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September|October 2004
Killing Their Young By Dashka Slater
Empty Suits By Alicia Mundy
Moving Mountains By Geoffrey Gagnon

Moving Mountains

Prospector Frank Duval has wanted to extract the silver lining from the federally protected Cabinet Mountains for 40 years. Why he may very well get his way.

By Geoffrey Gagnon

IN WESTERN MONTANA NEAR THE CLARK FORK RIVER, an old logging road goes from bad to barely there. It shoots like a slalom course through 20-foot-tall cedars. Up here the forest is thick and the trail perilously steep, and buried somewhere in the undergrowth is the entry point for the most controversial mining project in the United States.

But Doug Ward, a vice president of the Revett Silver Company, can't find his way. Maps confirm that this trail in the Kootenai National Forest is near where Revett wants to dig one of the nation's largest silver mines, but Ward doesn't see the markers. His company's plan is to tunnel from the national forest to the federally protected Cabinet Mountain Wilderness Area a mile away. Once under the wilderness area, Revett aims to spend 30 years hollowing out an untouched patch of mountain, and extracting its riches. The proposed Rock Creek Mine is a big, brash idea that could yield up to a hundred million ounces of silver and a billion pounds of copper, worth $600 million and $900 million respectively in today's markets. In many circles, the idea is an unpopular one. Nobody has ever been allowed to build a mine under a national wilderness area.

"Once we've got our trucks up here, the environmentalists are gonna come unglued," Ward said. For the past 16 years, environmentalists have joined forces to slow the charge of trucks up the mountain. One group worried about the mine's effect on endangered grizzly bears and native Bull Trout, another championed the pristine waters of nearby Lake Pend Oreille and the Clark Fork River that runs to it, and others argued for keeping the public land untouched. Last spring, this web of resistance got help from an unexpected quarter when the jeweler Tiffany & Co. placed a full-page ad in The Washington Post, lambasting the U. S. Forest Service for greenlighting the $200 million project.

The open letter from Tiffany's CEO warned that the mine would pollute the "stark beauty" of the Cabinet Mountains and place wildlife at greater peril. It reserved special scorn for the General Mining Law of 1872, which has handed over huge swaths of public land to miners since it was instituted.

Eight consecutive presidential administrations, from Franklin Roosevelt's through Jimmy Carter's, have criticized the law, but the giveaways have continued. In 1994, under Bill Clinton, Secretary of the Interior Bruce Babbitt mocked his own inability to stop the handouts. At a press conference, he brandished a fake, oversized U. S. Treasury check for $10 billion, the estimated value of the 30 million ounces of gold under 2,000 acres of land in eastern Nevada. A Canadian firm bought the land for $9,765.

The message has come down repeatedly from the highest levels of government: Our hands are tied. But a reform bill introduced last year in the House of Representatives could bring about sweeping change. The bill would grant the secretaries of agriculture and of the interior broad veto power over mine projects, and carry an explicit exhortation that they use all legal force to protect sanctuaries like the Cabinet Mountains.

Congress tried to do that when it earmarked treasured land for protection under the Wilderness Act of 1964. The Cabinet Mountains were among the first to earn the new status. But mining industry muscle persuaded lawmakers to compromise and grandfather claims that had previously been filed or were in the exploratory phase before that date. It also allowed claimholders to sell the claims to new owners who could take advantage of the grandfather clause. That exception allowed the tentacles of the 1872 law to reach into the Cabinet Mountains, and it allowed Revett's founder, 68-year-old Frank Duval, to buy claims filed by others a generation ago.

The Cabinet Mountains cover 93,000 acres, just inside Montana's border with the Idaho panhandle. The entire preserve sits inside the Kootenai National Forest and is populated by wildlife, including bears and trout as well as wolverines, lynxes, and mountain goats. Its charms, however, escape Ward. "There shouldn't be anything sacred about this spot. Plenty of mines are built in prettier places," he said, driving near a ridgeline that dropped off into an emerald valley. "A wilderness area is nothing but a line on a map."

