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A New Look at Mining and the Environment: Finding Common Ground
Frank T. Manheim

Minerals consumption soars
Notes and references from the author Web Exclusive

Trying to pick out one narrative to describe the development of U.S. mining policy is reminiscent of the classic Japanese film Rashomon. In the movie, four witnesses each describe a forest crime scene in compelling and believable stories. But the stories are incompatible with each other. The movie never reveals the truth, but watching each tale offers up interesting new perspectives.

The now-abandoned Kelly Mine near Socorro, N.M., shown here in 1995, peaked in the early 20th century. Today, it stands as a reminder of the heyday of U.S. mining and outdated practices. Photo courtesy of Christopher M. Keane.

In similar fashion, U.S. environmental groups and the U.S. mining industry each offer convincing but incompatible perspectives on the state and history of minerals development in the United States. One view conjures images of old, of dumping toxic wastes that contaminate the air and water, while the other presents a view of progress and change. Reviewing these two iconic views illuminates the longstanding conflict that has become more entrenched with time and that has contributed to a decline in the U.S. minerals industry.

The United States is increasingly dependent on foreign supplies of mineral commodities, while the country’s economy is losing industrial capabilities. Concurrently, the U.S. ranking among nations in environmental performance has also declined, according to an evaluation by a 2006 consortium of Yale and Columbia universities that was presented at the World Economic Forum meeting at Davos, Switzerland, in January.

The current impasse between environmentalists and industry, however, is unique among advanced nations. The U.S. conflict contrasts especially sharply with policy in Sweden, where a dynamic mining and mineral industry coexists with a strong national environmental commitment in a high-wage, strong economy. The Swedish policy model, as well as Canadian and Finnish models, may not be applicable to current U.S. sociopolitical conditions, but they offer important perspectives on potential ways to break out of the current standoff.

National role

Mineral commodities — ranging from steel and building stone to diamonds and salt — are critical to society. Not only do these commodities provide products essential to everyday life, but the industry as a whole stimulates “upstream” activities, such as specialized equipment manufacturing, advanced materials research and development, high-paying jobs and infrastructural support for sparsely populated areas; its “downstream” benefits include a stable raw material supply for manufactured products.

During the heyday of the U.S. mining industry, from the mid-19th to mid-20th centuries, mining boomed under the most liberal mining policy system in the world — reflected in the controversial and still little-amended Mining Law of 1872. The law states that anyone can freely stake a claim and, upon certifying a “discovery,” can seek a patent to produce hard minerals from the claim with only trivial fees (less than $100) for 5 acres.

However, the “free and easy” era of mining left negative legacies — poisonous wastes, and physical and psychological relics of a careless attitude toward the environment. For example, during the 1849 California Gold Rush and later in the Coeur d’Alene area of Idaho, miners used mercury to extract gold from ore. Toxic mercury residues remain trapped in sediments and in mine wastes. Today, mercury from Gold Rush times is slowly leaching out of the Sierra Nevada in California.

But such environmental impacts went largely unnoticed for more than 100 years. Then, the Santa Barbara oil spill occurred in 1969, where a pipe under an offshore oil platform ruptured, coating beaches and ducks with oil. The spill became primetime news on the nation’s TV screens and triggered a crisis in confidence in U.S. governmental stewardship over the environment. This event helped galvanize the environmental movement and contributed to the passage of a series of watershed environmental laws in the early 1970s, along with establishment of the U.S. Environmental Protection Agency (EPA) in 1970.

The rigorous and highly detailed statutes passed by Congress, such as the Clean Air and Clean Water acts, Endangered Species Act, and many others, marked a major departure in federal management policy. An arm of government designed to debate and set national policies for the first time assumed responsibility for detailed control over complex issues requiring specialized expertise and knowledge of local conditions that involve constant change.

Reckoning that economic interests would overly influence federal and state regulatory agencies, the framers of the 1970s environmental laws added an adversarial mechanism that would let citizens challenge governmental agencies in court on environmental grounds. Key laws further encouraged litigation by providing for reimbursement of “reasonable” attorney and witness fees if citizen suits won.

The tough new laws, many of which were administered by EPA, had initial success, which heartened environmentalists. However, the environmental management system has become increasingly controversial with time, satisfying neither environmental groups nor industry.

One of the problems with the system is that the new laws’ detail and deliberate inflexibility have limited regulatory agencies’ ability to plan, accommodate new conditions, innovate, consider social and economic factors, and mediate disputes. New problems or failures have tended to be met by new or amended laws. Even minor issues are decided in the courts.

