Tag Archives: economic development

All Clear for the Mining Boom in Michigan’s UP, Unclear What That Portends

Just before the holidays I wrote a short post about the one-two punch that Michigan legislators delivered during the 2012 lame duck session. They rushed through legislation to make Michigan a “right to work” state despite widespread protests and they passed Emergency Manager Legislation in defiance of voters.

Most of the news coverage of these bills focused on the action in Lansing and effects this legislation might have in the Detroit auto industry. I wondered aloud (or at least on Twitter) what implications these bills might carry for towns and working people in the Upper Peninsula.

There’s a new mining boom underway in the region, with global giants like Rio Tinto and Orvana exploring, leasing, and re-opening old mines.

This map [pdf], put together by the Lake Superior ad hoc Mining Committee, shows all mines, mineral exploration and mineral leases in the Lake Superior Watershed as of 2010.


The map merits some careful study. As you can see, there is already significant activity in the Upper Peninsula. On the Canadian side, especially around Thunder Bay and further north, there’s been a leasing boom. Lots of gold on the eastern shore; copper and nickel as you move further west. They’re also exploring for uranium in at least two places.

The new mining is going to put enormous pressure on the Lake Superior basin. There are the usual environmental hazards associated with mining — subsidence, toxic runoff, acid mine drainage. Mining puts the waterways – the Lake and the streams and rivers that feed it – at risk. And then there is the infrastructure that’s going to be built to support all those mines. Access roads and haul roads, like the proposed CR 595 in Big Bay, roads to get to those roads, gas stations to fuel the vehicles that run along those roads, housing to shelter the people who drive on those roads to get to work and haul the ore from the mines, and so on.

Governor Snyder and his cronies in the Michigan legislature are doing everything they can to encourage this new activity. Just before the holidays, the Governor signed a third lame-duck bill, addressing the taxes that mining companies operating in Michigan will pay. The new bill, brought by outgoing Republican representative Matt Huuki, relieves mining companies of up front costs.  Indeed, they will pay no taxes at all until they start pulling minerals from the ground. Even then, companies will pay only 2.75 percent on gross value of the minerals they extract. So a million dollar sale of Michigan’s mineral wealth on the copper exchange will yield the state a paltry $27,500 in taxes.

35 percent of these so-called severance taxes will go to a “rural development fund to support long-term economic development opportunities.”

A number of things aren’t clear to me. What, exactly, is meant by “economic development” here? What’s the best course of development for a rural region, and for the Lake Superior region? How will fueling the boom benefit the region over the long term? How much if any of this money will go to alleviating the environmental impact that all this new mining is bound to have? How is it possible to talk about rural development without taking responsible stewardship of the environment into account?

It’s also unclear what sort of working conditions in the new mines the “right to work” legislation might allow, and whether the Emergency Manager bill could be used to limit community oversight.

For now, at least, it looks like the big mining companies are running the show in the UP, and the vague promise of economic development — whatever that means — has trumped all else.

Our Stake in Afghan Mining

At the time, our meeting seemed like nothing more than a strange coincidence.

The scene was a restaurant patio in Moss Beach, California. The sun had set. People clustered around firepits to keep warm. (It was, after all, July in northern California.) We pulled up two chairs and after a few minutes fell into conversation with the couple sitting to our right. The usual preliminaries: he traveled frequently to India and Asia on business, we learned, and she had some kind of corporate job in the Valley. I can’t remember if I ever found out what it was.

Nobody was really interested in talking about work anyway. Almost immediately our conversation veered – I can’t remember how; I think it had to do with an appreciative remark about the lack of humidity on the West Coast — away from polite chatter about their lives in California to their daughter’s life in Florida. She had just moved there, close to the military base where her fiancé was now stationed. He was suffering from PTSD, which his mother-in-law-to-be attributed to an incident in Afghanistan not too long ago, when he inadvertently directed a combat unit into the line of fire.

Just a few minutes after the conversation had taken this grim turn, another couple pulled up chairs. They had moved to Silicon Valley from India years ago. The husband was some kind of engineer. They had come to Moss Beach that evening with their two adult sons, one of whom was getting ready to leave the next day – for Afghanistan. He wasn’t going there to fight, but to work for a food relief effort. He seemed confident and courageous. His mother could not disguise her worry.

