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of sludge management requirements to preserve the operational capacity for water treatment in the ponds, Climax will construct new facilities to manage precipitates (sludge) from the water treatment system and to improve the quality of water discharged from the facility. An Amendment to Exhibit G, Water Information, is included with this document. Mining Plan Amendment The Climax Mine is one of the largest known deposits of molybdenum in the world. The molybdenum market is dominated by two primary application areas: metallurgical applications and chemical applications. Chemical applications typically result in more highly refined molybdenum products than metallurgical applications, and thereby benefit from using molybdenum concentrate that contains low levels of impurities. Chemical applications were a small but growing portion of the overall molybdenum market when the reclamation permit for the Climax Mine was originally issued in 1977 and amended in 1989? They now constitute a substantial portion of the molybdenum market. When the reclamation permit for the Climax Mine was originally issued in 1977, production at the mine was approximately 50,000 tons per day from both underground and open pit operations. Reserve and mine life estimates were premised on maintaining the production rates of the time. It was assumed that there would be uninterrupted production and strong molybdenum demand for the life of the mine. The vast amount of molybdenum produced from the Climax Mine during this period was used for metallurgical applications. In approximately 1982, the molybdenum market crashed. The Climax Mine ceased production activities in 1987. However, it maintained its ability to operate as a swing producer in the metallurgical applications dominated market that existed at the time. In 1989, the reclamation permit for the Climax Mine was amended to provide for the Climax Mine's intended role as swing producer in that market. During and subsequent to this period of time, primary mol~rbdenum mines experienced a continuing deterioration of sales for metallurgical applications. During the peak molybdenum market in the late 1970's and early 1980's, copper mines that also contained molybdenum deposits invested in milling circuits that enabled them to process molybdenum concentrate. Because the molybdenum concentrate produced from these mines was a byproduct of the primary metal that was being mined (i.e., copper), these "byproduct mines" incurred lower costs in mining molybdenum than were incurred by "primary mines" which contained only molybdenum ore deposits. However, molybdenum concentrate produced from byproduct mines contained greater impurities than concentrate produced from primary mines. This led producers of chemical applications to pay a premium for molybdenum concentrate produced from primary mines. As an overall trend, molybdenum concentrate produced from byproduct mines was generally purchased for use in metallurgical applications, and molybdenum concentrate produced from primary mines was generally purchased for use in chemical applications. However, the overall price of molybdenum concentrate was depressed due to the entry of byproduct mines into the molybdenum market. CMC, which is the owner of the Climax and Henderson Mines, both primary mines, has adapted its business plan to these market developments. CMC primarily focuses its investments and operations at the Climax and Henderson Mines based upon anticipated demand for use of s A relatively minor Amendment of the permit occurred in 1980 for the primary purpose of amending the permit to enable the consWction of a road to the top of BaNett Mountain. a "Primary mines" are molybdenum mines that only produce molybdenum concentrate. 'Byproduct mines" are mines that produce molybdenum concentrate as a byproduct that results from the mining of a different metal, usually copper.