IN TROY, MONT., A HALF-HOUR'S DRIVE north of the Rock Creek claim, on the bank of the Scotchman Peak mountain range, sits a window that looks into the possible future of the Rock Creek Mine. A valuable chunk of ore was discovered here in 1964, on a hill called Mount Vernon, at the same time that the claims at Rock Creek were made, and by the same prospectors. But the unprotected hill near Troy was considered easier to reach. After two decades of geological exploration, the mine opened in 1981. When it closed two decades later, it had pulled 44 million ounces of silver and 400 million pounds of copper from the tunnels beneath Mount Vernon, worth a total of about $630 million if traded today. "Our goal at Rock Creek will be to make Troy," Ward explained. "And then make it bigger."

The road leading into the old Troy mine runs past a pair of giant milling buildings that were used to process rock as it flowed out of the mine on conveyor belts. From outside the mountain, the operation looks like a factory on a camping trip. Front-end loaders and rock-crushing machines are pitched on the north ridge of the mountain. The industrial campsite is now silent, although Revett, which acquired this spot along with Rock Creek five years ago, wants to bring it back online.

When miners open hills from the inside, they often unlock seams of water flowing through the mountain. So for much of the year, it rains inside the Troy mine. The miners employed a technique called "room and pillar mining"—they blasted "rooms" and used the huge rock pillars left behind to support 60-foot high "ceilings" of rock. The same method will be employed at Rock Creek, where the "rooms" will stretch on in the darkness for three miles.

Twenty years' worth of pulverized rock was dug from the mountain and separated from copper and silver. It was then piped down the mountain as a sludgy compound known as "tailings," dried, and stored in beds that fill a 400-acre valley six miles away. Those beds are stacked 90 feet deep. A former miner caused a local stir two years ago when he said that barrels of waste were buried in these tailings beds. Despite previously denying the story, Revett and the company that ran the mine now admit that discarded barrels had been buried. What the barrels contain remains a mystery. Ward said it's a harmless compound used to thicken waste-rock, but environmentalists and some former miners say the waste is likely far more toxic, perhaps cyanide. A lawsuit seeking to unearth the barrels is scheduled to go to trial next spring.

The water near the tailings is mired in controversy as well. A pond of water piped from the mine will have to be monitored and treated for years to come because it has been tainted with minerals. But the real damage that seeped out of the mine, some say, are the ruins of the towns nearby. As Mary Mitchell, who heads the Rock Creek Alliance, a group fighting to stop the mine, put it, "If you wonder if Rock Creek will be good for the folks who live here, take a look at how good the Troy mine was for the people who lived there."

No ore body lasts forever, and the 20- to 30-year life spans of mines create boom and bust cycles in the small towns that support the industry. Nearby towns like Troy and Libby have been feeling the bust. Unemployment has hovered between 11 and 13 percent the last few years, more than double the national average. Julie Norman works a cash register not far away, at a gas station that doubles as a motel, and she wants no part of Mitchell's protests. Her husband, a truck driver, misses his old job at the Troy mine, and she shook her head at the thought of her neighbors protesting job growth simply because it'll dry up in a few dozen years. "The kids here need jobs, my grandkids need jobs," she said. "Mining jobs today are better than no jobs at all."

Revett plans to put 350 people to work beneath the Cabinet Mountains, and Ward says it's not just mining jobs that his company will bring back to the region. He noted that Rock Creek will mean money in the pockets of the local pickup truck salesmen, the grocery store owners, and the hunting supply store owners. He said his company will pay around $1.5 million in taxes each year, which will fund school and civil service development, and he asked what's wrong with that.

IN 1865, 24 YEARS BEFORE IT BECAME THE 41ST STATE, the territory of Montana adopted a seal that made clear its priorities. The seal depicted a pick and shovel beneath a mountain, with the phrase "Oro y Plata"—Spanish for "gold and silver." It was an era when public land giveaways were pushing industry west in a blaze of railroad ties and survey stakes. The 1872 mining law was passed among a rash of statutes born of that spirit. Homesteading laws privatized some 214 million acres of federal land, while railroad giveaways and education land grants developed roughly the same amount of territory. It was hoped that opening the West to industrial development through mining would spur the linking of the coasts.

