MAC: Mines and Communities

US Update

Published by MAC on 2006-12-15

US Update

Green Group Asks Banks not to Fund TXU Coal Plants

PlanetArk US

15th December 2006

NEW YORK - An environmental group Thursday called on banks worldwide not to finance TXU Corp.'s project to build 11 new coal-fired plants in Texas.

It is the latest in a string of challenges to TXU expansion plans by environmental, community and business groups concerned that the pulverized coal plants will dirty Texas' air and spew greenhouse gases into the atmosphere.

The Rainforest Action Network (RAN) said it sent letters asking 54 financial institutions not to participate in lending TXU US$11 billion to fund construction of the plants.

According to RAN, the plants will produce 78 million tons of new carbon dioxide emissions per year, greater than the greenhouse-gas emissions of 21 US states or the entire emissions reduction commitment of Japan under the Kyoto Protocol.

Scientists believe that carbon dioxide and other greenhouse gases cause global warming.

"The world's financial institutions can prevent this project from ever leaving the ground by simply declining to be a part of it," RAN said in a statement.

But TXU defended its program, arguing that Texas needs new power plants to meet rising electricity demand and that the new plants will be built with the latest environmental controls.

TXU said in June it had secured a commitment for US$11 billion of bank loans to fund the construction of the plants, with Citigroup Inc., Morgan Stanley and Merrill Lynch & Co. the three lead arrangers for the funding.

Some loan commitments allow banks to provide financing only if they can find other banks and institutions to share the risk of the loans, while others require the banks to shoulder the load themselves if they cannot find partners.

It was not immediately clear under what terms the banks have agreed to provide financing to TXU.

Citigroup and Merrill Lynch declined to comment. Morgan Stanley also had no comment on the TXU financing, but a spokesman said the bank was currently revising its environmental policy.

"We take this issue very seriously," he said.

Story by Lisa Lee


Appeal Letter from Rainforest Action Network (RAN)

Dear Folks,

TXU, a Texas utility company, hopes to build 11 new coal-fired power plants, but first it needs to raise $11 billion to finance the proposed plants. The Texas plants are part of a growth strategy that could make TXU the biggest single corporate greenhouse gas emitter in the United States.

These new power plants would emit a whopping 78 million tons of carbon dioxide per year, and they have a projected lifespan of up to 50 years. With the help of Wall Street bankers, this global warming crime could happen sooner than you think!

We're following the money. Merrill Lynch is one of the banks helping TXU underwrite this dirty deal. They've already given more than $3 million in support of TXU's project. We need you to call and tell them to stop helping TXU destroy our climate.

Make your phone call now! /

TXU claims that these dirty plants are needed to meet Texas' energy needs, but independent analysis has shown that energy efficiency, renewables and demand management offer quicker, cheaper and cleaner energy alternatives to meet Texas' current and future needs.

Texas is already the country's largest emitter of greenhouse gases. TXU's proposed new power plants would:

- put out more than the combined greenhouse gas emissions of 21 U.S. states. / - emit as much as the equivalent of 14 million new cars on the roads. / - negate Japan's entire greenhouse gas emission reduction commitment under the Kyoto Protocol.

Furthermore, these plants will cause environmental health problems relating to air and water quality and mercury emissions, threatening nearby communities that include Dallas-Fort Worth and Waco. TXU would like to ignore the consequences of its greenhouse gas pollution, taking advantage of the fact that carbon emissions are unregulated - for now. But with leading economists estimating the true costs of C02 at $85 per ton, TXU's new plants will impose a toll on society of at least $6.6 billion a year.

TXU is awaiting state approval to begin construction, but with help from Texas Governor Rick Perry, who granted a "fast-track" approval process for his political donors at TXU, the company could have permits by April 2007.

However, the company still needs to secure financing - a cool $11 billion worth - and is currently soliciting funds from a series of banks. We are reaching out to those same banks and telling them to stay away from TXU's project.

We need your help. Please call Merrill Lynch and tell them to stop helping TXU finance its dirty coal power projects and instead adopt climate-friendly environmental and social policies.

