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MiningWeek Online
December 3, 2004 Volume 10, Issue 46
This Week's Issue:
NMA advances agenda to address permit delays in omnibus appropriations bill passed by Congress
NMA was once again successful in ensuring several critical needs of the mining industry were funded when Congress passed the omnibus appropriations bill the weekend before Thanksgiving. In addition, NMA used the omnibus bill as a vehicle to address the priority issue of permitting delays.
The House and Senate passed H.R. 4818, the Foreign Operations Appropriations bill, which served as the vehicle for eight other appropriations bills (Agriculture; Commerce, Justice, State; Energy and Water Development; Interior and Related Agencies; Legislative Branch; Labor, HHS, Education; Transportation and Treasury; and, VA-HUD (includes EPA)).
Below are highlights (by Department and agency) from the Omnibus package. The funding levels referenced do not reflect minimal across-the-board cuts of 1.4 percent that were applied to all non-defense programs.
DEPARTMENT OF THE INTERIOR:
Bureau of Land Management (BLM)
Funding: $848.9 million provided for BLM ($837.4 million requested) and $32.7 million provided for mining law administration.
Language: As sought by NMA, the Senate version of the Interior bill rejected the proposed increase in claims maintenance and location fees until the Departments of the Interior and Agriculture establish a nationwide permit tracking system to determine and address the length of time from submission of a plan to approval, a position strongly advocated by NMA. The department is also directed to provide Congress with a report within a year of enactment of the bill that details the length of time it takes the department to approve proposed mining plans of operations and recommend steps to reduce current delays.
Because of the July 1, 2004 rule that increased the fees for inflation, as required by current law, NMA attempted to obtain a refund or a credit for those fees, which were paid by Sept. 1, 2004. However, since these funds were already collected in Fiscal Year 2004 and put into the General Treasury, congressional appropriations staff determined that neither refunds nor credits were possible because of budget scoring issues. As a workable alternative, the bill as passed rolls back the fees due in 2005 to the pre-July 2004 rule levels until the Department of the Interior implements a permit tracking system and completes work on the permitting delay report. NMA believes this is a favorable result and represents progress in focusing the department’s attention on the critical permitting delay issue. The bill also retains the patent moratorium carried over from previous years.
U.S. Geological Survey (USGS)
Funding: $948.9 million provided ($919.7 million requested). The administration’s proposed cut of $6.4 million to the Mineral Resources program was restored, an NMA goal.
Office of Surface Mining (OSM)
Funding: $109.9 million was provided for regulation and technology ($108.9 million was requested). $190.8 million was provided for the Abandoned Mine Reclamation Fund ($243.8 million was requested).
Language: The bill provides an extension until June 30, 2005, of the Secretary’s authority to collect fees pursuant to the Surface Mining Control and Reclamation Act.
DEPARTMENT OF ENERGY (DOE):
Office of Fossil Energy (OFE)
Clean Coal Technology Funding: The bill defers the availability of $257 million in clean coal technology funds until Oct. 1, 2005 and transfers funding for the FutureGen Initiative from this account to the fossil research and development account. DOE is directed to provide a table on the FutureGen program in future budget requests. The report also “makes no assumptions on the future use of deferred clean coal technology funds.” This is a change from the preferred House version of the bill which designated $237 million for the FutureGen project.
Fossil R&D Funding: $579.9 provided ($635.8 million requested).
- $18 million for FutureGen (transferred from the Clean Coal Technology Account (administration requested $237 million, but the appropriated level is consistent with the DOE's program plan for the project).
- $50 million provided for the Clean Coal Power Initiative (CCPI) (requested level); the amount is $55 million less than the House level. The report states that funding for the CCPI "will need to be increased substantially in fiscal year 2006 to keep this initiative on schedule."
- $288.1 million for base coal research and development programs ($183.1 million requested by the Administration): $208.6 million for Central Power Systems and $79.5 million for Distributed Power Systems.
Office of Industrial Technologies (OIT)
Funding: The Mining Industry of the Future Program was funded at $3.994 million (the requested level was $1.7 million), a level urged by NMA and its member companies, and significantly above the administration’s request. The House version funded the program at $4 million and the Senate funded it at $3.8 million.
