MAC: Mines and Communities

Crandon: Firm may abandon battle to mine ore

Published by MAC on 2002-09-18

Firm may abandon battle to mine ore -
Wisconsin foes fought for years to block operation

By Julie Deardorff, Chicago Tribune staff reporter

September 18, 2002

Crandon, Wis. - In a sign that a decades-long battle with environmentalists is taking its toll, the world's largest mining company shut the Wisconsin subsidiary it hoped would pull 55 million tons of zinc and copper ore from the ground, officials said Tuesday.

BHP Billiton officials said they are considering selling the 5,000 acres in northern Wisconsin that are not only rich in minerals but also hold the pristine headwaters of the Wolf River. A band of Chippewa Indians consider sacred a rice lake downstream from the proposed Crandon Mine site.

The company said it will continue to pursue the elusive state permits for the mine, despite closing the local office of Nicolet Minerals and laying off eight employees. Environmentalists and anti-mining groups, while heartened by the company's shift, say the fight is not over.

"The fact that the permit application has not been withdrawn leaves the future of the mine site in limbo," said Dave Blouin, coordinator of the Mining Impact Coalition of Wisconsin.

For years battle lines have been drawn between locals who want the mine and the jobs it would bring, and newcomers who want to preserve the environmental character of the region, which includes more than 800 lakes, 82 trout streams and acres of wilderness.

Native Americans who live near the site believe the mine threatens their water supply, air quality and cultural traditions, including burial sites and wild rice resources.

Though the ore deposit was discovered by Exxon nearly three decades ago, the mining project has recently seen a flurry of activity. Last week Wisconsin rejected the idea of purchasing the land for conservation, a move environmentalists championed as a way to kill the mine proposal. State officials deemed the cost, estimated between $51 million and $94 million including mineral rights, too high.

Last month a delegation of local tribal members met with executives from BHP Billiton in Johannesburg, South Africa, at the World Summit on Sustainable Development, the first time the two groups have faced each other. In recent years the campaign against the mine has brought together Native Americans with sport fishing groups, environmentalists with union members and rural residents with urban students, said Zoltan Grossman, a professor of geography at the University of Wisconsin-Eau Claire and a board member for the Midwest Treaty Network.

"It has been one of the most powerful grass-roots movements Wisconsin has ever seen," Grossman said.

Opponents of the Crandon Mine argue that if the ore is mined, it could create a boom-bust economy, irreparably damage the Wolf River and hurt tourism, which is supported by the north region's fragile wetlands, streams, wildlife and other natural resources.

Mine supporters tout its practical and economic advantages. Not only does modern society require minerals and metals for everything from batteries and sport-utility vehicles to nutritional supplements, but the Crandon Mine promises valuable jobs to one of the poorest counties in the state. Since 1996 more than 1,200 people have applied for 400 jobs at the mine, should it be built.

"The community needs good-paying jobs," said mine supporter Ron Eveland, 70, a member of the Forest County Board and the Crandon City Council. "I don't know what's going to happen with this. It's a mess."

Long-running dispute

The Crandon Mine saga spans a generation. In Nashville, a town of 1,157 where some of the ore is located, the dispute has so severely strained relationships that that the township is threatening to break in two. Generally, the south part of Nashville--where many former city dwellers have built homes around lakes--opposes the mine. The north end of the township--which has deep roots and is largely rural and working-class--supports the mine.

The Mole Lake band of the Sokaogon Chippewa, meanwhile, who live on an 1,800-acre reservation just a mile downstream from the proposed mine, is worried about the mine's impact on groundwater, as well as on nearby Swamp Creek, a tributary of the Wolf River, and Rice Lake, where they annually harvest wild rice for cultural and spiritual ceremonies. A major hurdle for the mining company is a U.S. Supreme Court ruling allowing the Sokaogon Chippewa to set their own standard for groundwater used in the mining process. Leaders have promised it will be tougher than the state's.

"People could live with the mine if it definitely wouldn't pollute, but there is so much uncertainty," said Tina Van Zile, tribal vice chairwoman for the Mole Lake Sokaogon Chippewa, one of the poorest and smallest tribes in the nation. "The uncertainty of the science could destroy who we are. We'd rather live with the creators' plan than the mining company's. It seems they don't worry about the future."

The proposed Crandon Mine--on one of the 10 largest ore deposits of its kind in the world--also has become a contentious issue in the state legislature. Although recent legislative attempts to doom the project have failed--including a proposal to ban the use of cyanide, essential to the mining process--several gubernatorial candidates are publicly opposed to it.

