National Mining Association

Toward a Renewed National Minerals Policy:Moving Beyond 3809 in the Public Interest Keynote
Las Vegas, Nevada November 28, 2001

Keynote Remarks by Jack N. Gerard President & CEO
National Mining Association
To The Solid Minerals Conference of The Bureau of Land Management
of The United States Department of the Interior

Thank you, Jim Kohler, for your introduction.

And thank you ladies and gentlemen of the Bureau of Land Management for your welcome and your invitation.
Your day-to-day responsibilities with the mineral estate underlying 700 million acres of America's public land mean that you exercise

Authority in a geographic area larger than most countries;
And authority over a resource base richer than the bases of all but one or, maybe, two other countries.

I can't think of a more fitting venue than this first solid-minerals conference of the new administration to do two things:

First, to ask you to think about the importance of mining to the United States;
And, then, to think about the future of mining in the United States, which right now is a question in search of an answer.

It's been a year and a week to the day since the last administration, in a parting act, undertook to reorient the regulation of mining toward proscription with a rulemaking under Part 3809 of the regulations on the management of the public lands.

The rulemaking created a new power to veto new mines at the last minute that was the same as a decree of expulsion for the American mining industry, the world's most advanced. It meant that investments of millions in prospecting, exploration and development could be wiped away almost at whim. It was a textbook-grade example of deterrence.

Last month the department came forward with revisions that return regulation and practice toward the proposition that a healthy, functioning nation needs a flow of resources: Needs it as much as the body needs a flow of lifeblood.

In her letter of notification to Congress, Secretary Norton proposed a congressional modernization of the General Mining Law this coming year so that the policy disputes of Part 3809 and the last century finally can be left behind.

Before we're finished today I intend to respond constructively, on behalf of the mining industry, to Secretary Norton's constructive leadership. In turn, I will suggest additional positive steps.

It has to do with clarifying the public interest.

Let's put America's mineral reserves and the public lands in a perspective.

There are about 185 nations in the world from Afghanistan to Zimbabwe, but the world's ores and other minerals are not spread evenly among them.

A few years ago a think-tank studied the global distribution of 15 metals with important uses. It found that:

Just 16 nations hold 87 percent of the world's reserves based on value;
Just 5 hold almost 60 percent;
And that the United States was third among the five.

The Soviet Union was first, holding all 15. But that union has been dissolved. The resources were divided among new states of untested stability and uncertain experience with free markets. Second was Australia, a continent, with 13.

The United States has 12 of the 15 metals.

The nationwide mineral estate of 700 million acres claimed for BLM is a little more than 1 million square miles of geographic area that is, in turn:

About one-third the areas of either Australia or Brazil, the nations the think-tank ranked Number 2 and Number 5, respectively;
About four-fifths the area of India, Number 10;
About one-and-a-half times the area of South Africa, Number 6;
More than twice the area of Chile, Number 7;
And more than any single one of 175, or so, other nations, Afghanistan and Zimbabwe included.

The 11 Western states and Alaska account for 75 percent of America's metal production and they contain 90 percent of the public lands.

To tighten the perspective, consider:

Chile ranks first in the world in both copper production and reserves;
And the U.S. is second to Chile in both categories;
South Africa ranks first in the world in both gold production and reserves;
And the U.S. is second in both.

Five geologic areas hold 90 percent of the world's copper. The Western states of the United States comprise one of these. Two others are in institutionally unsettled parts of the world - the former Soviet Union and Africa.

Most copper- and gold-bearing lands are within the BLM purview.

BLM alone is one of the world's foremost holders of mineral reserves - reserves on the public lands.

The United States traditionally ranks first, second or third in world production of 10 metals and more than 15 industrial minerals. We deliver an appreciable share of the world's supply of at least seven other metals and nine other minerals.

In almost all of these we rank either among the top three reserve holders or have reserves significant enough for the itemized listing.
The standard references say an advanced economy requires 75 different minerals. Of these, the United States has 60, which may be the world's largest and most useful combination.

Many occur in the mineral estate of public lands administered by the Bureau of Land Management.
Energy is an item of high concern in policy now, the consequence of renewed potential for instability in world oil, and of this past winter's homemade dislocations in natural gas and electric power.

Let's extend the public-lands perspective into energy.

The U.S. coal reserve of 274 billion tons is the largest single increment of energy in the world within the borders of one country.

A little more than one-third is under federal ownership or control in the West. Think of this as the public-lands increment.

The energy content of the public-lands increment is at least equal to:

13 times the U.S. gas reserve;
4 times the combined gas of North and South America;
And almost four-tenths of the world's known gas.

We import more energy in natural gas from Canada than we do in oil from Saudi Arabia. Recoverable coal on the public lands contains 33 times the energy of the known gas in Canada.

In equivalents to oil, the public-lands increment is at least equal to:

16 times the U.S. reserve;
1.4 times the Saudi Arabian reserve;
And one-half the oil of all the Mid East.

