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MiningWeek Online
February 4, 2005 Volume 11, Issue 5
This Week's Issue:
NMA applauds President’s State-of-the-Union energy and environmental initiatives
NMA President and CEO Jack N. Gerard this week applauded the energy and environmental initiatives included in President Bush’s Wednesday State-of-the-Union address.
Gerard said the president “highlighted practical measures to strengthen our energy independence and improve our environment. We join him in calling on Congress to support without further delay comprehensive energy legislation, advanced clean coal technology, and the Senate’s Clear Skies approach for guaranteeing further reductions in power plant emissions (see separate story).”
Although social security reform and the war on terror received much attention in national press coverage of the address, Bush strongly endorsed the passage of national energy legislation and his Clear Skies plan, as well once again mentioning clean coal technology.
“To keep our economy growing,” he said, “we also need reliable supplies of affordable, environmentally responsible energy. Nearly four years ago, I submitted a comprehensive energy strategy that encourages conservation, alternative sources, a modernized electricity grid, and more production here at home,” Bush said.
“My Clear Skies legislation will cut power plant pollution and improve the health of our citizens. And my budget provides strong funding for leading-edge technology from hydrogen-fueled cars, to clean coal, to renewable sources such as ethanol.”
Bush added: “Four years of debate is enough. I urge Congress to pass legislation that makes America more secure and less dependent on foreign energy.”
Bush also noted the “archaic, incoherent federal tax code,” and referred to a bipartisan panel he established to “examine the tax code from top to bottom (see separate story).” When their recommendations are complete, he told Congress, “you and I will work together to give this nation a tax code that is pro-growth, easy to understand, and fair to all.”
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NMA urges prompt passage of Clear Skies Act
Through a series of activities, including leading a multi-industry coalition, direct advocacy with key senators, issuing a press statement, sending letters to the Senate and communications with Senate staffs, NMA this week strongly urged the Senate to “act favorably this year on multi-emissions legislation such as S. 131, the Clear Skies Act of 2005.”
The legislation, formally introduced last week by Sens. James Inhofe (R-OK) and George Voinovich (R-OH), was the subject of a hearing this week by the full Environment and Public Works Committee, chaired by Inhofe. The chairman has set an aggressive timetable for the legislation, which would require a 70 percent reduction in nitrogen oxide, sulfur dioxide and mercury from power plants in two phases (2010 and 2018), with hopes of a floor vote by spring at the latest.
In a press statement, NMA President and CEO Jack N. Gerard said the Clear Skies Act will pay immediate dividends to the nation in two fundamental respects: “First, it promises continued and significant reductions in emissions from coal-fired plants that generate over half of the nation’s electricity. Second, it gives states and utilities the assurance they need to get on with the urgent task of building the next generation of power plants to fuel the nation’s economic growth.”
Gerard said S. 131 “offers a timely remedy to the decade-long conflict between policies that have favored natural gas utilization and environmental policies that discourage natural gas production. The predictable result - less fuel diversity and spiraling energy prices - has cost the country manufacturing growth and high-wage jobs. It would break this cycle. We commend its Senate supporters for proposing a solution that would moderate energy costs at the same time it improves air quality.”
Elaborating further in the Senate letter, Gerard said S. 131 is “urgently needed so that the nation’s manufacturing and agricultural sectors can recover from the effects of years of soaring natural gas prices brought on by an over-reliance on natural gas to fuel over 90 percent of the new power plants built in the 1990s.” He noted, “Coal remains our most abundant domestic source of energy; thus, multi-emissions legislation must permit continued use of all coals without disadvantaging any coal type.”
Among the witnesses during the hearing this week was James L. Connaughton, chairman of the White House Council on Environmental Quality, who also strongly urged the Senate to pass the legislation, which President Bush also emphasized in the State of the Union address (see separate story). Connaughton said: “The market-based trading approach will substantially cut the overall cost of compliance that is passed on to consumers and shareholders. In addition, the specific cap levels in Clear Skies -- endorsed by organizations such as the U.S. Conference of Mayors and National Association of Counties -- are calibrated to encourage utilities to put controls on coal rather than switch to natural gas in order to comply. That minimizes the overall impact on energy prices. Forcing fuel switching to natural gas, by contrast, maximizes it.”
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High iron ore demand expected to continue, Duluth paper reports
Iron ore pellet prices are likely to increase significantly in 2005 for the second consecutive year, a sign of high worldwide demand for the raw material used to make steel, the Duluth News Tribune reported this week.
