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MiningWeek Online
October 15, 2004 Volume 10, Issue 40
This Week's Issue:
Administration Supports Coal Use in Regulatory Approach
The National Mining Association (NMA) applauds EPA Administrator Leavitt's commitment to use all types of coal and clean coal technologies to preserve "our economic competitiveness and energy security," and released the following statement today by NMA President & CEO Jack N. Gerard:
We welcome EPA Administrator Leavitt's affirmation today that, "This Administration will not discriminate against any coal type or region of the country," in its formulation of the nation's first-ever regulation of mercury emissions from coal based power plants. This is good news for the nation, America's electricity consumers and for the hardworking men and women that produce the coal used in generating over half our country's electricity needs.
Administrator Leavitt's strong commitment to a set of power plant regulations that ensures "a level playing field for all types of coal and that stimulates innovation in new technologies" is clearly in the nation's best interests and relies upon our proven ability to effectively employ technology to meet our environmental objectives while preserving our economic and national security and coal mining jobs around the country.
NMA's statement came in response to a letter sent today by Administrator Leavitt to Pennsylvania Governor Edward G. Rendell. In his October 14 letter (also sent to the Pennsylvania Coal Association), Leavitt says the Pennsylvania Department of Environmental Protection's advocacy of a 90 to 95 percent mercury control from all coal types by 2008 would "cause significant disruptions in the nation's coal markets." A proposal similar to PA DEP's was endorsed by some 40 members of the US Senate, including Presidential and Vice Presidential candidates John Kerry and John Edwards in an April 1, 2004 letter to EPA.
NMA supports EPA's approach to further reduce emissions of mercury, sulfur dioxide and nitrogen oxide based on achievable technological advances. Based on economic and technical analyses, NMA finds the 90 to 95 percent reduction in mercury emissions by 2008 called for in the PA DEP proposal and Senate letter is unachievable and would result in severe dislocations throughout our economy and in the loss of high-paying mining jobs across America.
For a copy of Administrator Leavitt's letter, visit nma.org/pdf/rendell_letter_101504.pdf.
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American Jobs Creation Act approved by Congress; awaits President’s signature
Before taking a pre-election recess, both the Senate and House approved a conference report to accompany the final version of H.R. 4520, the “American Jobs Creation Act of 2004,” clearing the measure for signature by President Bush. The House vote was 280-141; the Senate approved the bill by a vote of 69-17.
NMA supported the measure, which repeals the existing law that resulted in a decision by the World Trade Organization against the U.S., allowing the European Union (EU) to impose tariffs on American exports to EU countries. In its place, the legislation creates a new corporate tax deduction for income from domestic manufacturing operations that includes extraction, as sought by NMA.
Despite NMA’s diligent efforts, House conferees rejected several attempts to add clean coal tax provisions in the pending energy bill and the Senate version of H.R. 4520 to the final package, including those relating to clean coal technology incentives. The final version also does not contain the precious metals capital gains reduction which passed the Senate. NMA will continue to pursue these initiatives.
The principal benefit to NMA members from H.R. 4520’s enactment is the creation of a new corporate tax deduction relating to income attributable to U.S. manufacturing and production activities that will effectively reduce the U.S. corporate income tax rate for those engaged in qualifying domestic production. Once fully implemented for taxable years after 2009, the deduction will be equal to 9 percent of qualified production income (essentially gross receipts minus allowable costs). The deduction will equal 3 percent in 2005 and 2006, rising to 6 percent in 2007, 2008 and 2009.
The legislation defines “qualifying domestic production” to include extraction, construction and the generation of electricity, among other domestic economic activities. NMA worked with congressional tax staff to add extraction to the definition to be certain that all mining activity qualified for the income deduction. In addition, “qualifying domestic production” includes the manufacture of mining and other equipment. The income tax deduction is available even to those corporations who are in an Alternative Minimum Tax (AMT) position.
The measure also makes it easier for a U.S. corporation to repatriate income from foreign activities without the tax liabilities under existing law. This “holiday” period gives the taxpayer the option of electing to repatriate profits either in the tax year immediately before enactment or the year immediately after, while claiming an 85 percent dividends-received deduction. This one-time deduction is not available for years beyond one year after enactment, at which time the current law will become effective again. The rationale for the proposal is to remove the barriers to U.S. companies for bringing profits back to the U.S. for investment domestically.
