Conservation Minnesota

When Mining Operations Reach the End of Their Economic Life

“LTV Steel Mining operations have reached the end of their economic life”

Richard J. Hipple, president of LTV Steel

May 24, 2000

LTV Steel Mining Company began operation in 1957 as the Erie Mining Company with strong ties to Cleveland Ohio steel milling interests. LTV is a classic example of the multilayered corporate structures that have dominated the mineral extraction and milling industry. As a separate subsidiary it was designed specifically to run out the marginal iron ore beds lying south and slightly east of the rich deposits of iron ore in Mesabi Range. Once the quality of the ore had played its way out, LTV filed bankruptcy to avoid ongoing liability. Investors made their money and then, through bankruptcy, they were shielding their investments from future liabilities.

In order to take advantage of some of the remaining ore and another giant mining interests, Cleveland Cliffs Inc. purchased the remaining assets of LTV with of course through another subsidiary. This deal was in part subsidized by state taxpayers, with the Iron Range Resources & Rehabilitation Board purchasing some of the less valuable mineral lands. Fortunately the state was able to keep the environmental liabilities from dissipating in bankruptcy.

The largest of these future liabilities was in pollution from mercury and other heavy metals. The most significant of this pollution was from one pit known as the “Dunka Pit”. It was here that the mining company strayed off course into soil laden high levels of sulfide ores. When brought to the surface sulfide ores can undergo a chemical reaction that can create long-lasting contamination to water and the plants and animals dependent on that water. When sulfides interact with oxygen and water they create sulfuric acid – the same caustic substance used in car batteries and one many of us were cautioned about using in our high school chemistry labs. In addition, the acids dissolve harmful metals out of the surrounding rocks, metals that are toxic to fish and other aquatic life as well as to humans. The term for this pollution is Acid Mine Drainage (AMD).

Not surprisingly, the Dunka Pit started to leak ADMs into wetlands and near-by streams on the edge of Birch Lake and the nearby Boundary Waters wilderness. After persistent prodding from local citizens, state regulators finally began enforcing cleanup just a few years ago. Cleveland-based Cliffs Natural Resources paid a $58,000 fine, built retention ponds and was required to collect information to monitor the pollution.

What should concern Minnesotans is that the very ore that is causing this pollution at the Dunka Pit is what many new mining companies would like to extract minerals from in the near future. The much talked about new copper and nickel mining proposals would intentionally expose this very toxic ore to the environment. Even more concerning is that the history of sulfide mining is filled with companies going bankrupt or lacking the financial resources to respond to pollution from their mines.  The result has either been ongoing environmental contamination, or a shift of financial burden from the companies to the public to clean up mining pollution.

The U.S. Environmental Protection Agency estimates that the cost of mine cleanup for sites listed as national priorities is $20 billion. The most significant cost associated with this cleanup is long-term water treatment and management. Some recent examples are:

  • Summitville Gold Mine, Colorado – The company filed for bankruptcy, leaving cleanup costs to the public. Costs are expected to be about $235 million and cleanup to take at least 100 years.
  • Zortman Landusky Mine, Montana – In 1998, the company abandoned the site and filed for bankruptcy. After several lawsuits against the mining company and its creditors following the company’s bankruptcy, Montana’s taxpayers are still liable for anywhere from $8 million to $90 million.
  • Gilt Edge Mine, South Dakota – The parent company, Dakota Mining, went bankrupt and abandoned the mine in 1999 with only a $6 million bond in place, an amount insufficient to cover water treatment for even a single year. In 2000, South Dakota requested the site be designated a Superfund site for long-term cleanup, leaving the burden of reclamation costs on taxpayers.

As Minnesota taxpayers move into this new boom and bust economy of sulfide mining we should be very careful about taking care of our own resources; both our minerals and our tax dollars. These companies should be expected to cover their cleanup costs and not leave Minnesota again subsidizing their profits. Given opportunities, these individuals that make up these companies take their profits and move on. For example, you should not feel sorry for the bankrupt Richard J. Hipple mentioned above. While LTV’s pollution and cleanup have followed others, he has moved on and done quite well. Within only 5 years he was promoted to President and Chief Operating Officer of Brush Engineered Materials Inc. in Cleveland.

About John Tuma

John Tuma

John is a former state legislator and litigation attorney. He served in the Minnesota House of Representatives for eight years from the Northfield area, beginning in 1994. Elected as a Republican, John was known for his independent thinking and ability to work across party lines. He is well-known in Minnesota state government circles.

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