Several of the world’s largest iron ore producers are seeking iron ore price increases of 30 percent to 50 percent or more, Peter Kakela, a Michigan State University professor and iron ore industry analyst told the paper. Annual negotiations between iron ore suppliers and steelmakers traditionally begin in January and can take two or three months, the News Tribune said.
Officials of Minnesota’s iron ore industry told the paper a price increase would reflect a healthy market and strong demand. But some Minnesota Iron Range producers already have long-term pellet-supply contracts in place that would not be affected by an international price increase, said Frank Ongaro Jr., president of the Iron Mining Association of Minnesota. Other Iron Range mines, which provide iron ore pellets directly to a captive owner, wouldn’t stand to gain much from a price increase.
“Some contracts are already in place with inflation factors,” Ongaro said. “Obviously, demand for the product has already driven prices upward. And the fact that there’s this type of talk about these kinds of prices means that they expect the demand to be there for a while.”
Six Northeastern Minnesota taconite plants are cumulatively expected to produce about 40.6 million tons of iron ore pellets in 2005. Production expansions at United Taconite in Forbes and Northshore Mining Co. in Silver Bay, along with full-out production at Northeastern Minnesota’s other four taconite plants, are major reasons behind the strong 2005 forecast. A jump in iron ore prices would also benefit Cleveland-Cliffs, a Cleveland-based supplier of iron ore pellets that has an ownership stake in six North American iron ore mines, the News Tribune reported.
The paper said prices for a ton of iron ore could rise to $50 or more per ton from about $35 per ton when negotiations are complete.
Some iron ore companies negotiate in the European market and others in the Asian market, Kakela said. “But when they’re done, prices are set for the year, and they’re usually within a half penny of each other.”
While an increase in international iron ore prices would benefit foreign producers, the paper reported, it also makes foreign ore more expensive to ship into the United States. The result is additional long-term security for North American iron ore producers that ship to Great Lakes basin steelmakers, Kakela said.
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Kentucky lawsuit ‘another attempt to stop coal mining,’ Caylor, Gerard say
A lawsuit filed by three environmental groups challenging the U.S. Army Corps of Engineers (COE) re-issuance of Nationwide Permit (NWP) 21 is “another attempt to stop coal mining, not make it more environmentally responsible,” a letter to the editor of the Lexington Herald-Leader said this week.
The letter, sent by Kentucky Coal Association President Bill Caylor and NMA President and CEO Jack Gerard, said the impact of a successful lawsuit by the groups would be “widespread hardship throughout Kentucky’s coal industry and dependent communities, with no legitimate environmental benefit.” The letter responded to a recent Herald-Leader article on the NWP 21 suit.
Caylor and Gerard noted the significant impact of coal mining on Kentucky’s economy, and said the impact of a similar lawsuit filed in West Virginia “was confined by a federal judge to one region and to only future mining operations. In contrast, activists in Kentucky are seeking to enjoin not only mining operations statewide, but also to halt 54 operations dating back to 2002, as well as 27 pending operations awaiting permit approval.”
The two industry leaders said the economic impact would be “further magnified by the consequences of disrupting fuel supply in the face of record breaking demand for American coal needed for generating low-cost electric power for individuals and businesses.”
“In short, this lawsuit’s grossly exaggerated claims of environmental damage are even less compelling when set against the likely cost to all Kentuckians and to millions of other Americans who benefit from Kentucky’s great coal resource.”
The lawsuit, filed Jan. 27, takes the position that the 2002 reauthorization of NWP 21 is contrary to Section 404(e) of the Clean Water Act and certain sections of the National Environmental Policy Act (NEPA). It is based on similar arguments used in the Southern District of West Virginia case, OVEC v. Bulen.
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NMA files comments on FWS Migratory Bird Treaty Act List
NMA filed comments yesterday on the Fish and Wildlife Service’s (FWS) Notice of Availability of its Draft List of Bird Species to Which the Migratory Bird Treaty Act Does Not Apply.
In the comments, NMA supported the intent of the Migratory Bird Treaty Reform Act of 2004, which listed non-native, human-introduced bird species to which the Migratory Bird Treaty Act (MBTA) does not apply. NMA also generally supported the criteria established by the FWS to determine which additional birds should not be subjected to the MBTA.
Finally, NMA provided specific comments on the notice, including some aimed at ensuring that non-native birds that are introduced, supported, or sustained by landscape changes at mining operations are not covered by the MBTA.
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NMA supports Corps’ proposal regarding NWP verification letter expiration
NMA this week said it supports the U.S. Army Corps of Engineers (COE) proposal to issue verification letters that expire on the same date as the expiration date for the underlying nationwide permit (NWP).