The legislation also includes the repeal of the 4.3 cent excise tax on railroad diesel fuel and inland water way fuel, as sought by a coalition that included NMA. In addition, the final version includes a 50 percent tax credit for certain expenditures for maintaining railroad tracks by smaller carriers. .
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Dorgan, English visit NMA
Sen. Byron Dorgan (D-ND) and Rep. Philip English (R-PA) visited NMA separately last week, meeting with staff and members to discuss the upcoming election, minerals and energy policy and other issues of interest to mining. Dorgan is the ranking member of the Interior Appropriations Subcommittee and English serves on the House Ways and Means Committee.
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Study: Mining is in first boom of the 21st century
The global mining industry is in the midst of its first boom of the 21st century, according to a new PricewaterhouseCoopers study.
The report examines trends in the financial performance of the industry, based on a review of 30 of the largest listed mining companies. Its latest research picks up on many of the themes explored in a 2003 publication, Digging Deeper – Managing Value and Reporting in the Mining Industry. The earlier survey highlighted some significant gaps between what companies were reporting and what stakeholders perceived to be important.
The newest report gives the mining industry an A+ on almost every criteria, from market growth to profits; however, lower grades were handed out for market transparency and hedging strategies. The overall verdict, however, is that the global mining industry is feeding vigorously on strong worldwide mineral and energy demand and surging prices for commodities.
In March 2003, the global mining industry had a market capitalization of $390 billion, almost double the level of 18 months earlier. A rally in the gold price followed by base metal price rises were major contributors to the upsurge, with traded metal prices showing a consistent upward trend, the study said.
An 18 percent increase in mining industry revenue to $110 billion in 2003 was attributed to commodity price and production increases, the latter driven by demand, particularly from China. Importantly, the aggregate net profit of mining companies almost doubled in 2003, up to 10.4 percent from 6.3 percent in 2002.
“This is great news for an industry that has generated poor returns for many years,” the report said. “Even for 2003, the returns are not spectacular. However, it is encouraging to see an improvement and the industry has an opportunity to move past this in 2004 and beyond.”
The report noted industry consolidation over the past five years has dramatically changed its structure with the top three companies – BHP, Rio Tinto and Anglo American – remaining intact, but with different asset holdings and increased market capitalization.
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White paper sees no scientific evidence of harmful mercury exposure to public
There is “no sound scientific evidence to suggest that the American public, especially infants and young children, have been exposed to harmful levels of mercury (Hg),” according to a white paper by the Center for Science and Public Policy (CSPP).
“The preponderance of the latest scientific literature strongly suggests that at historic consumption levels we have always been, and will continue to be, safe from the fish we eat,” CSPP said. “All sectors of the U.S. population, especially pregnant women, children and the elderly, should continue deriving critically needed nutrition from fish.”
The center said the EPA (Environmental Protection Agency) Reference Dose, “the root of the recent alarm and confusion, should be re-examined. EPA’s Reference Dose of 5.8 ppb (parts per billion) is an ultra-precautionary level that was derived by introducing an added safety factor of 10 from the EPA’s chosen Benchmark Dose Lower Limit (BMDL) value of 58 ppb. In turn, that BMDL value was derived from statistical analysis of limited data from the critically flawed Faroe Islands children study.”
CSPP said strong scientific evidence “does suggest that most, if not all, of the trace amounts of methylmercury contained in ocean fish are not connected to the inorganic form of mercury emitted by power plants. That is because mercury is ubiquitous in our environment, the oceans alone containing tens of millions of tons of mercury – deep ocean vents likely being the regions for production of the methylmercury that ends up naturally and persistently over time in ocean fish.”
The bottom line, CSPP said, is that “current levels of methymercury production and aquatic uptake could simply continue unchanged even if all U.S. coal-powered plants were shut down, resulting in zero Hg emissions.”
The center said both epidemiological and clinical data suggest “no actual danger to average American women and children from consuming a wide variety of fish from our restaurants and grocery stores, but there is much potential harm from avoiding or restricting fish. Therefore, scientifically weak and distorted campaigns of alarmism are an irresponsible endangerment to public health.”
For more information, visit http://releases.usnewswire.com/GetRelease.asp?id=37111 or www.scienceandpolicy.org.
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NSF taps Colorado mine as possible underground research laboratory
The National Science Foundation (NSF) has tapped the Henderson Mine near Empire, CO, as a potential site for a high-tech laboratory where scientists could conduct research in high energy physics, astrophysics and earth sciences in caverns thousands of feet below ground.