The law rubber-stamped what people had already begun to do: enter public land and take minerals without paying a royalty. But it went further and turned over that land to prospectors to keep. Those prospectors could file a claim after exploratory drilling proved that valuable minerals were under the land, "patent" the claim by buying the land for $2.50 to $5.00 an acre, or keep an unpatented claim valid by performing $100 worth of mining work on the land yearly. Since the law was instituted, the federal government has sold off land equal to the size of Connecticut to private entrepreneurs at prices that have not changed since 1872. Bruce Babbitt curtailed land patenting by issuing a moratorium on the practice, but some tracts continue to slip from public to private hands. This year the Bush Administration sold a 155-acre chunk of mountain in Crested Butte, Colo., for $875.

But the law didn't consider environmental concerns, and it failed to anticipate what a big industry mining would become. As early as 1880, Congress convened a public land commission that concluded the law was already outdated because it raised more questions about land ownership than it answered. One commissioner predicted that its provisions would have to be scrapped and the whole thing rewritten "in the near future."

But the law proved durable. In its infancy, the law's critics came from within the mining industry: The big players wanted greater latitude in securing claims. A century later, it was the environmentalists who went after the law, and they were nearly successful in gutting it. A leasing system that would have charged rent for land use was almost implemented during the Carter Administration, but the plan fell apart when the congressman who chaired the House Interior Committee withdrew his backing for the reform after being burned in effigy by miners in his district.

By the mid-1990s, miners were warning that reform would kill their industry. They hyped the risk of American dependence on foreign minerals, and warned that proposed changes in the law would siphon $5.7 billion from 12 Western mining states, and would result in the loss of $420 million of corporate taxes to the federal government. A core of Western senators promised to filibuster any attempt at reform, saying the identity of a region rooted in minerals, timber, and other resource development was at stake. Their sentiment continues to block revision of the mining law, even though the version of the American West that mining supporters want to preserve has gone the way of the stagecoach. In Montana, for example, only 0.6 percent of workers are mining employees.

The fight isn't about nostalgia, however. Miners believe they need the 1872 law to survive, and to improve the long odds against success in their business. Mineral exploration is extremely expensive, and the chances of turning a claim on a map into a profitable mine in the ground are slim. Revett contends that $17 million has already been pumped into evaluating the Rock Creek claim, and that millions more will have to be invested before digging can begin. "For every mine that gets off the ground [there] are many more that never do," Ward said. "Millions of dollars and years of science go into these projects before they ever begin."

Still, the mining law is extraordinarily generous by the industry's standards. Companies that trade in natural resources other than hard rock bear similar risks but get nowhere near the same benefits. Companies that mine coal or drill for gas, for example, are required to pay fees of as much as 12.5 percent of the revenue they earn off resources extracted from federal land. If companies that have mined for gold, silver, and copper under the 1872 law were required to pay royalties of only 8 percent—the figure floated in the current reform bill—they would have to turn over upwards of $400 million over the next five years. But they have paid none of the more than $245 billion that reform advocates estimate mining companies have made during the long life of the law.

ON THE INTERIOR WALLS OF REVETT'S GRAY OFFICE BUILDING near Spokane, Wash., hang pictures of mines worked by other companies. Inside the five-year-old company's offices are maps and blueprints of mineral claims scouted by other firms and rocks dug up by other miners. Revett has no operational mine of its own—not yet, anyway. With little to point to, the reputation of Revett and the fight at Rock Creek boil down to a difference of interpretation about the résumé of its founder, Frank Duval.

There's a romantic quality to the way Duval sees mining, and to the way he describes the rumble of massive machines digging for rocks. His grandfather sifted gold from pans during Alaska's gold rush of 1896. His father tracked through Eastern Washington looking for uranium deposits just after World War II. Now the future of the family business rests at Rock Creek. This fall Duval will hit investors hard to raise the $150 million to $200 million he needs to build the mine.

