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MiningWeek Online
November 19, 2004 Volume 10, Issue 45
This Week's Issue:
Washington DC Coal Club honors Gerard, Inhofe, Barton
The Washington Coal Club this week honored three individuals, including NMA President and CEO Jack N. Gerard, for their outstanding contributions to the coal community. The presentations were made at the Club’s Annual Awards Banquet at the National Press Club.
Coal Club president Paul Oakley said Gerard and U.S. Sen. Jim Inhofe (R-OK) were co-winners of the Club’s 2004 Annual Achievement Awards. Glen A. Barton, former chairman and CEO of Caterpillar Inc., won the Club’s 2004 Sen. Jennings Randolph Lifetime Achievement Award.
NMA’s Gerard was praised for his energetic efforts in championing coal-based power in his position as the industry’s leading spokesman at the Washington trade group. In only his first few years as president, Gerard is credited with transforming NMA into a leaner and more effective advocacy organization. “Coal has needed a champion, and it has found a great one in Jack Gerard,” said Oakley in making the announcement.
Sen. Inhofe’s support for clean coal technology and comprehensive energy legislation were two of the reasons he was honored by the Coal Club. Inhofe, chairman of the Senate Environment and Public Works Committee, has been an articulate and forceful spokesman for balanced energy policies that recognize the fundamental importance of coal to the nation’s energy supply.
Former Caterpillar chief executive Barton was exceedingly influential in a host of education and civic initiatives that foreshadowed the wider corporate responsibilities eventually adopted by other companies. As leader of one of the world’s leading mining equipment manufacturers, he served effectively as chairman of NMA’s Manufacturing and Services Division and chairman of MINExpo® 2000.
The Washington Coal Club, organized in 1980, is an informal organization of government, industry and academic representatives interested in coal and coal-related energy policies and issues that hosts lunches featuring prominent speakers that include members of Congress, administration officials, industry leaders and scientists and other academicians.
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Analysis sees continued worldwide exploration spending rise in 2004, 2005
Worldwide spending for mining exploration in 2004 will reach the highest level since a 1997 peak and should continue to rise in 2005, according to the Metals Economics Group (MEG).
MEG’s recent edition of Corporate Exploration Strategies analyzed 1,138 companies’ exploration budgets (using a budget cutoff of $100,000), totaling $3.55 billion and covering an estimated 95 percent of worldwide commercially oriented nonferrous expenditures. “When we also include estimates for budgets that we could not obtain, our estimate of total 2004 expenditures for commercial nonferrous metals exploration is almost $3.8 billion.”
MEG said worldwide nonferrous exploration budgets steadily increased through the early 1990s to a peak of $5.2 billion in 1997, before falling for five straight years to a 12-year low of $1.9 billion in 2002 – an overall decline of more than 63 percent. Since that time, however, exploration budgets have risen for two straight years, rebounding to a level just slightly above the 1998 estimate. “This year’s $3.8 billion estimated total is up 58 percent over last year’s, and is double the estimated worldwide total seen at the bottom of the cycle in 2002.”
The group noted that as the rise in gold prices took hold and prices for other commodities strengthened in late 2003 and early 2004, continued budget increases by most major companies and increased availability of capital to the juniors continued to push worldwide exploration spending higher in 2004, to more than double the total seen in 2002. “Exploration budgets by junior companies included in our study are up 103 percent this year, accounting for about 60 percent of the overall increase in exploration allocations and almost 45 percent of the overall exploration total by all surveyed companies,” MEG said.
Latin America continues to be the most popular destination for exploration spending, increasing its lead over second-place Canada to more than $76 million this year from $46 million in 2003. Africa remains in third place by region, having surpassed Australia for the first time in 2003. “The substantial increase in allocations in our rest-of-world region have outstripped a more moderate recovery in Australian spending, moving the region to fourth place, with Australia slipping to fifth.” The United States and the Pacific/Southeast Asia regions remain in sixth and seventh place, respectively, positions they have held since 2001.
Continued low inventories and a lack of significant new production in the pipeline, combined with high demand in China, “should provide adequate support to keep base metals at attractive levels for the near future,” MEG said. “In addition, most analysts expect that the U.S. dollar will remain soft in the near term, which, combined with other global uncertainties, should continue to support the gold price.”
MEG said if metals prices remain relatively high in the current cycle, “the increased rate of junior financings over the past 12-18 months should continue.” While “we don’t expect to see further substantial increases in exploration spending by major companies in 2005, we anticipate that growing spending by junior and intermediate companies will lead to an increase in overall spending again next year, although at a more modest rate than seen this year.”
