Revett Mining Co. will shutter its Troy underground mine over the next few weeks, reducing its workforce from 85 to eight or fewer.
Falling prices for copper and silver forced the shutdown, according to company president John Shanahan.
The mine had resumed milling operations in November after a two-year suspension due to cave-ins. It has about 40,000 tons of ore to process before it can go on care-and-maintenance status.
“We need to see a higher metals price environment for a sustained period of time,” Shanahan said from Revett’s corporate office in Spokane. “The last thing you can do is reopen an operation like Troy and three months later say whoops, and close again.”
The mine needs prices of better than $20 an ounce for silver and $3 a pound for copper to be economical, Shanahan said. Silver was trading for about $18 an ounce Tuesday, while copper was selling for $2.57 a pound.
Reductions in the Chinese economy and the falling price of oil were some of the factors driving down prices, Shanahan said.
China’s 2014 growth was 7 percent, compared with previous highs of around 10 percent. That affects the worldwide market for raw materials, especially copper. The oil price drop from more than $100 a barrel to less than $50 was a more indirect effect.
“It seems the baby gets thrown out with the bath water,” Shanahan said. “With all prices coming under pressure, it puts macroeconomic pressure on copper to fall in price.”
The Troy Mine produced 159,121 pounds of copper and 27,053 ounces of silver since last November. It has an estimated 12 years worth of ore to mine. But Shanahan described it as a “marginal” deposit with a profitability level that made it sensitive to low prices.
Revett is also trying to land permits to mine a deposit at Rock Creek near the Cabinet Mountains Wilderness. That deposit has considerably higher grade minerals. Its supplemental environmental impact statement should be available by mid-2015.
“If we were in a different development phase at Rock Creek, we’d look differently at Troy,” Shanahan said. "We’ve always looked at Troy as an operation that’s there for us – a bridge to Rock Creek.”
In particular, that means a way to keep Revett’s crew of experienced miners together so they could be deployed at Rock Creek – assuming it is allowed to open in early 2016. Rock Creek’s office only has occasional administrative staff and no production workers yet.
Kootenai Job Service manager Johnette Watkins said Revett employed about 200 people before its shutdown in 2012. Many of those workers left the area for other mining jobs or the Bakken oil and gas fields of eastern Montana and North Dakota.
The Troy Mine will only need six to eight workers to keep its tunnels and equipment in shutdown status.
“We were counting on them to get back in full production this quarter,” Watkins said. "In south Lincoln County, they were one of our main family-supporting employers.”
Most of the Job Service’s programs are dedicated to retraining or on-the-job training, with only limited resources for relocation or out-of-area job searches, Watkins said.
“We’ve been working with the human resources people at the mines to schedule some workshops and share options with the workers,” Watkins said. “This is going to be a big blow to the community.”