December 8, 2008

Hard-rock miners gear up for new 1872 mining act fight

Industry fights economic woes, reform plans

The Associated Press
Las Vegas Review-Journal

A deepening recession has hurt the hard-rock mining industry, including the Gold Quarry Mine in Carlin, above. Companies are also worried about mining reform legisation in Congress. Photo by John Locher.

SPARKS — The boom days are over for much of the hard-rock mining industry.

Falling metal prices and rising production costs have squeezed profits in recent months, forcing many mine layoffs and putting some new mines on hold.

Now, the industry is gearing up for another fight over mining reform legislation with a Congress that has fewer mining supporters after November's elections that saw Democratic majorities increase in both houses.

"It'll be much more challenging for us now," acknowledged Laura Skaer, executive director of the Northwest Mining Association based in Spokane, Wash.

The industry's economic and political challenges were discussed during the group's annual meeting and trade show in Sparks. Billed as the second largest annual mining convention in the United States, the five-day gathering drew more than 2,200 people before it ended Friday.

Mining experts told attendees that the next Congress will revive a decades-old battle over proposals to scrap the 136-year-old law that governs the mining of so-called hard-rock minerals: gold, silver, copper and many other metals.

A mining reform measure passed the House 244-166 in 2007, but failed to make it out of a Senate committee. The bill, sponsored by Rep. Nick Rahall, D-W.Va., would have forced the hard-rock mining industry to pay royalties on minerals extracted from public lands and would have put new environmental controls on mining.

Reno mining attorney Jim Butler said he foresees House passage again of the Rahall measure and a likely rival bill emerging in the Senate. But he thinks the troubled economy will make mining reform a backburner issue and change terms of the debate.

"Mining jobs will have to be part" of the discussion, Butler said, because metals will be needed for the infrastructure and renewable energy projects that President-elect Barack Obama is pushing to help revive the economy.

James Cress, a natural resources attorney from Denver, urged miners to locate claims now because new claims may be subject to a federal royalty in the future.

"It's virtually certain that we're going to see a royalty and it's a good time to prepare for it," Cress said. "The only question is will it be ruinous or something reasonable."

Robert Comer, regional solicitor for the Interior Department based in Denver, said there will be renewed interest in a 1999 legal opinion that gave the Interior Department the right to veto any mining proposal that causes substantial environmental harm

The opinion rendered by John Leshy, the Interior Department's top lawyer during the Clinton administration, was later abandoned by the Bush administration.

Leshy, now a member of Obama's Interior Department transition team, based the opinion on his interpretation of a 1976 federal law that directed the Interior secretary to prevent "unnecessary or undue degradation" of the public lands from all activities, including hard-rock mining.

"It's an important standard that's been misapplied by the courts and the agencies, and there needs to be discipline in implementing the standard," Comer said.

Skaer said she thinks mining opponents will use the standard as a tool to stop mine projects over the next four years.

But she said the industry is banking again on support from Senate Majority Leader Harry Reid, D-Nev., a gold miner's son whose state is the fourth-highest gold producer in the world, after South Africa, Australia and China.

Skaer pointed out that both Reid and Obama opposed Rahall's 2007 bill as too extreme.

"But I'm still concerned because we don't have as many friends in Congress who truly understand the importance of the mining industry and where our stuff comes from," she said.

Skaer said the industry is not exempt from the recession and predicted a "very slow" 2009 for it.

"The industry went from a strong boom time to all of a sudden, bam, the lights are shut off overnight," she said. "But miners are cautiously optimistic because they've rebounded before."