At stake, some say, are other mining project proposals across the mineral-rich state. If the Crandon Mine is successful, it "would show that you actually can permit a mine in Wisconsin," said Laura Skaer, executive director of the Northwest Mining Association. "If they could get it permitted, other companies would be interested in exploring."

"All those people who have homes on the lake, computers, cell phones, SUV's, they all have stuff that came out of holes in the ground," Skaer said. "Unfortunately the minerals are where God put them. It's not like building a Ford plant."

Mine formed, found

Created 1.8 billion years ago when mineral-rich water, volcanic material and gases bubbled up through cracks in the sea floor, the zinc-copper sulfide deposit was discovered by Exxon in 1975 in Forest County, a rural timber region dotted with small towns.

The ore deposit, which also contains small amounts of lead, gold and silver, primarily runs east and west through Nashville and Lincoln, extending to a depth of 2,200 feet. According to the project plan, ore would be mined for 28 years at a rate of 5,500 tons per day by underground methods. The ore would be crushed underground and hoisted to the surface for milling.

The waste rock at Crandon contains pyrite, a sulfide-bearing mineral that can generate acid if exposed to air and water over a long period of time. The pyrite removed from the ore will be mixed with cement and used as backfill in the mine, according to Nicolet Minerals officials.

Nicolet Minerals, run by Dale Alberts, a former public affairs director, has spent more than $150 million making Crandon the "most environmentally friendly mine in the world," according to Alberts, who has conducted more than 300 public meetings and made presentations on the project to more than 13,000 people to improve mining's historically dreadful reputation.

"A major problem in the beginning was the company did a poor job communicating to the local people," said Alberts, who will stay on with the company at least until the land is sold. "Environmental groups got out ahead and frightened people." Alberts argues that the legitimate environmental concerns have been addressed and the rural population is being ignored.

"Urban centers are setting policy that is stifling, killing the rural way of life and the way we use natural resources," he said. "I've never seen the industry as diminished and hamstrung as it is today."

Activists push state to revisit buying mine site - Firm gave up plans for site near Crandon

By Tom Held

Last Updated: Sept. 17, 2002

Activists fighting against a proposed mine near Crandon urged the governor Tuesday to reconsider purchasing the property now that its owner has abandoned plans to extract minerals from the site.

Members of several environmental groups said the white flag from BHP Billiton, the parent company of Nicolet Minerals Co., shows the company has realized its proposed copper and zinc mine is not viable. The governor should use that leverage to negotiate again with the company and finally end the uncertainty of mining prospects at the headwaters of the Wolf River, said Rebecca Katers, executive director of the Clean Water Action Council of Northeast Wisconsin.

On Friday, Gov. Scott McCallum announced the state would not buy the 5,000-acre parcel near Crandon with money from its Stewardship Fund because of the cost. Two appraisals put the value of the property, including the mineral rights, at $51.2 million to $94 million.

And on Monday, Nicolet Minerals announced that it was laying off its employees in Crandon and that it planned to sell the property and mining rights. Even if Nicolet obtained the permits to mine the zinc and copper, the financial picture didn't warrant pursuit of the mine operation, said Dale Alberts, company president.

While announcing the plans to sell the property, Alberts said Nicolet would keep its permit application active with the state Department of Natural Resources. The department is seeking additional information from the company before issuing its preliminary environmental impact statement.

Alberts predicted the mine property would be sold within a few months to one of the companies that had shown interest in the mineral deposits.

Albert Gedicks and other mine opponents doubt that's true, saying BHP Billiton discovered what Exxon and Rio Algom had learned earlier in the 25-year history of the mine controversy: The site is too environmentally fragile to sustain a mining operation. In addition, the low prices now for copper and zinc make it unprofitable to pursue in the current market, said Gedicks, of the Wisconsin Resources Protection Council.

Laura Skaer, executive director of the Northwest Mining Association in Spokane, Wash., agreed it would be difficult to sell the mining interests to another company.

"Why would you come to Wisconsin and fight all those opposition groups and deal with a regulatory agency that is afraid to make a decision?" Skaer asked.

Katers said McCallum and the state should not be fooled by BHP Billiton's talk about selling the mining interests to another company, and that the price for the property should not include the value of the mineral rights because the mine is not viable.

In an interview Tuesday, McCallum blamed the potential lawsuits, and "the politics of delay, and added cost, of having to constantly not only go through the hoops, but go back over them again" for the company's decision to kill the mine.