The Surface Mining Control and Reclamation Act of 1977 (SMCRA) is a good example of the detail to which federal environmental law can extend through hundreds of separate bills. With amendments added until 1993, SMCRA, just one small part of U.S. environmental law, fills 251 pages and alone is longer than each of the omnibus environmental acts governing Canada and Sweden. The thicket of sometimes intersecting laws in which SMCRA is embedded adds to the cumbersomeness and inflexibility of coal mining regimes.

Cuts in funding for the Mine Safety and Health Administration (MSHA) pursuant to SMCRA law were among the factors cited for lack of implementation of better safety equipment for West Virginia coal mines, in which 19 lives were lost earlier this year (see Comment, this issue). About the same time as the West Virginia fatalities, all 72 Canadian miners caught in a potash mine fire in Saskatchewan were rescued because it had safe rooms with adequate air, food and water sufficient for many days.

Although the conditions in the West Virginia coal mines are inherently more dangerous than in the Canadian potash mine, an examination of the circumstances indicates clear differences in the effect of regulatory policy on mine operations. These examples point to serious problems with the U.S. mining regulatory policy and the need for change.

Clashing views

The dissatisfaction of environmentalists with hard minerals mining is articulated by former Secretary of Interior (1966 to 1969) Stewart Udall, who delivered a stinging indictment of mining and its contamination of the nation’s rivers, streams and groundwater in an introduction to the Mineral Policy Center 1997 book Golden Dreams: Poisoned Streams. The book cites examples that illustrate how hardrock mining regulation is largely left to the states, whose oversight is variable and inadequate. The Mineral Policy Center does not reject mining but advocates stronger and better enforcement of environmental rules, as well as vigorously exercised citizen rights.

The mining industry is also dissatisfied with the present system. While industry does not dispute poor mining practices in the past, it cites improvements in operational efficiency, environmental precautions and land rehabilitation practices. The industry also has called the present regulatory regime inefficient, inflexible and unjust — a system that some say has caused many industry operations to move out of the United States.

The system has also led to a political backlash, in which industry supporters in Congress have sought evasions and exclusions such as anti-environmental riders on appropriations and other bills. Early riders by environmentalists placed most of the U.S. offshore Exclusive Economic Zone under leasing moratoria, limiting U.S. exploration for oil and gas; the Carter and Clinton administrations also utilized executive orders to place more stringent controls on federal lands by designating them protected “monuments.”

Independent strategies by either environmentalists or industry to change current policy seem to have poor prospects for good national outcomes. Unilateral attempts to advance the mining industry would result in opposition by environmentalists, possibly leading to placing more land off limits to mining. On the other hand, more regulations, enforcement and exercise of citizen rights (in the form of litigation) would likely accelerate loss of U.S. mining and minerals production, creating more antagonism and economic imbalances. Such actions also would probably lead to further reliance on mineral materials imported from countries where environmental controls are weaker. Indirect effects could reduce U.S. technological, entrepreneurial and financial resources to remediate abandoned mine properties.

To address a variety of problems associated with environmental laws, the House of Representatives Committee on Resources completed draft legislation last year to achieve bipartisan reauthorization or reform of the National Environmental Policy Act and the Endangered Species Act. However, environmentalists regard the moves with concern, and the main parties in the conflict appear to have had little contact with each other to explore compromise or creative solutions.

Foreign models

Among the seven leading mining nations (Australia, Brazil, Canada, China, Russia, South Africa and the United States), China is rapidly increasing its lead as the world’s number one mining nation. At the same time, China has stated its intention to shut down or gain control of tens of thousands of illegal domestic mines, reduce marginal operations and increase attention to the environment. Whereas China’s environmental laws are in early stages of development or application, others such as Australia and Canada have more mature, evolved laws and operational frameworks that have achieved substantial support within their respective states and provinces.

The Canadian National Environmental Protection Law of 1999 is now the overriding national legislation, supplemented by laws dealing with special issues such as the Arctic and fisheries. It is overseen by the federal agency Environment Canada, but for most cases, management of mining is delegated to the provinces. In Canada, mining plans now require land restoration plans, and most provinces require bonds to ensure restoration in the case the operating company goes out of business. Unlike in the United States, the Canadian system emphasizes decentralized management with intensive consultation among stakeholders (including the federal government). The system includes special environmental courts and has relatively low levels of litigation.