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Gerard praises leadership of Lauriski, Abraham
NMA President and CEO Jack N. Gerard this week praised the leadership and accomplishments of Assistant Secretary of Labor for Mine Safety and Health David Lauriski and Secretary of Energy Spencer Abraham – who both announced they are stepping down from their respective positions.
Regarding Lauriski, Gerard said: “The US mining industry commends Secretary Lauriski for his leadership and commitment to mine safety. He has been a valued partner in our continuing effort to achieve zero injuries and fatalities. During his term, the U.S. mining industry has achieved three consecutive years of record safety performance-making U.S. mines the world’s safest. His vision to make mine safety a ‘value’ ensures that mining is not only a vital industry for our economy but a safe industry for our workers.
“Through extensive training and education, continued technological advancement, individual commitment and the Mine Safety and Health Administration’s (MSHA) regulatory efforts, US mining fatalities have declined by 45 percent since 1990. Further, the industry’s incidence rate for non-fatal occupational injuries and illness is among the lowest of major US industries-ranking below wholesale and retail trade and service industries, for example.
“David Lauriski’s strong desire and dedicated efforts to further improve the safety and health of US mine workers will serve as a continuing inspiration to all of us.”
Gerard especially praised Abraham’s “steadfast support of clean coal technologies. “U.S. coal producers greatly appreciate Secretary Abraham’s strong and consistent advocacy for clean coal technology as the key to unlocking America’s potential for greater energy independence,” said Gerard. “At a time of international instability, Secretary Abraham understood better than most the crucial role of technology in helping to meet the environmental challenges for our nations most abundant and affordable energy source.”
Gerard noted the Secretary was in the forefront of efforts to find voluntary solutions for addressing concerns over climate change, such as his carbon sequestration initiative that encouraged both domestic and international cooperation. His leadership was also apparent in his support for the FutureGen project that will one day generate clean hydrogen power from coal.
Gerard praised Secretary Abraham’s efforts to rally support for a comprehensive energy bill, which provided important funding for the development of new technologies designed to achieve lower emissions and more efficiency from coal-fired plants.
“We wish him continued success and look forward to working with him in future endeavors,” said Gerard.
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Murkowski: Mining’s future in Alaska bright
The future of mining in Alaska is bright, and “intertwined” with that of the state, “both in economic benefits and in the responsibility for protecting our environment,” Alaska Gov. Frank Murkowski (R) told the Alaska Miners Association (AMA) 2004 Annual Convention Nov. 3.
“I have always believed that Alaska’s true wealth lies in its natural resources and within the spirit of its people,” Murkowski said. “There is no better example of this principal put into action than the Alaska mining industry. The proof of their success is reflected in the fact that once again the men and women of Alaska’s mining industry have surpassed the billion dollar mark in your contribution to Alaska’s economy – for the eighth consecutive year.”
Murkowski said the “real future of mining prosperity is defined by the amount of effort going into exploration. I am happy to report that in 2003, about 2,443 new state mining claims were filed, 92 new state prospecting sites were staked, and 676 new federal claims were recorded. That brings the amount of land in Alaska under claim up to 2.9 million acres. Exploration investment increased to $27.6 million,” he added, up 4 percent from 2002 levels, “and development investment climbed 15 percent to $39.2 million.”
The governor outlined steps the state has taken to encourage mining, and said, “we will be doing more on permitting. I have directed my staff and DNR (Department of Natural Resources) to work together to fashion what I call ‘best permitting practices.’” He said they would reconcile conflicting state laws affecting resource development so that permitting is “less of a target for litigation;” eliminate duplicative state laws and “unnecessary process which simply adds time and cost without protecting the environment;” base permitting on the “large project team concept to allow professionals to tailor environmental requirements to what they find on the ground;” and “make sure that we don’t require too much engineering and design work too early in the permitting process, thereby unnecessarily increasing costs.”
Murkowski added, “When we have set the state process in order, we will enter an MOU (memo of understanding) with federal agencies requiring them to also follow the best permitting practices outlined above.”
He said because miners “take their livelihood from the land, you better than most understand the value of a clean environment and responsible development practices.”
Commenting on the convention, Alaska Miners Association President Steve Borrell said, “The Alaska Miners Association 2004 Annual Convention was the largest and most exciting in more than a decade. High metal prices provided a great starting point and then some great election results the week of the convention were the icing on the cake. The 2004 exploration season has been the biggest in many years, both in terms of dollars spent and in the number of active projects, which included many totally new prospects. A large portion of the new prospects are held by companies that are new to Alaska.”
Borrell added: “The expanded interest in Alaska is due in part to changes over the past several years that have improved the regulatory and business climate for operating in Alaska. These improvements are now being recognized by the international minerals industry. Governor Murkowski and his administration are responsible for many of the changes, some of which have been needed for a long time. Many of Alaska’s miners know Governor Murkowski personally and are very appreciative of the effort his administration has expended during the past two years.”
