Tag Archives: UP

The Mining-Labor Juggernaut, A Day After the Election

Mother Jones ran an election-day piece about corporate campaign contributions yesterday, with a map designed to show “which companies dominate” the politics of each state.

There were a few surprises: I didn’t expect to see that “Finance” contributes the most to candidates in Maine, and “Tech” to candidates in Minnesota. On the other hand, the authors, Alex Park and Tasneem Raja, warn that their categories are pretty broad and loose: “‘Real Estate’ for instance, includes donations by individuals and groups connected to both construction and the sale of buildings”; and a category like “Health” might include donations by individual doctors and nurses as well as healthcare companies.

Breaking things down by states doesn’t make all that much sense either, as I learned when I looked at Michigan, to see if it’s possible to track down some of the money driving the politics of the mining boom in the Upper Peninsula.

Michigan is one of about half a dozen states in which “Real Estate” makes the most contributions to political campaigns; but this isn’t the case throughout the state.

Have a look at the Upper Peninsula on followthemoney.org, the site Park and Raja use to make their map. Political money comes mainly from big labor and “Energy and Natural Resources” along with Rick Snyder’s One Tough Nerd PAC and other Republican PACs.

Zoom in a little more. Over in Ironwood, where Orvana now has a permit for their Copperwood project, Energy and Natural Resources interests are among the biggest contributors; as I mentioned in a previous post, the district’s own outgoing Republican Matt Huuki paid big mining back when he brought a bill during the 2012 lame-duck session that relieved mining companies of up front costs and ensured they pay no taxes until they go into production. But in this part of the Western UP, contributions from labor are nearly twice those of the mining industry; and that is before you count contributions from the construction industry.

In Marquette, where I’ve been following the Eagle Mine project, you see contributions across the board in State elections from the pro-mining Michigan Petroleum Association and a group called the Michigan Laborers, an AFL-CIO affiliate. Labor and mining are right up there with big Republican donors like Randy Richardville (under the aegis of something called the Citizens Action Fund) and the Stamas Leadership Fund.

The snapshots this site and others like it afford are pieces of a larger mosaic, in which extractive industry and big labor now dominate the politics of the Upper Peninsula; and whereas they used to be on opposite sides of the fence, they are now working toward the same goals — in what is now a right to work state. I wonder how long before these strange bedfellows start kicking one another beneath the covers.

There are, at the same time, other forces at work in the politics of the UP, at least on a more local level. All four City Commission candidates in Marquette — Dave Campana, Mike Plourde, Sarah Reynolds, and Tony Tollefson — said that they want to see job growth in industries other than mining and they are all for promoting “economic sustainability” instead of riding the boom and bust cycle of mining. A candidate survey from the organization Save the Wild UP also shows all candidates saying they “[believe] that new mining developments near waterways threaten fish populations and recreational fishing” and they want to “[hold] companies financially accountable for their environmental degradation.”

Maybe that’s a start or at least a sign of intelligent life. Of course these are politicians, so I take their responses to this questionnaire with a grain of salt and I realize that they are only saying what they need to say, not necessarily what they believe. Now that Campana and Reynolds have won seats, will they have the courage, or at least the political cover, to take stands that might put them at odds with the UP’s mining-labor juggernaut? Or will big money just steamroll the entire UP? I wonder, too, if we will start to see more fractures in the politics of the region — between big mining and big labor, between local, state and industry actors over everything from trucking routes to hunting grounds and fishing spots, or between right-to-work Republicans and out-of-work locals, who probably cannot and should not count on a mining job or the economic revival big mining promises to bring.

What’s Mozambique to Michigan?

Tom Albanese has stepped down from his position as CEO of Rio Tinto, after the mining giant announced a $14 billion dollar writedown. While most of those losses were connected with Alcan, the aluminum business, the company also lost $3 billion on a coal project in Mozambique. That’s by far the more interesting aspect of the story, and it’s one that deserves attention not just from investors, industry analysts and Africa watchers, but also from those (like me) with an eye on the company’s operations around Lake Superior, in Michigan’s Upper Peninsula.

Here’s how it all went down in Mozambique. A couple of years ago, Rio Tinto acquired Australian-based Riversdale Mining for $4 billion. Riversdale had a number of coal projects going in Mozambique near Tete, “the coal capital of the world.” Logistics – moving coal in significant quantities from the mines in the Moatize Basin – was a challenge. Some coal mined at Benga could move by rail, pending “final approval by government authorities.” Still, that was only a partial solution; “long term logistics,” as a Rio Tinto presentation [pdf] put it, would be required once the Zambeze and Tete East projects were in full swing.

The company proposed moving Zambeze coal by barge on the Zambezi River. Barges would travel from Tete to the port of Chinde, on the Indian Ocean. The promised solution would not only make the coal business boom in Mozambique; it would also allow for “future growth” and “provide a catalyst for further socio-economic development in [the] region.” The company sought approval for its Zambeze River project by autumn of 2011 and planned to start coal barging by 2014.

All very well, except the Mozambique authorities never approved the transport of coal on the Zambezi.

How could the Mozambique authorities refuse Rio Tinto? After all, the company’s own Environmental Impact Report showed that coal-barging on the Zambezi would have no “significant” environmental effects.