Duval has been interested in Rock Creek for 40 years, since geologists hit upon copper and silver deposits there in 1964. But the heavyweight mining companies that owned the claims over the years were too big for Duval to go after. In 1999, he seized an opportunity created by the project's owner, ASARCO. For 12 years, ASARCO had poured money into exploring the site and fighting in court to get mining permits. Then it cried uncle to the environmentalists and signaled its desire to sell. Duval bought the claims at the cut rate of $23 million. He says this project will be his last, and he believes it could give him a chance to salvage a reputation still haunted by his first.

In 1973, Duval founded a company called Pegasus Gold with an old friend who today serves as a director at Revett. Pegasus posted large profits by pioneering cyanide heap-leach technology, a process that allows miners to pull gold from low-grade deposits. Miners spray piles of ore with cyanide, which seeps through the rock and collects in a mineral-rich soup from which the gold is chemically extracted. The process was perfected by Duval's company on a stretch of mountains in northeast Montana. The land had been scarred and tunneled by a century of gold prospecting, but Duval suspected there was more money locked in the mountains. He and his team scavenged for flecks of metal from the lowest-grade ore in America. The toxin-heavy process made Duval rich, but the bounty came at a cost.

The technique reduced the mountains to massive piles of cyanide-drenched rock and dirt. Chemicals spilled, toxins leaked into nearby streams, and the drinking water in the neighboring town of Zortman was turned off. Still, mining continued, despite a process that yielded just one ounce of gold from every 100 tons of rock. The technology turned the Zortman-Landusky operation into the biggest revenue-generating gold mine in Montana. When gold prices dipped in the mid-1980s, however, the company determined that the cost of bathing mountains in cyanide had become too high—or, more precisely, that profits had become too low—to justify the operation.

Meanwhile, Duval was finding that his mining interests were becoming a liability. Even though the company had $65 million in the bank, Duval walked away from Pegasus in 1987, right around the time he was trying to settle unrelated charges of wrongdoing levied by the Securities and Exchange Commission. A lawsuit forced Duval to accept SEC sanctions for failing to disclose his financial stake in a company he then sold part of to Pegasus.

These days the gold is gone at Zortman-Landusky, and so are the mountain caps that used to rise out of the Milk River Valley. Pegasus is gone, too. After Duval left, the plummeting gold prices and squabbles with state regulators over chemical leaks grew into a cluster of lawsuits that Pegasus settled for $37 million. Bitter Montana voters outlawed the cyanide-leaching process that allowed Pegasus to extract $300 million in gold specks over its 20-year run. Pegasus declared bankruptcy and left the mine, along with a $33 million cleanup tab, to the citizens of Montana.

Duval continued to sift through abandoned mining projects in search of fortune. In the late '80s at the Bunker Hill Mine in Idaho's Silver Valley, he found a 21-square-mile project he was certain he could reopen. He wooed investors from Canada and put up a million dollars himself. After less than a year of digging, though, the project fell apart and the company in charge went belly-up, owing back taxes of $2 million when it left town. "I thought it'd be a good project," he said. "I always thought it was a good ore body, and I still do." And then there was the Star Phoenix Mining Company, which sputtered into bankruptcy shortly after it re-opened a mine in 1989. "We couldn't pay our bills," Duval said. "I was the president, and I was responsible." Duval is now also the president of the Midnite Mine, a dormant uranium project that fought a long battle against environmentalists before becoming a federally monitored Superfund waste site. But failures like these are barely recognizable to a man blinded by self-confidence. According to Mary Mitchell, "Frank Duval looks for a profit, makes a mess, and then walks away."

Duval counters that he's an optimist, not an opportunist. When one project doesn't work, he looks for the next. "I'm a situation finder," he said. "I look for things that'll work, and then do my best to make them work." At Rock Creek, Duval is again selling his brand of hope. He assured his critics, "I believe that there's no way we'll do anything wrong here."

Geoffrey Gagnon is the managing editor of Legal Affairs.

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