Australia has 14 Commonwealth laws regarding environment, with states (for example, New South Wales) having an additional five to 15 laws each. With a few exceptions, Canada and Australia’s national and state laws, and even regulations, emphasize objectives, administrative frameworks and legal definitions. They leave detailed plans to be prepared according to local circumstances. In the relatively infrequent cases where environmental disputes or questions require formal legal adjudication, they are heard in courts or by magistrates with special environmental expertise. A private environmental organization, Minewatch, monitors both nations’ mining interests and raises alarms at intervals.

Nowhere is the contrast in mining policy so starkly different, though, than between the United States and Scandinavian countries. As in Australia and Canada, mineral resources in Norway, Sweden and Finland were owned by the Crown and had more consistent management than evolved in the United States in the 19th century.

Scandinavian slant

The decline in the U.S. minerals industry, unresolved conflicts and pessimistic U.S. attitudes contrast with booming extractive industries in Scandinavian nations. These countries lack such conflicts and are global leaders in environmental and energy policy.

Norway, with a population of about 5 million, is the world’s third largest oil exporter, and a leader in rig and submarine pipeline technology, liquid natural gas production and transport. Finland is the world leader in the enclosed flash smelting process for copper and other sulfide ores. This technique has dramatically increased production efficiency and reduced energy requirements for ore processing, while almost completely eliminating toxic emissions.

The magnetite-producing Kiruna Mine in Sweden is one of the world’s largest and most modern underground mines. Photo courtesy of Frank Manheim.

Sweden leads Europe in mineral production. Under Sweden’s Mining Law, only nine employees work in Bergstaten, the national mining bureau office within the Swedish Geological Survey. The office handled 305 mineral exploration leases in 2005 — almost double the total for 2004. Where no local or county objections are encountered, permits may be granted in six months. The Chief Inspector of Mines stated: “In Sweden ... we should not have such regulations that the mining industry is forced to operate in countries that are less scrupulous…we want a mining industry that operates under modern conditions… that will also apply far into the future.”

In 1999, Sweden consolidated 15 existing environmental laws into a single Environmental Code amounting to 164 pages. Permit requests for each type of mining activity are given an administrative level corresponding to the level of hazardous materials involved in the activity. For example, bulk mineral mining permits are in category C, handled by municipal boards. Normal mining exploration (except uranium) is in category B, corresponding to county boards. Full-scale metal mining requests are in category A, handled by regional environmental courts. These courts have advisory and oversight duties in addition to rendering legal decisions.

A regional administrator of the Swedish Environmental Code summarized a key operating principle by stating: “It is difficult for a supervisory body with limited resources and detailed regulations to achieve better safety than the operator who takes active responsibility.” Yet Sweden has exceptionally high public environmental awareness and standards, which the government proposes further extending to meet 19 national environmental goals, along with the requirements of membership in the European Union.

Mining accidents and failures, well-publicized and analyzed when they occur, are rare, and the acceptance of mineral industries by Sweden’s oldest and largest environmental movement, Svenska Naturskyddsföreningen, is reflected in the fact that mining does not appear among the 14 topics of environmental concern listed on its Web site (see Links, below).

Coming together

How do the Swedes and Canadians manage the “impossible” combination of decentralization and flexibility in environmental regulation with high standards, whereas the United States has not? Part of the answer dates back to the history of the industries in each country.

Early in the 20th century, resumption of mining activity in Sweden coincided with initiation of prolonged political hegemony by the Socialist (Labor) Party, during whose leadership the government assumed control of the largest mines. However, adoption of market principles expanded greatly beginning in the 1970s. The history of extractive industry regulation and environmental management in all the Scandinavian countries tends toward broad consensus, with policies remaining little affected by changes in party control of the government. Trust in public administrators is strong.

In contrast, in the United States, lack of trust in regulatory agencies pervaded the congressional environmental laws passed in the 1970s, which dominate the country today. Essentially, absence of communication and escalating conflict since the 1970s has given even the idea of mining or drilling for oil a stigma among U.S. environmentalists that is largely absent in Canada or Europe.

Both the United States and Sweden employ the “polluter pays” principle. Swedish environmental courts have discretion to deal with individual cases. In the United States, however, the rigid provisions of laws create high-liability risks that discourage entrepreneurial, innovative approaches to remediation and management.

The Endangered Species Act, for example, places severe restrictive measures on any public or private land that contains listed species or sensitive habitats. An early, celebrated example was the shutdown of construction on a major dam on the Tellico River by the Tennessee Valley Authority because the dam site involved the habitat of an endangered fish species, the tiny snail darter (later found in other localities).