Mozambique Transport Minister Paulo Zucula saw things differently: “the impact was seen to be very negative, and there were no plans for mitigation. As proposed it is not doable,” he said. Barging would adversely affect the river’s fish and dredging would increase the likelihood of floods: “every four years we have problems with flooding and killing people. So if you’re going to dredge the river, expand the banks, we will be in trouble.”

Zucula suggested Rio Tinto move its coal by rail. He has championed the construction of a new railway line from Moatize to the port of Nacala, and helped secure a $500 million investment in the $1.5 billion project from the Dutch government and the European Union. So Zucula may not have been solely concerned with the fate of the Zambezi’s fish or the people living along its banks. But the purity of Zucula’s motives is really not at issue. The issue is that Rio Tinto seriously miscalculated and overplayed its hand in Mozambique.

A blogger in the Financial Times today sees here “a useful lesson for other mega-project investors in emerging markets.” He doesn’t say what that useful lesson is. I’m certain it’s something more than the need for prudence, and that it extends beyond emerging markets. It has to do with overconfidence – hubris, even: “Rio knew what the challenge was. It just couldn’t find an effective answer.” And yet, it forged ahead, certain that it would prevail upon the authorities in Mozambique to see things its way. That was just plain arrogant.

Sam Walsh, the new CEO of Rio Tinto, should take this $3 billion lesson in humility to heart. At the very least, he and the board of directors might ask whether the company’s failures in Mozambique are the outcome of behaviors that are in evidence elsewhere.

In Michigan’s Upper Peninsula, where the company is developing the Eagle Mine, it faces a set of challenges of the same kind if not of the same magnitude as those it faced in Mozambique. The mine is being built on a site sacred to Native Americans and will be situated in the heart of the Yellow Dog Watershed, which feeds into Lake Superior. The company has run roughshod over Native American claims and issued familiar and predictable assurances that it will be a responsible steward of the environment – whatever that means when you’re extracting sulfide ore in the middle of a fragile watershed ecosystem. As for logistics, Rio Tinto was banking on the approval and construction of County Road 595, despite local opposition and concern from environmental regulators, just as it banked on the approval of the barge plan in Mozambique.

What could possibly go wrong? Rio Tinto had big Michigan politicians on its side: Debbie Stabinow, Dan Benishek, Rick Snyder, Matt Huuki. Even the Romney campaign was for County Road 595. But the EPA along with local environmental groups objected. After much wrangling, the Michigan Department of Environmental Quality denied the wetlands fill permit for the new road just a couple of weeks ago, on January 3rd: the road did not meet the requirements of the Clean Water Act. Rio Tinto has now had to shift financial support from this $82 million project to improving and upgrading existing roads. It’s as if the company’s blunder in Mozambique found a faint but telling echo in Michigan’s Upper Peninsula.

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.

Mining-Activity-Lake-Superior-2011

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.

It’s 1913 Again in Michigan

Crossposted from 1913massacre.com

I’ve run across a few people drawing connections between the Italian Hall disaster and the school shooting yesterday in Newtown, Connecticut (e.g., here). Maybe listening to Woody’s song helps people register Newtown’s loss, or the horror of Newtown helps us understand a little better what it must have been like for the Italian Hall parents and the Calumet community as a whole in 1913. But beyond that I don’t think there’s a very meaningful connection to be made.

It is, however, worth reflecting on what happened in Calumet in December of 1913 and what’s happening in Michigan right now. This week, the Michigan legislature — without allowing much debate or deliberation, and over the protests of thousands — handed Governor Rick Snyder a bill making Michigan a “right to work” state. They added insult to injury a couple of days later when they passed Emergency Manager Legislation that Michigan voters had rejected on November 6th. This one-two punch is supposed to remedy Michigan’s economic woes and get the state back on the road to recovery. It looks more like a last-minute power grab before the next legislature is seated, enabled by another big-money subversion of democratic process.

Indeed, a provocative piece by labor historian Nelson Lichtenstein published last week cast the “right to work” legislation in Michigan as part of a “coup.” Lichtenstein sees here “a serious defeat not only for the unions but for the very idea of social solidarity.”

this conflict is about something far bigger — the meaning of solidarity, a way of feeling and thinking about the world of work that is the basis not just of the union idea, but of a humane cooperative society.

I am not entirely persuaded by Lichtenstein’s argument: I just don’t think the “idea of social solidarity” goes down in “defeat” so easily.

It was under attack in Calumet in 1913. The Christmas party at the Hall was itself an exhibition of solidarity, six months into a brutal strike. And after the Christmas Eve tragedy, the town came together, again, to mourn. They grieved, but they didn’t give up, even after they lost their bid to unionize and the strike was over. As Joe Krainatz says in our film, “They did go on. They did survive. They raised their families. They went to work in the mines again.” And what’s most remarkable is that they rebuilt their community; their feeling of solidarity and shared humanity survived even the closing of the mines and the ruin that came in its wake.

Maybe the lesson of Calumet is that human solidarity runs deep. Money and power have never really won out over it. So far, I haven’t seen any white flags waving in Michigan.