An NSF committee is also looking at potential sites for the laboratory in Washington state, South Dakota, Minnesota and Southern California. The South Dakota site, a closed Homestake mine now owned by Barrick, has been particularly active in pursuing the project (Mining Week, 9/27/04).
The Henderson Mine is operated by Climax Molybdenum Co., a subsidiary of Phelps Dodge Corp., and the world’s largest molybdenum producer. It is located about 50 miles west of Denver and, among other things, provides $30 million annually in miners’ salaries and other economic impacts. Officials in Clear Creek County see the proposed laboratory as a means of continuing the mine’s life after mining activity eventually ceases. “We need to be thinking about what can be done here,” said Steve Shultz, executive director of Clear Creek County’s nonprofit Arapaho Project, formed to pursue the laboratory project.
The idea is to carve out six-to-eight caverns in an unused portion of the underground mine where scientists can research neutrino physics and geochemistry without interference from meddling cosmic rays. Colorado’s Department of Local Affairs has given the project a $40,000 grant to drill below the mine’s 10-mile conveyor, one of the longest in the world, to see if the rock is suitable for carving caverns.
Phelps Dodge has joined in the Arapaho Project task force along with the county and three research universities in an effort to land the underground lab. “The mining industry in general now has to look beyond the life of the property and plan what’s next,” Fred Menzer, general manager of the Henderson mine, told the Denver Post. “We think this could be the poster child for the redevelopment of a large mine.”
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GE Bechtel announces alliance to develop standard IGCC commercial offering
GE Energy and Bechtel Corp. said they intend to establish an alliance to develop a standard commercial offering for optimized integrated combined-cycle gasification (IGCC) projects in North America. IGCC systems convert coal and other hydrocarbons into synthetic gas and offer significant environmental benefits.
The alliance will integrate the development, marketing, commercialization and implementation of GE’s IGCC process with Bechtel’s engineering, procurement and construction expertise. GE is a leading supplier of gas turbines for IGCC applications and has provided gas turbines for more than 60 percent of the world’s operating IGCC plants, the company said.
The two companies have already worked together on a number of IGCC projects, including the 100-megawatt Cool Water Plant in California and the Tampa Electric Co.’s 250-megawatt Polk Power Station in Florida.
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OSM awards cooperative agreement to Friends of the Cheat
The U.S. Office of Surface Mining (OSM) has awarded a $96,687 Watershed Cooperative Agreement to Friends of the Cheat, a watershed organization in Preston County, WV, for the Upper Muddy Creek Acid Mine Drainage (AMD) Clean-Up Project.
Friends of the Cheat is partnering with the West Virginia Department of Environmental Protection’s Division of Water and Waste Management (WVDEP) on the project to treat AMD discharging into Muddy Creek from four collapsed abandoned mine portals. Proposed remedial measures include a passive treatment system that will direct the four seeps into limestone leach beds. This design will form a single treatment system consisting of four consecutive limestone beds, joined by open limestone channels. A final limestone channel will transport treated water from the last leach bed into a final retention pond before discharging into Muddy Creek.
The installation of the system should increase pH, reduce acidity and metal concentrations and restore a trout fishery to the middle section of Muddy Creek, OSM said. Neutralization of the four seeps at the Muddy Creek site will remove up to 141 tons of acid per year from Upper Muddy Creek and the lower Cheat River, the agency said.
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Newsbits
American Electric Power and four other electricity generators have filed motions to dismiss carbon dioxide lawsuits announced July 21 by a group of state attorneys general and other. The motions were filed in the U.S. District Court for the Southern District of New York – the other utilities were Cinergy, Xcel, Southern Company and the Tennessee Valley Authority . . . . Hecla Mining Co. celebrated 40 years of trading its shares on the New York Stock Exchange when current Chief Executive Officer, Phillip S. Baker Jr., and two former CEOs – Arthur Brown and William Griffith -- rang the closing bell on the New York Stock Exchange this week. The company, now 113 years old, first traded publicly on the Curb Exchange in 1915, the precursor to the American Stock Exchange . . . .Cleveland-Cliffs announced that Jack Tuomi, vice president-operations services has become acting vice president of operations, assuming the duties of Edward C. Dowling Jr., who resigned to accept a senior executive position with a major global mining company. The change is effective Nov. 1 – the company said it will initiate a comprehensive search for a permanent replacement to head Cliffs’ operations.
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