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MiningWeek Online
March 5, 2004 Volume 10, Issue 9
This Week's Issue:
Declining domestic minerals exploration, production has security, economic implications, witnesses say
The outsourcing of U.S. energy and minerals jobs and the strategic and economic implications of declining domestic minerals exploration and production were focused on by the House Resources Subcommittee on Energy and Minerals this week.
“Americans are concerned about jobs, yet some of the best jobs we have in this country are being driven from our shores by special interest groups who oppose economic development here at home,” said House Resources Committee Chairman Richard W. Pombo (R-CA). “In many cases, these jobs are the mainstays of rural economies.”
Subcommittee Chair Barbara Cubin (R-WY) noted that extractive industries, including mining, “provide thousands of good paying jobs to the people of Wyoming and America. We already depend on foreign sources for too much of our energy and minerals, and depending on foreign workers will only compound the problem. We need to not just protect the jobs we already have, we need to create more of them.”
Milton R. Copulos, president of the National Defense Council Foundation, told the subcommittee the goal of “assured, adequate, secure supplies of (energy and strategic minerals) is best met through domestic sources of supply. In some cases, of course, we must relay on overseas sources for key commodities because they either are not present in the domestic resource base, or not present in sufficient volumes to meet our needs. Where this circumstance exists, there is a straightforward answer: create stockpiles against the prospect that overseas supplies could be disrupted.”
A much more troubling problem, he said, “relates to those energy and mineral resources which are present in the domestic resource base in sufficient quantities to meet our defense and economic security needs. Increasingly artificial barriers created through legislative and regulatory mandates are foreclosing them to development. The implications of this disturbing trend are more than an interesting academic exercise. Rather, these barriers are simultaneously imposing significant costs on the American public and jeopardizing the nation’s ability to defend itself.”
Donald K. Cooper, president of Behre Dolbear & Co Inc., noted his company’s annual survey of the 25 countries with the largest mining industries and/or the most significant mining industry potential consistently ranked the U.S. poorly in the “Permit Issues” category. “In this category, permitability rankings are based on the time and expense required to get permits, not on stringency of regulations. For the current rankings, the U.S. numerical score is 4 – that score ranks the U.S. 19th out of the 25 countries studied.”
For “expeditious and inexpensive procurement of mining permits, the top four countries are Mexico, Australia, Tanzania and Chile,” he said. “It might come as a surprise to some that, in this category, the U.S. ranks lower than Peru, Ghana, Colombia, South Africa, Argentina, Canada, Brazil, Namibia, Bolivia, Zambia, Venezuela, Zimbabwe and China, and the same as India. Only seven countries . . . rank lower than the U.S.”
Cooper noted that some of Behre Dolbear’s strongest U.S. based mining companies “have been focusing their exploration and development efforts (and their investment monies) on properties outside the U.S.” This is not because of a lack of good mining projects in the U.S., economics, markets or other considerations, he said – “it is predominantly a function of the unconscionable lead time required to get a project up and running so that it can begin to generate a return for its investors.”
Carson W. “Pete” Culp Jr., former Bureau of Land Management official, noted “very substantial hurdles” faced by mining and energy companies seeking to develop resource projects on U.S. lands. He said a “major opportunity for reducing time delays and uncertainties for projects on federal lands is in collaboration with the comment process” between federal agencies and state agencies in preparing Environmental Impact Statements (EIS).
Dale L. Alberts, former president of Nicolet Minerals Co., noted the company’s Crandon Project in the second poorest county in Wisconsin was stopped because “regulators with jurisdiction . . . seemingly made a policy decision that mining was not an acceptable activity in Wisconsin, despite over 200 years of historical lead/zinc mining . . . . They opposed this development regardless of the extent to which the company was willing to go in terms of engineering, environmental design, compliance and social responsibility.”
“The Crandon Mining Project and Nicolet Minerals Co. were ultimately sold and the permits withdrawn after nine years of permitting and an investment of $75 million,” Alberts said. “The 400 people who could have had high paying, family wage earning jobs in Forest County, Wisconsin, now have to count on tourism and an ever diminishing timber industry for their livelihoods. That,” he added, “is the real harm that comes from regulatory interference as opposed to regulatory oversight.”
