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MiningWeek Online
January 21, 2005 Volume 11, Issue 3
This Week's Issue:
Federal technology program, regulatory certainty are critical elements of public policy, Gerard says
A “robust federal program” for advanced technologies, as well as “regulatory certainty,” are critical elements of public policy for supporting “expanded utilization of clean coal,” NMA President and CEO Jack N. Gerard said this week at a conference attended by the Washington news media.
Participating in the U.S. Energy Association’s (USEA) “State of the Energy Industry 2005” panel at the National Press Club in Washington, Gerard said the marketplace has played a key role in the keen interest in energy policy, as well as coal’s resurgence, in recent years. “Energy prices are higher, more volatile and offer little assurance to consumers and manufacturers that they will stabilize, let alone fall back to the levels we once knew.”
Gerard added: “Our nation’s energy security has become somewhat problematic in the past few years – and consequently we no longer take the availability of reliable, low-cost energy for granted.”
This realistic approach has affected how coal is now viewed. “In the space of just a couple of years,” he said, “we’ve seen an unprecedented resurgence in the U.S. coal industry. Demand last year broke all records. Coal production is up impressively in both the East and Western regions of the country. Investors have taken notice and boosted the valuations of coal companies. And energy companies have recognized coal’s abundance, reliability and low cost by announcing more plans for building coal-based units in the past 12 months than they have in the past 12 years.”
Behind coal’s resurgence are several key factors, Gerard noted – a growing demand for electricity that will continue to expand by 45 percent or more over the next 20-to-30 years; coal’s lower cost than competing fuels for electricity generation; and the effect of clean coal technologies in reducing nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions from coal-based plants.
Public policy needs to rise to the occasion to ensure continued low cost energy in an era of dwindling supplies and growing demand for electricity, Gerard said. From coal’s perspective, key policy elements include a “sustainable, robust federal program for advanced coal technologies that will make coal combustion more efficient, cleaner and will be available for export to developing economies to help control their emissions as we are controlling ours.” Because the resurgence in coal use is global, Gerard said, “other governments should join the U.S. in supporting an array of innovative technologies” that “will have less overall economic cost and provide greater efficiency than can be achieved through command-and-control regulation such as MACT (maximum available control technology) or arbitrary carbon caps.”
Gerard said no one today “can predict which technology or suite of technologies will yield the greatest value tomorrow. Technology is changing too fast, the findings of science may change basic assumptions and the regulatory climate is too uncertain. That is why it is misguided to support technology by mandating a specific approach. Central planners had no more success when they tried to set price or production quotas,” he said. “Another critically important objective of energy policy should be regulatory certainty” that gives utility companies facing massive capital investments in new plants and equipment “a clearer picture of what standards they will be expected to meet.” A good example of such an approach, he concluded, is President Bush’s Clear Skies Initiative.
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PGA Nationwide Tour names NMA-sponsored Pete Dye tournament ‘Charity of the Year’
The “Pete Dye West Virginia Classic” co-sponsored by NMA last July not only showcased mining reclamation, it benefited children’s charities around the state. In recognition of the latter, the PGA Nationwide Tour recently selected the tournament, co-sponsored by NMA and the state of West Virginia, as its “Charity of the Year” for 2004.
NMA served as a presenting sponsor and primary paid advertiser for the tournament, held on the Pete Dye course near Bridgeport, WV. The 250-acre course with a coal mine theme is constructed on reclaimed mine land. NMA’s television ads, featuring reclamation at coal and hardrock mines across the country, were carried on the Golf Channel throughout the tournament. In addition, there was significan regional media attention to NMA’s sponsorship and mining reclamation projects throughout the state.
The inaugural Pete Dye tournament, operated by the West Virginia Golf Charities, raised $100,000 for various children’s charities around the state. It will receive a check for $25,000 from the PGA Tour in recognition of its selection as Charity of the Year. Jimmy LaRosa, president of West Virginia Golf Charities, said: “On behalf of Pete and Alice Dye, the state of West Virginia, the National Mining Association and the sponsors and volunteers of the Pete Dye West Virginia Classic, we humbly accept this award from the PGA Tour. We are thrilled to be able to help children’s charities throughout the state by operating this wonderful Nationwide Tour event.”
NMA’s Carol Raulston, senior vice president-communications, said the association is “proud to be associated with this important sporting event, not only because of the positive image of coal mining that holding the tournament on reclaimed mined land conveys, but especially for the benefit to West Virginia children’s charities. We believe this event reinforces both the integral role of reclamation in modern mining and the commitment by the mining industry to local communities.”
