Tag Archives: corporate social responsibility

Mozambique, Michigan, and the SEC Complaint Against Rio Tinto

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Chinde_Rusting_boats

Rusting boats at the port of Chinde, where Rio Tinto proposed to barge Riversdale coal via the Zambezi River.

Yesterday, the Securities and Exchange Commission brought a complaint in New York City against Rio Tinto, charging Tom Albanese, the former CEO of Rio Tinto, and Guy Elliott, his Chief Financial Officer, with fraud. According to the complaint, Albanese and Elliott actively misled the Rio Tinto board, audit committee, auditors, and the investing public about their acquisition of the Riversdale coal business in Mozambique in 2011.

The fraud that Albanese and Elliott are accused of perpetrating looks awfully familiar to those who have followed the development of Eagle Mine and the controversy over County Road 595. Having noticed the parallel between Mozambique and Michigan back in 2013, when Tom Albanese was forced to step down, I now have to wonder whether prosecutors will take the company’s representations around the Eagle Mine into account when building their case.

In Mozambique, they told investors, coal would be transported by barge to the Indian Ocean port of Chinde. Although their technical advisors “highlighted the ‘showstopping’ risks” associated with the barging proposals before the acquisition, Albanese and Elliott blundered recklessly ahead. Then eight months later, the Mozambique government denied Rio Tinto a permit to transport the coal by barge down the Zambezi River. Suddenly, the coal business they had acquired for $3.7 billion appeared to be worth a negative $680 million. According to the SEC’s complaint, Albanese and Elliott “concealed and glossed over” the fact that they had no viable haul route for the 30 million tons per year they projected in their business plans, and misled investors as they raised $5.5 billion in US debt offerings.

In that very same period, Rio Tinto was also promoting Eagle Mine to investors and promising economic renewal in the Upper Peninsula, though they had not yet secured a transportation route — a haul route — for Eagle’s sulfide ore. In Michigan, it appears, the company took the same cavalier attitude toward planning and risk that the SEC complaint says got them into trouble in Mozambique.

Way back in 2005, John Cherry, who was then a Kennecott Minerals project manager and is now President and CEO of the Polymet project in Minnesota, characterized Eagle as a “direct ship” operation, “meaning that the rock would not be processed on site, thereby avoiding the storage of highly toxic debris left over, called tailings.” Presumably this is what Michigan DEQ’s Robert McCann had in mind in 2007, when he told The Blade that Kennecott’s permit “would require them to keep the ores underground, put them in covered rail cars, and ship them to Ontario for processing”; the Marquette Monthly told roughly the same story that year, only now there were trucks in the picture: “ore would be transported by truck and rail to a processing site in Ontario.” This seems to have been nothing more than a cover story.

Everything changed in 2008, when Rio Tinto bought the Humboldt Mill. Those permit requirements the DEQ’s McCann touted back in 2005? They were quickly abandoned. Covered rail cars come into the picture only after the ore is crushed, ground into a slurry, floated and rendered into concentrate at Humboldt Mill. A glossy 2010 company publication promoting Eagle Mine includes not a single word about how Rio Tinto and Kennecott plan to travel the 30 kilometers from mine to mill: “Happily, processing of the nickel and copper can take place in Humboldt, around 30 kilometres [sic] away, at a previously abandoned iron ore plant.” By 2011, the company had “considered more than a half dozen transportation routes” from mine to mill, according to a Marquette Mining Journal article by John Pepin published in February of that year, but they still had no viable haul route.

A good prosecutor with a rigorous and thorough discovery process would probably be able to determine whether the evasions and misrepresentations perpetuated on the public over the Eagle Mine haul route also amounted to fraud, or were part of a larger pattern of deliberately misleading statements. It’s clear Rio Tinto never came clean — and perhaps never really had a firm plan — on mine to mill transport at Eagle before it sold the works to Lundin Mining in June of 2013 and decamped. As long as regulators in Michigan continued to be more accommodating than those in Mozambique, the company seems to have been content to let the people of Marquette County fight out the haul route issue among themselves.

Save the Wild UP December Gala Keynote Address

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This is the text I prepared for my remarks at the Save The Wild UP December Gala. My talk deals with the ethics of Lake Superior mining, connecting it with climate change, the loss of the wild and the dawn of the Anthropocene. It’s also a reflection on human ingenuity and human responsibility. The half-hour keynote makes for a long blog post, but I hope readers will find something here worth sharing and discussing.  

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When you invited me to speak tonight, I tried almost immediately to come up with names of people who might be better suited to the task. In this crowd, I ought to be listening and trying to catch up.

I’m an outsider, and a latecomer to boot. Some of you were here when Kennecott and Rio Tinto first staked their claim to the Yellow Dog Plains. I didn’t fully appreciate the extent of the new mining activity in this area and all around Lake Superior until about 2012. That was right after Ken Ross and I had finished making 1913 Massacre, our documentary about the Italian Hall disaster.

I was so caught up in the story our film tells that I was under the impression that copper mining — sulfide mining — was a thing of the past in the Upper Peninsula.

Very near the end of 1913 Massacre, there’s an interview with an Army veteran who’s sitting at the counter of the Evergreen Diner, drinking a coffee and smoking a cigarette. He says that after the copper mines closed in 1968, attempts to re-open them failed because people were “bitching about the environment and all that shit and the water and the runoff.” The camera, meanwhile, is exploring the industrial damage left behind by the mining operation.

This is the one moment in the film where we had to bleep out some bad language before Minnesota Public Television would air 1913 Massacre on Labor Day in 2013. The only time anyone in our film curses is when the subject turns to protecting the water and the environment.

That these two things — a destroyed, toxic landscape and a hostility toward people who care about the environment — exist side by side; that people can watch a mining company leave a place in ruins, poison its waters, damage it to the point that it’s now a Superfund site, with high levels of stomach cancer and fish that can’t be eaten, and direct their anger and curses at people trying to prevent it from happening again: our film presents all that as part of what we’ve come to call “mining’s toxic legacy.”

The Army veteran went on to say — this part didn’t make it into the film — that people who bitch about the environment are “people from out of town.” He wasn’t complaining about environmental regulation or about big government; he was complaining instead about out-of-towners, strangers who make it tough for regular guys to make a living.

Strangers can be people from faraway, or just people from whom you feel estranged: people who don’t share your ways or speak your language; and it would be possible to talk at some length about the way the mining operations in the Keweenaw estranged people from each other and from the place they live.

Everywhere it goes, it seems, mining divides and displaces people. It’s never just about extracting ore from the ground. Mining is development and the power to direct it.

When strangers come to town or when people feel estranged, we need translators, guides and mediators. This is one reason why it’s so important to have a local, grassroots organization dedicated to the shared interests people have in the nature and culture of the Upper Peninsula.

