In Canada, it would be unthinkable for a politician of any mainstream political party to submit a bill designed to place a moratorium on all mineral-related activities on lands governed by the federal government. Yet in the United States, such a bill was introduced last year by U.S. representative Dave Wu, a Democrat from Oregon. It sought to prohibit any agency of the federal government from “issuing any new authorizations for any mineral activities on federal lands.”
While the bill didn’t go anywhere — perhaps because, by definition, it would have prohibited all reclamation activities — the initiative nonetheless reflects a growing anti-mining sentiment that is making project development and permitting about as pleasant an experience as walking over coals.
This negative view of mining isn’t confined to a handful of green politicians, according to Sharon Prager of BHP Copper. At a conference sponsored by the National Mining Association (NMA), she warned that the American public is not particularly favourable or sympathetic to mining.
“For example, when President [Bill] Clinton designated 1.7 million acres of Utah wilderness a national monument, in effect permanently prohibiting recovery of US$1 trillion worth of low-sulphur coal, or stopped the New World mine near Yellowstone, there was virtually no public debate,” Prager said. “Rather, the nation’s general consensus indicated that the public believed Mr. Clinton had acted in an environmentally — and, more importantly, morally responsible — manner. Public approval polls indicated that the president judged the public’s sentiment correctly.”
Against this backdrop, the NMA and other industry associations are scrambling to find ways to deliver the message that mining’s decline is bad news for all Americans. But even as these efforts continue, more land is being withdrawn from exploration and more projects are being stalled or stopped by government agencies, or citizens’ initiatives.
In addition to New World (one of the first American projects to be expropriated and made a protected area), the list of stalled or derailed projects includes the Imperial gold project in California, the Crown Jewel gold project in Washington state, the McDonald gold project in Montana, and the Carlota copper project in central Arizona, to name only the more high-profile cases.
At the same time, vast land withdrawals have taken place. Early this year, Clinton used the 1906 Antiquities Act to set aside 1 million acres of land in three national monuments in Arizona, California and Nevada. It was the second time he used the Act; the first was in 1996, when he created the Grand Staircase-Escalante National Monument in southern Utah. In both cases, resource development is prohibited.
While Clinton’s actions were cheered in Washington and other parts of the country, many Utah residents were dismayed, because the withdrawal locked up, without public consultation, one of the largest clean-coal deposits in the world. In the process, 1,000 local jobs were lost and the public school system was denied an estimated US$2 billion in royalties.
The land withdrawals are merely beginning, according to industry associations. Bruce Babbitt, secretary of the Interior and an outspoken critic of the mining industry, has recommended that 5 million acres of national monuments and wilderness areas be set aside this year. If that weren’t enough, Clinton recently declared 60 million acres as “roadless areas” within the National Forest System, supplementing a previous initiative under the Clean Water Action Plan that called for the withdrawal of 5,000 miles of roads on federal land each year through 2002.
These controversial developments have alarmed rural communities dependent on resource development. They’ve prompted a group of mining executives to meet in Colorado Springs this past spring for a summit on the “regulatory crisis” in their industry, and they’ve spurred the U.S. House of Representatives Sub-committee on Energy and Mineral Resources to conduct hearings to review actions taking by the Department of Interior against the mining industry. They’ve also prompted several mining communities to take legal action against government agencies at both the state and federal level. Enough had become enough.
Imperial woes
While Bruce Babbitt’s preservationist views are no secret to American miners, even long-time industry veterans were shocked last year when agencies under his control denied
Glamis had been trying to permit its proposed gold mine for more than five years as a replacement for its depleted Picacho mine, some 8 miles distant. Local support was strong, as the mine was expected to bring millions to a regionally depressed economy.
However, the permitting effort came to an abrupt standstill when John Leshy, chief solicitor for the Department of Interior, concluded that the Bureau of Land Management (BLM) had “the discretionary authority” to deny the project because of its alleged impact on the historic, cultural or religious values of the Quechan Indians. Leshy is a former professor of environmental law at Arizona State University.
Although the Imperial project is not on tribal lands, Leshy concluded that because it lies in a much larger traditional and cultural area, a mine would introduce activities and intrusions “incompatible with the historic area.” The interpretation raised eyebrows even outside mining circles, because most economic activity in the region (as well as roads and infrastructure to support them) would also be “incompatible” with the “historic area.” Babbitt supported and signed the opinion, which effectively gave the BLM the power to veto any project on cultural or religious interests . . . notwithstanding America’s long-held belief in the separation of church and state.
In a move cheered by industry, Glamis filed suit against Babbit, the Department of the Interior and the BLM earlier this year. The company is seeking to declare the opinion unlawful and bar the government from applying it to the project. In the meantime, it has offered to work with the BLM and the tribe to reach a compromise, including a possible change to the mining plan.
“We commend Glamis for taking this step,” says Denise Jones, executive director of the California Mining Association (CMA). “The Leshy directive effectively overturns existing regulations and congressional mandates, threatening not only Glamis and other mining projects, but all development in the California Desert Conservation Area.”