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U.S. is ‘increasingly’ import dependent for minerals, USGS report says
The United States is “increasingly reliant on foreign sources for raw and processed mineral materials,” says the latest edition of the U.S. Geological Survey’s (USGS) Minerals Commodity Summary 2005, released last week.
“Imports of raw and processed mineral materials increased by about 30 percent (in 2004) from the previous year’s level, to a value of about $66 billion,” USGS said. “As in recent years, aluminum, copper and steel were among the largest imports in terms of value.”
According to the USGS data, the U.S. is now 100 percent import dependent on 17 major minerals, ranging from bauxite and alumina (used in making aluminum) to more exotic commodities, such as columbium, indium, strontium and yttrium, all essential for the manufacture of electronic devices. In some cases, the U.S. has reserves of critical minerals, but is import dependent. One example is titanium, a primary metal used in aircraft frames, turbine engines and space vehicles, for which the U.S. was more than 65 percent import dependent in 2004.
NMA President and CEO Jack N. Gerard said the growing import reliance trend confirmed by the USGS study underscores the fact that in spite of U.S. advantages over other countries – such as general market and economic conditions and political stability – “we clearly are being disadvantaged by even more compelling barriers.”
Gerard noted that according to numerous analyses, including those of the National Research Council and the U.S. Bureau of Labor Statistics, “these barriers include the uncertainty of the public policy environment as it applies to mining, the complexity of U.S. regulations, and the time delays and excessive costs associated with permitting.”
“Unless we develop a comprehensive National Minerals Policy for the United States that effectively addresses these and other concerns, the import reliance trend identified by the USGS is likely to grow and deepen in the years ahead, posing a serious challenge to the nation’s security and economy,” he added
Included in the USGS report:
· The U.S. has moved ahead of Australia to become the world’s second largest gold producer;
· Major industries that consume processed mineral materials added $1.97 trillion to the U.S. Gross Domestic Product of $11.7 trillion in 2004;
· The estimated value of all mineral-based products manufactured in the U.S. during the year increased by about 13 percent to $418 billion, when compared with 2003;
· Metal mining “continued to be depressed in the United States”; aluminum is “increasingly produced offshore in areas with cheaper energy”;
· The U.S. mining and mineral processing industries “continued to lose both jobs and, in many cases, production while productivity continued to improve.”
· California ($3.6 billion) ranked first in value of nonfuel mineral production, followed by Nevada ($3.3 billion), Arizona ($3 billion), Texas ($2.4 billion), and Florida ($2.2 billion).
The full report can be accessed at minerals.usgs.gov/minerals/pubs/mcs/2005/mcs2005.pdf.
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First meeting under MOU signed at NMA in December scheduled Feb. 17-18
The first meeting of U.S. and Canadian government representatives, including industry participation, resulting from the recently signed Memorandum of Understanding will be held Feb. 17-18 in Ottawa, Canada. The MOU encourages bi-lateral cooperation in the promotion and development of metals and minerals industries and was signed at NMA last month.
The MOU spells out areas of reciprocal understanding and cooperation for enhancing the economic and scientific value of the minerals and metals resources that both countries have in abundance. Signing the document at NMA in December were Joseph Bogosian, deputy assistant secretary for manufacturing, U.S. Department of Commerce, and his counterpart, Gary Nash, assistant deputy minister for minerals and metals sector, Department of Natural Resources, Canada.
NMA President and CEO Jack Gerard, who hosted the ceremony, noted the two countries “share not only a common border, but an abundance of metals and minerals. With this agreement, we can now combine our mining and technology expertise to make better use of these valuable mineral resources.”
If you would like more information about the meeting in Ottawa please contact Connie Holmes at cholmes@nma.org.
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Caterpillar donates $12 million to The Nature Conservancy’s Great Rivers Partnership Project
Caterpillar Inc. said it is the lead corporate donor in The Nature Conservancy’s Great Rivers Partnership project, committing $12 million over the next five years to the endeavor. “It is the largest outright corporate gift in The Nature Conservancy’s history and the second largest gift ever granted in the Caterpillar Foundation’s 50-year history,” CAT said.
The Great Rivers Partnership project will support the conservation of large river systems that supply fresh water to approximately 550 million people on three continents: the Upper Mississippi River (US), the Paraguay/Parana River (Brasil) and the Upper Yangtze River (China).