You might look like the underdog right now. But I think you’ll agree that there’s a pressing need for a more responsible, inclusive and respectful conversation about development in this place. Save the Wild UP is in a great position to lead it.

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Back home in Brooklyn, I have a fig tree. I planted it last spring. I just finished wrapping it for the winter. I love the work the fig tree involves — the care it involves — because it connects me to the memory of my grandfather and the fig tree he kept. My tree connects me to my family tree (my roots), to history, and in my imagination the tree belongs as much to history as it does to nature. The life of my tree depends almost entirely on my care. I sometimes wonder if there is anything wild about it.

There is a wild fig. The ancient Greeks even had a special word for it: φήληξ. They seem to have derived its name from another word (φῆλος) meaning “deceitful,” because the wild fig seemed ripe when it was not really so. The ancient world knew that wildness is tricky. It can deceive and elude us, or challenge our powers of discernment.

Nature, we claim, is our dominion, as if it (naturally, somehow) belonged to history, the world of human activity. Our economy organizes nature to produce natural resources. But the wild represents a living world apart from history and another order of value altogether.

We can’t assimilate the wild into an engineered and technical environment: it will cease to be wild the instant we try. The wild begins where engineering and ingenuity stop, at the limits of human authority and command. So “wild” is sometimes used to mean beyond the reach of authority, out of control.

But what’s wild is not alien. Sometimes the wild calls out to us, usually to ward us off. The wild is almost always in flight from us, leaving tracks and traces for us to read. It always responds to us, as wild rice and stoneflies respond to the slightest change in water quality, offering guidance if we are attentive and humble enough to take it.

The wild marks the limits of our powers, our ingenuity and ambition, and before it we ought to go gently.

We have not.

The headlines tell us that our carbon-intensive civilization, which brought us so many material advantages, is now hastening its own demise. We are entering an entirely new era of human life on earth. Some scientists and philosophers talk about the end of the Holocene and the beginning of the Anthropocene — the dawn of a new geological epoch of our making.

The story beneath the headlines is a record of loss. A map of the terrestrial biosphere shows that today only a quarter remains “wild” — that is, “without human settlements or substantial land use” — and even less is in a semi-natural state. Data from the Mauna Loa Observatory tell us that this year was the last time “anyone now alive on planet Earth will ever see” CO2 concentrations lower than 400 parts per million. Those levels started rising in the 1700s with the industrial revolution, spiked dramatically in the postwar period and have climbed steadily higher. Since 1970, the populations of vertebrate animals have dropped by 52 percent. The same report by the World Wildlife Fund tells us that freshwater animal species have declined by 76 percent since 1970.

That precipitous drop in freshwater species should set off alarm bells, especially here, on the shores of one of the largest freshwater lakes in the world. Since the 1970s, Lake Superior surface-water temperatures have risen and ice cover has dramatically reduced. Walleye can now live in more areas of the lake than ever before. There’s an earlier onset of summer stratification. By mid-century, according to the National Wildlife Federation, Lake Superior may be mostly ice-free in a typical winter.

Now I know it’s the holiday season and these aren’t exactly tidings of comfort and joy, but they are tidings all the same. And what they announce is this: we are responsible. We’re responsible for all this destruction of the wild — of the whole web of life — and for the changes sweeping over us. Denial will not let us off the hook.

Responsibility is not just about being held accountable for the damage you’ve done; it’s also about taking steps to limit damage, repair the broken world, reclaim it and make things better. We have that responsibility to ourselves and to future generations.

“Loss belongs to history,” writes the political philosopher Sheldon Wolin, “while politics and life are about what is still to be done.” But, he’s careful to remind us, loss still has a strong claim on the way we live now and on our future plans. The loss of the wild gives us a new responsibility that should inform our politics and our lives at every turn, direct the investments we make and the activities we sanction, and give rise to new conversations about what to do.

Saving the wild is now bound up, inextricably, with saving the human world — for ourselves and for future generations. We can appreciate in a new way Thoreau’s famous statement: “in wildness is the preservation of the world.”

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Knowing all this, why don’t we act? Why haven’t we acted?

One answer to this question has to do with the word “we,” and our underdeveloped capacity for coordinated, collective action.

Mark Carney, Governor of the Bank of England, suggested another good answer in a speech he gave back in September to a group of insurance industry executives. Not exactly a bunch of tree huggers, but actuaries, people interested in accounting for risks and costs.

Carney talked about the future in terms of horizons, near versus long term. When we focus only on the near term, we don’t account for the true cost of our activities. That’s why for Carney, climate change is a “tragedy of the horizon,” or the tragic consequence of our inability to see and plan and take steps beyond the near term. Since “the catastrophic effects of climate change will be felt beyond our immediate horizons” — beyond the business cycle and the quarterly earnings reports, beyond the political cycle and the current election — we have deferred the cost of fixing the problem to future generations.

We’ve organized things — markets, politics, institutions — so that near-term interests win out over longer-term well-being and more sustainable arrangements.

Nowadays, if you look out at the Lake Superior horizon, you might see all the way to China. An unsustainable scheme of Chinese urbanization and economic growth fueled much of the new mining activity around the lake, and especially the exploration and exploitation of copper-rich deposits. Over the last decade or so, copper was used not just to build and wire new Chinese cities, many of which today stand empty; it was used mainly for collateral on loans. As much as 80 percent of the copper China imported was used to back loans. Today, as China unravels and the price of copper plunges, commodities investors are expressing remorse. Nickel’s down, too. The rush for Lake Superior minerals now seems to have been reckless — part of a larger market failure, with unforeseen risks and costs current and future generations are likely to incur.

Or look at the Polymet project in Minnesota. It’s an exaggerated case of not accounting for the long-term costs of mining. Currently, the Polymet Environmental Impact Statement says that water treatment will go on “indefinitely” at a cost of 3-6 million dollars a year. There is no way, so far as I know, to multiply 3 or 6 million dollars by a factor of indefinitely; and even the company’s most concrete prediction is 500 years of water treatment. Just to put that in perspective, the state of Minnesota has only been around since 1858: 157 years.

How is it possible that a proposal like this can be taken seriously? They promise jobs, a fix to a near-term problem; but there’s something else at work here as well: technology or, rather, misplaced faith in technology and human ingenuity. We make technology a proxy for human responsibility.

But technological advances that create efficiencies or solve problems for mining companies can carry hidden social and environmental costs: for example, a study done after the Mount Polley spill last year concludes that “new technologies, deployed in the absence of robust regulation” have fostered a “disturbing trend of more severe tailings failures.” Recent events in Brazil underline the point.