And so it turned out that everyone in our little group had had their lives touched by the US war in Afghanistan: the six Americans who gathered to warm themselves around the firepit might make a good study in diminishing degrees of separation. We shared a connection to the war; we talked about wounded soldiers, hungry villagers and Bagram prison (where Daphne had gone in February of 2011 to chronicle human rights abuses, leaving me and the dog at home to worry for her safety). We remarked on how uncanny it seemed that all of us should have some connection to the war in Afghanistan. Nearly ten years after September 11th, 2001, it was one thing we all had in common.

Everybody put a brave face on. We talked about how Kabul is fascinating and what an adventure the young relief worker was about to have; we all tried to say some reassuring things about how resilient the young couple in Florida would turn out to be.

When this morning I remembered our accidental meeting around the firepit, I wasn’t thinking about the upcoming anniversary of September 11th and our disastrous conduct of the War on Terror there and around the world. I was, instead, reading a story by Graham Bowley on the front page of today’s Times about plans to extract a “trillion” in mineral wealth from underneath the soil of Afghanistan.

Judging from Bowley’s report, it would seem there’s big trouble ahead: the Taliban and tribal chieftains are trying to expand and claim new territories, so the mining will take place on their lands; this factionalism and corruption at all levels of government means it is unlikely that contracts (for mineral rights or infrastructure upgrades) will be awarded without bribery or criminal involvement. It also seems uncertain that the environment will be protected, human rights will be respected, or that “ordinary people” will benefit from the boom.

Ordinary people in Afghanistan have good reason to worry that criminals and corrupt officials along with global mining giants will rob them of their chances at a better life. But ordinary people in America – like the people who gathered around that firepit in Moss Beach in July – have reason to worry about Afghan mining as well. Why? It has to do with where our money goes – not just the billions of federal dollars that have already been squandered in Afghanistan, but billions in private funds (like pension funds) invested with and managed by America’s big banks.

Big banks already have a stake in mining Afghanistan’s mineral wealth. For example, Bowley mentions an “investment consortium organized by JP Morgan Chase” involved in gold mining. It’s odd that in that same paragraph he fails to note that Chase is also involved in the oil fields of Amu Darya. That operation is being conducted by China National Petroleum Corporation, and China National Petroleum Corporation is a subsidiary of PetroChina –a company in which JP Morgan Chase is heavily invested, and whose involvement in the genocide in Sudan has been the focus of shareholder resolutions and human rights campaigns.

In another post about JP Morgan and PetroChina, written in the wake of London Whale scandal, I asked whether JP Morgan was capable of managing its human rights risk. Bowley’s article raises a similar question for me. It’s unclear what credible assurances about risk management or environmental and human rights monitoring the bank can give shareholders and customers regarding its involvement in Afghanistan’s mining and oil industries. JP Morgan shareholders may find themselves unwittingly entangled in the plunder of Afghanistan’s buried treasures, and the civil conflicts, human rights abuses, and environmental degradation their extraction seems bound to entail.

One wonders whether we have learned anything at all in the past eleven years.

StarKist Cans Samoans

The economic news from faraway America is grim. Unemployment in the U.S. territory of American Samoa now sits at around thirty percent. More trouble is on the horizon.

In a bid to save jobs at the StarKist tuna cannery, the Territory’s big employer, American Samoa had asked to be exempted from the minimum wage increase to $7.25 an hour. Congress rejected that plea. StarKist predictably responded with a fresh round of layoffs, and the company is likely to follow Chicken of the Sea to Thailand and other places in Asia where cannery workers earn as little as 75 cents an hour.

Congress is not indifferent to the lot of the American Samoans, of course, so it has proposed $18 million in new spending for the tiny, remote island territory of 65,000 people . An editorial in the Wall Street Journal the other day observed, with some justice, that this “taxpayer handout” amounts to foolishly attempting “to undo the damage Congress’s economic illiteracy has caused.” The editorial then went on to blame the Democrats, the unions, and the minimum wage for the layoffs and all the Territory’s economic woes. Apparently even the South Pacific cannot escape the socialist scourge.

Of course, that’s not the whole story. First, the $18 million set aside in the new spending bill was already being given away, to StarKist. Or, more precisely, StarKist would have already been entitled to that amount – up to $18 million dollars — in “30A” tax credits for 2010 if it had operated “at a profit” in American Samoa. In the language of the proposed legislation, this “economic development tax credit” was intended to reward StarKist for “the corporation’s employment and capital investment in American Samoa.”

The proposal now is to channel that same $18 million in credit directly to the American Samoan Government “for purposes of economic development.”