Energy Information Administration (EIA)
Funding: $85.0 million was provided (the amount requested by the administration).
DEPARTMENTS OF LABOR (MSHA), HHS (NIOSH):
Mine Safety and Health Administration (MSHA)
Funding: $281.5 million provided ($275.5 million requested by the administration).
- $2 million provided for mine rescue and recovery activities.
- $750,000 provided for infrastructure improvements at the Mine Academy in Beckley, WV.
- $3 million provided Wheeling Jesuit University for the National Technology Transfer Center for a coal slurry impoundment pilot project.
Federal Mine Safety and Health Review Commission (FMSHRC)
Funding: $7.8 million provided the FMSHRC (level requested by the administration).
National Institute for Occupational Safety and Health (NIOSH)
Funding: $323.4 million was provided for NIOSH ($278.5 million requested by the administration). The bill also provided an additional $4.28 million for the mining research program above the $42.0 million requested by the administration.
Language: NMA led a group of industry and labor unions to accomplish favorable outcomes for NIOSH. The bill and report concurred with the Senate language sought by NMA directing the Center for Disease Control (CDC) to make no changes to NIOSH’s current operating procedures, and organizational structure. In addition, the bill adopted the Senate language regarding a 3 percent cap being placed on the operating, personnel and business expenses charged NIOSH by the CDC.
U.S. ARMY CORPS OF ENGINEERS - CIVIL WORKS:
Funding: Included in the Energy and Water Development Appropriations Bill is $4.7 billion for the U.S. Army Corps of Engineers Civil Works Program. This amount is approximately $485 million more than the $4.215 billion request by the administration. Of the $4.7 billion, Construction General receives $1.796 billion ($1.421 billion, administration request), Operations and Maintenance receives $1.959 billion ($1.926 billion, administration request) and General Investigations receives $144.5 million ($90.5 million, administration request).
Language: The report accompanying the bill acknowledged that historically the U.S. Army Corps of Engineers has done an “outstanding job” of managing the hundreds of water resource projects throughout the United States that “greatly contributed to our economic security”.
However, the report did outline concerns regarding the awarding of multi-year contracts and the “reprogramming” of funds from one project to another. The report cautioned the Corps that it needs to continue the progress it has made in resolving issues related to the awarding of multi-year contracts by regaining control of all parts including the execution of the program appropriated to the contract. The report cautions the awarding of multi-year contracts is a privilege that can be revoked. Regarding the “reprogramming” privilege, the Report provides guidance to the Corps of Engineers regarding the definition, criteria for reprogramming, budget limits and reporting requirements to Congress.
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EPA releases Notice of Data Availability for Clean Air mercury rule
The Environmental Protection Agency (EPA) this week released a “Notice of Data Availability” (NODA) for its proposed Clean Air Mercury Rule. The NODA summarizes the more than 680,000 public comments received during the comment period and solicits further comment on new data and information to help EPA evaluate which regulatory approach will best reduce mercury emissions from power plants.
The NODA is part of the EPA process toward delivering a final mercury rule by March 15, 2005. The rule, aimed at reducing power plant mercury emissions, was initially proposed on Jan. 30, 2004.
EPA said it received a number of modeling analyses from various groups, including both industry and environmental groups. NMA earlier submitted a critique of EPA data, in which the association said the poor quality of the agency’s data, drawn only from a limited number of coal types and operating conditions, resulted in proposals that would prevent existing and new power plants from utilizing substantial portions of the nation’s coal reserves. EPA said the NODA shares the various analyses it has received and seeks additional comment on the models and assumptions used.
EPA Administrator Mike Leavitt has outlined five guiding principles that provide context for additional inquiry and that narrow the focus of the Agency’s deliberations. They include: (1) concentrating on the need to protect children and pregnant women from the health impacts of mercury; (2) stimulating and encouraging early adopters of new technology that can be adequately tested and widely deployed across the full fleet of U.S. power plants utilizing various coal types; (3) significantly reducing total emissions by leveraging the $50 billion investment that CAIR (Clean Air Interstate Rule) will require; (4) considering the need to maintain America’s competitiveness; and (5) comprising one of many agency actions to reduce mercury emissions.