Jones insists that the current permitting structure has served both the BLM and California effectively. Mining companies operate under the most stringent regulations anywhere in the world, and many have won awards for protecting endangered species and reclaiming spent mine sites. “Glamis Gold has a proven track record of successful mining, mitigation and reclamation in California,” she stated.
For its part, Glamis intends to make the case that Leshy’s opinion was not authorized by Congress and is contrary to long-standing practices of the BLM. Furthermore, the company says the opinion “disregards nearly twenty years of extensive land-use planning efforts in the southern California desert,” which had already restricted the use of large tracts of land. The company proceeded with its development plans only after its project area was made available for development.
Glamis is having no such problems permitting its new San Martin gold mine in Honduras. The company broke ground at the site early this year, and the project remains on schedule for mining to begin in the third quarter. At full production, it will churn out about 85,000 oz. gold annually at a cash cost of about US$150 per oz. Mining will be carried out using a fleet of refurbished equipment from the Picacho mine in California. Local communities are already benefiting from a new medical clinic and school, as well as new water wells.
Carlota waits
After seven years and more than US$50 million in expenditures,
While the proposed sale was prompted by the company’s recent financial problems related to a failed hedging program, permitting Carlota has been a costly and frustrating exercise. At one time, the project was stalled by lawsuits launched by four separate environmental groups (including the powerful Sierra Club and the Mineral Policy Centre) and two local organizations.
The suits were filed after the U.S. Forest Service issued a record of decision in favour of the project. Eventually, the project’s opponents combined their suits into one case, which alleged that the Forest Service violated provisions of the National Environmental Policy Act.
The court ruled in favour of the Forest Service last summer, and Cambior now has all the major permits necessary for construction of a mine. Unfortunately, it doesn’t have the cash. Even though permits are in order, selling the project may require persistence because of the project’s troubled history. Given the current climate for mine permitting in the western states, resistance to development could flare up again, even under a new owner.
Crown Jewel
Partners
Over those years, the partners have had their hopes of opening a mine dashed, revived and dashed again so many times that uncertainty now seems the normal state of affairs.
More than a year ago, the Departments of the Interior and Agriculture overturned a decision allowing the project to move forward on a technicality concerning the number of mill site claims relative to lode claims. The ruling was both unexpected and unprecedented, and was based on an overly strict interpretation of the 1872 Mining Law that restricted 5-acre mill site claims to one for every lode claim developed.
The outcry from the mining industry was immediate and vocal. Appeals were made to local politicians and to the U.S. Congress, which used its considerable weight to overturn the bizarre technicality that had sidelined Crown Jewel. Operator and 54%-owner Battle Mountain then resumed plans to develop an open-pit mine capable of producing 185,000 oz. gold annually at a cash cost of US$160 per oz.
Then, early this year, a pollution control board in Washington state revoked water rights and the water quality permit for Crown Jewel. The permit had been issued in early 1999, only to be opposed by local environmental groups.
Battle Mountain and Crown have since appealed the court ruling. At last report, they were considering underground mining as an alternative to open-pit methods. This plan would decrease the overall life of the mine to six years from eight. No hoisting would be necessary because the flat-lying deposit could be mined via an adit.
While the milling rate would decrease to 1,850 tons per day (from 3,000 tons), cash operating costs would fall to US$134 per oz. Reserves would drop by 15% under a new mining plan.
The permitting delays have hurt the companies in other ways, including a weakening of Crown’s share price. Gold prices have slumped over the 8-year permitting fiasco, making financing a more difficult task than it would have been years earlier.
McDonald ‘taking’
Unfortunately for Canyon, a citizen’s group launched a ballot initiative several years ago that sought to ban the use of cyanide at any new operations in the state. Initiative I-137 passed in November 1998, with 53% of the vote.
The mining industry has since argued that it might not have passed at all, had it not been for a previous initiative, I-125, which prohibited for-profit companies from participating in the election process. As a result, Canyon and other companies were not allowed to campaign against I-137.
Eventually, I-125 was declared unconstitutional, but only six days before the passing of I-137. By this point, the public had already been fed a steady diet of misinformation about cyanide, which the industry was unable to overcome before the election.
This spring, Canyon filed a “takings” lawsuit against the state of Montana. It is seeking damages to compensate for the value of the deposit, which has been estimated at US$500 million.
Canyon claims that Initiative I-137 violated its constitutional rights not to be deprived of property without due process, the right to equal protection of the laws, the right to be protected against laws that impair existing contracts, and the right to be protected against laws that impose retroactive liability with respect to existing transactions.
The suit also asserts that the state breached its contractual obligations and covenants of good faith and fair dealing. Canyon and a previous partner spent US$70 million advancing the project, and, since 1986, the state has granted six leases for the project. In 1994, it amended those agreements with the understanding that the deposit would be developed by open-pit, heap-leach methods.
