Overview
In a move prompted by the global COVID-19 crisis, Freeport-McMoRan Inc. (NYSE: FCX) announced on April 24, 2020, that it will cut production at its Climax Mine—located atop Fremont Pass near Leadville—by roughly 50 percent for the remainder of the year. The decision follows the release of the company’s first-quarter financial results and reflects the pandemic’s severe drag on worldwide markets.
Impact on Mine Workers
Inside sources tell Leadville Today that Climax employees are shifting to a 7-days-on, 7-days-off schedule, effectively slashing their paid hours in half. As of December 2019, Freeport-McMoRan employed 440 workers at Climax, with the mine’s revised life expectancy stretching to 2038. The company’s updated plan also calls for cuts to operating and support costs, reduced capital expenditures, and a two-crew rotation at the mill.
Company Statement
“Due to current market conditions, we intend to scale back molybdenum output by approximately 50 percent through 2020,” Freeport-McMoRan said in its press release. “In addition to production cuts, we are lowering operating, administrative, and support expenses, and we will implement a two-crew mill schedule.”
Earlier in April, Freeport-McMoRan similarly paused operations at its Chino copper mine in New Mexico after a handful of COVID-19 cases among staff. Although the company noted that its health protocols have successfully prevented a larger outbreak, it pledged to keep evaluating and adjusting its response as the pandemic evolves.
Investor Outlook
CEO Richard C. Adkerson sought to reassure shareholders:
“Our team has deep experience navigating volatile markets. We will weather this downturn and emerge stronger—just as we have in past economic slumps. Ongoing projects in copper and gold at Grasberg, plus other initiatives across the Americas, are positioned to boost cash flow in 2021 and beyond.”
Local Economic Ripples
Beyond jobs and production, Climax’s scaled-back operations are poised to shrink Lake County’s property-tax revenue. As one of the county’s largest taxpayers, the mine’s lower output—which often correlates with lower assessed property value—could force residents and businesses to shoulder higher tax rates to balance local budgets already strained by recent reassessments.
Broader Market Perspective
Market analysts, including those at Seeking Alpha, warn that the broader economic rebound may be fragile. “The rapid rally has been driven by stimulus and hopes for a quick reopening,” notes Vladimir Zernov. “But gradual, cautious reopenings—and potential virus resurgence this autumn—mean continued economic challenges lie ahead.”
As Leadville and Lake County brace for tightened budgets and reduced mining activity, the community faces tough choices. For now, the Climax Mine’s production cut stands as the latest example of COVID-19’s far-reaching impact on both global markets and local livelihoods.