Great machinery, even full automation, will never amount to responsible stewardship. New technologies can have unintended consequences, distancing us from each other and from our responsibilities. Things corrode, repairs are made or not, entities dissolve, contracts are broken, obligations are forgotten, empires decline and fall, even within definite time horizons.

The industrial development that mining brings distorts horizons in another way. One theme of Tom Power’s research on the economics of the Lake Superior region and on what he calls wilderness economics is that “protecting the quality of the living environment…lays the base for future, diversified economic development.” Over-reliance on mining — and mining that damages or threatens the living environment — hinders economic diversification and makes the economy less resilient. It also requires us to discount the value of water and land it puts at risk, a value that is only going to increase over the long term, as freshwater becomes ever more scarce and as carbon capture afforded by peatlands and forests becomes more critical.

To allow that calculation for the nonce is not to concede that the market value of these wild places is their true value. The living world, creation and generation, is more than a bundle of ecosystem services, a tap and a sink for human activity. That way of thinking won’t save the wild; it is bound to open the door to the very forces that have already destroyed so much of it.

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Let’s not lose sight of the larger point: if you take the long view, looking forward into the future and out across the horizon, protecting the land and water in this region actually looks like a more attractive investment than extracting all the ore from the ground.

That makes the capture of government by mining and extractive industry — from Marquette County to the state and federal levels — all the more troubling and deplorable. It directs investment and development down these risky and unsustainable paths, where short-term interests of multinational corporate actors are paramount and enjoy the full protection of law. The coercive power of the state, which ought to place constraints on corporate actors, is used mainly to benefit them. When things go south, society ends up bearing the cost.

This grassroots effort challenges that whole topsy-turvy arrangement. We have to continue to challenge it, at every opportunity, in every forum, recognizing that the results we’re looking for probably aren’t going to come on a quarterly basis or anytime soon. We have to lengthen our horizons.

At the same time, we have to re-open the conversation about how we are going to organize ourselves in this place, so that what remains of the wild UP can flourish and the people living here can thrive.

It’s imperative, too, that Save the Wild UP stay connected with other groups around the lake facing similar challenges. To take just one example: Kathleen’s recent Op Ed in the Star Tribune about Governor Dayton’s visit to the Eagle Mine. That made a difference to people in Minnesota: it was widely shared and talked about. People connected with it.

I have to believe that there’s power even in these little connections — and in conversation, cooperation and community. There is power where we come together, when we are no longer strangers and no longer estranged from each other. There would be power in an international congress where people from all around Lake Superior gathered to talk about responsible development. This isn’t the power the mining companies and the state can wield; it’s another kind of power, coordinated, collective, non-coercive, one we as a society have not done enough to realize.

We’re going to need that power to meet this current set of challenges.

Now you may have noticed that I keep using the word “we,” and I’m conscious that by including myself here I might be overstepping and intruding. But maybe that’s why I keep coming back to the UP: deep down, I know this is not a faraway or a strange place but a familiar place, where I have a stake in things — where we all have a stake.

The “wild UP” that we are organized to save is not just wilderness, waterfalls, wolves and warblers. It is the stage of humanity’s tragic predicament. It marks a boundary that we cross at our great peril. It can be a vital source of economic and social renewal.

Ultimately, saving the wild UP is about realizing the power and political authority we all have, everyone in this room, people across the UP and around the lake, to govern ourselves and make decisions about the future we want. What do we see on the horizon? What do we want for our children, grandchildren, our great-grandchildren and so on down the line? What do future generations require of us? What do we owe them?

That’s a conversation we need to keep having. And that’s why this organization deserves all the support we can give it, because Save the Wild UP connects us and shows us that we can be both powerful and responsible at the same time.

Thanks for listening so patiently, and thanks again for inviting me to the Gala.

delivered 5 December 2015

The Political Project of MCRC v. EPA, 1

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First in a Series

oretrucksAAA

Ore trucks from Lundin Mining’s Eagle Mine make their way down the Triple A road.

No Labels

I’ve just gotten around to reading the complaint filed on July 8th in the U.S. District Court for the Western District of Michigan, Northern Division, by the Marquette County Road Commission against the EPA. The complaint alleges that the EPA’s repeated objections to County Road 595 — that the road will threaten and destroy wetlands, streams and protected wildlife in its way — are “arbitrary and capricious” and in violation of Section 404(J) of the Clean Water Act. The Road Commission asks the court to set aside the EPA’s Final Decision against the building of County Road 595, restore Michigan Department of Environmental Quality’s authority to permit the road, and bar the EPA from further interference in the matter.

While it may take the court some time to decide whether MCRC v. EPA has any legal merit, the complaint is written to serve other ends as well: political objectives. The complaint is aligned with efforts in Michigan, Wisconsin and elsewhere, to ease regulations, subvert the legal authority of the EPA and whip up anger against the federal government; and the plaintiffs appear to be connected, through their attorneys, to one of the most powerful Republican party fundraisers and a network of ultra-wealthy political donors.

The MCRC complaint directs ire against a familiar cadre of enemies — environmental “activists,” overreaching federal bureaucrats and the area’s indigenous community; and it pretends to discover a dark conspiracy, in which these groups meet “surreptitiously,” write “sarcastically” about mining interests, and collude to block economic development. In fact, it’s often hard to decide whether the arguments and evidence assembled in this complaint are meant to serve as legal fodder or support political posturing. So I thought I would try to sort through them in a short series of posts on the CR 595 lawsuit.

There is the tiresome pretense throughout the complaint that CR 595 would serve as something other than a haul route from the Eagle Mine to the Humboldt Mill, and that the road will benefit the public as much as the mining company. While the mining company says it is committed to making do with current infrastructure, the public clearly deserves some relief: trucks hauling ore on a makeshift route from Eagle have already been involved in a few scary accidents, and it remains a question whether cars can safely share the same road, especially an icy winter road, with ore trucks trying to beat the clock. People are understandably concerned, too, about big trucks loaded with sulfide ore barreling through the city of Marquette.

The public has another cause for grievance, and it makes for some angry foot stomping in the complaint: the MCRC spent millions to prepare for EPA reviews of the CR 595 application and failed repeatedly to win approval. Both time and money were wasted, the complaint says, not due to incompetence, stubbornness or denial, but because the EPA was never going to give the Road Commission a fair hearing. It’s in this connection that the complaint tries to lay out an “anti-mining” conspiracy between the EPA and environmental activists and the indigenous community in the Great Lakes Basin, and where the arguments become specious and contorted.