In December 2003, EPA proposed two alternatives for controlling mercury. One approach would require power plants to install controls known as “maximum achievable control technology” (MACT) under section 112 of the Clean Air Act. If implemented, this proposal would reduce nationwide mercury by 14 tons or about 30 percent by early 2008. Currently, nationwide mercury emissions from power plants are about 48 tons per year.
A second approach would create a market-based “cap and trade” program that, if implemented, would reduce nationwide power plant emissions of mercury in two phases. Beginning in 2010, the first phase would reduce power plant mercury emissions by taking advantage of “co-benefit” controls – mercury reductions achieved by reducing SO2, and NOx emissions under the Clean Air Interstate Rule. In 2018, the second phase of the mercury program sets a cap of 15 tons. When fully implemented, mercury emissions would be reduced by 33 tons (nearly 70 percent).
As part of its leadership role in the mercury debate, NMA has strongly espoused a phased-in national cap-and-trade program and sought assurances, publicly reiterated several times in recent weeks by Leavitt, that any final rule would not play favorites among coal types and regions.
The rule was published in the Federal Register on Dec. 1 (http://edocket.access/gpo.gov/2004/pdf/04-26579.pdf). EPA said it will take comment on this action for 30 days after publication. For more information on the NODA, visit: www.epa.gov/mercury/control_emissions/noda.htm; on the Clean Air Mercury Rule, visit: www.epa.gov/air/mercuryrule; and on the Clean Air Interstate Rule, visit: www.epa.gov/interstateairquality.
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Mining’s TRI data available electronically
The mining industry’s Toxics Release Inventory (TRI) reports for calendar year 2003 are available on a site-specific basis at the Environmental Protection Agency’s website, www.epa.gov/tri-efdr.
As in the past, NMA expects mining facility reports to be characterized by the following overall results:
- Over 98 percent of the weight of substances reported by mining operations occurs naturally in the local rock and soil and remains in low concentration in the large amount of this material handled and managed at the mine sites. This single characteristic continues to set mining operations' reports apart from those provided by other reporting industries; and
- Mining operations will represent approximately 0.2 percent of all air releases reported; 0.5 percent of all releases to surface waters; and 3 percent of total transfers to offsite treatment.
The reports reflect a commitment by EPA and the mining industry to make TRI data publicly available on an accelerated time table through the launch of EPA's "Electronic Facility Data Release," or e-FDR. The e-FDR system facilitates access to TRI reports on a form-by-form basis. (EPA will provide aggregated data and trend analyses of the 2003 reports at a later time.)
Under the TRI program, mining operations and other industries are required to file reports with EPA on their release of any of nearly 650 chemicals on July 1 of each year for the prior year's results. In past years, EPA has made the data publicly available the following spring.
For additional information on TRI, please visit NMA's web site, www.nma.org/policy/tri/tri_index.asp.
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Low dollar, burgeoning demand continue to boost metals
Major metals continue to benefit from record dollar value lows and burgeoning demand, industry analysts said this week.
Gold futures recently hit a 16-year high of $457 a troy ounce on the Comex division of the New York Mercantile Exchange, the first time gold has risen above $450 an ounce since 1988. Meanwhile, the dollar hit three straight days of record lows against the Euro.
Gold has risen by about 13 percent in the past two months. Kamal Naqvi, a precious metals analyst with Barclays Capital, told the New York Times investors might well push gold prices higher, toward $460, and other analysts suggested it could go a lot higher if the dollar weakens further. “A number of people in the gold market are coming in assuming further losses in the dollar,” he said.
Copper prices, meanwhile, have also risen consistently on speculation of a further weakening in the U.S. dollar. “Copper should continue to go up,” Tim Evans, an analyst at IFR Markets in New York, told Bloomberg. “The weaker U.S. dollar supports the advance.”
Fourteen of 24 copper producers, traders and analysts surveyed by Bloomberg on Nov. 24-25 said prices will rise. Eight expect a drop and two forecast little change. The U.S., the world’s biggest copper consumer after China, is using more of the metal in construction – housing starts in October rose 6.4 percent to an annual rate of 2.03 million units, according to U.S. Department of Commerce data.