“Development” is a tricky word in this context — everybody’s doing it — and it’s hard to imagine that $18 million can buy the kind of development American Samoa needs. The Territory is still recovering from last year’s 8.0 magnitude earthquake and tsunami, which wreaked havoc all over the island.

We might get a better fix on the word if we were able to specify what will be entailed in the program of “economic development” to which the $18 million will be dedicated. The answer seems to be pretty straightforward: keeping StarKist in American Samoa. Last month, Eni Faleomavaega, the non-voting House Delegate from American Samoa, worked with Carl Levin of Michigan and Max Baucus of Montana “to convert the 30A tax credit in a way that will provide a direct payment” to the American Samoan Government. The Territory’s government would, in turn, use the money “to help StarKist until we can put a more long-term solution in place.” There go those Democrats and their anti-business agenda again.

As a headline in the Samoa News put it, StarKist would get the $18 million as an inducement to stay, “in lieu of” its tax credit, even though it was operating at a loss. One reader of that paper asked its editors to “please explain to your readers what lieu means– not all our folks know the word.” Of course, to explain the word is to reveal the sleight of hand it is meant to cover up. But Samoa is in a tough spot. “Without help,” Faleomavaega said, without exaggeration, “StarKist will be forced to close its operations in American Samoa and, if this happens, the Territory’s economy, which is barely hanging by a thread, will collapse.”

The fight over the minimum wage has put Faleomavaega in a tough spot, too, and that’s probably why he is now taking a more conciliatory position than ever before toward StarKist. Just a few years ago, in May of 2007, Faleomavaega penned an angry letter to Richard Wolford, President and CEO of Del Monte, StarKist’s parent company, in which he railed against “corporate greed” and “hypocrisy,” and noted that Wolford’s own compensation amounted to “over 400 times more per year than the average cannery worker in American Samoa.”

According to my calculations, you have approximately 3,000 employees and an increase of $0.50 per hour equates to about a $3,000,000 increase per year for StarKist and Chicken of the Sea. Considering that you do not pay health care benefits to our cannery workers which in itself is un-American, and also given that after 20 years of dedicated service you only pay out $160 a month in pensions to Samoan men and women who stand on their feet and clean fish for 8 hours a day, I believe your wisest course of action is to join with me in supporting a one-time increase of $0.50 per hour.

Faleomavaega ended his letter by taking issue with Del Monte’s notion of “responsibility” – which the company defines as “an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders” – and reminded them of other obligations: “I believe higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us.”

I leave it for others to decide whether securing $18 million on behalf of a multinational corporation that is probably going to pull stakes anyway amounts to following the golden rule. The real question in American Samoa is whether that $18 million transfer amounts to development, at least in any meaningful sense of the word.

I have my doubts, unless by “economic development” Faleomavaega and associates merely mean saving jobs – or making a desperate bid to save jobs — at the StarKist cannery. That would seem to be the very antithesis of sustainable development, and though it may be politically advantageous for Faleomavaega in the short term, it does little for Samoa’s long-term prospects.

Worse, the proposed arrangement will launder the StarKist payoff through the American Samoan government. Corruption, as one CNN report put it, is “endemic” in American Samoa, which receives about $250 million in federal funding every year. Governor Togiola Tulafono has been accused of bribery; so have sundry government officials. In early 2007, one year before the quake and tsunami hit, Department of Homeland Security inspectors found that millions in disaster-preparedness had been diverted to other uses – flat screen televisions, expensive leather chairs, trips to Las Vegas, and miscellaneous entertainments. In response, our government temporarily froze all federal funding to the island. (That freeze did not and could not last. In the wake of the 2009 tsunami, President Obama declared an emergency and directed federal aid to the Territory.)

There has been some speculation that corruption made the natural disaster much worse than it could have been. The Homeland Security funds squandered by government officials in American Samoa were intended to pay for an early-warning system, which included thirty towers with thirty sirens that could have been activated with the push of a button in the event of a disaster. None had been put in place when inspectors arrived in 2007; Governor Tulafono claimed there was “never a plan for a system.” So disaster struck, and nobody was able to sound the alarm.

No surprise, then, that there are no viable economic recovery plans in place should StarKist decide to pull out of American Samoa. The Territory has relied on a mix of corporate interests and federal assistance for too long, counting on help from greater powers without making any long-term plans of its own. Maybe that’s what makes this remote island territory quintessentially, and uncannily, American.

