds a year, already down from 40 million pounds in 2007. In 2016, Henderson suspended development of new mining areas, reduced its workforce, and announced an imminent end to all activities.
The notice resulted in serious concerns for the counties, which each receive large property tax revenues from the Mine-Mill, helping to support the local governments and numerous special tax districts. Commissioners in both counties responded by tightening annual and projected budgets. In Grand County, it created a shift from a long-time philosophy of not accruing any County debt, to exploring equipment lease agreements, capital bonds, etc. to meet County needs.
Last week, however, Freeport-McMoRan announced that, since the curtailment was implemented, the price of molybdenum oxide has increased from $5.00 to $8.30 per pound. Additionally, improvements in the mine plan and increased productivity by employees have prompted steps to resume and expand new mine development in a block section of the mine known as 7210 A Panel, keeping production rates at the currently reduced 10 million pounds per year.
Eric Kinneberg, Director of External Communications, says that “mine development activities will be performed by a mining contractor who has been hired and is expected to begin work in September with a workforce of approximately 35 people. Henderson is excited about this development and pleased with the positive outcomes it will have on our employees, the communities where we live and work, and county governments who so diligently work for this region.”
In 2006, a Colorado state summary of annual mining estimated Henderson’s remaining recoverable molybdenum reserves to be 500 million pounds. But in response to whether or not further expansion could occur, Freeport-McMoRan issued a statement saying, “Looking into the future, in order to mine all of Henderson’s ore reserves, additional panels would need to be developed, which would extend the life of the mine to 2040 at the current production rate. Decisions whether to make the investment in mine development at Henderson will be made at a later time and would be dependent on market conditions and production factors at the time.”