State might buy Crandon mine site

State might buy Crandon mine site

June 21, 2002

Ron Seely, Environment reporter

Wisconsin State Journal

A proposal for the state to buy land that is being considered for a large zinc and copper mine near Crandon may signal an approaching end to one of Wisconsin's most bitter environmental controversies.

For the past 25 years, four major mining companies - Exxon, Rio Algom, Billiton Plc., and BHP Billiton - have tried to secure permits to mine the 60 million-ton ore deposit south of Crandon, in northeastern Wisconsin. The plan has been fought every step of the way by state environmentalists, largely because the mine is at the headwaters of the Wolf River, one of the state's most pristine rivers.

Thursday, Gov. Scott McCallum and officials with Nicolet Minerals Co. said they are interested in pursuing a suggestion from several environmental groups and state Indian tribes calling for the state to buy the almost 5,000 acres of land and the mineral rights from Nicolet.

"The proposal," McCallum said in a news release, "is an intriguing idea that deserves further consideration and discussion."

McCallum said he intends to meet with all the parties involved in the proposed purchase to discuss potential effects on the local economy were the mine not to be built. According to Nicolet, the proposed mine would be a $400 million construction project with an estimated economic impact of $1.5 billion. The mine would provide as many as 400 jobs over its 30-year life, the company said.

The purchase proposal brought cautious interest from Nicolet. In a three-paragraph statement, Dale Alberts, Nicolet president, said the company will continue to pursue permits for the project.

"However," Alberts said, "the company would be willing to consider an offer to purchase the property, if the purchase is in the best interests of Nicolet's parent company, BHP Billiton, and the offer reflects the value of this project to our shareholders."

The purchase proposal surfaced in the last month, according to David Blouin, who chairs the mining committee of the state's Sierra Club chapter. He said mining opponents have been discussing the idea with Nicolet's parent company, BHP Billiton, and that, recently, the company suggested through a neutral third party that it might be interested in selling.

Blouin said the timing is good for such a plan. He said BHP Billiton is divesting itself of what it calls "non-core assets," including the proposed Crandon project.

He said the company sold a western uranium mine Wednesday. But Blouin stressed that the proposal is not a payoff or a buyout. Instead, he said, the plan calls for using a combination of money from the state Stewardship Fund and private conservation groups to buy the land and mineral rights "for a reasonable price based on fair market value."

The proposal from the environmental groups calls for management of the site by an integrated board of state, local and tribal governments.

"We will not support a public bailout of this company's bad investment," Blouin said.

It is crucial, Blouin added, that mineral rights also be purchased. "We want to permanently end this controversy," he said. "Gaining the mineral rights would do that."

Not everybody was happy with the idea. Wisconsin Manufacturers and Commerce, the state's largest business organization, blasted the proposal. James Haney, the organization's president, called the proposed purchase a "taxpayer bailout."

"The state's only role," said Haney, "should be to either approve or reject the permit for the mine. Wisconsin has a $1.1 billion deficit, and the taxpayers shouldn't be forced to pick up the tab to buy out a project deemed politically unpopular." Haney said the environmental groups should buy the land themselves. Among the 17 tribes and environmental groups making the announcement Thursday were the John Muir Chapter of the Sierra Club, Environmentally Concerned Citizens of Lakeland Area, Mining Impact Coalition of Wisconsin, Menominee Indian Tribe, Mole Lake Sokaogon Chippewa Community, Wisconsin's Environmental Decade and the River Alliance of Wisconsin. Others praised the plan. Kathleen Falk, Dane County executive and Democratic candidate for governor, said she supports the use of Stewardship funds if the state "pays a fair market value and the companies are not enriched."

State Rep. Spencer Black, D-Madison, a longtime opponent of the mine, said Thursday's announcement signals an apparent end to the decades-long controversy. "The reality," Black said, "is that the mining company wanted out. For all practical purposes, it's the end of the mine."

Mine chronology

A history of the proposed mine near Crandon in Forest County:

• 1969: Exxon Coal and Minerals Co. of Houston begins mineral exploration in northern Wisconsin
• 1976: Exxon announces the discovery of a deposit south of Crandon with perhaps 60 million tons of zinc, copper, lead, gold and silver ore. It is described as one of the 10 largest ore bodies of its type in North America.
• 1980: Exxon negotiates a purchase option to buy 880 acres of forest from Forest County for $2,000 an acre, or $1.76 million.
• 1982: Exxon applies to the state for the necessary permits to mine the Crandon deposit, which triggers the Department of Natural Resources' formal review of the idea.
• 1986: Exxon announces it is suspending plans for the mine because of low metal prices. The company says it invested $60 million in the project since 1976.
• 1993: Exxon forms a 50-50 partnership with Rio Algom Ltd. of Toronto and creates a subsidiary called Crandon Mining Co.
• 1994: Crandon Mining applies to the state for the necessary permits to open the Crandon mine. The plan calls for mining 55 million tons of ore at a projected 5,500 tons per day.
• 1998: Exxon sells its interests in the mine to Rio Algom for $17.5 million but retains a 2.5 percent royalty on profits. Crandon Mining is renamed Nicolet Minerals Co. Nicolet Minerals announces it has redesigned the project so less water seeps into the mine and it will remove the most harmful sulfur so it won't be buried with the waste rock. The company says it hopes to begin construction in 2001.
• 1999: Rio Algom decreases the book value of the mining project from $76 million to zero, and characterizes it as a late-term exploration project as opposed to a full-scale development project.
• 2000: State regulators say a proposed environmental impact statement on the mine will be delayed for months because the mining company's plan was still being developed for dealing with contaminated water in underground shafts after the mine closes. Rio Algom's board of directors votes to accept a $1.2 billion buyout offer from London-based Billiton Plc., one of the world's leading mining and metals businesses. Billiton says it is transferring assets of its U.S. holdings to a subsidiary in Ireland, but Nicolet Minerals spokesman says the move has no impact on development of the Crandon project.
• 2001: Former Supreme Court Justice Janine Geske rules the local agreement with the town of Nashville is valid. The town appeals. BHP Ltd., headquartered in Melbourne, Australia, and Billiton announce a merger to create the world's second-largest metals company, to be called BHP Billiton, with headquarters in Melbourne.
• 2002: The Mining Impact Coalition of Wisconsin said the owners of the mine were responsible for 31 spills of hazardous materials over four years in Arizona and Nevada. January 2002: Wausau-based 3rd District Court of Appeals upholds Geske's ruling in dispute over the town of Nashville's local agreement. June 5, 2002: State regulators reject one of three mines Nicolet submits as examples of similar mines that have operated pollution free. June 20, 2002: Gov. Scott McCallum said he will consider a proposal for the state to buy a mine near Crandon and the surrounding areas in northeastern Wisconsin.