A Response From Bill Carvalho – On Sustainability and Sardines

This afternoon I received an email from Bill Carvalho, President of Wild Planet Foods, in response to my Sunday post about sardines and sustainability. I’ve included the full text of Carvalho’s very thoughtful email as a comment below my original post. I wanted to cite a couple of paragraphs from the letter here, and didn’t want to give the impression that I was taking his words out of context.

Carvalho takes time in his note to address all my points, even the point about creating “a fairer, and more equitable world order,” in the phrase of the Georgetown Agreement. “In my personal opinion,” Carvalho writes, “that requires much more than social and ecological audits; that would require that we all submit ourselves to a moral audit, something that we can leave for another conversation.” I hope someday we can have that conversation, here in New York, or there in Eureka, California, or maybe in Vietnam.

Who knows how that would all turn out. I don’t know about Carvalho’s qualifications as a father confessor (or, for that matter, my own); but he is a good correspondent: for the most part he doesn’t dodge tough questions or deliberately confuse things. He sets me straight about carbon footprints. And he even offers some insight concerning the Wild Planet canning facility in Vietnam.

We do consider the effects of our decisions on the environment and desire to treat our customers and business partners with dignity and respect. The one cannery we use near Ho Chi Min City [sic] is owned by a long-time acquaintance who lives in the San Diego area. We selected this facility for the same reasons we choose business partners here in the US: trust in their integrity and confidence in their competence. The facility is a small enterprise by global standards which is precisely what we needed in order to teach them the specialized handling techniques needed to produce the superior quality products featured in our line. Our increase in activity at their plant has meant the creation of many dozens of new jobs in highly respectable conditions. It is interesting that the cannery provides meals for all workers daily and also owns an apartment building in which they provide housing for many employees. Your comments on how a cannery can be an economical boon to a region or community are exactly what has happened in the case of our friend’s cannery in Vietnam. I don’t think it is out of line for U.S. residents to provide economic benefits to Vietnamese residents given the history between these two countries that has not been exactly mutually beneficial.

That last sentence requires some careful parsing and further thought. Luckily, there will be more on this point from Wild Planet soon:

We have decided to a post detailed explanation of our selection of our processing partner and address issues of carbon footprint on our website and that should be up shortly. We have also decided to fully disclose the processing country on our packaging. We were not seeking to conceal data from consumers and are comfortable explaining these points as we have nothing to hide.

For my part, I am going to start researching a trip to Ho Chi Minh City. I would like to meet and interview some of the cannery workers, visit the apartment block where they live, and see the cannery in Ho Chi Minh where they pack the sustainably caught California sardines. Who knows if I’ll get there anytime soon. But maybe, if I’m lucky, or persistent, I will.

Fishy Sustainability

Dear Wild Planet,

I’m unsure what to make of this: your sardines are “sustainably caught” off the California coast, then shipped to a cannery in Vietnam?

Vietnam! I didn’t find that interesting little fact anywhere on the Wild Planet package, and it’s nowhere on the web page you have devoted to “sustainable fishing methods.” It is, however, stamped on the cardboard cartons in which the tins of your sardines are packed for shipping, and just last week I had to lift about ten of these cartons during my shift at the Food Coop.

(All members of the Food Coop have to work a few hours each month; mine is an early Friday morning shift. I work at what’s called “the top of the belt,” unloading groceries from big palettes brought in by trucks, and sending them down the conveyer belt to the basement. I might complain about the shift — it is never convenient — but I usually enjoy the simple work, lifting and carrying, which is unlike any other work I do. It sometimes even has a nice rhythm to it; and I can allow my mind to wander as I work.)

So while stooping and lifting and carrying, I happened to notice that your shipping cartons make no secret of the fact that your sardines are packed in Vietnam. Maybe the law requires that declaration. But I was surprised to discover that everywhere else you seem to take great pains not to disclose the place where the sardines are packed. The packaged tin says the sardines are “micro-cannery produced for Wild Planet Foods, Inc.” A Google search reveals that the word “Vietnam” does not appear on your website at all. Not once.

Instead, one learns that Wild Planet sardines are “wild caught,” a method rated by various environmental organizations — Seafood Watch, Blue Ocean, Fish Wise, and Sea Choice — as the “best” or “green” method of catching sardines. The trouble is, the phrase “wild caught” is terribly vague: as one writer puts it, “‘wild-caught’ casts a wide net and can mean that your fish were caught using highly destructive (read: downright demonic) fishing methods such as dynamiting reefs, high-seas bottom-trawling, and drift nets. But the term wild-caught can also encompass more desirable lower-impact techniques, such as hand-lines, divers, or the use of pots or traps.” Let’s assume you opt for the low impact techniques: why not say so and specify those techniques? Instead, you ask that we take your word that you limit your “bycatch” (those fish who happen to get caught up in a net not intended to net them), and that you don’t use destructive methods.

