Tag Archives: earthworks

The CEO and the Social Compact: Conibear Comes to Michigan

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.

Polluting the Future — A Question of Human Rights

Last week, the organization Earthworks released Polluting The Future, a report focusing on “the staggering amount of our nation’s water supplies that are perpetually polluted by mining” and the “rapidly escalating national dilemma” of perpetual mine management.

Perpetual is the key word here. Forty existing hardrock mines pollute 17-27 billion gallons of water per year, “and will do so in perpetuity,” for hundreds if not thousands of years. Include other mines likely to contribute to the problem, and take into account four new big mining projects currently being proposed, and the number jumps: to 37-47 billion gallons of polluted water every year. Pour that all into 8 oz water bottles and stack them one on top of the other and you can go to the moon and back about 100 times.

When Earthworks adds up the cost of treating this perpetual pollution, the figure is staggering: 62 to 73 billion dollars a year. That’s one very powerful way to talk about the social cost of mining — a cost that the mining companies (many of them foreign-based multinationals) are passing directly to the American public. The EPA “questions the ability of businesses to sustain” treatment and management efforts for the required length of time. That’s putting it mildly. As Earthworks points out, “most corporations have existed for far fewer than 100 years… Mining corporations simply won’t be around to manage water treatment that will continue for thousands of years.” They are passing along the true costs of their operations to all of us, for generations to come.

I was hoping to find some discussion of the proposed mining on Lake Superior. It’s a subject I’ve blogged about before — here and here, for instance — and I’m trying to put together a documentary project on the subject as well. So I was left wondering where the Rio Tinto / Kennecott Eagle Mine and the many other new mining projects around the perimeter of Lake Superior fit in the scheme Earthworks presents here.

It seems largely to be a question of scale. It may be easier for the mind to grasp the horror of open-pit projects with a “high risk for perpetual pollution” due to acid mine drainage, but acid mine drainage is also one risk of the sulfide mining projects about to be staged in and around the watershed of one of the world’s largest freshwater lakes — Lake Superior. Again, the report singles out the Pebble Mine in Alaska, another Rio Tinto project, to talk about the threat that mine poses to “the nation’s largest wild salmon fishery”; but the new mining in Michigan’s Upper Peninsula threatens the natural habitat of the coaster brook trout, the Salmon Trout River in northern Marquette County. So there are a couple of ways to make connections between the mining around Lake Superior and Polluting the Future.

Then there are the policy recommendations in this report — which range from enforcement of the Clean Water Act to other legislative and regulatory changes to hold companies accountable. Those all deserve careful consideration. What’s missing for me is something that came out of another report issued last week, this one by the United Nations Office of the High Commissioner for Human Rights. At the end of a ten day mission to assess the state of business and human rights in the United States, the UN delegation “noted the allegations of significant human rights impacts of surface mining, particularly the rights to health and water, and the deep divisions between stakeholders on the most effective ways of assessing and addressing the impacts.” (Significantly, for those who have followed the controversy over the Eagle Mine project, the UN team also looked at “the rights of Native Americans, particularly as regards the lack of free, prior and informed consent for projects affecting them and sites of cultural and religious significance to them.”)

So I would like to talk about the Earthworks report in this human rights context. The discussion might start with the very first sentence of the report, which characterizes water as “a scarce and precious asset.” The word “asset” makes me a little uneasy (but I would have to defer on this to people like Jeremy J. Schmidt, who together with Dan Shrubsole just put out a paper on the ethics and the politics entailed in the words we use about water). Think, for a moment, about how this discussion of perpetual pollution for immediate profit might be reframed as a human rights discussion. Or at least how the two perspectives — the environmental perspective and the human rights perspective — are complementary, and more powerful when taken together. The problem isn’t just that freshwater is a precious asset in increasingly high demand and short supply; it’s that when we permit big mining projects to pollute our water for generations to come, we are also failing to protect the human rights of our children and our children’s children, and so on, in perpetuity.