After the gold rush

Miners have many ways of turning rock into metal - brute force, corrosive chemicals, high heat and extreme pressure. Likewise, environmentalists are discovering there is more than one way to transform the West's most refractory industry.

Mining has fiercely resisted change since it was first given free license to pillage the mineral riches of a lawless West. Now it finds it must change to survive in the society and the scenery of which it is just a part. Like rock that is blasted apart, crushed, and then melted down and turned into metal, the once monolithic mining industry is being broken apart by a combination of market forces, changing environmental values, increased scrutiny, and regulatory pressure.

Chief among the forces at work is a sea change in public attitudes about mining and the environment. The tide began shifting in the 1970s with the passage of mutiple-use laws for public lands. Equally important was the commodities crash that followed. These events loosed forces that demonstrated to the industry that it no longer held an exalted position, either on the public's land or in the marketplace. At the same time, the rise of the price of gold and the discovery of massive deposits of invisible gold in Nevada set off a boom that meant many mining companies could afford to go along with higher standards.

Mining companies once again generated excitement on Wall Street. But investors had to learn to separate the gold from the dross. While some companies proved solid, others were no more than promotional stock scams. Still others were honest operations but were being run according to pre-1960s values. Investors don't like to buy high-flying mining stocks and then watch their value plummet when the company is slapped with a Superfund listing or some other disaster due to poor planning for environmental mitigation.

Phil Schlom, an accountant with Coopers and Lybrand who handles mining accounts, says the reporting requirements of the Securities and Exchange Commission, which regulates sales of stock in companies in the United States, are "driving" corporate environmental policy worldwide.

These pressures are creating a subculture within mining companies that works to make environmental quality part of the bottom line. "Good environmental practice makes good business sense," says Ian Strachan, the top corporate director for environmental affairs for RTZ, the biggest mining company in the world. "Long-term value for shareholders cannot be achieved without environmentally responsible behavior."

The most visible sign of this change is industry PR. Mining companies that not so long ago wouldn't even pay lip service to environmental values are producing videos and glossy publications touting their environmental policies and reclamation work. Industry conferences focus on the environment and feature some of mining's toughest critics. And mining journals are filled with stories and ads promoting the industry's green deeds.

Mining's tarnished environmental image still does not shine as brightly as industry spokesmen would like. Many industry critics aren't buying mining's new image. Some call it "green-washing' - public relations hype slathered over a dirty business.

"It's the same thing their lobbyists are doing with their sham reform in Washington," says Elyssa Rosen, a field representative for the Sierra Club in Reno. "They're trying to make something that is enforcing the status quo look responsible. There are miners making meaningful change. But the industry has such a long way to go."

For years, environmentalists have tried to change mining by reforming its Bill of Rights, the 1872 Mining Law, the bedrock policy allowing mining on public lands. They argued that the law was great for miners but took away everyone else's rights and property. It gave mining free access to public lands to mine ore without paying any royalty to the owners, the people of the United States. Despite environmental laws and regulations intended to keep mining in its place, the law made a mockery of multiple use. Where mining reigned, it was the only use.

Until recently, the mining industry has presented a united front against changes in the 1872 Mining Law. The fight over mining law reform continues in Washington, D.C. But here and there the industry is acquiescing to reforms on the ground.

Late last year, soon after industry lobbyists successfully killed a mining reform compromise in Congress, copper giant Kennecott agreed to pay $1 million plus a first-ever hardrock royalty payment of 3 percent to the federal government. In exchange, Kennecott got the right to expand an existing silver and gold mine in Alaska onto 7,500 acres in the Admiralty Island National Monument in the Tongass National Forest.

Kennecott's parent company, RTZ, is an example of the new face of mining. The biggest mining company in the world, RTZ owns 47 mines and processing plants in 35 countries, including copper, gold and silver mines in Utah and Nevada and coal mines in Wyoming.

While their lobbyists have been trying to figure out an acceptable mining reform compromise, RTZ mine managers have been fleshing out a new corporate policy mandating the use of "best contemporary practices' at their mines around the world.