In comments filed with the agency, NMA said the current policy of requiring that verification letters be renewed after the two-year term “serves no purpose from an environmental standpoint. Moreover, the impact of a two-year term limitation is that verification letters must typically be renewed at sometime before the project is completed, creating a workload issue for the Corps and an additional regulatory burden for permittees.”
NMA requested COE to “take a hard look at its policy of requiring NWP 21 to be reauthorized before completion of the mining project to which the Section 404 authorization is tied.” The association said the Corps should “return to its original policy that the NWP 21 was viewed as good for the life of the mining project. To decide otherwise only further stresses the Corps’ workload and budget and places an additional but unnecessary regulatory burden on industry while deriving no additional environmental benefits.”
NMA said it supports a NWP system that “minimizes duplication with other environmental permitting requirements” for projects that must secure Section 404 authorizations. “An efficient and predictable NWP program is essential to the mine planning process and ultimately impacts the stability of our nation’s energy and minerals production.”
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Tax panel’s first meeting Feb. 16
The President’s Advisory Panel on Federal Tax Reform will hold its first meeting on Wednesday, Feb. 16, at 10 a.m. in Washington.
According to former Sens. Connie Mack (R-FL) and John Breaux (R-LA), the panel’s chairman and vice-chairman, respectively, the first meeting will provide an opportunity “to hear background information about the federal tax code.” It is the first in a series of public meetings that will be held before the committee submits its final report, due July 31, 2005.
The bipartisan President’s Advisory Panel on Federal Tax Reform was established on Jan. 7 and charged by President Bush with recommending reforms to the tax code that will make the U.S. system “simpler, fairer and more growth oriented.”
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Senate panel to hold March coal conference
The Senate Energy and Natural Resources Committee is planning a March 10 conference “to address the challenge of developing and using coal in an environmentally friendly manner and to help meet the growing U.S. demand for electricity.”
Committee Chairman Pete Domenici (R-NM) and ranking minority member Jeff Bingaman (D-NM) said they are seeking written proposals addressing “any or all of the challenges surrounding coal production and use.” To be considered, the proposals must be received electronically by close of business on Feb. 14. They said the proposals will be reviewed by committee staff and “the most promising ideas will be discussed” at the half-day conference.
The committee, which held a similar conference on natural gas last month, was expected to issue guidelines for the written proposals later this week. NMA will be coordinating its efforts via its Energy Policy Task force – interested NMA members or those seeking additional information can contact John Shelk (jshelk@nma.org), Dave Finkenbinder (dfinkenbinder@nma.org), or Connie Holmes (cholmes@nma.org).
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Newsbits
Newmont Mining Corp. reported record proven and probable gold reserves of 92.4 million equity ounces for year-end 2004, based on a gold price assumption of $350 per ounce. Chairman and CEO Wayne Murdy said, “In 2004, we again exceeded our goal of replacing depletion through exploration and had another year of reserve growth, adding 8.6 million equity ounces” . . . . The U.S. Senate this week confirmed Samuel Bodman as the next secretary of energy. Bodman, 66, was deputy secretary of the treasury and former chairman of chemical-maker Cabot Corp. . . . Golden Phoenix Minerals Inc. said it has sold its 30 percent interest in the Borealis Gold Project to Borealis Mining Co., a wholly owned subsidiary of Gryphon Gold Corp, for $1.4 million . . . . Pin-Hole Technologies, a startup company founded by university graduates that is based in Cardiff, Wales, says it has been able to turn information obtained from ground surveys in Africa, Asia and Australasia into highly visual maps which illustrate quite clearly exactly how much gold could be found in a specific location. The company uses a specialized desktop mapping system to create 2D and 3D displays “that allow the most techno-phobic of people to understand how much gold is available and where it is located.” For more information, contact John T. Mulqueen at 212-402-1628 . . . . John J. Dwyer, retired former president and CEO of Oglebay Norton Co. and once a board member of NMA-predecessor the National Coal Association died last Friday in Cleveland, OH, at the age of 87. He led the mining and lake transportation company for a dozen years until 1982 . . . . The Milwaukee Journal-Sentinel reports Joy Global Inc. projected sales growth of up to 33 percent for its mining equipment and Bucyrus International Inc., another Milwaukee-based mining equipment supplier, said it plans to add about 100 workers on top of the 750 it employs, including 125 hired in the last year . . . . Barrick Gold Corp. said that full-year gold production for 2004 reached 4.96 million ounces at an average total cash cost of $212 per ounce. The company also confirmed that it expects 2005 gold production to be 5.4 to 5.5 million ounces at an average total cash cost of $220 to $230 per ounce, and that it remains committed to its 40 percent targeted growth plan and gold production target for 2007 of 6.8 to 7 million ounces.
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