A recent decline in the price of copper — and worrisome projections about the metals market going forward — has led to the closure of one mine in Montana and concern throughout the industry.
Spokane Valley, Washington-based Revett Mining Co. this week announced it would suspend operations at the end of the month at Troy Mine, which mines copper and silver northwestern Montana.
Of the 80 employees current working at the mine, more than 70 will be laid off as the company shifts the mine into "care and maintenance" mode next month, which Revett CEO John Shanahan said would enable the mine to reopen should prices rebound.Revett had announced plans to increase hiring at Troy last year, but Shanahan said copper prices have since fallen to the point at which operating the mine became uneconomical.
Another mining company, Montana Resources, indicated its copper mine in Butte — which employs about 350 workers —would remain operational, with officials saying the company had already adjusted for an expected downturn in the price of copper.
Montana Resources, however, operates an open pit mine in Butte, which is considered cheaper than the underground mining utilized at Troy Mine. And although the jobs appear to be safe, company revenue and employee take-home pay could suffer due to the price drop.
Copper — which is critical to industries ranging from telecommunications to construction and manufacturing — fared the worst of all industrial metals on the market in 2014, falling 18 percent amid a lingering supply excess and declining demand expectations, particularly in China.
Then, earlier in the month, pessimistic economic projections from the World Bank and ongoing concerns about the impact of falling oil prices sparked a rash of selling in copper, sending the metal to its lowest price in more than three years.
The copper price later rebounded, but analysts attributed that to overselling in previous trading rather than an improved outlook for the commodity. Standard & Poor's and Goldman Sachs were among the groups revising their outlooks for copper downward this week.
Although a slew of potential pitfalls have hindered global economic expectations this year, forecasts of an economic slowdown in China have had the biggest impact on copper. China accounts for 45 percent of global copper demand, compared to just 8 percent for the U.S.
The Asian country, however, continues to pump out copper at a record pace, increasing output by more than 10 percent in December compared to the same month in 2013.