As a result, your claim to sustainable fishing methods, your claim to sustainable practice, lacks cogency. NO PURSE SEINE OR LONG-LINE CAUGHT TUNA WILL EVER BE USED IN OUR PRODUCTS! your site boldly announces — in capital letters, and with an exclamation point to boot. But does that mean your sardine fishermen don’t use purse seine nets? After all, the purse seine is a very good, proven way to catch sardines; and one wonders how the fishermen casting those nets assure the bycatch is, in your words, “negligible.” Sea Choice currently rates the sardine “of ‘low’ conservation concern regarding fishing pressure”; and the big drop in sardine populations off the California coast in the middle of the last century seems to have been due as much to a natural cycle of boom and bust as to heavy fishing. So, taking all this into account, what exactly does sustainable fishing of sardines mean? Does it simply mean fishing that does not exceed catch quotas — in other words, fishing that’s simply legal?

I would like to believe that Wild Planet is the environmentally-conscious company it makes itself out to be, and that you have simply done a bad job of explaining yourselves on sustainable fishing. Still, it’s a very narrow definition of sustainability that takes into account how the fish are pulled from the sea and doesn’t consider what happens to them after that. I imagine — I could be wrong — that the sardines are fresh frozen and then transported to Vietnam for canning. Have you calculated the amount of energy it takes to transport them to and from Vietnam? What is the carbon footprint of a typical catch? What can you tell me about the the Vietnamese canneries? Where exactly in Vietnam are they? What are the working conditions like? What is the average pay? Surely all of this has to figure into any discussion whether a practice rightly deserves to be called sustainable, doesn’t it?

Of course, there are no canneries here in the United States. The last one, the Stinson Sardine Cannery in Prospect Harbor, Maine, closed in February of this year. Steinbeck’s Cannery Row in Monterey, California is more like a mall or an amusement park than an industrial center. King Oscar packs their sardines in Poland. StarKist and Bumble Bee also ship their fish to faraway canneries. But (I couldn’t help but wonder as I stooped and lifted and carried) why Vietnam?

There is very little information readily available – at least to someone who can’t search in Vietnamese – about canneries in Vietnam. I was able to find a picture of a Vietnamese fish processing plant; it looks clean and orderly, with everyone dressed in protective face masks, a little like the high-tech manufacturing facilities I have seen, except there are dead fish everywhere.

I can infer a little more from a Request for Emergency Dislocation Aid filed by American Samoa’s governor, Togiola Tulafono, in May of 2009. There, Tulafono complains that a mandated 50-cent increase of the hourly minimum wage in American Samoa “is a direct cause” of the StarKist cannery moving to Vietnam, where workers earn around 70 cents an hour, “and less.” Granted, a worker earning 70 cents an hour, working five days a week, eight hours a day at one of your Vietnam canneries would not be considered poor in a country where per capita income in 2008 was $1,024, or about 85 dollars a month. But what drudgery!

Maybe I am not seeing the bigger picture here, and how this all adds up to sustainability or sustainable practice. In a business proposal for a cannery, Don Hosokawa, a consultant, lists some of the economic benefits that canneries bring: jobs — one cannery alone can generate 1,500 on-site jobs, and up to 2,000 more jobs in the surrounding community — economic development, a big client for local utilities and other services; “an entire infrastructure would be developed.” A fish cannery can be a real boon for the host region.

What’s more, Asian countries that are members in the ACP — the African, Caribbean and Pacific Group of States, created by the Georgetown Agreement in 1975 — enjoy special trade agreements with the EU; and the ACP is committed to “sustainable development of its Member-States and their gradual integration into the global economy, which entails making poverty reduction a matter of priority and establishing a new, fairer, and more equitable world order”.

Only Vietnam is not a member state. Hosokawa says this would spell “more advantages” for the entrepreneur in his cannery scheme; but it’s unclear to me what advantages the people working at the Vietnamese cannery might enjoy, and how all this might help secure them, or us, a new, fairer, and more equitable world order. On this last point, especially, I hope you can enlighten me.