Freeport-McMoran Copper & Gold Inc said on Tuesday it plans to reopen its Climax molybdenum mine in Colorado, which has been closed for 12 years.

The initial $500 million project involves restarting open pit mining and construction of new milling facilities, with annual production of about 30 million pounds of molybdenum at an estimated cash cost of $3.50 per pound beginning in 2010, the Phoenix, Arizona-based mining company said.

Freeport said it will evaluate the second phase of the Climax project, which could potentially double future annual molybdenum production to about 60 million pounds. The metal, known as moly, often occurs near copper deposits and is used mostly in stainless steel production.

Major construction at the mine near Leadville, Colorado, is expected to begin in the spring of 2008, Freeport said. The Climax mine, which last operated in 1995, is believed to be the world's largest, highest grade and lowest cost undeveloped molybdenum deposit.

Using a long-term molybdenum price of $6.50 per pound, reserves are estimated at half a billion pounds of recoverable molybdenum.