Collapse: How Societies Choose to Fail or Succeed (85 page)

pay another dollar per ounce for copper and palladium, just as long as I can still buy a car this year." Instead, you shop around for a better deal on a car.
The copper and palladium middlemen and car manufacturers know how
you feel, and they pressure the mining companies into keeping their prices
down. That makes it hard for a mining company to pass on its cleanup costs.

Mining companies have much less capital to absorb their cleanup costs
than do oil companies. Both the oil industry and the hardrock mining in
dustry face so-called legacy problems, which mean the burden of costs from
a century of environmentally damaging practices before the recent growth
of environmental awareness. To pay those costs, as of the year 2001 the total
capitalization of the entire mining industry was only $250 billion, and its
three largest companies (Alcoa, BHP, and Rio Tinto) were capitalized
with only $25 billion each. But the leading individual companies in other
industries
—Wal-Mart Stores, Microsoft, Cisco, Pfizer, Citigroup, ExxonMobil, and others—had capitalizations of $250 billion each, while General
Electric alone had $470 billion (almost double the value of the entire min
ing industry). Hence those legacy problems are relatively a much heavier
burden on the hardrock mining industry than on the oil industry. For ex
ample, Phelps-Dodge, the largest surviving U.S. mining company, faces U.S.
mine reclamation and closure liabilities of about $2 billion, equal to its entire market capitalization. All of the company's assets amount to only about $8 billion, and most of those assets are in Chile and cannot be used to pay
North American costs. In contrast, the oil company ARCO, which inherited
the responsibility of $1 billion or more for Butte copper mines when it
bought Anaconda Copper Mining Company, had North American assets of
over $20 billion. That cruel economic factor alone goes a long way towards
explaining why Phelps-Dodge has been much more recalcitrant about mine
cleanup than has ARCO.

Thus, there are many economic reasons why it is more burdensome for mining companies than for oil companies to pay cleanup costs. In the short
run, it's cheaper for a mining company just to pay lobbyists to press for
weak regulatory laws. Given society's attitudes and existing laws and regula
tions, that strategy has worked
—until recently.

Those economic disincentives are exacerbated by the attitudes and corporate culture that have become traditional within the hardrock mining
industry. In the history of the U.S., and analogously also in South Africa and
Australia, the government promoted mining as a tool to encourage settle
ment of the West. Hence the mining industry evolved in the U.S. with an

inflated sense of entitlement, a belief that it is above the rules, and a view of itself as the West's salvation
—thereby illustrating the problem of values that
have outlived their usefulness, as discussed in the preceding chapter. Mine executives respond to environmental criticism with homilies on how civili
zation would be impossible without mining, and how more regulation
would mean less mining and hence less civilization. Civilization as we know
it would also be impossible without oil, farm food, wood, or books, but oil
executives, farmers, loggers, and book publishers nevertheless don't cling to
that quasi-religious fundamentalism of mine executives: "God put those
metals there for the benefit of mankind, to be mined." The CEO and most
officers of one of the major American mining companies are members of a church that teaches that God will soon arrive on Earth, hence if we can just
postpone land reclamation for another 5 or 10 years it will then be irrele
vant anyway. My friends within the mining industry have used many color
ful phrases to characterize prevailing attitudes: "a rape-and-run attitude";
"robber-baron mentality"; "a rough-and-tumble heroic struggle of one man against nature"; "the most conservative businesspeople I've ever met"; and "a speculative attitude that a mine is there to let its executives roll the dice
and get personally rich by striking the mother lode, rather than the oil com
pany motto of increasing asset value for the shareholders." To claims of
toxic problems at mines, the mining industry routinely responds with de
nial. No one in the oil industry today would deny that spilled oil is harmful, but mine executives do deny the harm of spilled metals and acid.

The third factor underlying mining industry environmental practices,
besides economics and corporate attitudes, is the attitudes of our government and society, which permit the industry to continue with its own atti
tudes. The basic federal law governing mining in the U.S. is still the General
Mining Act passed in 1872. It provides massive subsidies to mining companies, such as a billion dollars per year of royalty-free minerals from publicly
owned lands, unlimited use of public lands for dumping mine wastes in
some cases, and other subsidies costing taxpayers a quarter of a billion dol
lars per year. The detailed rules adopted by the federal government in 1980,
termed the "3809 rules," did not require mining companies to provide fi
nancial assurance of cleanup costs, and did not adequately define reclama
tion and closure. In the year 2000 the outgoing Clinton administration
proposed mining regulations that achieved both of those goals while also
eliminating corporate self-guarantees of financial assurance. But in October
2001 a proposal by the incoming Bush administration eliminated almost all
of those proposals except for continuing to require financial assurance, a re-

quirement that would in any case be meaningless without a definition of
the reclamation and cleanup costs to be covered by financial assurance.

It is rare that our society has effectively held the mining industry re
sponsible for damages. Laws, regulatory policies, and the political will to
chase mining scofflaws have been absent. For a long time the Montana state
government was notorious for its deference to mining lobbyists, and the
Arizona and Nevada state governments still are. For example, the state of New Mexico estimated reclamation costs for the Chino copper mine of
Phelps-Dodge Corporation at $780 million, but then decreased that estimate to $391 million under political pressure from Phelps-Dodge. When our American public and governments demand so little of the mining in
dustry, why should we be surprised that the industry itself volunteers little?

My account of hardrock mining so far may have given the false impression that the industry is monolithically uniform in its attitudes. Of course, this is
not true, and it's instructive to examine the reasons why some hardrock
miners or related industries have adopted or considered cleaner policies. I'll
briefly mention half a dozen such cases: coal mining, the current status of
Anaconda Copper Company's Montana properties, Montana platinum and
palladium mines, the recent MMSD initiative, Rio Tinto, and DuPont.