Fighting back
When mining industry representatives headed to Washington, D.C., last summer to testify before the U.S. House Resources Sub-committee on Energy and Mineral Resources, they had plenty of ammunition to show that Babbitt and his officials were waging a war of attrition on mining.
Three controversial issues were the main focus of the hearing, which was chaired by Representative Barbara Cubin of Wyoming. They included two legal opinions by the solicitor of the Department of Interior, including the mill site opinion, and proposals for a federal royalty on public lands.
Mining companies provided their views, as did Gerald Shaheen, group president of Caterpillar. “If allowed to stand,” he says, “the Interior Department’s ruling[s] will render the Mining Law virtually meaningless and shut down all hardrock mining operations and projects, representing thousands of jobs and billions of dollars of investment throughout the west.” He also reminded Congress that the mining industry encompasses more than jobs or miners out west. “It’s machinists, steel workers, tool makers, rubber workers, and assemblers from all parts of the country.”
After listening to various submissions, Representative Cubin expressed the view that the recent decisions by the Department of the Interior — “in which the public had no opportunity to comment, of course” — indicated that Babbitt was frustrated by Congress’s unwillingness to cede its authority over public land policy-making. She went on to observe: “So, rather than negotiate with Congress, the Administration is ‘making law’ by handing down novel interpretations of statues, which have been around for centuries in one case, and decades in the other. In fact, Secretary Babbitt recently said to the National Journal, ‘We’ve switched the rules of the game. We’re not trying to do anything legislatively.'”
While the sub-committee’s finding confirmed the experience of the mining industry, and eventually led to an amendment that prevented the Leshy mill site opinion from being applied to the Crown Jewel project, there was no sign that the Department of the Interior was chastened enough to reduce its anti-mining efforts. Indeed, in the fall of that year, Babbitt was widely quoted as saying: “I am not prepared to sit back and let this Congress do what it has done for the last seven years on these areas, which is virtually nothing. . . . If Congress does not act and produce an acceptable bill protecting these lands, I will consider asking the president to use his power.”
Babbitt has done exactly that. Indeed, the spate of conservation proposals was recently described by Associated Press as “falling like rain from the White House as President Clinton tries to create an environmental legacy. . . . Authorities inside and outside government cannot remember when there has been so much activity.”
With the battle lines drawn, the Northwest Mining Association repeatedly urged its members to do everything possible to make their concerns known to both politicians and the public. “It is now clear that the intent of Secretary Babbitt and Solicitor Leshy is nothing less than the total cessation of new mineral development on federal lands,” the NMWA warned its members. “They are using every means at their disposal — legal or not.”
On the land withdrawal front, the NWMA has warned its members that attempts are being made to create more than 40 million additional acres of wilderness where resource development will not be allowed. The largest withdrawal attempt is being launched by the Friends of Nevada Wilderness, who are seeking to remove 14.75 million acres, several times more than in most other states.
“These withdrawals and potential withdrawals would be in addition to the more than 61% of all public lands that has already been withdrawn or severely restricted from mineral entry because of wilderness designations, national monuments, national parks, wilderness study areas, areas of critical environmental concern, wild and scenic rivers and the like,” the association warned. “If the Clinton administration and their environmental supporters have their way, the public lands in the west will be turned into museum-like dioramas where human activities are prohibited. Meanwhile, natural-resource-dependent rural communities are enduring economic hardships and manufacturing and wealth-creating industries are being driven overseas. The economic impact on future generations and national security implications is sobering. Sadly, a similar scenario is being played out in Canada.”
The NWMA is also urging its members to contact their elected officials and express concerns about de facto wilderness creation, “which improperly excludes the public and their representatives from the process.”
In addition to the NWMA’s effort, the National Mining Association is participating in outreach program and communication programs between industry and the public. The powerful association is also continuing efforts to educate politicians about the Clinton administration’s “assault on mining.”
The message appears to be sinking in, particularly in the west, where local communities are beginning to speak out against directives from Washington that affect their livelihoods. In a recent letter to Babbitt, two prominent Republican politicians accused the Clinton administration of having “launched an orchestrated campaign to preclude mining on vast acreages of public lands governed by multiple-use laws, without consulting Congress and without soliciting public input or independent scientific review.”
The NMA hasn’t minced words about the Clinton administration’s actions either. “As the clock winds down on this administration, we can only expect to see an increase in such actions,” the association warned in the latest issue of Mining Voice. “As an industry, we must, and will, use all available means to combat such actions. As citizens, we must also exercise our constitutional rights through the ballot box. For our economy and our industry, it is vital to keep mining jobs in America.”
With an election looming in the fall, the industry is making no secret of that it distrusts presidential candidate Al Gore, the current vice-president. Gore is an avowed environmentalist who once questioned the necessity of the internal combustion engine and who is believed to be spearheading many of the wilderness initiatives in the western states.
“Gore scares the hell out of me,” says one industry executive who prefers to remain anonymous. “If you thought Clinton was bad for mining, Gore is going to be a thousand times worse.”
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