MiningWeek Online
March 26, 2004 Volume 10, Issue 12

This Week's Issue:

• Gerard: Permit delays, excessive regulations pose ‘persistent threats’ to U.S. mining
• MSHA data show significant improvements in U.S. mine safety and health
• NMA: Permitting delays, regulatory uncertainty discourage mining investment
• “Mine the Vote” program aimed at maximizing industry participation in election campaign
• Norton: Budget proposal aimed at ‘advancing our vision of healthy lands’
• BLM Instruction Memorandum provides guidance on implementing court decision
• NMA: COE budget ‘does not provide sufficient funding’ for waterways
• Clean coal agreement will integrate online optimization technology to reduce emissions
• Newsbits

Permit delays and excessive environmental regulations pose “persistent threats” to the timely development of the nation’s vast mineral and coal resources, NMA President and CEO Jack N. Gerard said in a major address at the University of Utah this week.

Presenting the Willson Distinguished Lecture on “Mining in the West – Public Policy Versus Economic Reality” at the Engineering and Mines College, Gerard noted the United States holds world class reserves of both minerals and coal. Just as important, “few countries – perhaps none – have the combination of mining technology, engineering expertise and infrastructure to develop these resources in an environmentally responsible manner.”

The reserves and productive capability mean the mining industry “can provide our manufacturing industries and economy with secure, low-cost electricity and with vital metals to help our factories compete in the world economy,” Gerard told the university community.

Unfortunately, “few countries – perhaps none – constrain mineral development as we do with public policies that create delay, uncertainty and frustration,” Gerard added. “These factors are discouraging mining investment.”

Specifically, the delays in obtaining approvals for exploration and development, the prospect of unreasonable regulations for controlling emissions, and the uncertainties these combined obstacles create for investment are diminishing the value of America’s competitive advantage, Gerard said. “It’s not about geology – it’s about public policy,” he said, in explaining the challenge before the mining industry.

“The fundamentals of our industry encourage optimism, but current policies make us cautious,” he said. “Bad public policy for coal and minerals not only hurts our industry—it hurts American manufacturing. It is a prescription for economic contraction – and a cause of possible further de-industrialization.”

Gerard concluded: “As long as we dismiss mineral and energy costs as isolated factors – as long as we refuse to acknowledge their collective impact on manufacturing competitiveness – we will fail to address the reasons for the looming danger to our industrial base.”

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MSHA data show significant improvements in U.S. mine safety and health

NMA President and CEO Jack N. Gerard said the latest positive news is indicative of “the continuing commitment to safety by America’s mining industry as well as dedication to achieving the goal of zero injuries and fatalities.”

MSHA said since passage of the Mine Safety and Health Act in 1977, mining deaths have declined from 242 to a record low 56 in 2003. “Even one mine fatality is too many,” Gerard noted. “But this continued downward trend is gratifying and the result of ongoing applications of equipment and technological advances, improved engineering methods and advanced training and conscientious safety awareness by all involved.”

According to the MSHA data, since 1990, fatalities have been more than halved, from 122 to 56 in 2003. The all injury rate has also been cut by more than half, from 8.36 per 200,000 employee hours to 4.18. The past three years have seen consecutive all time lows in total fatalities.

“By any analysis, it is clear the mining industry is making significant progress toward its safety and health goals,” Gerard said. “It is a testament to everyone involved, from management to mine worker, as well as the industry’s partners in government. It also underscores the belief that in mining, people are our greatest resource.”

The complete MSHA data is available at www.msha.gov/MSHAINFO/FACTSHET/MSHAFCT10.pdf.

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NMA: Permitting delays, regulatory uncertainty discourage mining investment

House Small Business Committee Chairman Don Manzullo (R-IL) emphasized that it all starts with mining. If the raw materials are not mined in the first place, he said, the manufacturing sector will suffer.

“To make sure that US manufacturers do not face a shortage of metals and other raw materials over the longer term, it is imperative that the U.S. develop and implement a national minerals policy that allows mining companies access to resources for development and assures that the resource can be developed in a timely, socially and environmentally responsible manner,” said Connie Holmes, NMA senior economist, who was the lead off witness before the committee.

Holmes reviewed recent studies that document the impact of permitting delays and regulatory uncertainty on American mining, making a country richly endowed with important minerals among the least attractive countries for new mining investment. Last year, U.S. mining exploration investment was 66 percent below levels five years ago, while applications for new exploration permits fell by 73 percent over the same period.

“Between investing in the U.S., where permit delays could postpone a return on investment for a decade or more, and investing offshore with only a 1 to 2 year wait, mining companies are less likely to select the U.S.,” said Holmes. “The result,” she explained, “is a growing U.S. dependence on imports of key minerals needed for manufacturing, and the loss of a short, local supply chain.”

“We need policies that turn the U.S. from the ‘least attractive’ location for investment to the ‘most attractive’ location,” Holmes told the congressional panel. When asked for recommendations on immediate legislative action, Holmes stressed enactment of the pending energy bill.

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“Mine the Vote” program aimed at maximizing industry participation in election campaign

In presenting the plan at the board meeting, Gerard noted that in 2000, only 10,000 votes decided control of the U.S. House and White House, and in 2002, less than 2/10ths of one percent decided the party in control of Congress. “For 2004,” he emphasized, “polls indicate the parties are again at parity and narrow margins will exist.”

Gerard said “Mine the Vote” is an exciting initiative that will provide information to companies that assists them in educating their workforce about mining issues and also provides easy access to information, including congressional voting records. In addition, the program, which is part of the association’s ACT Online service, has voter registration and absentee ballots, further enhancing its effectiveness.