McCallum said state officials ended negotiations that would have ensured the site would never be developed because the company wanted so much money that it would have "wiped out" the Stewardship Fund used to buy pristine properties to make sure they will never be developed.

Steven Walters of the Journal Sentinel staff and The Associated Press contributed to this report.

Industry official: Selling Crandon mine won't be easy

The effort to get state permits for the mine will continue despite BHP Billiton's pullout

By Robert Imrie Associated Press

It will be difficult to sell a proposed underground zinc and copper mine in northern Wisconsin now that one of the world's largest natural resources companies is pulling out of the project, an industry spokeswoman said Tuesday.

BHP Billiton, parent company of Nicolet Minerals Co., said it wants to sell some 5,000 acres of its mining property near Crandon, but the effort to obtain state permits for the mine - described as the largest

undeveloped zinc deposit in North America - will continue. "From a pure ore body standpoint, it is quite attractive," said Laura Skaer, executive director of the Northwest Mining Association in Spokane, Wash.

"Whether someone wants to bang their head against the Wisconsin brick wall is another story," she added. "It is pretty clear to me that there is a strong segment of the Wisconsin population that doesn't want this mine built."

A number of companies have indicated an interest in buying Nicolet Minerals, company president Dale Alberts said Tuesday. "I would expect it to be sold within the next few months."

"The asset is still here. The permitting process will continue and we will see what happens," Alberts said. BHP Billiton decided that even if Nicolet Minerals received the necessary state and federal permits to begin mining, the Crandon mine and its prospects for big profits don't stack up well enough against other BHP Billiton projects around the world, Alberts said.

Eight workers at Nicolet Minerals' Crandon office were notified their jobs would end Sept. 30, which will leave Alberts as the lone employee, he said.

Since 1994, Nicolet Minerals has sought state, local and federal permits necessary to mine 55 million tons of ore from a mine just south of Crandon, near the Mole Lake Chippewa Reservation and the headwaters of the Wolf River.

Environmentalists and area Indian tribes have fought the project, contending it poses too great a pollution threat. Supporters say the mining can be done safely and will create badly needed jobs.

BHP Billiton's announcement came just days after talks with the state to buy the company's land - in essence buying out the mining project - ended with no deal. State officials said the price would be too high.

Appraisals done for the state and paid for by Nicolet Minerals set the value of the land, with mineral rights, between $51.2 million and $94 million.

Paul Benson, BHP Billiton's vice president of business development for base metals in Houston, said Tuesday the company decided to cut costs at the Crandon site to save money. Efforts to seek the needed permits will be done by consultants under contract, he said.

There might be only six mining companies capable of investing the $350 million needed to build the Crandon mine, Skaer said. The Northwest Mining Association is a 106-year-old group that represents the hard-rock mining industry, primarily in western states.

The state Department of Natural Resources has said it could be early next year before it recommends whether the mine can be operated safely without polluting the environment. But such deadlines have come and gone for years.

"Why would you come to Wisconsin and fight all those opposition groups and deal with a regulatory agency that is afraid to make a decision?" Skaer asked.

Also working against the mine are today's depressed zinc and copper prices, Skaer said. "Someday in the future, the mine will be developed. Whether or not it is in our lifetime, I can't predict that," she said.

Crandon Mayor Pat DeWitt was discouraged about the mine's future. "I don't have much hope for it any more. I certainly don't," he said. The eight jobs eliminated were probably some of the best- paying jobs in Forest County, DeWitt said.

"It is a shame. It was a good chance for Forest County and northern Wisconsin to get a shot in the arm," he said.

Rusty Price, a mining analyst for Nelson Securities in Spokane, said the Crandon project might get some interest from smaller companies that can take a little more risk.

But the trend in the mining industry has been to move overseas given the difficult process of getting permits to open new U.S. mines, he said.

BHP Billiton has headquarters in London and Melbourne, Australia. Most of the company's metallic mines similar to the Crandon proposal are in Canada or Latin America.

BHP Billiton is not the first mining company to pull out of the project. Exxon Coal and Minerals Co., which discovered the deposit in 1976, applied in 1982 for permits to run the mine and then suspended those plans in 1986 when metal prices were low.

Exxon and a partner, Rio Algom Ltd. of Canada, revived the project in 1994, but Exxon sold its interests to Rio Algom. Rio Algom was later acquired by London-based Billiton, which then merged with BHP.

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