In a later incident, controversy erupted over closure of large lumber areas in the Northwest because they were habitat for the spotted owl. In this case, environmental efforts to save old growth in the forests had been unsuccessful. They reportedly turned to a strategy involving the Endangered Species Act, seeking out a protected species, namely the spotted owl.

Reformers claim that in its present form, the Endangered Species Act itself may be a threat to endangered species because its draconian provisions give landowners strong disincentives to identify endangered species or critical habitats. Some analysts suspect that it leads not only to lack of diligence in seeking out these objects of concern, but also to deliberate destruction to avoid legal liabilities. Instead of encouraging societal cooperation in working toward environmental goals, it may foster hostility and mutual distrust.

The provisions of the Endangered Species Act and other environmental laws also encourage litigation. Fear of legal action by a few individuals or a small organization with a skilled lawyer and a supportive judge can create sufficient uncertainty to stop the kind of industrial development that would have no problem in Canada or Sweden.

Management experts account for Finland’s international leadership status in environmental performance, along with top rating for mining investment, by the “trust as capital” concept. They assert that where mutual trust is established, market efficiencies can be achieved in environmental management as well as in industry. Polls show that adversarial attitudes appear to be held by leadership groups rather than the general U.S. public. The question is whether the leadership of these U.S. groups can recognize the disadvantage of continued conflict, show respect for opponents’ positions, cooperate to define goals and conflicts, and explore alternatives to policy paralysis.

If the leaders from environmental and industry groups show interest in a break with the patterns of the past, a new approach could be set in motion. Unlike the unresolved Rashomon story, further breakthroughs could ultimately lead the United States to join other nations in applying consensus rather than adversarial policies to management of natural resources.

Minerals consumption soars

“If 2004 was the year that the world awoke to the possibilities of rapid economic growth in China and other developing countries, then 2005 may be remembered as the year the world began to adjust to the realities of that growth,” says Kate Johnson, coordinator of the Mineral Resources Program at the U.S. Geological Survey (USGS). Indeed, increasing consumption of metals and minerals, especially in China and India, was the story in 2005, according to the USGS Mineral Commodity Summaries 2006 report released in January.

While many non-fuel mineral commodities showed long-term price stability throughout the 20th century, the large increase in mineral consumption by developing nations has led to historically high prices in the past couple of years for these commodities, as it has for petroleum. The value of non-fuel mineral materials produced in the United States in 2005, including some 90 commodities such as salt, gravel and gold, rose to $51.6 billion in 2005 — a 13 percent increase over 2004.

“The value rose because prices rose,” Johnson says, and prices rose because although production increased worldwide, increases in consumption outpaced supply growth. However, increasing transportation and production costs, owing to high fuel prices worldwide, reduced profitability, and in some cases, lowered production rates.

Natural disasters also affected the prices of mineral materials, according to USGS. The Sumatra earthquake and tsunami in December 2004, as well as the U.S. Gulf Coast hurricanes in 2005, damaged mineral operations and transportation, leading to regional declines in production of industrial minerals. Construction efforts in the areas affected by the disasters increased the demand for mineral materials, such as cement and steel, and the raw materials needed to make them.

Iron ore prices, for example, rose 70 percent in 2005, primarily because of increased consumption in China. Steel consumption rose by 5 percent worldwide, contributing to an increase in the price of molybdenum (a component of steel) by 189 percent. In fact, Johnson says, the price of molybdenum has risen about 500 percent over the last couple of years, after decades of prices below $4.00 per pound. Over the past year, the price of copper, about half of which is used in building construction, increased from $1.41 per pound to $2.00 per pound due to decreasing production from heavy rains in mining areas, equipment problems and two worker strikes. These increases in prices are beginning to show up in U.S. construction projects and elsewhere at the consumer level, Johnson says.

Although estimating future mineral consumption involves considerable uncertainty, analysts expect increased mineral consumption, especially of metals, in China and other growing economies. One unknown factor to watch, however, is the growing environmental concerns that some are raising about the implications of these developing countries’ increasing consumption of mineral materials.

Megan Sever

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Manheim is a professor in the School of Public Policy at George Mason University in Fairfax, Va. He retired from the U.S. Geological Survey in 2002, after 35 years of service as a marine geochemist. He wrote about energy policy in the December 2004 Geotimes.

Links:
Comment, Geotimes, April 2006
Svenska Naturskyddsföreningen, www.snf.se

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