Thank you for all that you do,

Scott Parkin / Global Finance Campaign / Rainforest Action Network /

Copperheads vs. Greens

A plan to open the Superior National Forest to copper mining promises good jobs and threatens enviro troubles

by Mike Mosedale

13th December 2006

As PolyMet Mining Corporation Vice President Warren Hudelson tells it, his company's plan to construct Minnesota's first-ever copper and nickel mine is all upside. "These are the high-quality, good-paying jobs that could sustain the entire regional economy," Hudelson declares. For the Iron Range town of Hoyt Lakes, which was left reeling by the loss of some 1,400 jobs in the wake of the bankruptcy of the LTV Steel Company plant six years ago, the potential economic benefits are tantalizing. PolyMet says it will employ up to 400 full-time workers for at least the next 20 years and possibly twice as long.

And while the company has not committed to a unionized work force, Hudelson expects the jobs will pay wages comparable to those earned by union steel workers—in other words, as much as $65,000 year. Then there are the approximately one million man hours of construction work needed to rehab the old LTV facility, where PolyMet plans to process the ore it extracts from a mine in the Superior National Forest six miles away. That project, Hudelson says, would provide temporary work for up to 1,000 skilled laborers. Finally, Hudelson points to a study from the University of Minnesota Duluth that estimated PolyMet's venture would yield an additional 500 spin-off jobs, mainly in the service sector.

Given such rosy prognostications, it's no surprise that Iron Range politicians and business folk alike have touted the PolyMet proposal as an important boost to the region's fortunes. The proposal has garnered the enthusiastic support of Iron Range Resources, a state-run economic development agency. While the IRR has not yet provided direct financial aid, it greased the skids for PolyMet's acquisition of the old LTV plant, a critical factor in the company's financial plan.

But the PolyMet proposal has also sparked skepticism and, increasingly, fervent opposition among environmentalists. That's because, historically, sulfide ore mining—the process by which copper, nickel, and assorted precious metals are extracted from sulfide ores—has long been one of the dirtiest, most ecologically damaging forms of mining. The chief problem is a phenomenon called acid mine drainage: When water and air mix with the sulfur in the unused ore, it can generate a toxic brew. If that run-off escapes to streams and rivers, it can leave waterways either badly impaired or, in the worst-case scenarios, entirely devoid of aquatic life.

Bob Tammen, a retired electrician from Mountain Iron who volunteers with the Sierra Club, says he was agnostic about the PolyMet proposal when he first heard about it. Then, during a visit to South Dakota last summer, he stopped by the site of an abandoned sulfide ore mine in the Black Hills. It was, Tammen says, a bleak experience. The mine, which closed in 1999 after a decade of operation, was plagued by problems of acid mine drainage from the outset.

Faced with the prospect of an expensive cleanup, the mine's owner, a Canadian company called Dakota Mining, ultimately declared bankruptcy. And while the company did post a $5.6 million bond to pay for cleanup costs, that bond proved grossly inadequate. The shuttered mine is now a federal superfund site.

"It was the same old story," offers Tammen. "These companies talk about creating jobs and how, when they're done, the area will be cleaner than when they started. That's not how it works out." Dakota Mining was right about one thing: The mine did create lasting jobs. "I talked to a man who was working there who said they had eight employees, all monitoring pollution," Tammen recalls. "He said it was going to cost between $40 and $140 million to clean up the site."

There is no shortage of such horror stories. Nationwide, according to the Sierra Club, the cost of cleaning up waterways contaminated by acid runoff and related mining pollutants has been estimated at $32-$72 billion.

According to a two-year study released last week by the environmental advocacy group Earthworks, government regulators, the mining industry, and its consultants consistently underestimate the amount of water contamination at hard rock mines. According to the report, 100 percent of the mining companies surveyed predicted at the outset that they would not violate water-quality standards for their operations. In the end, the report concluded, at least 76 percent of those mines did violate standards and, in 64 percent of the cases, mitigation plans failed to produce the predicted remedies. The result? Across the American west, the public has been left to foot most of the bill for the cleanup.

Arlo Knoll, the manager of the Department of Natural Resource's mine land reclamation office, says he's aware of the high costs associated with acid mine drainage and pledges that it will be taken into account in the drafting of PolyMet's permits. "On a yearly basis, they will have to provide financial assurance in case there has to be [mine] closure, and that would have to address not only [closing the mine] but long-term maintenance," Knoll says.