In subsequent posts I’ll address some of the ways MCRC v. EPA constructs this anti-mining strawman in order to mount a political offensive; and throughout this series, I’m going to be asking whether the “anti-mining” label correctly characterizes the evidence brought by the MCRC. I think it’s fair to say from the outset that it does not accurately represent the priorities and commitments of people and groups concerned about the construction of CR 595. It’s reductive, and turns road skeptics into industry opponents. To be against this particular haul road — or hold its planners to the letter of the law — is not necessarily to pit yourself against the entire mining industry.

The anti-mining label deliberately confuses haul-road opposition with opposition to the mining industry in order to coerce people into going along with the haul road or risk losing their livelihood, or at least the jobs and economic prosperity promised when mining projects are pitched. The MCRC complaint goes even further: it conflates mining with economic development — or reduces all economic development in the region to mining — and so runs roughshod over the thoughtful arguments of people like Thomas M. Power, who has studied the ways mining can restrict and quash sustainable economic development.

The anti-mining label fences ordinary people in, distorts and exaggerates their legitimate concerns, and does not recognize that people might come to the CR 595 discussion from all different places. Most don’t arrive as members of some anti-industry coalition; they are fishermen, residents, property owners, teachers, hunters, parents, hikers, snowmobilers, birdwatchers, loggers, parishioners, kayakers, merchants, and so on. Some are many of these things all at once.

The label is fundamentally disrespectful: it refuses to meet people on their own terms and fails to ask what any of the people who oppose CR 595 actually stand for. What do they want for the area? What do they value and love? What do they envision for the future? Where do they have shared interests? Where do they have real differences? How can we work together? The anti-mining label forecloses all those questions. Instead, people are divided. The label demands that everybody take one side or the other (and, as I learned in the course of my work on 1913 Massacre, in the Upper Peninsula that demand has deep historical roots in the labor conflicts of the early twentieth century; but, no worries, in this series of posts I’ll try to stay focused on the present).

I have always had trouble with the idea that “anti-” and “pro-” mining positions should govern the way we talk about the environmental regulation of mining. I myself can easily slip into this way of talking. But as I tried to explain in an exchange on this blog with Dan Blondeau of Eagle Mine, that way of thinking impedes and short-circuits important conversations about the ethics of mining. Playing the anti-mining card reduces the questions of whether and how mining can be done responsibly — in this place, by that company, at this time — to mere pro and contra. It’s a dangerous ruse: instead of identifying risks and addressing responsibilities, it generates social conflict.

Can Mining Be Saved?

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TeslaGigafactory

The Tesla Gigafactory, currently under construction in Storey County, Nevada.

Andrew Critchlow, Commodities Editor at The Telegraph, speculates in a recent article that Elon Musk and Tesla might “save the mining industry” by ushering in a new age of renewable energy. Domestic battery power production at the Tesla Gigafactory (now scheduled to go into production in 2016) is bound to create such demand for lithium, nickel and copper, Critchlow thinks, that the mining industry will find a way out of its current (price) slump and into new growth, or possibly a new supercycle.

“Major mining companies are already ‘future proofing’ their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry,” writes Critchlow; and the “smart commodity investor” will follow suit, with investments in “leading producers” such as — this is Critchlow’s list — Freeport-McMoRan, Lundin Mining and Fortune Minerals.

It’s a credible scenario, but it’s also terribly short-sighted. The big switch over to domestic solar power and battery storage Musk is hyping in the run up to the opening of the Gigafactory would no doubt give miners a short-term boost, but it will also take a lasting toll on the places where copper and nickel are mined, raise serious human rights concerns, and put even more pressure on the world’s freshwater resources.

After all, the copper and nickel used to make Tesla’s batteries are going to come from places like the Democratic Republic of Congo, where Lundin and Freeport-McMoRan operate a joint venture at Tenke Fungurume, and which has been at the center of the recent debate in the EU parliament over conflict minerals; Peru, where protests against Southern Copper Corporation’s Tia Maria project led the government to declare a state of emergency in the province of Islay just last Friday; or the nickel and copper mining operations around Lake Superior that I’ve been following here, where there are ongoing conflicts over free, prior and informed consent, serious concerns that sulfide mining will damage freshwater ecosystems and compromise one of the largest freshwater lakes in the world, fights over haul routes, and repeated complaints of lax regulatory oversight and political corruption.

Rice farmers clash with riot police in Cocachacra, Peru. The fight is over water. (AP Photo/Martin Mejia)

These are just a few examples that come readily to mind. It wouldn’t take much effort to name others (Oyu Tolgoi, Oak Flat, Bougainville) and to see that the same problems arise, to a greater or lesser degree, no matter where copper and nickel mining — sulfide mining — is done.

The mining industry and commodities investors have historically tended to minimize and marginalize the environmental and social costs of sulfide mining; so it’s really no surprise that Critchlow should argue that increased demand by battery producers is all it will take to “save” mining. Leave it to others, I guess, to save the world.

But the supply and demand model is reductive and misleading, even for those looking to make a fast buck. A recent Harvard study of company-community conflict in the extractive sector summarized by John Ruggie in Just Business suggests just how costly conflict can be. A mining operation with start-up capital expenditures in the $3-5 billion range will suffer losses of roughly $2 million for every day of delayed production; the original study goes even further, and fixes the number at roughly $20 million per week. Miners without authentic social license to operate lose money, full stop. So Critchlow’s is at best a flawed and myopic investment strategy that ignores significant risks. It also appears to shrug off legitimate human rights claims, and turn a blind eye to environmental degradation, and deadly violence of the kind we’re seeing in Peru right now. That’s irresponsible, if not downright reprehensible.

A Macquarie Research report cited by Critchlow claims that the switch away from fossil fuels to battery power in the home is all but inevitable. But if we make the switch to renewables and fail — once again — to address the ethics of mining, what exactly will we have saved?

Deepening the Dow Conversation

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“Let’s take this show on the road,” quipped Mark Tercek, President and CEO of The Nature Conservancy, at the close of Dow Chemical’s Google hangout on “Redefining the Role of Business in Society.” Moderator Alice Korngold guided the panelists, three Dow executives and a few big names in sustainability from the NGO world, through the hour-long hangout without a hitch; audience approval (registered via the thumbs up/thumbs down Applause function) seemed pretty consistently high. Everyone played their part well, and they had reason to congratulate each other.

Still, Tercek’s final remark was telling, a sort of gloss on the hour that preceded it. In fact, if I had to offer just one criticism of yesterday’s hangout — and I intend this to be constructive criticism — it would be that this was, essentially, a show. It lacked the spontaneity and the give and take of conversation, as well as the informality promised by the word “hangout” (and which characterizes hangouts I’ve attended and in which I have participated).