Coal mining is superficially even more similar to hardrock mining than
is the oil industry, in that its operations inevitably create heavy environmental impacts. Coal mines tend to make even bigger messes than do
hardrock mines, because the quantity of coal extracted per year is relatively
enormous: more than triple the combined mass of all the metals extracted
from hardrock mines. Thus, coal mines usually disturb more area, and in
some cases they strip the soil down to bedrock and dump mountaintops
into rivers. On the other hand, coal occurs in pure seams up to 10 feet thick stretching for miles, so that the ratio of dumped wastes to product extracted
is only about one for a coal mine, far less than the already-mentioned fig
ures of 400 for a copper mine and 5,000,000 for a gold mine.

The lethal Buffalo Creek disaster at a U.S. coal mine in 1972 served as a wake-up call for the coal industry, much as the
Exxon Valdez
and North Sea
oil rig disasters did for the oil industry. While the hardrock mining industry
has had its share of disasters in the Third World, those have occurred too far
from the eyes of the First World public to have served as a comparable
wake-up call. Stimulated by Buffalo Creek, the U.S. federal government in
the 1970s and 1980s instituted tighter regulation, and required stricter

operating plans and financial assurance, for coal mining than for hardrock
mining.

The initial response of the coal industry to those government initiatives was to prophesy disaster for the industry, but 20 years later that has been
forgotten, and the coal industry has learned to live with the new regulations. (Of course that doesn't mean that the industry is consistently virtu
ous, just that it is more regulated than 20 years ago.) One reason is that
many (but certainly not all) coal mines are not in beautiful Montana moun
tains but in flatland not highly valued for other reasons, so that restoration
is economically feasible. Unlike the hardrock mining industry, the coal in
dustry now often restores mined areas within a year or two of ceasing
operations. Another reason may be that coal (like oil but unlike gold) is per
ceived as a necessity for our society, and we all know how we use coal and
oil but few of us know how we use copper, so the coal industry may have been able to pass on its increased environmental costs to consumers.

Still another factor behind the response of the coal industry is that it typically has short transparent supply chains, in which coal is shipped di
rectly or else via just one intermediate supplier to the electric generating
plants, steel plants, and other main consumers of coal. That makes it easy for the public to figure out whether any particular consumer of coal is ob
taining it from a cleanly or dirtily operated coal mining company. Oil has a
supply chain that is even shorter in number of business entities, even if
sometimes long in geographic distances: big oil companies like Chevron-
Texaco, ExxonMobil, Shell, and BP sell their fuel to consumers at gas sta
tions, thereby permitting consumers enraged by the
Exxon Valdez
disaster
to boycott gas stations selling Exxon fuel. But gold passes from the mine to
the consumer via a long supply chain that includes refiners, warehouses, jewelry manufacturers in India, and European wholesalers before arriving
at a retail jewelry store. Take a look at your gold wedding ring: you don't
have the faintest idea where the gold came from, whether it was mined last
year or stockpiled for the last 20 years, what company mined it, and what their environmental practices were. For copper the situation is even more
obscure: there is an extra intermediate step of a smelter, and you don't even realize that you are buying some copper when you buy a car or phone. That long supply chain prevents copper and gold mining companies from count
ing on consumer willingness to pay for cleaner mines.

Among Montana mines with a historical legacy of environmental dam
age, the ones that have come furthest towards paying their cleanup costs are
the former properties of Anaconda Copper Mining Company around and

downstream of Butte. The reason is simple: Anaconda was bought by the
big oil company ARCO, which in turn was bought by the even bigger British
oil company BP (British Petroleum). The result illustrates more clearly than could anything else the differing approaches to environmental messes in the
hardrock mining industry and in the oil industry: same mining properties,
different owners. When they discovered the mess that they had inherited, ARCO and then BP eventually decided that their own interests would be
better served by trying to get the problems behind them than by denying all
responsibility. That is not to say that ARCO and BP have shown any enthu
siasm for spending the hundreds of millions of dollars to which they were
obligated. They have tried the usual resistive strategies, such as denying the
reality of toxic effects, funding local citizens' support groups to state their case, proposing cheaper solutions than those proposed by the government, and so on. But at least they have spent large sums of money, they are evi
dently resigned to spending more, they are much too large to declare bank
ruptcy over just their Montana mines, and they are interested in bringing
matters to a resolution rather than delaying indefinitely.

The other somewhat bright spot in the Montana mining picture is two
platinum and palladium mines owned by Stillwater Mining Company,
which entered into good-neighbor agreements with local environmental
groups (the sole such agreements reached by any mining company in the
U.S.), gave money to those groups, allows the groups free access to their
mining area, actually requested the environmental organization Trout Un
limited (to the latter's astonishment) to monitor effects of their mines on
local trout populations in the Boulder River, and reached long-term agree
ments with the surrounding communities regarding labor, electricity,
schools, and city services
—in return for environmentalists and local citizens' not opposing Stillwater. It seems obvious that this peace treaty be
tween Stillwater, environmentalists, and the community benefits everybody
concerned. How can we explain the surprising fact that, among Montana
mining companies, only Stillwater reached this conclusion?

Several factors contributed. Stillwater owns a uniquely valuable deposit:
the sole primary deposit of platinum and palladium (much used in the au
tomobile and chemical industries) outside of South Africa. The deposit is so
deep that it is expected to last for at least a century and probably much
longer; that encourages a long-term perspective rather than the usual rape-
and-run attitude. The mine is underground, hence it presents fewer prob
lems of surface impact than an open-pit mine. Its ores are relatively low in sulfide, and most of that sulfide is extracted with the product, so that