Neither Knoll nor PolyMet's Hudelson could provide any dollar estimates on the financial assurance package PolyMet will be required to post. According to Hudelson, those calculations will be made once the company's environmental impact statement has been completed and its mining plans formalized.

Clyde Hanson, who chairs the Mining Without Harm campaign for the North Star Chapter of the Sierra Club, says he can't project the cost either. However, he adds, he is unaware of a single sulfide ore mine in the country that has operated without adverse environmental consequences. For that reason, Hanson argues, the state shouldn't issue any permits until companies like PolyMet can identify a problem-free sulfide ore mine. Hanson points out that legislation to that effect has been enacted in Wisconsin. He would like to see a similar law in Minnesota.

PolyMet's Hudelson acknowledges that the industry's record is not pretty. But, he adds, local conditions and technologies vary enough that comparisons between PolyMet and other operations are not fair. In the case of PolyMet, he says, test samples have shown the sulfur levels to be relatively low, which would seem to limit the potential for acid mine drainage.

Concerns about acid mine drainage are not PolyMet's only problem. The company expects to fill in approximately 1,200 acres of wetlands at its mine site. To comply with state law, PolyMet and St. Louis County are looking at a major wetland restoration project on tax-forfeited land near the city of Floodwood. That, too, has proved controversial. According to Len Anderson, a retired school teacher from Cloquet, a hearing on the proposal in Floodwood was met with stiff local opposition, largely because the land to be "reclaimed" is already a functioning wetland.

PolyMet critics also express concern about the ability of state regulators to adequately police mining interests. They point to Minntac, the state's largest taconite producing plant. The company has been in violation of clean water standards for the past six years because sulfate-tainted waters from its tailing ponds are seeping into two nearby rivers. Through a complex biological mechanism, the sulfates are believed to increase the levels of methyl mercury in the waterways. Now the company is seeking a variance to discharge the polluted waters into the St. Louis River.

In the view of Bob Tammen, that's a problem. "The state wants to give Polymet permits. But if they can't get Minntac to clean up their sulfates, how are they ever going to control Polymet? The principle is the same," Tammen argues. "The state of Minnesota is having trouble regulating these mines. We shouldn't allow them to open up more mines if they can't monitor the ones they've got."

If the PolyMet mine opens as expected, there will be considerable ramifications for the mining future in northern Minnesota—and not just because of PolyMet's success or failure on environmental and economic levels. Already, at least four other mining concerns are in the early stages of planning for copper-nickel mines in the state.

"Polymet is plowing new ground," says PolyMet's Hudelson. "We're on the edge of starting a new era in Minnesota." It is an assertion that even the company's opponents will grant him.

US Airline Industry Lags Nation on Recycling

PlanetArk US

15th December 2006

NEW YORK - US airlines and airports send more of their trash to the dump than the country as a whole, losing the chance to save emissions through recycling, according to an environmental group's report.

Passengers at US airlines and airports left behind about 425,000 tons of aluminum cans, newspapers, magazines and other trash in 2004, 75 percent of which was recyclable, the Natural Resources Defense Council said in a report released this week.

Airlines and airports sent 80 percent of their garbage to the dump or incinerator rather than recycling, while the United States as a whole sent about 70 percent, the report said.

The 30 largest US airports alone generated about as much trash as the city of Miami over the same period, it said.

Recycling paper and aluminum cans discarded by the air industry could save emissions of greenhouse gas carbon dioxide from processing virgin timber and bauxite ore equal to removing nearly 80,000 cars from the road, according to the report.

"These are resources that don't need to be mined, logged or drilled," said the report's author Allen Hershkowitz, a scientist at the NRDC. "And by avoiding all that, you save a lot of energy and avoid a lot of emissions."

He said the aluminum wasted by the industry every year is enough to build 58 commercial jumbo jet airplanes.

Jessica Steinhilber, environmental director for the industry group Airports Council International-North America, said several airports like Seattle-Tacoma International have recycling programs.

"We try to encourage these airports to share what they've learned so other airports can implement or better their own programs," she said.


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