Industry official: Selling Crandon mine won't be easy

Industry official: Selling Crandon mine won't be easy

The effort to get state permits for the mine will continue despite BHP Billiton's pullout

By Robert Imrie Associated Press

It will be difficult to sell a proposed underground zinc and copper mine in northern Wisconsin now that one of the world's largest natural resources companies is pulling out of the project, an industry spokeswoman said Tuesday.

BHP Billiton, parent company of Nicolet Minerals Co., said it wants to sell some 5,000 acres of its mining property near Crandon, but the effort to obtain state permits for the mine - described as the largest

undeveloped zinc deposit in North America - will continue. "From a pure ore body standpoint, it is quite attractive," said Laura Skaer, executive director of the Northwest Mining Association in Spokane, Wash.

"Whether someone wants to bang their head against the Wisconsin brick wall is another story," she added. "It is pretty clear to me that there is a strong segment of the Wisconsin population that doesn't want this mine built."

A number of companies have indicated an interest in buying Nicolet Minerals, company president Dale Alberts said Tuesday. "I would expect it to be sold within the next few months."

"The asset is still here. The permitting process will continue and we will see what happens," Alberts said. BHP Billiton decided that even if Nicolet Minerals received the necessary state and federal permits to begin mining, the Crandon mine and its prospects for big profits don't stack up well enough against other BHP Billiton projects around the world, Alberts said.

Eight workers at Nicolet Minerals' Crandon office were notified their jobs would end Sept. 30, which will leave Alberts as the lone employee, he said.

Since 1994, Nicolet Minerals has sought state, local and federal permits necessary to mine 55 million tons of ore from a mine just south of Crandon, near the Mole Lake Chippewa Reservation and the headwaters of the Wolf River.

Environmentalists and area Indian tribes have fought the project, contending it poses too great a pollution threat. Supporters say the mining can be done safely and will create badly needed jobs.

BHP Billiton's announcement came just days after talks with the state to buy the company's land - in essence buying out the mining project - ended with no deal. State officials said the price would be too high.

Appraisals done for the state and paid for by Nicolet Minerals set the value of the land, with mineral rights, between $51.2 million and $94 million.

Paul Benson, BHP Billiton's vice president of business development for base metals in Houston, said Tuesday the company decided to cut costs at the Crandon site to save money. Efforts to seek the needed permits will be done by consultants under contract, he said.

There might be only six mining companies capable of investing the $350 million needed to build the Crandon mine, Skaer said. The Northwest Mining Association is a 106-year-old group that represents the hard-rock mining industry, primarily in western states.

The state Department of Natural Resources has said it could be early next year before it recommends whether the mine can be operated safely without polluting the environment. But such deadlines have come and gone for years.

"Why would you come to Wisconsin and fight all those opposition groups and deal with a regulatory agency that is afraid to make a decision?" Skaer asked.

Also working against the mine are today's depressed zinc and copper prices, Skaer said. "Someday in the future, the mine will be developed. Whether or not it is in our lifetime, I can't predict that," she said.

Crandon Mayor Pat DeWitt was discouraged about the mine's future. "I don't have much hope for it any more. I certainly don't," he said. The eight jobs eliminated were probably some of the best- paying jobs in Forest County, DeWitt said.

"It is a shame. It was a good chance for Forest County and northern Wisconsin to get a shot in the arm," he said.

Rusty Price, a mining analyst for Nelson Securities in Spokane, said the Crandon project might get some interest from smaller companies that can take a little more risk.

But the trend in the mining industry has been to move overseas given the difficult process of getting permits to open new U.S. mines, he said.

BHP Billiton has headquarters in London and Melbourne, Australia. Most of the company's metallic mines similar to the Crandon proposal are in Canada or Latin America.

BHP Billiton is not the first mining company to pull out of the project. Exxon Coal and Minerals Co., which discovered the deposit in 1976, applied in 1982 for permits to run the mine and then suspended those plans in 1986 when metal prices were low.

Exxon and a partner, Rio Algom Ltd. of Canada, revived the project in 1994, but Exxon sold its interests to Rio Algom. Rio Algom was later acquired by London-based Billiton, which then merged with BHP.