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-Caveat Lector- U.S. mining towns enjoy a boom, thanks to China
Rising prices have firms hiring, reopening old facilities.
By Don Lee Los Angeles Times Sun, Apr. 25, 2004
MORENCI, Ariz. - The last time Roxanne Musser saw road work here was
back in the mid-1990s, when the company that owns this copper mining
town paved one dusty street after another, only to stop abruptly
when the metal's price tumbled.
So the homemaker knew exactly what it meant when construction crews
appeared a few weeks ago on her corner and painted road signs and
repaired the street.
"You could see that copper was back up," says Musser, 34, whose
family has been connected to mining here for four generations. Her
husband now works for town owner and employer Phelps Dodge
Corp. "You know when copper's good."
Thanks to a near doubling of copper prices in the last year, largely
because of booming demand from China, Morenci and other communities
across the West are undergoing a modern-day mining boom. Companies
that dig copper, silver and other minerals are boosting production,
hiring workers, and reopening decades-old facilities. Some are even
proposing new mines, something that the long-ailing American copper
industry has not seen for a generation.
The revival of mining - gold in Nevada, silver in Idaho, copper in
Arizona, New Mexico and Montana - is generating more high-paying
jobs, spurring consumer spending, and providing a shot in the arm to
struggling rural economies. Like farming in the Midwest and textiles
in the Southeast, mining in the West had been in decline for
decades, the result of global competition and depressed prices. New
technologies also have eliminated thousands of jobs.
The fact that the mining upturn owes its success largely to China
illustrates an upside to globalization and increased trade with the
Asian nation. China's seemingly insatiable demand for metals for its
expanding industrial base could help support American mining
activity for years.
Although nobody is expecting a return to the industry's heyday in
the 1950s, people in mining are feeling more secure and hopeful than
most can remember.
In Idaho's Silver Valley, communities with names such as
Smelterville and Silverton have been grappling with double-digit
unemployment for 20 years. But with silver prices up by more than 50
percent since June, Coeur Silver Valley Inc. says it is profitable
again and is exploring for ore in northern Idaho. Its 165 workers
got a bonus this year tied to silver prices. Another company nearby,
Hecla Mining Co., is investing $8 million at its mile-deep Lucky
Friday mine, with the goal of doubling its output and expanding jobs.
In Safford, Ariz., residents appear almost giddy about the prospect
of Phelps Dodge digging two new open-pit copper mines along the
foothills of the Gila Mountains. The project has been batted around
for years, but the latest surge in copper prices and the company's
stepped-up efforts - Phelps Dodge engineers recently occupied empty
storefronts in Safford - have heightened anticipation of hundreds of
new jobs and millions of dollars pouring into the local economy.
Safford's outgoing mayor, Van Talley, like others around here,
checks the price of copper every day. About a third of the 2,050
miners at Morenci, home to the nation's largest copper operation,
live in Safford; many others shop in this town of 9,400. Car dealers
and other merchants say business is hopping again.
Not long ago, "you could have shot a gun on Main Street and not hit
a soul," Talley said. Now, "it's coming back."
Just how long this excitement lasts is anybody's guess. Copper booms
are notoriously cyclical, with relatively short periods of upswings
followed by long downturns. That's because it takes a while for
mining companies to ramp up production when times are good, and
often they are unable to adjust quickly when demand slumps, leading
to a supply glut that drives down prices.
Copper was strong for about three years through mid-1997 amid lean
inventories, then languished for the next six years. But since last
spring, copper prices have soared to new highs, in recent weeks
hovering around $1.35 a pound in global markets.
While the strengthening U.S. manufacturing sector has helped, a key
factor behind the run-up is China's huge appetite for raw materials.
China needs copper to supply its car and electronics factories, as
well as for all the houses, dams and telecommunications systems that
the country is building. U.S. producers of other commodities,
including cotton and scrap metal, also are benefiting from China's
hearty consumption.
Globalization is not new for the mining industry, where demand,
supplies and capital have been shifting around the world for more
than a century. George Leaming, a Tucson-area consultant who has
tracked mining for four decades, remembers when U.S. copper
companies fell on hard times in the early 1980s and how Japanese
investors, taking a long-term view, poured much-needed capital into
some mining facilities in the West. Today, he says: "It's China
that's coming rapidly into the Industrial Age, and they're a major
consumer."
None of this is lost in the copper belt in southeastern Arizona,
particularly at the Morenci mines, 85 percent owned by Phelps Dodge
and 15 percent by Tokyo-based Sumitomo Corp. Workers here are
acutely aware that even as competition from Chile's high-grade
copper mines pose a threat down the road, China's purchases now are
helping put bonus checks in their pockets, supplementing their
salaries, which average about $40,000 a year.
Almost everyone can tell a visitor the latest copper prices, which
affect just about everything here: employee bonuses, where and how
deep to dig, even whether the company holds its summer picnic or
offers public tours of the facilities. The tours went away in 2001,
when copper fell below 70 cents a pound, along with about 100 jobs
at the plant.
Sixty-five cents is the danger zone. That's how much it costs Phelps
Dodge to make a pound of copper in Morenci. Hunter White, president
of the Morenci operation, says the goal is 60 cents. To get there,
he is looking at everything: Can the 270-ton haul trucks squeeze a
few more tons on their loads? Can they go a couple of miles an hour
faster?
When copper hit $1 a pound in December, workers were thrilled.
Lazaro Palomarez, 61, an equipment operator who makes $16.83 an
hour, went out and traded in his 10-year-old truck for a $27,000 red
Chevy Silverado. "It should stay up for a while," he says of copper
prices. "They said the market is good. China and Korea are buying a
lot of copper... . We got the product they
want."
Please let us stay on topic and be civil.-Home Page- www.cia-drugs.org
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