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CBGS CEOs briefed by Connaughton, Card
CEOs from major coal and utility companies were in Washington this week for visits to Capitol Hill on behalf of the Coal-Based Generation Stakeholders (CBGS) group. Prior to the visits, the CEOs were briefed on the energy bill, FutureGen and the importance of a voluntary climate program by key administration officials Jim Connaughton (left), head of the Council on Environmental Quality (CEQ) and Robert Card (right), under secretary of the U.S. Department of Energy.
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Otter criticizes policies that unnecessarily restrict domestic natural resources
In a meeting at NMA headquarters this week, Rep. Butch Otter (R-ID) was critical of U.S. policies that restrict the development of domestic natural resources and result in jobs being exported overseas.
Discussing the forest products and mining industries, he noted that unreasonably excessive environmental restrictions have created shrinking options. “We’ve been outsourcing a lot of our minerals (production) for a long time, because we couldn’t dig it here,” he noted.
“Mining isn’t a lot different from most of our other (industrial) production,” he said. “With technology and some of the new capabilities, we can produce more with fewer people.” Otter criticized those who don’t recognize the industry’s ongoing technological progress, which has also helped impove safety and productivity.
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Spreading the word about ACT Online
NMA participated in SME’s annual conference in Denver last week to help get the word out about ACT Online. With the help of the Women’s Mining Coalition, NMA demonstrated the grassroots program and signed up new constituents. For more information on getting involved with ACT Online, visit www.actformining.org.
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Fiscal 2005 waterway budget is ‘inadequate to meet growing needs,’ NWA letter says
The pending federal budget proposal for FY 2005 is “inadequate to meet the growing needs” of the nation’s water resources infrastructure and should be increased, the National Waterways Alliance (NWA), including NMA, said in a Feb. 27 letter sent to House and Senate Budget committees.
“In 2003, the Corps (U.S. Army Corps of Engineers) expended $4.905 billion – which means OMB’s (Office of Management and Budget) budget request of $4.215 billion will not only delay or terminate projects, it will cost U.S. taxpayers millions of dollars in benefits-foregone and higher transportation bills,” the letter said.
“In 1986, in constant dollars, the Corps program was at a $6.6 billion level, and the Corps’ mission since expanded. We’re not moving ahead, we’re falling behind,” the NWA said.
The current proposal “clearly indicates that on-going construction projects will have to be stretched out, slowed down or terminated,” the alliance said. “We have been told that the Corps of Engineers will be able to continue work on replacement locks and dams, port improvements and flood control projects at only about 60 percent of its capability. Such unnecessary delays in construction schedules mean that projects cost more and that the realization of project benefits is delayed, effectively costing the nation hundreds of millions of dollars.”
Fully funding waterway projects “offers a unique opportunity to take advantage of the high productivity level of our nation’s contractors, thus providing needed economic job growth, as well as enhancing the transportation network for international trade,” NWA said. “At the same time, it provides the shippers of America’s building blocks – steel, coal, fertilizer, sand and gravel, cement, salt, petroleum, chemicals, etc. – a safe, cheap and eco-friendly transportation alternative.”
In considering the water development portion of the budget resolution, the groups urged Congress to “provide the necessary funding to keep America’s water resources infrastructure functioning as a major contributor to the nation’s wealth and prosperity.”
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Mine reopening brings economic hope to county in Washington state
The reopening of a zinc and lead mine in Metaline Falls, WA, has brought welcomed economic development to a part of the state that perennially has some of the highest unemployment rates and poverty, according to local officials.
Teck Cominco American Inc. has spent about $70 million to reopen the Pend Oreille Mine, a facility the company bought in 1995, and which has been idle since 1977. In Pend Oreille County, which traditionally relies on resource extractive industries, unemployment hovers around 10 percent, well above the state’s average of 6.8 percent.
Top-paid miners will earn about $43,000 annually in an area where the median household income is less than $25,000. The company hired 140 workers, about half of them locally, but many others with experience in underground mines in Alaska, Nevada and Idaho, according to a story in the San Francisco Chronicle. Almost overnight, the mining company, which expects the zinc deposit to last about 10 years, became the second-largest private employer in the county of 12,000 people.
Metaline Falls Mayor Jane Reed said she hoped the economic activity generated by the mine would be attractive to the county’s young adults. “You do lose a lot of young people from the community. We’re excited about the prospect of keeping some of our young people at home,” she said.