As a result, the hangout was less about “redefining” the role of business in society than promoting a settled definition of that role. Dow executives ran through talking points, and at several junctures even the people from the NGO world seemed to have adopted the jargon that Dow has developed around its 2025 sustainability goals. Where conversation would have uncovered discrepancies in order to work toward new understanding, here was little disagreement or dissent, and nothing like irreverence or skepticism — which are ways that interlocutors withhold assent and keep conversations honest.

For example, no one in the hangout challenged what in most other settings would be regarded as a relatively new and extraordinarily controversial idea: that business’s role is to “lead” society; no one suggested that it ought to be the other way around. The most vocal dissent focused on one small point: Peter Bakker, President of the World Business Council for Sustainable Development, said that he didn’t think it would be necessary for Dow to create another sustainability think tank. Maybe he’s right: the world has plenty of talk shops; but in this context, where it was quickly followed by Dow Chairman and CEO Andrew Liveris saying we need “do tanks, not think tanks,” it felt like another way to close the discussion, short circuit deliberation, and declare the matter settled.

I appreciate that this may not have been the appropriate occasion to invite others into the circle, to take live comments, or open bigger questions that couldn’t be resolved in the short space of an hour. I appreciate, too, the effort it takes to bring a twentieth-century industrial giant like Dow into a twenty-first-century online social forum, and the legitimate concerns about everything from reputation to litigation that effort raises. But the broadcast quality of this hangout lent it an air of artificiality and, more importantly, just didn’t seem to jive with the commitment Dow has publicly made to collaboration, dialogue, listening, and building social capacity.

Clearly, the sustainability goals Dow has set for itself warrant a more inclusive and dynamic conversation — where the outcome is not set in advance, and which allows heterodox views, strong dissent and unresolved, maybe irresolvable differences. That’s especially true because Dow claims to be serious about its sustainability goals — this isn’t just window dressing — and what Liveris called its sustainability “journey” has only just started.  At the very least, subsequent conversations should tease out and develop some salient points about this ambitious program and the thinking behind it. Here, I’ll confine myself to identifying just three of these points, based on what was said during yesterday’s hangout.

The first issue concerns the historical roots of the corporate sustainability movement. Two participants in the hangout, Liveris and John Elkington (who coined the phrase “Triple Bottom Line” and has written extensively on the subject) both traced it back to the 1960s, and what Liveris called their “hippy” days.* But, as Elkington came close to suggesting, sustainability thinking also has roots in the reactions of the 1970s and 1980s, which saw the rise of neoliberalism and the idea that markets can offer solutions to social problems, sometimes better, or at least more efficiently, than governments.** This is obviously not just a debate with historical interest; it is a question of the commitments — and the ideas about business’ role in society — that sustainability thinking carries with it.

The second point worth discussing and developing has roots in the 1970s and 1980s as well. This is the idea of natural capital. It not only went unquestioned in the hangout; it seems to have achieved the status of an article of faith. The trouble isn’t just that the figures used to calculate natural capital are made of  “marmalade,” as George Monbiot put it in a lecture on the topic, and reduce the inestimable — the natural, living world, all of creation, if you like — to the merely estimable; but there were several points during the hangout where that trouble lurked just beneath the surface. There are other objections that merit fuller discussion here; namely, that the concept of natural capital:

[harnesses] the natural world to the economic growth that has been destroying it. All the things which have been so damaging to the living planet are now being sold to us as its salvation; commodification, economic growth, financialisation, abstraction…. what we are doing here is reinforcing power, is strengthening the power of the people with the money, the power of the economic system as a whole against the power of nature.

That’s Monbiot again. The point is not that he’s right, though I think he’s got a strong argument here. Agree or disagree, meeting these arguments and others like them when it comes to natural capital would produce a much deeper, more nuanced and truer understanding of the interventions that sustainability thinking requires.

And finally there’s that question of power that Monbiot raises, which I would recast in this context as a set of important ethical considerations that cluster around the idea that you can do well by doing good. At one point, Liveris ran through some impressive numbers to suggest that Dow has figured out how to make sustainability profitable. But there was no mention during the hangout of what agency or power will hold Dow and other companies to account — or oblige them to meet their responsibilities — in case of non-performance.

The unspoken assumption just underneath the surface here seems to be that we are to trust the company, because its intentions are good; or at least the intentions of its executive team are. There’s no reason to doubt that, but if you are rolling out a “blueprint” for society’s future, as Dow says it is, you are also assuming responsibilities toward the people who now live and will live where you plan to build that future. So to get buy-in to the blueprint, earn the trust and engage the energies of all those people, it’s important to enumerate and discuss those responsibilities, to put in place appropriate checks that measure success in society’s terms, not just in business terms, and to prescribe remedies in case of failure.

All this brings me back to Bakker’s suggestion that the world does not need another think tank, and the idea that it’s time for Dow and other companies to partner with NGOs and other social institutions in order to start “doing.” The challenges Dow is trying to address —  climate change, clean water, food security, income inequality and youth unemployment were among the issues Liveris enumerated — are no doubt urgent. But a focus on “solutions” to pressing problems can’t be an excuse to short-circuit discussion or sidestep political process; and we should be careful not to mistake the advance of a business agenda for social progress, or, in our rush to meet the very real challenges the world now faces, confuse the two things. The thing we need to sustain, right now and into the future, is the conversation.

*Postscript, 18 April 2015: The day after I wrote this post, a friend brought this provocative 2006 essay by Slavoj Žižek to my attention. Here, Žižek characterizes professions of “love” for May 68 as a staple of “Porto-Davos” sustainability discourse: “What an explosion of youthful energy and creativity! How it shattered the confines of stiff bureaucratic order! What an impetus it gave to economic and social life after the political illusions dropped away! And although they’ve changed since then, they didn’t resign to reality, but rather changed in order to really change the world, to really revolutionize our lives.”

**Postscript, 14 December 2015 Joe Bakan offers a smart discussion of this point in “The Invisible Hand of Law: Private Regulation and the Rule of Law”. see especially pp. 293-4 and 297-9.

Five Questions On Business And Society

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Dow Chemical is currently soliciting questions for a Google Hangout on “Redefining the Role of Business In Society.” The Wednesday morning Hangout will be moderated by Alice Korngold, author of A Better World Inc., and feature Dow Chairman and CEO Andrew Liveris along with other “global sustainability leaders.”

I submitted five questions for the group’s consideration. I can’t say whether they’ll address any of them or whether these questions are even appropriate for this forum. This is a huge topic, and there are lots of ways to approach it. Nor do I pretend that these are the only five questions worth asking. But it strikes me that these five simple questions might help others start and structure a conversation about business’s role in society. So, after tweeting my questions and putting them up for easy reference on Google docs, I thought I’d post them here as well.