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U.S., 13 nations sign methane agreement
The United States and 13 other nations this week signed an agreement creating a “Methane to Markets Partnership,” to explore ways to capture methane gas emissions.
The U.S. is underwriting the cost of the agreement, $53 million over five years, which calls on the participating countries to use American expertise to develop methods of capturing the gas from landfills, coal mines, and oil and gas refineries. The gas would then be sold for energy.
Other countries participating in the agreement are Argentina, Australia, Brazil, China, Columbia, India, Italy, Japan, Mexico, Nigeria, Russia, Ukraine and the United Kingdom.
EPA said the Methane to Markets Partnership will also encourage active involvement by private industry, financial institutions and other non-government organizations.
NMA attended the meeting and a detailed report will be available to members early next week. For more information on the program, visit www.epa.gov/methanetomarkets.
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Analysts see gold boom continuing
As gold prices surged to a new 16-year high earlier this month, the majority of traders, investors and analysts participating in a Bloomberg survey said the precious metal may continue to rise on expectations of slumping dollar prices, and urged either buying or holding.
In addition Business Week reported that “gold is finally getting some respect” – prices have climbed 75 percent since early 2001, gold is topping $435 an ounce, a level not seen since 1988, and scarcity is driving prices higher still.
Twenty-eight of 55 participants surveyed advised buying gold, with 11 recommending holding the precious metal, and 16 advocating selling. “Gold is a good investment,” Andrew Roalstad, who helps manage $50million at Minneapolis-based TIS Group Inc., told Bloomberg. “As global confidence in the dollar continues to weaken, people are going to look for a store of value, and that’s going to be more and more in the form of commodities. Historically, that’s been in gold.”
Wang Xinyou, Beijing-based gold trader at the Agricultural Bank of China, said, “Gold prices may rise further on the weaker U.S. dollar.” Gold’s gain may accelerate should U.S. regional manufacturing and the index of leading economic indicators show slowing growth, Alexander Zumpfe, an analyst at Dresdner Kleinwort Wasserstein in Frankfurt told Bloomberg.
The World Gold Council’s proposed offering of shares, which would trade on the New York Stock Exchange, follows sales of other gold investment funds backed by the gold council and listed on stock exchanges in London, Australia and Johannesburg, Bloomberg reported. The offering in New York may boost investor demand for gold by as much as 550 tons, or about 18 million ounces, in the first year, London-based research company Virtual Metals said in August, according to the Bloomberg account. Global net investment demand for gold last year was 600 tons, said GFMS Ltd., a London research company.
“We will put money into the new gold product when it arrives on the market,” TIS Group’s Roalstad told Bloomberg. Pension funds aren’t allowed to invest directly in commodities, he said.
Bloomberg cautioned that gold’s rise may be limited by speculation the Federal Reserve will raise its benchmark interest rate at least once more this year. The central bank lifted its target rate for overnight loans between banks on Nov. 10 to 2 percent from 1.75 percent and said it plans more increases at a “measured” pace.
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EPA removes chemicals from lists of regulated pollutants
The U.S. Environmental Protection Agency (EPA) this week finalized several actions that will create incentives for industry to use solvents that are less toxic and may help decrease the formation of ground-level ozone or smog.
EPA said each of these actions is based on extensive scientific and technical review over a period of years. “These reviews concluded that the chemicals pose less risk than previously thought and that reclassifying them would not compromise public health, and may even benefit public health if they are substituted for more toxic or environmentally damaging chemicals,” EPA said.
Under the authority of the Clean Air Act, EPA has delisted or exempted six chemicals: the solvent ethylene glycol mono-butyl ether (EGBE) has been removed from the list of air toxics (also known as hazardous air pollutants) and the chemical t-butyl acetate (TBAC) and four others exempted from control as volatile organic compounds (VOCs). Delisting an air toxic is a rigorous process, involving independent scientific peer review, to demonstrate there are adequate data to determine that emissions may not reasonably be anticipated to cause adverse effects. Public comment was received and considered in making this determination. EPA last delisted an air toxic (caprolactam) in 1996. [Note: The air toxic EGBE being delisted today remains regulated as a VOC and therefore will continue to be reported in the Toxics Release Inventory.]
Exempting a VOC requires a demonstration that the compound is negligibly reactive, meaning the compound forms less ground-level ozone than ethane. EPA has exempted 48 VOCs since 1977.
Additional Compounds: EPA is excluding HFE-7000, HFE-7500, HFC 227ea and methyl formate from control as VOCs. These compounds, which are used as refrigerants, fire suppressants, and propellants, contribute little or nothing to ground-level ozone formation. All four of these compounds are environmentally preferable substitutes for CFCs and HCFCs, EPA said.