The company is also taking care of its environmental responsibilities. Water from the underground mine will be treated and pumped into the Pend Oreille River. Comments at a recent public hearing on a wastewater discharge permit were largely favorable. “You have to give credit to Teck Cominco,” said Neil Beaver of The Lands Council, a Spokane-based natural resources watchdog group. “They have put together a great process to eliminate heavy metals in the system.”
Anne V. Williams, a community activist and editor of the weekly Selkirk Sun, wrote in a recent edition that residents have come to trust Teck Cominco because the company has been forthcoming on its water quality plans. “These actions have been impressive, but they would be meaningless without trust,” she wrote.
Theresa Sanders of the Tri-County Economic Development Commission, said Teck Cominco has been accepted by the communities near the mine because of its attention to environmental details and public relations. “We are fairly confident in the regulations and guidelines,” she said. “ We feel fairly comfortable with them, and the economic impact is huge.
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FutureGen’s cost at $950 million over next decade, DOE plan says
The FutureGen project, originally pegged at $1 billion, will now cost $950 million over the next decade, with the federal/industry cost share at 65 percent and 26 percent, respectively, and 8 percent from foreign sources, according to a new Program Plan released by the Department of Energy (DOE) this week.
The plan was outlined by Energy Secretary Spencer Abraham during testimony on the Fiscal Year 2005 budget request for programs in fossil energy and conservation before the Senate Interior Appropriations Subcommittee. Members present at the hearing were Chairman Conrad Burns (R-MT); Ranking Member Byron Dorgan (D-ND); and Sens. Bennett (R-UT), Stevens (R-AK), Byrd (D-WV), Reid (D-NV) and Leahy (D-VT).
Abraham said the project will now cost $950 million, and the federal share is expected to be $620 million, which includes $120 million for carbon sequestration. Industry’s share is $250 million and $80 million is expected from foreign sources. Abraham cited the participation of 13 countries in the Carbon Sequestration Leadership Forum as an indication of interest.
Sen. Dorgan requested a written plan on how DOE intends to get the $80 million from foreign sources and which countries the department felt were viable prospects for contributions. He also emphasized that while FutureGen is worthwhile, it should not take money away from basic coal research and development programs.
Both Sens. Dorgan and Stevens expressed concern that the U.S. is trying to develop its domestic resources, but the FY 2005 budget proposals do not reflect this effort. Burns told Abraham, “We hear three things from industry: (1) they commend you and your staff for doing an excellent job sorting through the technical and scientific implications of the (FutureGen) project; (2) they see it as a meritorious project and want to lend their financial support to the project if a productive path forward can be found; and, (3) they are deeply concerned that OMB (Office of Management and Budget) and the department are heading toward a financing and project management strategy that brings into question the long-term viability of the venture.”
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COE should conduct comprehensive survey of district office jurisdictional practices, GAO says
The U.S. Army Corps of Engineers (COE) should conduct a comprehensive survey of district office practices to evaluate differences in how they determine which waters fall within federal jurisdiction, says a new General Accounting Office (GAO) report.
The study, “Waters and Wetlands: Corps of Engineers Needs to Evaluate its District Office Practices in Determining Jurisdiction,” was prepared at the request of Rep. Doug Ose (R-CA), chairman of the House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. Essentially, it finds that COE districts differ in how they interpret and implement the federal regulations when making decisions about the limits of federal Clean Water Act (CWA) jurisdiction since the Supreme Court’s decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (SWANCC).
The report also points out that only three of 16 districts reviewed by GAO have written documentation of their practices, with the majority of the districts reporting that they typically rely on oral communication to convey their practices to interested parties.
As a result of the study, GAO recommends the Corps, in consultation with the Environmental Protection Agency: (1) survey district office practices in making jurisdictional determinations to determine if significant differences exist; (2) evaluate whether and how these differences need to be resolved; and, (3) require districts to document their practices and make this information publicly available.
The report is available at the GAO website: www.gao.gov/cgi-bin/getrpt?GAO-04-297.
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EPA will host ‘listening sessions’ on coal combustion byproducts
The Environmental Protection Agency (EPA) will host three “listening sessions” – one in March and two in April – to gather public comment and additional information on mine filling with coal combustion byproducts (CCBs) and placement of CCBs into surface impoundments and landfills.