Many of RTZ's environmental managers concede that the best is always subject to the bottom line. "Best contemporary practices are like pornography," says Preston Chiaro, a Kennecott vice president in charge of cleanup at the Bingham Canyon copper mine near Salt Lake City. "It's hard to define. But you know it when you see it."

The Environmental Protection Agency has proposed adding the Bingham Canyon mine to the Superfund national priorities list of hazardous industrial sites. Kennecott is spending $200 million to clean up and contain acid drainage from the mine. Now the company and the EPA are negotiating how much more the company will have to spend to clean up contaminated groundwater (HCN, 5/30/94).

Regulations such as EPA standards for human exposure to heavy metals are forcing companies to clean up their operations, and not only in the United States. International banks that provide financing for mining projects are requiring that North American standards be used around the world. And mining companies are realizing it is probably no longer in their best interest to give short shrift to environmental concerns as regulations become standardized worldwide.

Mike Johnson, an environmental consultant to RTZ, urges its managers to stop looking "at environmental issues as threats' and instead think of ways to "turn environmental standards into competitive advantages." Johnson helped RTZ develop a bid for an open-pit gold mine in the Czech Republic that would meet EPA standards and provide a municipal water system for a nearby town with a contaminated groundwater supply. "Remember, the competition will be thinking environment," he tells RTZ planners.

"The sun never sets on RTZ," says John Collier, head of the company's worldwide exploration efforts. "If we're going to make new business for RTZ, it's imperative we get it right."

If the sun never sets on mining, it also always shines on mining's opponents these days. Mining companies are quick to tell critics and regulators that mining is being driven offshore by opponents and by tough laws. But miners don't always get a warm reception abroad. RTZ, for example, is facing stiff opposition to new mining projects around the world. A London-based group called Partizans - People Against RTZ and its Subsidiaries - has helped groups in Australia, Papua New Guinea and Wisconsin take on the mining giant. Now Nevada - long a safe haven for mining - is joining the fray.

Until recently, environmentalists in Nevada were lonely voices in the wilderness, their warnings drowned out by the noise made by the greatest gold rush in the history of the United States, centered on the Carlin Trend in northern Nevada. But now they are being joined by some ranchers, Indians, and even a couple of independent prospectors in an effort to keep RTZ from digging a huge, new open pit in Crescent Valley, Nev. The pipeline project has been promoted as the next Carlin Trend. Opponents have formed a coalition called Great Basin Mine Watch.

Great Basin Mine Watch has hooked up with the international campaign to fight the Pipeline project. The proposed mine is a joint venture between RTZ and Placer Dome, a Canadian company.

Environmentalists oppose the mine because the pit will be below the groundwater table, putting the aquifer and nearby Humboldt River in jeopardy, says Elyssa Rosen, who organized Great Basin Mine Watch. Crescent Valley rancher Maynard Alves says the mine will dry up springs on his ranch. The Western Shoshone Defense Project, based at the Crescent Valley ranch of Mary and Carrie Dann, says the mine violates the 1863 Treaty of Ruby Valley. Although the treaty allowed for mining, they say, "The Western Shoshones in no way agreed to the scale, intensity or form of modern open-pit, heap-leach gold mining." And prospectors Bill and Ardith Anell say big mines such as the Pipeline project are destroying the environment for the short-term gain of multinational companies rather than for the long-term benefit of local communities.

These strange bedfellows have been at odds over issues such as the Danns' claim to grazing rights, as well as rangeland and mining reform. But mining, this "David and Goliath" struggle, as Rosen calls it, brings them together to take a populist stand. It is not mining, per se, they explain, but the huge scale of modern mining that is the big problem in the Great Basin today.

The industry argues that modern mining - of both low-cost commodities such as copper and low-grade deposits such as invisible gold - involve economies of scale that mean small-scale mining is a thing of the past. Even relatively small mines now require big investments. One example industry points to is Viceroy Gold - a so-called "junior" Canadian company that owns the Castle Mountain mine on the edge of the new Mojave Desert National Preserve near the border of Nevada and California.