The U.S. coal reserve stands for at least 250 years of electric power at present rates of generation. The public-lands increment is an important part of the national power picture.

Today a significant expansion of power generation is called for in the President's National Energy Strategy, which looks to coal to stabilize domestic energy markets.

Significant shares of private planning center on super-efficient, supper-clean generation in the West. Much added coal use will be in the West.

The public needs power, the public needs metals and industrial minerals, and the public lands hold most of these resources.
So where is the public interest?

Is it in the public interest to deliver these resources from the public lands, or to import them?

Or to try to do without?

Federal statutes and their declarations of intent say one thing. But the evolution of practice says quite another.

The General Mining Law says that:
"…mineral deposits in lands belonging to the United States…shall be free and open to exploration…"

The Mining and Mineral Policy Act of 1970 finds that:
"…it is in the national interest to foster…mining…(and) domestic mineral resources…"

The Federal Land Policy and Management Act of 1976 asserts that:
"the public lands shall be managed…(to recognize) the nation's need for domestic sources of minerals…"

And. The National Materials and Minerals Policy Research and Development Act of 1980 holds that:
"…the continuing policy of the United States (is)…to promote an adequate and stable supply of minerals …to maintain national security, economic well-being and industrial production…"

However, the congressional Office of Technology Assessment has looked at locatable minerals and leasable minerals on public lands.
In the case of locatable minerals and the mining law, OTA found access as follows:

Moderate limitation, 12 percent of public land;
Severe limitation, 16 percent;
And prohibited, 42 percent;
For a total of 70 percent of public land under some restriction for locatable minerals.

In the case of other minerals under the leasing act, it found access as follows:

Moderate limitation, 7 percent
· Severe limitation, 23 percent;
And prohibited, 36 percent;
For a total 66 percent of public land under some restriction for leasables.

To sum up the OTA findings, limits running from severe to outright prohibition apply to:

58 percent of public land for locatable minerals and ores;
And to 59 percent for leasable minerals.

Perhaps even more troubling, the OTA study was done in 1976 and has not been updated.

Let me be very specific here for mining's friends and critics alike: The American mining industry does not now, and never has, wanted to prospect the national park system; we don't want to explore every square mile of the established wildernesses.

But we do believe a serious review is appropriate if we are to secure a healthy mining industry in this country.

Last year's wholesale withdrawals by executive order and regulatory initiative were the culmination of a series of policy disputes that came after the OTA study.

Today no one has a clear idea of what resources and how much land are withheld from public use. But the proportions have grown.

Another mining study was influenced by the questions and consequences of the 1990s - this one by the international consultants Behre-Dolbear & Company.

Behre-Dolbear rated the mining nations of the Western Hemisphere for investors on seven criteria predictive of a project's likely success or failure.

The United States was the worst among 27 nations on the time required to open a mine - worst on the time and expense needed to clear government requirements, to obtain operating permits and to begin mining.

The chief executive of an international company based in the U.S. put it another way when he announced the cessation of exploration here. He simply said, America has made itself inhospitable to the opening of new mines.

And I've heard a smaller operator go more to the point. He asked, why would I want to discover a deposit in the United States and go bankrupt trying to get it permitted?

The criticisms and complaints are not about the stringency of the process. The industry can and does meet stringent environmental requirements every day.

The harm of the process is in its length, its lack of clear objectives and its open-ended nature. It is filled with redundancies and conflicts of the kind complained of by the Western governors in their comments on Part 3809. It can be reopened and reoriented at any point short of finality. And it often is.

In the U.S. it can take 5-to-10 years to clear the requirements of the National Environmental Policy Act and obtain the necessary permits. It can take 10-to-20 years to go from finding a show of minerals to having a mine in production.

Unending due process in administration can come out overdue and unjust in result. And it often does.

The 1990s saw:

A 54 percent decline in operating metal mines over 10 years;
A 66 percent decline for investment in exploration over the last five years;
And, an 88 percent decline for investment in mine development;

Recent hearings in the House of Representatives produced testimony by government, professional and industry witnesses to a number of points that are pertinent to our discussion.

The points include these:

Resources on public lands are a primary advantage for American workers - a comparative and competitive advantage;
Continued withdrawal of public land will deprive rising generations of these advantages and resources;
If we are to replenish the production we have now, we must begin prospecting soon for the metals and industrial minerals of 10 and 20 years hence;
The U.S. is no longer competitive for mineral exploration;
There is no detailed or specific assessment of the resource potential;
And, there is no national systematic assessment of the metallic potential for all the public lands;
But the best general estimate is that at least as much remains to be discovered as has been discovered.

Testimony highlighted that a material can be considered strategic and critical:

When we rely on imports for most of supply;
When only a few nations produce it;
And when it is critical to military and industrial uses.

The criteria for assessing importance include:

The susceptibility of supply to dislocation or disruption;
Net import reliance as an indicator of vulnerability;
And whether critical uses exceed the sum of reasonably secure domestic and foreign supply.

