Billion Dollar Heist
Did environmentalism go too far in killing Montana's New World Mining district?
Margaret Reeb grew up near Granite Peak, the highest mountain in Montana. She worked as a school teacher, and her husband as a deputy sheriff. Her dream was to own productive land. She was well on her way to realizing that dream.
The area around Henderson Mountain and Cooke City, Montana had been a mining district since 1876. Many small mines were developed on Henderson Mountain. These had been worked out by the early 20th Century. After WW2, land was cheap, and Margaret bought as much as her family could afford. By the 1960s she had hundreds of acres of good mining prospects.
Were this story an ordinary one, Margaret would have found a mining company to explore on her land, leased the production rights, and taken in a very substantial sum of money in royalty payments. It turns out that the proven resource on her land and very nearby was two million ounces of gold, eleven million ounces of silver, and 130 million pounds of copper, half on her property (1). At recent prices, the value of these minerals is $1.135 billion dollars.
Rather than making a fortune, bringing modern utilities, good roads and dozens of high paying jobs to her community, becoming another great American success story, Margaret Reeb passed away and was buried in January 2004. Her dreams of success were ruined by liars and thieves. The New World Mining district which she worked so hard to develop was sacrificed on the altar of religious fundamentalism. What religion? Environmentalism.
To understand this story fully, know the geography. Every mining operation has a real estate deal at its core. Every real estate deal is specific to the land involved. To know the story, you have to know the land. It wouldn't hurt to go there and walk around.
Had the politicians in the UN, Congress, or the White House done so, they'd have seen the key facts. True, the New World Mine is three miles from the edge of Yellowstone National Park, but three mountain ridges separate the park from the mining district. As a result of these mountains, the watershed from the New World Mine flows away from the park and all the wilderness and forest lands in the area.
Now, Yellowstone is a very nice park. So nice, it has been listed as a World Heritage Site by the United Nations. Contemporary mining companies are very aware of the environmental impact of their work, and are required by law to file environmental impact statements, be mindful of long-term environmental consequences, and may have to revise their operations to safeguard natural habitat. One would want to avoid polluting "water flowing into Yellowstone National Park, the Clarks Fork of the Yellowstone National Wild and Scenic River or the Absaroka-Beartooth National Wilderness area," according to an analysis by the Congressional Research Service. It turns out that some 24,000 acres would need to be safeguarded from polluting activities, "none of it located in the present New World mine site (2)."
The proposed mine was never intended to be a surface strip mine. It was a proposed underground hard rock mine to access a sulfide mineralization. There were never any plans for cyanide heap leaching. Rather, the minerals required flotation separation.
Former president of Crown Butte Resources Dave Rovig comments, "The thing to me is the dishonesty of it all. The portrayal of rape, ruin, and pillage of Yellowstone Park was completely false. The mine never would have been seen from Yellowstone. The water drains to Fisher Creek, goes away from Yellowstone, and we probably would have decreased traffic through the park by opening the road to Cooke City for year-round use. For one thing, the mine would have brought modern services to Cooke City, along with decent jobs and benefits to the area."
Crown Butte Resources did the exploration work in the 1980s to prove the resource. Then they licensed the development to Noranda which agreed to buy tranches of Crown Butte over a period of several years. Dave got Margaret to come to the table and lease her property, thereby assembling the whole mining district from north to south. Altogether, the companies spent about $40 million on exploration and development, including "reclaiming lands that were mined long before Crown Butte Mines [sic] began to explore for minerals in the area (3)."
Well over a billion dollars of gold, silver, and copper was found, based on today's prices. At the time, it was valued at some $800 million. As with all mines, in taking the resource out of the ground for ten to fifteen years at the rate of 500,000 tons a year or so, further exploration would have been performed, potentially doubling or tripling the total resource to be recovered. Of course, none of that happened.
To accomplish its goal of developing this resource, Crown Butte filed an environmental impact statement in 1993. Naturally, if any actual problems were found, the project could have been revised before proceeding or completely prohibited from operating. But, science is not a key ingredient in most major religions, and environmentalism, for all its pretensions to ecological science, is typical. So, in February 1995, before the three-year environmental impact study would be completed, fourteen groups demanded intervention from the United Nations World Heritage Committee. The groups were the National Parks and Conservation Association, Greater Yellowstone Coalition, American Rivers, Sierra Club, Trout Unlimited, National Wildlife Federation, World Wildlife Fund, National Audubon Society, Natural Resources Defense Council, Mineral Policy Center, Friends of the Earth, Beartooth Alliance, Canadian Parks, and the Wilderness Society (4).
These groups made the false claim that there was potential for "damage that could occur to the water, recreational assets, and wildlife habitats in and around Yellowstone National Park in the event of an accident or the improper treatment of waste (5)." Accordingly, they wrote to Dr. Adul Wichiencharoen of Thailand, chair of the World Heritage Committee requesting the Committee launch an investigation to have the Park added to the "List of World Heritage Sites in Danger."
