As Copper Demand Declined, Hope Dimmed at Troy Mine

Revett Mining Company announced it would close Lincoln County's last operating mine, cutting more than 70 jobs

By Justin Franz
A worker adjusts his final cleaners in the flotation room at the Troy Mine in Lincoln County. Beacon File Photo

A few decades ago, hundreds of people were employed in the mining industry in Lincoln County. Every day, men and woman would harness the power of massive industrial machines to harvest the earth’s bounty, be it copper, silver or vermiculite.

The industry supported entire communities and became ingrained in the area’s proud heritage, with roots almost as deep at the timber trade.

Next month, when the last operating mine closes, there will be fewer than a dozen people who make their living beneath the earth’s surface.

On Jan. 19, the Revett Mining Company announced it would shut down the Troy Mine, which leaves more than 70 people without jobs in an area already suffering from some of the highest unemployment in the state.

“It is a very serious economic blow to an area that is already severely economically depressed,” said Lincoln County Commissioner Greg Larson, who represents the Troy area.

While the decision to close the mine was made in Revett’s Spokane Valley, Washington offices, the forces that set that decision into motion began on the other side of the world. Revett CEO John Shanahan said that declining copper demand and prices meant the company could not economically operate the mine. The mine will continue to produce copper and silver until the end of January. In February workers will put the mine, opened in 1981 and reopened by Revett in 2005, into “care and maintenance” mode. After that a half-dozen workers will stay on the payroll to maintain the mine and the processor.

“This was a truly difficult decision because we have such a great and talented workforce,” Shanahan said. “We were confident we would see copper prices continue to rise, but the exact opposite happened.”

Revett had been working for more than two years to resume production at the mine after a series of underground rock falls closed it in late 2012. In September 2014, after new subterranean tunnels were completed, miners went back to work harvesting ore and the company hoped to resume full production by the middle of this year.

But soon copper prices began to slide to five-year lows, and on Jan. 21 the material was worth $2.55 a pound. Shanahan said the steep price drop was the breaking point.

“We could keep our heads above water at $3 a pound (but not $2.55),” Shanahan said.

Other mining officials and industry analysts said that the recent economic slowdown in China has contributed to the waning demand for copper. Last week, the Chinese government announced that its economy grew by 7.4 percent in 2014, its slowest growth rate since 1990.

Some economists have raised concerns that China’s real estate market, which has boomed in recent years, could bust, sending demand for raw materials like copper plummeting even further.

“When you take a major player like China out of the market, you’re going to see prices drop,” said Glenn Dobbs, president and CEO of Mines Management, the Spokane-based company that is trying to open the Montanore Mine south of Libby.

Earnings reports from Revett show that the company depleted most of its reserves during the two years it was trying to reopen the mine after the rock slides. At the end of the 2012, the company had $28.3 million on hand; 12 months later it had $12.1 million. According to an earnings report, the company had $7.2 million in September 2014.

The company’s stock value also suffered during the two years it was not producing copper and silver. In 2012, the company’s stock was worth more than $3, but it had decreased to about 80 cents at the end of 2014. News that the company was shutting down its only developed mine sent the stock price even lower, and on Jan. 22 the company was worth 45 cents a share.

Other mining companies are also hurting. On Dec. 29, 2014, an Arizona copper mine announced it was shutting down and laying off more than 350 employees. And on the same day Revett announced it was closing its mine, Tasecko Mines Ltd. in British Columbia announced it would lay off 45 workers.

Graham Davis, a mineral economics professor at the Colorado School of Mines, said it is normal for companies to shutter mines when prices dive.

“You’ve got a fixed amount of copper underground and so mine owners have to ask themselves when is the best time to bring this copper to the surface, because it is not going anywhere,” Davis said. “You want to harvest the material when it is most valuable.

“The people who work in this industry and the communities that depend on it need to understand that this is a very cyclical industry.”

Shanahan said he believes the Troy Mine will reopen – the timing depends on demand and prices.

Until the mine reopens, Shanahan said Revett would focus on getting the proper permits to open and develop the Rock Creek Mine in nearby Sanders County. A supplemental environmental impact statement is due some time this year and at that point the project would be open for public comment. Shanahan said the U.S. Forest Service could issue a record of decision in 2016.

Shanahan said since the Rock Creek Mine is considerably larger than Troy and has higher quality ore body, it’s better positioned to withstand fluctuating prices.

Dobbs said the drop in copper prices would not impact Mines Managements plans to complete the permitting of the Montanore Mine. The company has worked on the project since 2005 and, if approved, it could produce 7 million ounces of silver and 60 million pounds of copper annually.

“You can’t see the price of copper go up and then suddenly decide that you’re going to open up a mine,” Dobbs said. “It’s a long process to open up a mine and you develop it when you can. If the price of copper is up when you start production, well then that’s a bonus.”

Dobbs said Mines Management officials have been told that the Forest Service’s final environmental impact statement for the Montanore Mine will be published in a few weeks. After that the project will be open for public comment before a record of decision will be issued. The mine would take four to five years to develop and would potentially employ more than 350 people.

Future job openings, however, does little to help Lincoln County’s economy today. In November, the county’s 10.6 percent unemployment rate was one of the highest in the state.

“(The closing of the Troy Mine) is going to have a huge impact on the entire community,” said Troy Mayor Darren Coldwell. “Revett is a great supporter and steward of this community. They tried and tried and tried to get the mine back up but I guess you can only do so much.”