China’s demand grew 17 percent in the first half of the year, as its economy expanded 9.7 percent. The growing demand and shortfall in production has spurred users to withdraw metal from stockpiles, analysts said. Inventories monitored by the London Metal Exchange (LME) fell 7.2 percent recently to 59,450 tons, the lowest since July 1990. “Drawdowns in global copper inventories remain supportive of prices,” said Mark Crawshaw, an analyst at Mitsui Bussan Commodities in London.
Other analysts said the dollar’s weakening has helped boost purchases of dollar-denominated metals by both users and investors seeking an alternative to the U.S. currency.
A report by Goldman Sachs JBWere Ltd. said zinc prices may rise 15 percent next year as surging demand in the U.S. and China drain global stockpiles. Zinc prices were forexast to average 54 cents a pound, or $1,190 per ton, in 2005, from 47 cents, or $1,036 per ton this year, Goldman Sachs analysts Malcom Southwood and Paul Gray told Bloomberg.
Prices of zinc rose 25 percent in the past year to $1,159 a ton on the LME as mills in China, the world’s biggest consumer, use more of the metal to make galvanized steel for new buildings and automobiles. China is expected to use 9 percent more zinc, and the U.S. 3.5 percent more, causing global demand to be 215,000 metric tons more than mine production next year, the analysts said.
Goldman Sachs also increased its forecast for average lead prices by 13 percent to 40 cents a pound, or $882 a ton, in 2004 on stronger-than-expected demand for the metal in China, the U.S. and Europe. Forecast prices for next year increased 15 percent to 38 cents a pound, or $838 a ton. Prices of lead, which is mostly used in batteries, have risen 54 percent in the past year. Global lead demand is forecast to rise 3.1 percent this year to 7.1 million tons, leaving a deficit of 194,000 tons, analysts said.
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NMA urges COE to retain and revise Appendix C
In comments recently filed with the U.S. Army Corps of Engineers (COE), NMA urged the agency to retain and revise its Appendix C procedures for the protection of historic properties, rather than revoking the rules and using possibly more burdensome regulations of the Advisory Council on Historic Preservation (Council).
The comments were in relation to an advanced notice of proposed rulemaking titled: “Processing of Department of the Army Permits; Procedures for the Protection of Historic Properties (33 C.F.R. Part 325, Appendix C).”
Among other things, the association also made several specific suggested revisions to Appendix C, including:
- allowing permittees to work directly with State Historic Preservation Officers (SHPO);
- clarifying that the final decision on whether effects are adverse must rest with the Corps and not with the Council;
- narrowing the definition of “historic property”;
- clarifying that if there is no SHPO response within 30 days, the Corps should move on with the process;
- adding limits on Council involvement in Corps decision-making consistent with criteria in Appendix A of council regulations;
- shortening Council comment period from 60 to 45 days to speed permit processing;
- changing the requirement for permit conditions from “shall” to “may” to reflect the fact that the Corps may allow adverse effects as long as the impacts are considered; and
- changing the provision on permit revocation for post permit discoveries;
NMA also urged the Corps to retain their existing definitions of “permit area,” designated historic property,” and “undertaking” because they are favorable.
NMA members seeking additional information on the comments should contact Bradford Frisby at 202-463-2643, or bfrisby@nma.org.
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Hecla Mining Co. CEO Baker to chair day-long silver session
Hecla Mining Co. President and Chief Executive Officer Phillips S. Baker, Jr., of Hecla Mining Co. will chair a day-long session covering silver and the silver market on Thursday, Dec. 9, at the Northwest Mining Association annual convention in Spokane, WA.
Titled “Silver: The Coming Explosion?!”, the session will feature renowned experts on silver and the silver markets. The Silver Session will consist of silver economists and market analysts, junior silver company presentations, experts on the demand and use of silver and silver geological information.
Speakers include Michael DiRienzo, Executive Director of The Silver Institute; Ron Davies from the Silver Users Association and President of Ames Goldsmith; Jeffrey Christian, Managing Director of the CPM Group; David Kass, Senior Economist from the U.S. Commodity Futures Trade Commission; and David Morgan, precious metals analyst and host of Silver-Investor.com. The session will also feature a look at silver deposits around the world, as well as presentations from several junior silver mining companies.
