Molybdenum mine project wins Chinese investment

A major investment by a Chinese company puts a big mining project near Eureka back on track.

General Moly Inc. expects to begin construction of its Mount Hope molybdenum mine in early 2011, with production scheduled to begin 20 months later.

Construction employment is projected to average more than 700 workers, with peak employment near 1,000. General Moly has said the mine will employ 400 people when it's in operation.

The project had been on a slow track until General Moly reached agreement with Sichuan Hanlong Group about 10 days ago.

The Chinese company will make an $80 million equity investment in General Moly, taking a 25 percent stake in the company headquartered at Lakewood, Colo.

The company also will arrange for a $665 million loan from a Chinese bank, including $20 million to get Mount Hope jump-started.

And Sichuan Hanlong Group made a five-year commitment to buy all the molybdenum produced by the mine that isn't already promised to other buyers.

Molybdenum is used an alloy to produce stainless steel. Four international steelmakers POSCO, ArcelorMittal, SeAH Besteel and Sojitz Corp. previously signed on to purchase molybdenum from the northern Nevada project.

Bruce Hansen, chief executive officer of General Moly, called the deal with Sichuan Hanlong Group "a defining and transforming event" for his company.

He said the company now has all of the financing in place to complete the mine, which carries a price tag of slightly more than $1 billion.

The Mount Hope property 22 miles north of Eureka is believed to be one of the world's largest deposits of molybdenum. Geologists estimate the property's resource at 1.3 billion pounds of molybdenum, and the mine is expected to be in production for at least 40 years.

Hansen says he doesn't expect opposition from the U.S. government to the investment by a private Chinese company.

Late last year, the U.S. Committee on Foreign Investment in the United States recommended against approval of an investment in a Lovelock-area gold mine by a company controlled by authorities in China's Shaanxi Province.

The federal agency said the proximity of the Firstgold Corp. mining operation to facilities associated with the Naval Air Station at Fallon raised national security concerns.

The start of construction on the Mount Hope project awaits completion of federal environmental studies. That work is scheduled to be finished by early 2011.