  1. Governance: Where’s the seat for “society” in the boardroom, and who sits there?
  2. Priorities: Whose role is it within the company to identify and set social priorities?
  3. Non-performance: What mechanisms should be in place to identify and address human rights and environmental grievances?
  4. Authentic social license: What mechanisms ensure all stakeholders — esp. dissenters, skeptics, opponents — are represented?
  5. Metrics: How does [the company; in this case, Dow] currently measure social performance, and factor it into overall business performance?

The Boom Starts With A Rush

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Overturned Eagle Mine TruckThe news that an ore truck overturned last week on its way from Eagle Mine to Humboldt Mill brought me back to a conversation some friends and I had in the lobby of the Landmark Inn this past October. Earlier that day we’d been touring the Yellow Dog Plains on the smooth wide roads that the Marquette County Road Commission cut through the wilderness for the mining company, keeping count of the big trucks we saw. All the trucks were outfitted with double loads — two side-dump trailers worth of ore — and the ore was covered with black tarps, neatly tied down.

The ties caught my attention. I wondered how long it would be before human nature set in, and workers started getting lackadaisical about how they tied down the tarps, or stopped bothering to secure and check each tie.

I was not even thinking of anything so scientific as studies by Ludovic Moulin, which find that over sixty percent of industrial accidents can be attributed to “organizational and human factors.” I had in mind something closer to the line about the field of the slothful in Proverbs: “yet a little sleep, a little slumber, a little folding of the hands to sleep,” and disaster can ensue. Eventually, someone in the course of the day was going to shrug and say to himself, “good enough,” slacken his attention, or hurry off to a break, I thought, and things could go downhill from there. A loosely tied load might spill on the highway or on the roadside, even if the driver was taking every precaution on his route. Repeat that small human error enough times, and you have a trail of sulfide ore from the mine to the mill, running through the Yellow Dog Plains and right through the center of Marquette.

Turns out I’d failed to fully grasp the reality of the situation. I didn’t imagine at the time that the tarps used to tie down the ore on the Eagle Mine trucks would rip in the case of an accident. In this case, the tarp of the second trailer was “torn open,” according to Save the Wild UP; Yellow Dog Watershed Preserve has a photograph of the torn cover here. I was also unaware that the Michigan Department of Environmental Quality allowed these soft-cover tarps only after Eagle Mine had requested a special amendment to its permit. Hard covers would take longer to remove; with soft covers, the trucks could be more easily unloaded. Time is money.

Special amendments and exceptions seem to be the rule when it comes to Eagle. For instance, though Lundin Mining CEO Paul Conibear has repeatedly boasted to investors about the great transportation infrastructure already in place at Eagle when Lundin bought the property from Rio Tinto, the truth is that the current haul route for Eagle Mine was never part of the plan. It was a last minute concoction — an “upgrade” of roads hastily authorized by the Marquette County Road Commission. No surprise, then, that a full environmental assessment of the haul route — as required by Part 632 of the Michigan Nonferrous Metallic Mining Law — has never been made.

Last week’s accident might be yet another sign that Eagle Mine was not actually ready for prime time when Lundin announced, at the end of November, that Eagle had entered commercial production ahead of schedule. But consider things from the company’s point of view. Lundin had acquired the Candelaria copper mine from Freeport only a month earlier for $1.8 billion — taking on huge debt — and by the end of November copper prices were declining precipitously. That made it all the more urgent to start delivering nickel at Eagle. After all, analysts expect “Lundin to introduce a dividend in 2015 once its Eagle mine is ramped up.”  Pressure is mounting. The Lake Superior mining boom appears to have gotten underway in a slightly panicked rush.

Does Eagle Mine Have Social License to Operate?

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Lundin Mining CEO Paul Conibear hit all the right notes when he announced last week that Eagle Mine is now in production. Completed ahead of schedule and on budget, the new nickel and copper mine on Michigan’s Upper Peninsula marks “a tremendous achievement”:

The Eagle Mine is a significant new, high-quality, low-cost mine, that has been constructed to the highest of safety, environmental and social responsibility standards.

Our team has done an exemplary job in bringing the mine into production, and we look forward to the operation becoming a significant cash flow generator for the Company and a significant contributor to the local and regional economy. We would like to thank all employees and contractors for their dedication and excellent work in addition to all local stakeholders for their ongoing support.

Analysts and investors seemed pleased as well, and happy to take Conibear at his word. The company’s share price, which had been trending downward, ticked up the day after the announcement. Lundin Mining is “hitting the ground running,” declared one enthusiast, who goes by the pseudonym The Investment Doctor and published his report right on the heels of the company’s press release; “and it’s rare to see a large scale project being completed ahead of schedule. The production is starting just in time to benefit from a strong nickel price.”

Those inclined to follow the Doctor’s advice may wish to consider that his analysis focuses solely on nickel production, and makes no mention of what’s happened to copper prices lately: they’ve plummeted (though, to be fair, they now seem to be rebounding slightly).

In any case, the whole picture may be a little more complicated than the mining company and its boosters would have us believe. Eagle will count as “a significant contributor to the local and regional economy” only if you overlook the effect the mining operation is bound to have on tourism (which currently makes up around 20 percent of the Marquette area’s economy) and the many other detrimental and distorting effects mining will have on the economic life of the Upper Peninsula. Economist Thomas M. Power has run these down. For one thing, he observes, mining operations can hinder entrepreneurship and innovation, and drive away creative professionals and knowledge workers. They prefer not to live around a mine, or on the haul route from mine to mill; nowadays even the miners would rather commute. It remains unclear, too, how the region will benefit in the long term, after the accessible ore runs out and Eagle shuts down.

So one has the feeling that the tepid term “contributor” in Conibear’s statement about the broad economic benefits of the new mining operation was chosen with care: it positions the mining company as a social benefactor, but it reserves any talk of wealth generation for the “flow” of cash into the company coffers. Some will trickle down: the contribution Eagle makes to the economy will be “significant”; but even saying that leaves wiggle room to back away from stronger and more specific language about job creation that was used to promote the project in the first place. The main object here is to reassure Lundin’s creditors.

To bring the bigger picture into focus, we also have to take into account the social costs and environmental risks associated with this new mining operation. When Conibear says that Eagle Mine was built to “the highest of…standards,” I guess he’s talking about mining industry standards. At least some environmental and community groups have different and even higher standards, and they are not satisfied with DEQ enforcement to date or with the Community Environmental Monitoring Program established by Rio Tinto and the non-profit Superior Watershed Partnership (for which Lundin Mining will pay $300,000 annually). For local stakeholders like the Keweenaw Bay Indian Community, who opted out of the Superior Watershed Partnership deal, the new mine falls short on many important counts. Together with the National Wildlife Federation, the Huron Mountain Club and the Yellow Dog Watershed Preserve, the KBIC sued, only to lose in the Michigan Court of Appeals in August of this year; but that loss hardly means the concerns that motivated the twelve-year legal challenge to the mine were without merit.