Assistant Secretary of the Interior George Frampton said the Interior department was also concerned the mine would put the park "in danger" but that a formal response would not be made until the completion of the EIS (6). He paid the U.N. World Heritage Committee with Interior department funds to inspect the site. President Clinton got in on the act, declaring that he wanted a moratorium on further mining patents on 19,000 acres in the area. Subsequently, Interior withdrew access to its lands from the project, preventing so much as a road from being built on federal property.
According to Dave Rovig, the investigators from the UN took a helicopter ride over the site for their "investigation." They invited various environmental groups to testify at their hearings. The park was listed as "in danger" at the next meeting of the UN committee, before the environmental impact study was complete.
The follow-up to the story is very disappointing. Having forbidden the mine to go forward without even looking at the environmental impact study, the Department of Interior subsequently negotiated a payment of $65 million to Noranda for the patented and unpatented mining claims. Dave was so upset by the terms of this deal that he resigned in protest, along with three non-Noranda directors of Crown Butte, and one Noranda-appointed director. Margaret refused to give up her land, but finally was compelled to agree not to mine the property without Congressional approval.
To add insult and further injury, the government demanded that $22.5 million of the $65 million be placed in a trust fund for reclamation in the area. The company, Maxim Technologies, charged with performing the reclamation has had a hard time finding things to reclaim. So, the net result to Noranda was $42.5 million, about what had been spent on the mining property. Altogether, some $1.135 billion of mineral resources were taken for public use with "just compensation (7)" amounting to just 3.7% of the value taken.
Sadly, it doesn't stop there. The same World Heritage system was used in British Columbia to prevent development of the $10 billion Windy Craggy ore body (8). At Windy Craggy, there was no park, so it was necessary to create one: the new Tatshenshini-Alsek Wilderness.
Mining in Kamchatka, Russia was opposed by The Environmental Defense Fund, the Pacific Environmental Resources Center, and the Sierra Club which pushed UNESCO to establish a World Heritage site in the region. The UN did so in December 1996, making mine financing much more difficult (9).
A World Heritage designation is proposed for much of the Bering Strait area which would eliminate new coal and hard rock mineral development in northwest Alaska. It happens that a quarter of all the coal reserves in the USA are located here. In addition to coal and oil, the world's largest zinc mine north of Kotzebue is also possibly threatened by a World Heritage designation in the region (10).
Fairly characteristic of the goals of many of these environmentalists is the Wildlands Project conceived by David Foreman who writes, "The only hope for Earth is to withdraw huge areas as inviolate natural sanctuaries from the depredations of modern industry and technology ... identify big areas that can be restored to a semblance of natural conditions, reintroduce the Grizzly Bear and wolf and prairie grasses, and declare them off-limits to modern civilization (11)."
Dreams of wolves and bears roaming vast wilderness areas with islands of cities and towns "allowed" to remain are part of this vision. Yes, of course, wolves and bears may prey on livestock, children, and even adults.
It isn't that private property owners don't like wildnerness or living things. On the contrary, private land owners are better about managing their land, re-planting trees, encouraging wildlife, and even maintaining large tracts of complete wilderness. There are many foundations and companies that favor nature without abandoning private property.
But the objective of those who would steal land – and regulate land not yet stolen – is not to make a better world for humans. If that were the goal, then developing natural resources to raise standards of living and bring billions out of poverty would be desirable. Instead, certain environmentalists seem to seek the elimination of technological civilization, thereby condemning most of humanity to poverty or death. Worse, their methods of nationalizing land don't work to protect nature - national governments are among the worst polluters, clear-cutters, and destroyers of the environment.
In the end, the work of looters is always the same. Margaret Reeb died without her vision of a prosperous mining community being realized. It is up to us the living to remember her case and make of it a cautionary tale against property theft, no matter how theft is packaged.
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1. Humphries, Marc; Congressional Research Service Report for Congress "New World Gold Mine and Yellowstone National Park;" 27 August 1996.
4. Rothbard, David and Rucker, Craig; "UN Biospheres and World Heritage Sites CFACT Briefing Paper #104;" October, 1997; http://www.cfact.org/IssueArchive/biospheres.bp.o97.txt
6. Rothbard and Rucker.
7. Fifth Amendment, USA constitution.
8. Sumanik, Ken; British Columbian Mining; June 1996 quoted in Rothbard and Rucker.
9. "Reaction of Mr. Vasily to EDF press release;"Alaska Miners Association; January 1997; quoted in Rothbard and Rucker.
10. Borell, Steven C; Alaska Miners Association, Inc., letter to Senator Murkowski regarding Beringia Park and Loss of Sovereignty Over the Area, July 11, 1994, quoted in Rothbard and Rucker.
11. MacLeod, Laurel; "Sovereignty Under Siege;" Family Voice, Concerned Women for America; April 1997, quoted in Rothbard and Rucker.