A special “Mine the Vote 2004” website (www.minethevote.org) serves as a central location to access all of this information and provides useful guidance and tools to help companies become involved in this very important election.

NMA has developed this program because companies are in a unique position to provide voter education material to employees, retirees, shareholders and their families.  A recent survey conducted by the Tarrance Group showed that 78 percent of respondents wished their company would provide information on government and politics, or were at least open to receiving information.  In fact, employees cited their employer as the single most trusted source of this information.  Unfortunately, only 7 percent of the American workforce heard about the 2000 elections from an employer.

“We urge all segments of the mining industry to utilize this unique program and encourage their employees and others to exercise their right to vote in the 2004 election campaign,” Gerard said.

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Norton: Budget proposal aimed at ‘advancing our vision of healthy lands’

The Department of the Interior’s (DOI) Fiscal 2005 budget proposal is aimed at “advancing our vision of healthy lands, thriving communities and dynamic economies,” Interior Secretary Gale Norton told the Senate Interior and Related Agencies Subcommittee this week.

In discussing the 2005 budget request for current appropriations of $11 billion, Norton outlined the following programs of interest to mining:

• Abandoned Mine Lands – Noting the reclamation of over 225,000 acres of orphaned mining lands since 1977, Norton said the “primary impediment to completing reclamation of abandoned mines is the fundamental imbalance between the goals of the 1977 Act and the requirements for allocating funds under the Act.” In the 2005 budget, she said, “We propose to direct reclamation grants to sites where the danger is greatest. The reauthorization proposal will allow all states to eliminate significant health and safety problems within 25 years,” she said. “At the same time, by shifting funds to speed resolution of serious health and safety problems, the proposal will reduce fee collections and spending by $3 billion over the life of the program.”
• Energy – Norton said lands and waters managed by DOI produce about 30 percent of the nation’s energy supply. She said the agency is “committed to implementing the President’s National Energy Plan” and proposed maintaining the Bureau of Land Management’s (BLM) coal, oil and gas programs at the 2004 funding level of $104.4 million “through a combination of appropriated funds and $4 million in additional user fees.” She also noted an increase of $200,000 in the 2005 budget request “for the Minerals Management Service to begin a tract-specific hydrate assessment to determine fair market value” once production of gas hydrates is practical.

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BLM Instruction Memorandum provides guidance on implementing court decision

An Instruction Memorandum (IM) issued by the Bureau of Land Management (BLM) this week provides the agency’s field offices with guidance on implementing the November 2003 decision in Minerals Policy Center v. Norton. In that ruling, the U.S. District Court for the District of Columbia affirmed, with one exception, BLM’s 2001 revisions to the Part 3809 surface management regulations for locatable minerals.

Even in upholding the rules, some of the court’s rationale raised concerns regarding the implementation of the Mining Law and the Federal Land Policy Management Act (FLPMA) Program. However, NMA believes the IM mitigates these concerns by reaffirming the activities allowed and rights granted by the Mining Law, providing additional guidance on unnecessary or undue degradation, and reconfirming that, generally, BLM is not required to perform mineral validity exams of unpatented mining claims or millsites when reviewing plans of operations.

The IM addresses five issues related to the MPC decision: operations conducted pursuant to rights established under the Mining Law; the treatment of mining operations on unclaimed lands or on lands with mining claims or millsites determined to be invalid; receipt of fair market value for operations on unclaimed lands and on lands with mining claims or millsites determined to be invalid (the one issue remanded by the court); mineral validity examinations; and clarification that the decision “does not require any change in substance or process regarding exploration notices.”

NMA members seeking additional information on the IM can contact Katie Sweeney at 202-463-2627, or ksweeney@nma.org.

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NMA: COE budget ‘does not provide sufficient funding’ for waterways

In a statement for the record filed with the House Energy and Water Development Subcommittee, NMA said it is also concerned that the “full amount appropriated by Congress to a specific project is not always what is actually available to a project for a specified fiscal year. For example, in FY 2004, the Kentucky Lock was appropriated $29.9 million, but the project actually received $23.1 million. Because of the reduced funding levels, projects are taking longer and the benefits are being lost to shippers and to the U.S. economy. NMA requests that projects receive the full amount appropriated in a given fiscal year.”

In addition, NMA said it “continues to be very concerned with the surplus in the Inland Waterways Trust Fund (IWTF). One-half of the lock and dam construction and major rehabilitation funds come from the IWTF, which receives 20 cents from a 24.3 cents per gallon tax on the fuel used for inland waterways barge operations . . . . For the last 12 years, the federal government has not allocated sufficient funds to these projects to keep up with revenues flowing into the IWTF. The result as of September 30, 2001, is a fund surplus of approximately $392 million.”

NMA recommend appropriating a minimum of $5.5 billion in FY 2005 for the Civil Works Program; appropriating $150 million from the IWTF to “be matched by an equal expenditure from the general fund for the construction and major rehabilitation of locks and dams on the inland waterway system”; increasing the appropriations for the Corps’ General Investigations account to $200 million; and increasing the FY 2005 proposed funding of $1.926 billion for COE’s operations and maintenance functions.

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Clean coal agreement will integrate online optimization technology to reduce emissions

The $19 million project will utilize a series of sophisticated computational techniques to achieve peak performance from theree 600-MW units at an Illinois coal-based power plant, Dynegy Midwest Generation’s Baldwin Energy Complex. The aim is to increase power plant efficiency and reduce air emissions.

The four-year project will be managed by DOE’s National Energy Technology Laboratory and will create approximately 540 new jobs. It will utilize NeuCo’s ProcessLink technology platform, which is designed to permit flexible deployment strategies.

For more information, visit www.fossil.energy.gov/news/techlines/04/tl_ccpi_neucoaward.html.

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Newsbits

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