Minding Nevada’s mines

An Assembly Bill seeks to collect mining cleanup costs up front—no more corporate ‘promises’

Mine messes, even from bankrupt mines, will get cleaned up if Assembly Bill 321 passes, according to Great Basin Mine Watch.

Mine messes, even from bankrupt mines, will get cleaned up if Assembly Bill 321 passes, according to Great Basin Mine Watch.

Photo by David Robert

When the mines thrived, they provided jobs to Nevadans and a boost to the economies of such towns as Gabbs and Yerington. In the 1950s and 1960s, the Yerington Mine produced millions of dollars of copper. Between 1986 and 1994, Paradise Peak Mine produced 1.6 million ounces of gold and 22 million ounces of silver.

But when the mines’ owner, Arimetco Corp., went belly-up in 1999, taxpayers ended up with a mess on their hands. To clean up Paradise Peak could cost $20 million. At Yerington Mine, full cleanup and remediation could cost as much as $250 million.

Arimetco isn’t going to pay. The company is now history, kaput, rest in peace. But the governmental agencies that manage the land planned ahead. They required the mining companies to put up a bond in advance as kind of a deposit to go toward cleaning up the mine later. Although no money was put up by any of the various owners of the Yerington site, Paradise Peak Arimetco had put up a $4.5 million bond.

The hitch?

Only about a quarter of that was real money that could be collected by the government to clean up the site. Three-quarters of the bond was something called a “corporate guarantee.” Such a guarantee is largely a promise, backed by the full financial force of the mining company, to clean up the mining mess made after extracting metals from the ground and refining them using various toxic chemicals. You can’t get blood from a rock, they say, and you can’t force a bankrupt company like Arimetco to make good on a corporate guarantee.

The solution?

A recent taxpayer protection bill, Assembly Bill 321, would change the bonding process for mines in Nevada, phasing out the use of corporate guarantees to pay for eventual reclamation of mining sites.

“The Nevada taxpayer should not have to bear the responsibility for mine cleanup,” says Assemblywoman Sheila Leslie (D-Reno), who co-sponsored the bill with Assemblyman Jason Geddes (R-Reno).

The state of Nevada holds about $240 million in corporate guarantees. More than 90 percent of these cleanup promises come from two companies, Newmont Mining Corp. and Barrick Gold Corp. That’s quite a lot of financial responsibility for just two firms, however huge, say the supporters of AB 321.

“You don’t have to be an environmentalist to care about this issue,” says Christie Whiteside of Great Basin Mine Watch. “It’s a general-taxpayer and corporate-accountability issue.”

Whether the discussion is the reform of reclamation bonding or gross receipts taxes, now—with the economy tanking—is not the best time for force businesses to be accountable for their roles in Nevada communities. Whiteside says there is no better time than now, when taxpayers can hardly afford the liability, to ask mining companies to put their money where their cleanup efforts are.

“I’m convinced that if more Nevadans knew how much they’re potentially liable for, there’d be a public outcry,” Whiteside says.

Protecting the taxpayers from liability for mining reclamation is important, agrees Russ Fields, president of the Nevada Mining Association. That’s why the current laws require mines to post reclamation bonds in several forms, besides corporate guarantees. A company can use cash, a trust fund, insurance, letters of credit or a commercial surety.

The NMA will be testifying against AB 321, on the basis that Nevada reclamation law is already “sufficient and working well.”

Though the Arimetco case did expose flaws in the state’s 1989 reclamation law, those flaws have since been repaired, Fields says, to ensure that only financially stable companies receive the option of corporate guarantees. The state now has more tools at its disposal with which to review companies asking for corporate guarantees.

“Now, the Division of Environmental Protection has the authority to call for as frequent a review as it needs to ascertain that the corporate guarantee is sound,” Fields says, calling the risk to consumers essentially “non-existent.”

“The only corporations left in the game holding corporate guarantees are the strongest mining companies actually in the world,” Fields says. “These companies have the financial [stability] that warrants using a corporate guarantee to assure to the public that reclamation will take place. … Frankly, the Arimetco case was responded to by the state and the industry to make sure that something like that can’t happen today.”

Whiteside says that Nevada’s mining laws are not as tough as those in several states, such as Montana, New Mexico and California. In fact, California is in process of requiring backfills for closed open-pit mines—an expensive, enviable nod to the environment.

“The regulations in Nevada are not out of line and certainly not the toughest in the nation,” Whiteside says. “When they intimate that, if the laws get any tougher, they’ll go mine elsewhere, I’m not sure if that’s true.”

As one of the top gold producers in the world, Nevada does have some room to bargain.

“The gold is here,” Whiteside says. “[Mining companies] warn that they’ll take money and leave, and that would devastate the rural Nevada economy. But what we want to see is some accountability and for them to do it right. We know they have the resources to do it.”

That’s why Great Basin Mine Watch is so enthusiastic about AB 321, though it worries that the bill may not even get a committee hearing until sometime in May, toward the end of this legislative session.

“It would be sad to see this piece of legislation go quietly by," Whiteside says. "Mine bonding isn’t something people think about. I think that this bill is really a good one."