The hearings will take place on March 23 at the Nittany Lion Inn, State College, PA; April 13 at the Fairmont Hotel, Dallas, TX; and April 22 at the Quality Inn Vincennes, Vincennes, IN. The hearings are not only on minefilling, but also on management of CCBs by generators. In addition to EPA personnel, Office of Surface Mining (OSM) and state regulatory officials will also be present.
Each listening session will run from 6:30 – 9:00 p.m., but EPA will extend the session to accommodate additional speakers, who are limited to five minutes apiece. Speakers must register no later than seven calendar days prior to the listening session.
For more information, see the March 2 Federal Register notice (69 FR 9825) or visit www.epa.gov.
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EIA Kyoto cost study used ‘more comprehensive’ cost measure, GAO analysis says
Two studies that estimated the costs of implementing the Kyoto Protocol differed in their conclusions because one model used a more comprehensive cost measure, the General Accounting Office (GAO) said this week.
Asked to compare differing conclusions by the Energy Information Administration (EIA) and Council of Economic Advisers (CEA), GAO said the EIA study – which placed compliance costs at an estimated $397 billion “used a type of model that typically focuses on a more immediate time period and highlights the near-term costs of economic adjustments (such as unemployment) . . . . EIA’s model used a more comprehensive cost measure than CEA’s model and was thus able to capture certain costs that CEA’s model could not capture.”
CEA’s study found that the costs of implementing the Protocol could be as little as $7 billion to $12 billion annually in economic output, depending on the extent of international emissions trading allowed and the participation of developing countries.
GAO noted the model used by CEA “assumes that the economy makes a smooth transition to a new path over the long term, losing some productive capacity as a result of higher energy prices. Thus, CEA’s cost estimate includes only the loss in potential GDP (Gross Domestic Product), or the loss in GDP if employment were full. In contrast, EIA’s model captures both types of costs. EIA’s approach to modeling energy markets explicitly incorporates, on an annual basis, such factors as technological change and costs, consumer choice behavior, and changes to energy infrastructure.”
As a result, “in addition to the loss in potential GDP, the EIA model also estimates the adjustment costs, . . . . Compared to CEA, therefore, EIA’s estimate of economic loss is a broader measure of the costs of implementing the Protocol.”
GAO performed the comparison at the request of Sens. Ernest Hollings (D-NC) and John Kerry (D-MA).
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Mark Maddox named acting assistant DOE secretary for fossil energy
Mark R. Maddox has been named acting assistant secretary in the Office of Fossil Energy at the U.S. Department of Energy (DOE), replacing Carl M. Smith, who resigned after two years of service.
In the position, Maddox will be involved in several high-priority administration initiatives, including implementation of the $2 billion, 10-year initiative to develop a new generation of clean coal technologies and the $1 billion FutureGen project.
Maddox joined the Office of Fossil Energy in September 2003, when he was named principal deputy assistant secretary. Previously, he served as a senior policy advisor to Secretary of Energy Spencer Abraham, where he was responsible for advising on fossil energy and environmental management program issues, as well as communications strategy.
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Newsbits
Bucyrus International Inc. said it has sold three rotary blasthole drills to BHP Billiton’s Minera Escondida Ltda in Chile. The drills are designed to be productive in hard rock situations; delivery is expected to be completed during the first quarter of 2004 . . . . Mississippi Chemical Co. said it has completed the sale of two potash subsidiary companies to Denver-based Intrepid Mining LLC. Intrepid will pay about $27.4 million for Mississippi Potash Inc. and Eddy Potash Inc., as well as assume certain liabilities . . . . American Electric Power said it will invest an estimated $1.2 billion to install additional environmental controls at two of its coal-fired power plants – the Mitchell Plant near Moundsville, WV, and the Mountaineer Plant at New Haven, WV. The company is beginning preliminary studies and engineering for the installation of flue gas desulfurization systems that will reduce sulfur dioxide emissions by up to 98 percent . . . . Ann R. Klee will be nominated by the Bush administration as general counsel for the Environmental Protction Agency. Klee, who will hold the title of EPA assistant administrator, is currently counselor to Interior Secretary Gale Norton. She will replace Robert E. Fabricant, who resigned Sept. 3, 2003. Klee previously worked as chief counsel for the Senate Environment and Public Works Committee and as environmental counsel for former Sen. Dirk Kempthorne (R-ID) . . . . AMEC Earth & Environmental has signed a $300,000 contract with the Colorado Department of Public Health and Environment to assist with the Clear Creek federal Superfund cleanup project west of Denver.
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