After intense negotiations with environmentalists during planning for the mine, Viceroy bought the nearby Walking Box Ranch and donated the land to The Nature Conservancy as a desert tortoise preserve. The company employs a full-time botanist to keep century-old Joshua trees and other native plants alive in a nursery to revegetate disturbed areas. The mine's chemical solutions are kept in closed containers rather than open ponds. The exposed white walls of its pit have been painted with a chemical that oxidizes the rock so it blends with the surroundings.

Mine manager Mike Attaway predicts that in the future all mines will have to be operated as if they were in such sensitive areas. "You can't disturb a square foot without doing an environmental assessment," he says. "I think the industry has to go the direction we've gone to survive. I don't think the political climate in this country would allow anything else."

Attaway says that these changes spell the end for the small miner. "There is no way small miners will survive," says Attaway. "They can't afford to do any of the environmental work to bring a mine into production."

Open-pit mining requires a huge upfront investment in everything from planning and permitting to machinery. Viceroy spent $80 million before pouring any gold at Castle Mountain, Attaway says. But now it generates $2 million a month in cash flow.

This economy of scale leads to an unceasing drive for increased efficiency and productivity. Since 1985, employment in the mining industry in Nevada has more than doubled from 6,000 to 13,000 workers. But during the same period, the annual value of mineral production in the state increased five-fold to nearly $3 billion. Gold accounts for close to 86 percent of the total. Although production has steadily increased, reaching a record level of 6.8 million troy ounces last year, employment in mining is slowly but steadily declining from a peak above 14,000 workers in 1990.

"The individual small miner is dead," agrees Paul Strobel. The publisher of Mining World News, a monthly newspaper published in Reno, Strobel is also a geologist and part-time prospector. Strobel says he has had to drop many of his claims since Congress adopted an annual fee of $100 per mining claim.

The fee accelerated a shake-out that has been under way in the mining industry for more than a decade. Since the BLM began charging the fee, the number of active mining claims in the United States has dropped from 1.2 million to 330,000 claims today. Many of those claims were dropped by individual miners and prospectors.

Some of the smallest mining companies, really not much more than individual prospectors or "mom and pop" operations, feel betrayed by these changes in the industry.

Bill Anell is a brawny, bearded prospector who is at peace with a pick hammer. But talking about mining makes him visibly agitated. He rues that the days of the independent prospector and small miner are over. But unlike most miners, he doesn't blame environmentalists and government regulation. He blames big mining companies.

"They've effectively eliminated the little guy as competition," says Anell. "He's done and gone. The big companies now have the field to themselves."

Anell feels personally betrayed. He and his wife Ardith were working on a "grubstake" for FMC Minerals Corp. when they found a gold and silver deposit worth more than $800 million gold on Paradise Peak near the mining town of Gabbs in central Nevada. Anell says they were ripped off by the company that bankrolled them. They've been fighting in court ever since. Now they wish they'd never discovered the bonanza.

The Anells are so mad they have joined industry opponents in the new Great Basin Mine Watch. "The Great Basin is being ruined," says Bill Anell. "Corporations have no soul. They'll leave it a mess. And they'll be back in New York or Toronto."

"We loved mining," says Ardith Anell. "It was our whole life. Until we walked the bitter path of truth."

"Gold brings nothing but trouble," says Bill Anell. "It does something to the souls of people. They'll do anything, hurt anyone, destroy anything in the pursuit of it. We wash our hands of what our dream was. There's no romance left."

Perhaps the demise of the romantic myth of the sourdough prospector is no big loss if it forces the mining industry to stand on its own feet and face the public. In fact, the end of the West's romance with mining may be the main reason why mining companies are changing their political strategy.

At one time, mining giants hid behind the small prospector leading his burro into the outback. With the lone prospector fading into the distance, mining companies have to come into the open, approach the public land and the environment in the same way as other public land activities, and prove that they are responsible corporate citizens, willing and able to clean up after themselves.

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