The Materials and Minerals Act of 1980 sets three objectives for policy:

Economic well-being;
Industrial production;
And, national security.

In the economic activity, the most important base metals for industry traditionally are steel, aluminum, copper and zinc. We have the ores for three of the four in ample quantities. Our iron ore is not on public land.

But copper and zinc are public-lands metals. Copper delivers other important metals as secondary products.

Silver, zinc, titanium and platinum are on the traditional list of strategic and critical minerals. Silver, zinc and platinum are public-lands metals.

Copper, gold, lead, molybdenum, phosphate and potash are considered essential to the U.S. and world economies: And every one of them is produced on public lands.

Until its accidental discovery on public land we had no berylliuim, a metal very important in many uses. Now we are a leading producer. The platinum group of metals offers a similar example.

With a rising lack of access to public lands, we are losing the opportunity for the kind of prospecting that might uncover some strategic and critical resources we do not now produce.

Net import reliance is rising for many metals, including some we possess in abundance.

With the loss of exploration, of production and of the ability to produce, we are drifting toward some serious challenges down the line.
In Japan, which has few resources, almost everything is strategic or critical.

In the European Union, which has a few more, almost everything is still strategic and critical.

In the United States, only a policy of ignoring the public-land resources can put us in the position of the Japanese and the Europeans.

America is one of the world's resource-rich nations: Richer in the public lands than whole groups of other nations.

But American mining can't deliver to the public's use that which practice denies the public.

We can produce only where ores and minerals are to be found.

We can continue producing only if we are allowed to prospect and explore.

As U.S. practices grew more constrictive, the political evolution of the world began to work changes in other nations once considered
far too dangerous for investment.

Prospecting and exploration once done in the U.S. has moved to other countries. The next generation of mines is taking form in other countries.

And so, as America's current operating mines are exhausted, and fewer new ones open, imports can be expected to rise even more.

I ask you to consider: What is the public interest in the public lands?

U.S. production stabilizes world markets for many commodities - makes foreign supplies reasonably secure in price and availability.

But once America's capacity and capability to produce are gone - and both are withering - then the equations may well begin to change.
Then world markets will come to depend entirely on the political and economic stability of emerging nations in Asia, Africa and Latin
America: Perhaps could become as dependant in the near future for some important commodity as the world is now on the Mid-East for oil.

America now underwrites the stability and security of the world market for oil with a standing military commitment.

How might the world call on Americans to respond in a prolonged dislocation of other important commodities?

Where does the public interest lie?

The need for natural resources runs back to the Nation's beginnings, and a good place towards which to turn out thoughts is the beginning of the Nation.

The outline of the public interest in the public lands can be seen in the bedrock of the Nation - in the Preamble to the Constitution:

To promote the general welfare;
To provide for the common defense;
To secure the blessings of liberty.

I urge you, if you do not already do so, keep the Preamble in mind when questions arise in daily activities such as land-use planning and the related mineral considerations; and to use it in thinking about the future.

The Preamble is the world's most succinct and successful mission statement. It defines the public interest.

Secretary Norton's call to Congress on the General Mining Law is most constructive.

In response, the American mining industry is:

Ready to pay reasonable royalties;
Ready to pay reasonable holding fees;
And ready to work out a new approach to the old question of abandoned mine lands.

We recognize the need for flexibility in settling these questions.

At the same time, Congress and others must remember that:

Finding a mineable deposit is at least a 1,000-to-1 shot;
That without investment there is no prospecting or mining;
That prospecting and exploration demand the investment of millions that must be repaid;
That investors also demand a return on the investment they make to get mines in operation;
And that the products of American mining are sold in markets where global competition sets the price.

Beyond this are the declarations of intent on domestic minerals on which we touched earlier:

The Mineral Policy Act of 1970,
The Land Policy Act of 1976;
And the Materials and Minerals Act of 1980.

It's time to get our acts together - figuratively as to intent and practice, if not literally.

I propose that as Congress, the department, the industry and our critics move forward on Secretary Norton's constructive idea, we also: · Find ways to assess the mineral potential on and the availability of public lands at no new expense to the taxpayers;

Provide for specificity, clarity and timeliness in the application to mining of the National Environmental Policy Act;
And get a good definition of the public interest in the public lands.

If we can do these things, we will have moved beyond Part 3809 and the quarrels of the last century and the century before that.

We can secure both the future of protected lands and a flow of resources to the public from the public lands in the public interest.

When we do these things, we will have delivered a functioning National Minerals Policy that satisfies the important criteria - the criteria set down by the Preamble to the Constitution of the United States.

What President Lincoln wrote in 1865 is no less true today.

"…the mineral wealth of the Nation…shall prove the treasury of the world…"

The industry is ready to move forward - to move beyond Part 3809.

We accept the Secretary's offer and look forward to working with her, with the Congress, and with each of you in the days ahead.

Thank you for your attention.