The project will “create the core for a center of excellence on conservation of large river systems, the Great Rivers Center for Conservation and Learning,” CAT said. “This ambitious project will guide protection of the world’s vanishing freshwater supply and transform the way conservation is done on large working river systems. I’m very proud that Caterpillar is taking the lead on this visionary project,” said Chairman and CEO Jim Owens. “The Great Rivers Center for Conservation and Learning is an inspiring effort which many of our environmental associates will rally around, to bring a collaborative effort to the conservation forefront.”
The freshwater systems chosen for the Great Rivers Partnership will benefit as incubators for The Nature Conservancy’s development of large river conservation models. These models can demonstrate their effectiveness in these river systems as they are implemented and tested.
The learning from these projects will be a valuable resource for other water restoration efforts in the future through the Great Rivers Center.
Caterpillar’s $12 million commitment makes it the second-largest Caterpillar gift to date. “We’ve made a strong commitment to social responsibility in all the communities where we do business. Demonstrating social responsibility cannot be done by merely talking about it, but must be put to work funding the projects and programs which will change our world for the better,” said Owens.
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State of Illinois issues air permit for Peabody’s Prairie State Energy Campus
The State of Illinois this week issued the air permit for the $2 billion-plus Prairie State Energy Campus, a major coal-fueled electric generating station and coal mine planned for Washington County, Ill.
“The permit marks a major milestone in the development of the project,” said Peabody Executive Vice President of Corporate Development Roger B. Walcott Jr. “It is a testament to Peabody’s commitment to create clean, environmentally friendly energy in Illinois.” Peabody said the plant, which would be one of the largest coal-based facilities approved in the nation in the past 20 years, would also be among the cleanest.
Prairie State received its air permit following three years of rigorous environmental review, multiple public comment periods and extensive community input. The project will invest more than $500 million in control technologies, enabling the plant to use abundant Illinois coal reserves while achieving very low emissions levels.
Peabody said the 1,500-MW facility and an adjacent coal mine would employ 450 people full time – up to 2,500 workers will be needed to build the plant.
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Hecla acquires ‘significant’ gold district in Venezuela
Hecla Mining Co. said it has signed a letter of intent to acquire the Guariche gold project, which would more than double the company’s land position in Venezuela.
Hecla said it is the largest gold producer in Venezuela, with significant land holdings in the El Callao and El Dorado gold districts. With the acquisition of the Guariche property, the company will have some of the most prospective gold targets in three separate gold districts in the country.
To obtain the property, Hecla will acquire the shares of the subsidiary corporations of Triumph Gold Corp., which collectively control the concessions. The transaction is subject to approval of Hecla’s board of directors, as well as the shareholders of Triumph. Triumph’s board of directors has already given authorization to proceed with the transaction.
The project consists of over 20,000 hectares of mineral concessions in the country’s Bolivar State. Robust veins have been identified from historic alluvial mining in the area, and Triumph reports surface gold mineralization previously identified on the property of 13.6 million tonnes at 2.03 grams per tonne. Extensive drilling, engineering and other work would be necessary to confirm the mineralization.
Hecla has proposed to issue to Triumph 1.24 million units of stock, each unit consisting of one common stock and one warrant entitling the holder to purchase one additional common share for a period of three years. The warrant exercise price shall be the average closing price of Hecla’s shares for the 10 days preceding closing.
In addition to the stock and warrants, Hecla has agreed to a cash payment to Triumph of $75,000, as well as giving Triumph the right to earn in to two of Hecla’s other Venezuelan concessions by conducting exploration on the properties. Hecla has the right to buy back into the properties and operate them. Hecla also has a back-in right on Triumph’s Las Flores property.
Hecla’s President and Chief Executive Officer, Phillips S. Baker, Jr., said, “This will more than double our land position in Venezuela to over 150 square miles in three districts. The Guariche gold district is separate and distinct from the El Dorado and El Callao districts where we already hold ground, giving us the best land position in the country.”
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Newsbits
CONSOL Energy Inc. has named Patricia A. Malanos as vice president-human resources. She most recently was a principal in the Pittsburgh office of Mercer Human Resource Consulting, a firm that provides human resources counseling for a variety of multinational corporations . . . . Barrick Gold Corp. has appointed Rich Haddock as vice president, environment, replacing John McDonough, who recently became vice president, Chile/Argentina. Prior to the appointment, Haddock held the position of regional counsel, North America, and senior counsel, U.S. operations . . . . The Ohio Air Quality Development Authority and its Ohio Coal Development Office have announced a request for proposals for clean coal technology projects that will promote the clean use of Ohio coal in one of five categories. For more information, visit www.ohioairquality.org/ocdo/other_pdf/RFP2005.pdf.
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