For further information including the final rule and the Federal Register notice once published, go to EPA’s web site at www.epa.gov/airlinks/airlinks1.html.
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NMA generally supports proposed Forest Service rule on state petitions for inventoried roadless area management
NMA this week said it generally supports a proposed U.S. Forest Service (USFS) rule on state petitions for inventoried roadless area management, in comments filed with the agency.
Involved is the proposed Forest Service rule that would replace the Jan. 12, 2001 Roadless Area Conservation rule with a petitioning process that would allow Governors an opportunity to seek establishment of management requirements for National Forest System inventoried roadless areas within their states. NMA said it generally supported the proposal as an “appropriate process for reexamining the management of roadless areas.”
The comments noted that such a reexamination was critical due to “major flaws in both the content of the January 2001 rule and in the process used in the roadless rulemaking procedure, flaws that led to a nationwide injunction of the rule.” In addition, NMA noted specific benefits of rule and recommended improvements to certain provisions of the proposal.
Among the benefits of the proposed rule, NMA said, is that it “properly integrates local concerns and is consistent with both the National Forest Management Act (NFMA) and the Multiple Use Sustained Yield Act (MUSYA). Because the proposed approach complements, rather than obstructs, local-level forest planning, it is consistent with the NFMA, under which local-level forest planning has long been the mechanism used to develop forest plan decisions by the people most knowledgeable about the national forest lands.”
NMA added, “A national top-down, one-size-fits-all roadless conservation rule, such as the January 2001 rule, undermines the cooperative dialogue that takes place during each forest’s plan revision and cancels out years of research, scientific analyses, collaboration, and compromise.” In addition, the proposal, “by allowing greater opportunity for local input and consideration of local concerns, would assist the agency in appropriately balancing its responsibilities under MUSYA,” NMA said. MUSYA imposes a multiple use mandate on the Forest Service, a mandate that could not be met through a nation-wide prohibition on roads.
Another benefit of the proposed rule is it provides an additional opportunity to ensure mineral development is properly considered when determining how to manage roadless areas, the association said. One of NMA’s greatest concerns about the January 2001 Rule was that it failed to properly consider and account for the public laws that specifically control access and development of minerals on public lands. NMA commented that whatever mandate, or authority, the Forest Service believes it can derive from the laws it administers generally for activities that affect surface resources within the National Forest Service System, “they do not supersede, or override, the more specific mandates and requirements of the mineral laws.”
NMA said the proposed rule provides an “additional opportunity to ensure that management of roadless areas does not conflict with the mineral laws. It also provides another opportunity for the agency to consider the impact of roadless area management on the availability of minerals.” In promulgation of the 2001 rule, NMA noted, the Forest Service “neglected to consider the impact on the availability of domestic minerals, including those of strategic importance, on national security and the economy. For example, the January 2001 Rule failed to examine the severe adverse impact of the rule on the increasingly important reserve base of federal coal located on National Forest System lands.”
NMA also recommended some improvements to the proposal, including:
- urging the Forest Service to consider methods for modification of the State management requirements to address changing conditions.;
- suggesting the Forest Service establish an automatic review period, where the requirements would be reviewed every 5 years;
- recommending the agency develop objective criteria for petition acceptance so that states understand what is expected and how their petitions will be judged;
- advising the agency to shorten the timeframe for submission of state petitions to12 months unless a state requests an extension and demonstrates that the petition cannot be submitted within 12 months;
- requesting additional clarification regarding how the state-established management requirements will be coordinated with forest plans that are currently undergoing revision;
- recommending the Forest Service forgo convening a national advisory committee; and,
- urging the agency to provide criteria or guidance for States to propose to manage areas as roadless.
NMA also commented on the Forest Service’s newly reinstated Interim Directive (ID) 1920-2004-1, a directive that provides guidance for the protection and management of inventoried roadless areas. NMA noted that the reinstated ID is an “improvement over its predecessor ID 1920-2001-1 in that it revises the responsibilities of the Regional Forester for decisions on a road construction or road reconstruction project in an inventoried roadless area to include all lands associated with any mineral lease, license, permit or approval issued for mineral leasing operations.”
NMA emphasized, however, that the reinstated ID is “unnecessary and inappropriate given the enjoinment of the 2001 Roadless Rule. The ID is based on the vacated 2001 rule and thus predicates the management of inventoried roadless areas on a rule found to be illegal.” NMA recommended that the Forest Service retract ID 1920-2004-1.
For comments, see www.nma.org/Attach/final_Comments.pdf. NMA members seeking additional information should contact Katie Sweeney at 202-463-2627, or ksweeney@nma.org.
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