The Silver Session will be held from 8:30 a.m. to 5 p.m. on December 9, at the Red Lion Hotel at the Park, as part of the NWMA three-day exposition. Full three-day convention registration is available at www.nwma.org, or register for one day only for the Silver Session and Exposition Trade Show at a reduced rate by calling 509-624-1158, ext. 10.
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‘Mine the Vote’ maximized mining’s participation in election
NMA’s Mine the Vote grassroots effort provided a simple grassroots platform that ensured the mining industry was fully engaged in the democratic process this election year.
From voter mobilization to voter education – the response of the mining industry was tremendous. 15,000 individuals visited the website from all 50 states in the past few months and nearly half of those who visited gathered voter registration and early voting information. Some 10,000 “Mining Matters” bumper stickers were distributed in targeted states and several leading mining companies developed voter guides, held employee briefings and produced direct communications from their senior executive leadership promoting this grassroots effort.
The impact of Mine the Vote and other business related employee mobilization efforts was significant and important. Voter turnout increased by 5 percent or more in the major mining states of Alabama, Kentucky, New Mexico, Nevada, Ohio, Pennsylvania and West Virginia. Additionally, NMA was able to harness the energy of the election by speaking about the public policy issues that govern the industry and expand its political reach as 2,500 new advocates joined NMA’s public policy grassroots campaign.
Opponents of the mining industry will not be deterred by the results of the election and the success of industry voter outreach program. Deb Callahan (President – The League of Conservation Voters) has already targeted the 2006 elections by stating, “we’ll play the green card against lawmakers who side with industry,” and Sen. John Kerry (D-MA) has stated he plans to play a major role in the upcoming Senate battles over energy policy.
Going forward, the Mine the Vote campaign will need to be an even larger part of the grassroots efforts of NMA. To make the program even better NMA needs to hear from users in the mining industry. How we can be more successful in the future? What creative ideas NMA can use to further expand its political impact? Send your comments and ideas to Marc Ross by email (mross@nma.org) or visit www.minethevote.org to access the online survey.
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Newsbits
Apollo Gold Corp. said Gerald J. Schissler has resigned as a member of the company’s board, effective immediately . . . . The University of North Dakota Energy & Environmental Research Center has been selected to lead a $2.3 million project at TXU Energy’s Big Brown Station near Fairfield, TX, to test promising control technologies for removing mercury from coal-based power plants burning Texas lignite. The U.S. Department of Energy’s National Energy Technology Laboratory will fund $1.5 million of the project, which uses activated carbon injection . . . . The Missouri Minerals Education Foundation will receive the 2004 Prazen Award for excellence in educational programs about mining and minerals. The award, created in 1995 by Utah artist and sculptor Gary Prazen, is given to a company or organization that has been instrumental in educating the public as to the importance of mining and minerals in our society . . . . A team lead by the University of Kentucky Research Foundation recently signed an agreement to begin work on a $9 million cost-shred project under the first round of the 10-year, $2 billion Clean Coal Power Initiative. The project will focus on reducing greenhouse gas emissions and involves the building of a near-commercial-scale coal utilization byproduct beneficiation plant on the grounds of the 2,200 megawatt Ghent Power Station in Ghent, KY . . . . The Society for Mining, Metallurgy and Exploration Inc. (SME) recently announced that John Carter, manager-mining properties maintenance and restoration for the Doe Run Co., has been selected to receive the 2004 Environmental Division Distinguished Service Award. The award recognizes an active SME member for outstanding achievement and improvement of environmental performance within the minerals industry . . . . The U.S. Senate confirmed four presidential appointees to senior positions within the Environmental Protection Agency: Stephen Johnson, deputy administrator; Ann Klee, general counsel; Charles Johnson, chief financial officer; and Benjamin Grumbles, assistant administrator for the Office of Water . . . . Wartsila North America Inc. has signed a contract with Barrick Goldstrike Mines Inc. to build the largest gas-fired engine power plant in the U.S. for Barrick Mines in Nevada. The plant is expected to be commercially operational by October 2005 and will be located about 15 miles east of Reno, serving Barrick’s property in the northeastern part of the state.
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