The stark fact remains that like Rio Tinto before them, Lundin Mining cannot point to a single example of copper and nickel mining in the United States or Canada that did not pollute surrounding waters or groundwater. Questions raised by Jack Parker about the geological stress field of the Yellow Dog Plains — and the risk of “sudden collapse” he alleges was covered up by regulatory collusion — continue to be “studiously ignored.” Haul road construction has been mired in controversy: it took corporate wrangling of the County Road Commission and exercise of eminent domain to push through the the current route; and that road work has already violated the Natural Resources and Environmental Protection Act.

The point is not to multiply examples or revisit all the controversies that still surround Eagle Mine. Now that the mine is in operation, some of these issues may even be “moot,” as a writer in Crains suggested after the decision by the Court of Appeals in August. But taken together, they raise the question whether Lundin Mining has done enough (since purchasing the Eagle operation from from Rio Tinto) to earn the trust, let alone gain the support, of local stakeholders who were not already in the mining camp or the mining company’s pocket. So far, Lundin has demonstrated that it can bulldoze ahead and get stuff done. Its claim to social license remains unsettled.

Labor Day, 2013: Will Big Mining Do Better This Time Around?

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On Labor Day, I’ll be in New York City, so I won’t be able to see the television broadcast premiere of 1913 Massacre on Twin Cities Public Television. How many will tune in? How will the broadcast cut of the film look and play on TV? Above all, I wonder, what connections will the Labor Day TV audience draw between 1913 and 2013? My comments here run this holiday weekend on MinnPost.

Many people Ken and I met in mining towns around Lake Superior while filming 1913 Massacre urged us to see the positive contributions the mining companies had made to the region. Some insisted that the Woody Guthrie song that had introduced me to the story of the Italian Hall disaster and brought me to Calumet and the Upper Peninsula in the first place had gotten it all wrong. The greedy bosses, company thugs and violent social strife that Woody sang about in “1913 Massacre” did not fit the story they knew. “We all got along just fine,” they protested.

When the mines were running, the towns thrived. The big department stores downtown were open. The churches (and the bars) were packed to capacity. Everybody worked hard and the work was sometimes dangerous, but on Saturday nights, the streets were jammed and the atmosphere festive. The company put a roof over your head then sold you the house at terms you could manage. The copper bosses built libraries, sidewalks and schools, gave land grants for churches, and even furnished luxuries like bathhouses and public swimming pools. The men who ran the mines weren’t just robber barons from Boston; they were public benefactors.

But there were limits to their benevolence. The mining captains regarded the immigrant workers – Finns, Slavs, Italians — as charges placed in their paternal care. They knew what was best for these new arrivals. They discouraged organizing. Faced with strikes on the Iron Range in 1907 or on the Keweenaw in 1913, they adamantly refused to negotiate, brought in scabs to do the work and Waddell and Pinkerton men to deal (often brutally) with the strikers. Even after the tragic events of 1913, Calumet and Hecla Mining Company would not recognize the union for decades.

The Keweenaw miners were on strike again in 1968 when C & H made a calculated business decision to pull out. No more jobs, pensions cut short; the good times were over. They left the waters poisoned and the landscape littered with industrial wreckage and toxic mine tailings.

The companies driving the new mining boom around Lake Superior these days promise to do better. They are dedicated to corporate social responsibility. They practice “sustainable” mining, tout their environmental stewardship and declare their respect for human rights. They have community outreach programs and promise to make substantial, long-term investments in the economic development of the regions where they come to mine. They work closely – some would say too closely – with regulators to create environmental impact statements and plan for responsible closure of their mines. They are eager to gain social license.

For the most part, these big multinationals operate with the support of organized labor and politicians who want to create jobs — and what politician doesn’t want to do that? But the high-paying, highly-technical mining jobs are unlikely to go to local residents; and the new mining is likely to have detrimental effects on local economies, as the economist Thomas M. Power has shown in studies of Michigan and Minnesota. Mining may provide some short-term jobs, but it can also drive away creative professionals and knowledge workers, destroy entrepreneurial culture, diminish quality of life and damage long-term economic vitality.

So promises of good times and plentiful jobs need to be treated with circumspection. Polymet has repeatedly scaled back its job predictions for its huge, open-pit sulfide mining project near Hoyt Lakes, Minnesota, and the company’s own figures suggest that only 90 of the promised 360 jobs – just 25% — will go to local communities. Local is, moreover, a relative term. Mine workers today tend not to live in mining towns; they will commute an hour or more to work. And hiring will always be subject to swings in metals prices, which are now dependent on two new factors: continued Chinese growth (and urbanization) and the entry of big financial firms into metals warehousing and trading.

There are limits to big mining’s benevolence as well. The last time I flew into Marquette airport, a glossy Rio Tinto poster advertised the company’s commitment to “build, operate and close Eagle Mine responsibly.” Nobody had bothered to take the sign down after Rio Tinto had done an about-face and sold Eagle, a few months earlier, to Vancouver-based Lundin Mining for dimes on the dollar. Rio Tinto’s commitments lasted only until it was time to flip their property. Overnight, Eagle Mine had become a “non-core asset” and the surrounding community none of Rio Tinto’s responsibility.

In Wisconsin, Gogebic Taconite has drawn the line between company and community much more starkly, with help from a paramilitary firm called Bulletproof Securities. Black-masked guards, dressed in camouflage and armed with semi-automatic weapons, protect the mining company’s property from trespassers and environmental protesters. Imagine what they might do in the event of a strike.

gogebicguard

Bulletproof Securities patrols Gogebic Taconite’s property in northern Wisconsin.

The CEO and the Social Compact: Conibear Comes to Michigan

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I’ve been puzzling over the few public comments Lundin Mining CEO Paul Conibear has made regarding the announcement that his company plans to acquire the Kennecott Eagle Mine from Rio Tinto. Industry analysts studying these same tea leaves at the end of last week seem to have judged the Eagle sale to be auspicious. But I am looking for other signs — evidence of Lundin’s disposition toward the communities around the Eagle Mine and some indication of how Lundin plans to approach and address the social and environmental challenges of the Eagle Mine project.

There are suggestions in Conibear’s resume of some interest in local and global development issues and an appreciation for the environmental and social facets of large scale mining projects. An engineer by training, Conibear made his way as an operations man, parlaying his experience in Latin America, Europe and, above all, at the Tenke Fungurume mine in the African Congo into a leadership position — first at Tenke Mining, where he served as CEO before its merger with Lundin, and then, when Phil Wright resigned in 2011, as CEO of Lundin Mining. During his time in Africa, according to his official corporate biography, Conibear was “active in advancing the group’s corporate social responsibility initiatives”; and he “is one of founding directors of the Lundin for Africa Foundation, a charitable entity established to support sustainable development across Africa”. Here, then, is a CEO with CSR credentials.

