First it was 10 years, then 5, now 3. When will Henderson Mine close?
by Allen Best
IDAHO SPRINGS, Colo. – Last April, representatives of Freeport-McMoran stood on the auditorium stage at Clear Creek County High School and warned local residents to get ready. The Henderson Mine, operating since 1976 and providing 70 percent of the local property tax assessments, would be shutting down in approximately 10 years.
“Count on it,” said Bryce Romig, a long-time mine manager for the company in Colorado. “Get ready.”
At the time, the shut-down warning was precipitated by the diminishing of the ore body. But later last year, Freeport announced that the mine would actually close within five years, and jettisoned several hundred employees.
Then, in late fall, the company said to expect a closing in three years, even before the ore body was exhausted.
“And now I am hearing months instead of years,” says Keith Montag, the county manager.
In response to questions from MTN, Freeport issued this statement:
“Because development of new areas in the Henderson underground mine has recently been suspended, the amount of ore available to mine at the new production rate will be depleted in approximately five years. The mine life at Henderson can be extended beyond the remaining five years with further mine development, which would be dependent on a recovery in the molybdenum market. The timing of initiating a mine development schedule to enable a continuation of Henderson mine operations without interruption is under evaluation.”
Climax Mine continues to operate at normal rates, with a labor force of 390 and room to add 20 more employees, or a total of 410.
Henderson still employs 350 people. Of them, 230 work at the mine in Clear Creek County, while another 120 work at the mill in Grand County. Ore from the mine is transported under the Continental Divide to the processing mill, which was located there, in the Williams Fork Valley south of Parshall, because there is more room available for the mine tailings. Many of the mill workers live 35 miles away in Kremmling or other towns along the Colorado River, while a majority of the Henderson miners commute to and from metropolitan Denver, with some living in Georgetown and Idaho Springs.
In Clear Creek County, local officials speculate that even if the molybdenum market does not justify continued mining, the company will take its time in wrapping up operations. The company has a $50 million bond posted with the state for reclamation work, says Montag, and more slowly milling already mined ore will allow it to delay triggering that reclamation.
Freeport-McMoran says it has total financial assurance of $116 million posted for its two Colorado mines, Climax and Henderson.
Or perhaps this has to do with Freeport’s intention of operating its two Colorado mines “in a flexible manner to meet market requirements,” as the company said in its statement.
What remains clear enough is that when Henderson finally closes, there will be major consequences to local jurisdictions.
Filling in the property chasm
Property tax assessments on Henderson account for 70 percent of the assessed valuation of Clear Creek County and 20 percent of Grand County.
In Georgetown, county seat of Clear Creek, officials assume continued economic growth. But that growth will be more than offset by the loss of Henderson. The net will be a 40 percent reduction in the county’s general funds, says Montag. That means $8 million must be cut within the next five years.
Clear Creek County has begun itemizing what are generically called services. Some services are required by state government, such as operation of the jail. Others are discretionary but essential in the eyes of elected officials: road maintenance is an example. And then there are the discretionary services, which Montag is hesitant about identifying.
But at some point, the payroll will have to be reduced, simply because the county’s 240 employees, with their wages and benefits, are responsible for 80 percent of the general fund budget. The county will seek to downsize its staff through attrition and early retirement, but some layoffs may be necessary, says Montag.
At the same time, Clear Creek County has worked with the state’s Department of Local Affairs and the state’s Office of Economic Development, to strategize how to boost economic development.
Grand County’s reaction
About 85 percent of the property tax assessment of Henderson lies in Clear Creek. But Grand County still figures to take a $2 million hit to its property tax collections when Henderson’s mining and milling operations finally end. The money goes to everything from hospital, water, and fire districts to the town of Kremmling and the school district.
Tom Weydert, the Grand County assessor, says that the discussion has shifted from reduced production because of a lower price for molybdenum to now one of eventual closing. But Grand County, he says, doesn’t yet know when that will happen. “Will it have an impact? Yes, but how much, we don’t know yet.”
Grand County has received a federal economic adjustment grant, which would allow it to hire a consultant, with the goal creating a five-part action plan.
DiAnn Butler, economic development director, says a useful predecessor in this effort comes from Gunnison County, where the Oxbow Mining Co. closed its coal mine near Somerset. The practical impacts, however, are in Delta County, a few miles away.
The financial cost to West Grand schools in Kremmling will be buffered somewhat, says school superintendent Mike Page. “It will affect our tax base, but it won’t affect our funding at all,” he says. “What will affect our funding is a loss of students.”
Colorado’s equalization of funding is intended to ensure that a child in a poor district has at least some of the same advantages as that of a child in a wealthy district. But state funding levels are determined by how many students a district has.
As such, if Henderson Mill workers leave town eventually, West Grand’s enrollment will suffer. But will they figure out other ways to make a living?
“To me it’s too early for us to know,” says Page. “Long term, we know it will affect us. How much, we don’t know.”
Non-resort rural areas
Long term, West Grand’s story hews to the story line for most of the small school districts located in non-resort areas of rural Colorado. They continue to lose enrollment. Kremmling, although located equidistant between Winter Park, Breckenridge, Vail, and Steamboat Springs, doesn’t look all that much different than it did in the late 1970s. It has had logging operations come and go, ranching continue its slow decline, and since the 1990s even some movie stars fly in and out of the local airport as a result of low-profile, high-end homes in the Gore Range to the west.
However, West Grand schools now have about 430 students, down from 500 a few years ago. But the falloff hasn’t been nearly as precipitous as school districts to the west, at Oak Creek and Hayden, both of them dependent on nearby coal mines. Once comparable to Kremmling, they have enrollments that have fallen to between 320 and 370.