MAC: Mines and Communities

Mining Firm Gives $8m Back To Tribe; Gift Ends Crandon Mine Saga

Published by MAC on 2006-05-31

Mining Firm Gives $8m Back To Tribe; Gift Ends Crandon Mine Saga

The Capital Times (Madison)
By Robert Imrie (Associated Press)

31st May 2006

Three years after it helped to buy the site of a proposed mine near Crandon -- shutting down the disputed project -- an Indian tribe has made its final $8 million mortgage payment to a mining company that will donate the money back to the tribe through a trust fund, a tribal official said Tuesday.

"It is a gift. It is basically a gift out of the blue," said Tony Phillippe, administrator for the Mole Lake, or Sokaogon, Chippewa band. "It is going to be a charitable trust."

The BHP Billiton Fund for the Sokaogon People will be managed through the Madison Community Foundation, which holds more than 680 other endowment funds to enhance philanthropy for the long-term benefit of diverse individuals and organizations.

In October 2003, the Mole Lake Chippewa and Forest County Potawatomi agreed to pay $16.5 million to buy Nicolet Minerals Co. and more than 5,000 acres associated with the proposed underground zinc and copper mine just south of Crandon. The purchase was from Northern Resource Group, a new company started by a Laona family.

Northern Resource, with expertise in logging and wood products, had acquired the project in April 2003 from BHP Billiton, an international metals company headquartered in Melbourne, Australia, which had also provided $8 million in financing to the Laona company, authorities said. But Northern Resource said it was unable to find other investors and a partner with mining expertise to proceed with the mine.

The two tribes, with new wealth from casino profits, opposed the Crandon mine project for years, warning that it would pollute valuable water resources, including the pristine Wolf River nearby, and that the risk wasn't worth the mining jobs that would be created.

When the tribes bought the mine site, the Potawatomi paid cash for their share of the deal, and the Mole Lake made a $250,000 downpayment and acquired the mortgage from BHP. The $8 million payment was due in April, Phillippe said Tuesday.

The tribe borrowed all but $52,000 of the remaining debt as part of a $20 million, 20-year loan it acquired that was backed by future revenue from its casino, Phillippe said.

It was important for the tribe to pay off the mortgage and "honor our debt," he said.

But the tribe had approached BHP about making a donation to help the tribe, given the tribe's long and costly legal fight against the mine, when the mining company offered the trust, with no strings attached, Phillippe said.

"They are not maintaining mineral rights or anything. We own it all," he said.

The offer left tribal leaders "flabbergasted," he said.

BHP was the last of a string of mining companies to own the land, including Exxon Coal and Minerals Co. of Houston.

The tribe will be the sole beneficiary of the $8 million endowment's annual $400,000 to $600,000 earnings, Phillippe said.

The money can only be used for certain things, such as education or environmental projects, the tribal leader said.

"It is not going to be used for industry building or for gaming," he said. "This is strictly for the people of the community."

A five-person advisory committee, including Madison Community Foundation President Kathleen Woit, director of American Indian studies at UW-Madison Ada Deer and representatives of both the tribe and the region, will recommend how the funds will be distributed to the community.

Gibson Pierce of Toronto, BHP's project director for closed mining, said, "Creating this fund signals our permanent exit from the project. Our goal with this endowment is to help the Sokaogon people build and sustain a vibrant community by allowing the mining project to add value at its final closure."

The Crandon mine had been disputed for years after the minerals were discovered in 1976 in a deposit described as one of the 10 largest ore bodies of its type in North America.

In 1994, Exxon and Rio Algom Ltd. of Toronto applied for state permits to mine 55 million tons of mostly zinc and copper ore.

The regulatory review was expected to take about three years.

But a study by the state Department of Natural Resources never reached the point of recommending whether the project could be done without harming the environment, in part because new owners kept getting involved.

Exxon eventually sold out its interest to Rio Algom, which sold out to BHP.

In September 2002, BHP decided to close its Nicolet Minerals office in Crandon and sell the mine project to pursue more profitable ventures, leading to the sale to Northern Resources.

Over the years, the DNR billed the mining companies about $7 million to pay for the review, officials said in 2003.

Phillippe said Tuesday the land will be used for conservation purposes, such as public trails and parks, and the mining project will never be developed.

"The minerals underneath it are basically sacred from now on into eternity," he said. "We own it all."

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