It’s too early to tell whether this will matter when it comes to Lundin’s work in the UP. Reports that the company will uphold Rio Tinto’s commitments to the communities around Eagle Mine — and keep the current Kennecott team in place — are still short on specifics. That will probably be the case at least until the transfer of the mining permit is complete and Lundin has had a chance to figure out firsthand what’s working at Eagle and what isn’t. Conibear’s affiliation with Lundin for Africa, and that organization’s focus on social enterprise, may not translate to efforts on the ground in Michigan, for all sorts of reasons; he himself has said nothing so far about how the company will continue, depart from, or improve upon what Rio Tinto has already done. In a press release Lundin issued last week, the CEO is quoted as saying only that the acquisition of the mine in Michigan’s Upper Peninsula

fits ideally within Lundin Mining’s asset base and is the result of the disciplined approach we have been focused on for some time to acquire high quality, advanced stage assets in low risk, mining oriented jurisdictions. The Eagle Mine represents a very unique opportunity to acquire a high-grade project which is under construction and expected to begin generating significant levels of metal production and cash flow prior to the end of next year. Northern Michigan has an outstanding iron ore, gold and base metals mining history and consequently excellent regional power, road and rail infrastructure, with extensive mining expertise within local communities to support and staff Eagle Mine.

I was struck by a couple of things here, but most of all by the invocation of northern Michigan “history” in the last sentence. What makes the history of the Upper Peninsula so “outstanding,” in Conibear’s view? Nothing like what drew Richard White to his classic study of the French and the Algonquins in the pays d’en haut. Not the brutal strikes and hard times Arthur Thurner wrote about in Rebels on the Range; not the complex system of social patronage that obtained between immigrant hard-rock miners and the tight-fisted, iron-willed mining captains, described by historians like Larry Lankton. Not even the attitudes toward history that impressed me most in the interviews I did in connection with 1913 Massacre — the deep and heartfelt emotion many people in the area invest in the past, and the pride they feel in what their ancestors accomplished and endured; the way that shared stories have both concealed past trauma and allowed the region to heal; a resilience that has allowed communities on the Keweenaw to weather boom and bust.

It may not seem reasonable to expect much feeling for the history of the UP in Conibear’s remarks. He’s got a mining company to run and investors and analysts to impress. But it’s worth noting that a more considered view of UP history (and a look at the environmental damage caused by the last round of mining) would not necessarily lead one to characterize a mining venture in the Upper Peninsula as “low risk.” For Conibear, UP history seems to matter to the extent it can be exploited for business advantage. The past has value in the present as a source of “infrastructure” — a reliable power grid, rail and roads — and “expertise.” Widen the lens a bit, however, and that same history becomes a source of uncertainty and obligation as well as strength.

Take roads, for instance. It’s odd that Conibear would single out roads as one of the things that attracted Lundin to northern Michigan and the Eagle Mine. A proposed $80 million project to build a haul road from the Eagle Mine to the Humboldt Mill ended in failure earlier this year, after the Michigan Department of Environmental Quality denied the permit for County Road 595. It was a big setback for Rio Tinto, which had fought for the road for five years. Defeated, the company announced that it would spend $44 million to upgrade existing roads instead, but that plan remains controversial — and now that project and the cost as well as the controversy it entails are Lundin’s to manage.

There’s another, more general observation to be made here as well. History doesn’t just throw all those things — power, roads, expertise — into the Rio Tinto deal. If history, or the experience of the past 150 years of mining, works in favor of companies operating in the UP today, it also marks a good place to start enumerating the responsibilities mining companies have to society. This is a point about the relationship of business to society that Elizabeth Warren made in the run up to last year’s presidential election, and which snowballed into a ridiculous controversy over Obama’s “You Didn’t Build That” remark. It’s worth recalling Warren’s argument in this context. A skilled and educated workforce, reliable infrastructure, the protection of the law, even the free association to do business with whom and where you like, Warren said, are part of an “underlying social contract.” Companies have to honor that contract and “pay it forward” if they hope to continue to benefit from public goods; and society has a responsibility to push hard on companies until they do.

In Michigan, of course, Governor Rick Snyder and his cronies did all they could during last year’s lame duck session to weaken the compact between business and society and to relieve mining companies of the obligation to pay forward anything at all. A bill sponsored by the UP’s outgoing Republican representative Matt Hukki set out to “ease upfront costs for mines” and make the taxes on mineral extraction in Michigan “more simple, fair and efficient,” replacing property tax, corporate income tax, sales tax and use tax with a single “severance tax” of 2.75 percent on the gross value of minerals extracted — once the mine went into production. That works out very nicely for Rio Tinto, which never took Eagle into production; and it would be worth finding out whether the company is now entitled to a tax credit on property taxes paid before the passage of HBs 6007-12. That retroactive credit — the opposite of paying it forward — is one provision of Hukki’s bill.

Tax relief and regulatory easing are no doubt some of the things Conibear had in mind when he described the Upper Peninsula as a “mining-oriented jurisdiction.” It’s a piece of industry jargon that is used to talk about whether conditions are favorable or unfavorable — a way of assessing risk. Among US states, Michigan has never ranked very high in the annual survey of mining jurisdictions by the Fraser Institute [pdf]; but generally, writes Aaron Mintzes, “jurisdictions within the United States rank very well in large measure because we have stable and transparent democratic institutions, courts that enforce contracts and resolve disputes, and generous mining policies (like the 1872 Mining Law)”. This is another unappreciated provision of the social contract: strong public institutions and the rule of law reduce the risks companies take as much as if not more than mine-friendly policies.

You would think that companies, in turn, would be obliged to do everything they can to reduce the risks they pass on to society. That has rarely been the case, and it has not been the case when it comes to the Eagle Mine. Rio Tinto and now Conibear and Lundin are requiring communities around the mine and all around Lake Superior to assume an enormous risk. It goes beyond legitimate fears of environmental damage due to subsidence or acid mine drainage. When Eagle goes into production in 2014, it will signal the start of a new mining boom in the Lake Superior region. Over the next several years, one of the world’s largest mining operations will be staged around one of the world’s largest freshwater lakes. Just look at the map of mines, mineral exploration and mineral leases published by the Great Lakes Indian Fish and Wildlife Commission. It is difficult even to imagine the environmental hazards and the social costs that the mining boom and the inevitable industrialization of Lake Superior will entail. I am still wondering whether Mr. Conibear appreciates that.