MTN - Socio-Economic Aspects of Exxon's Proposed Crandon Mine [SAVE the RIVER] MIDWEST TREATY NETWORK + + Maps may be found from the Content Page.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-
Socio-Economic Aspects of
Exxon's Proposed Crandon Mine

from the Wolf Watershed Educational Project


Introduction

Exxon and Rio Algom say that the mine will bring jobs and tax revenues to Forest County, which is one of the least well-off counties in Wisconsin. We all want the economy of the Crandon area to improve. We all want the towns and county to be able to provide better services. We all want kids to be able to stay in the area where they grew up. We just don't feel that a mine is a safe, reliable investment in the future of the area. In fact, the mine may threaten any economic stability that the area does have, by overburdening local governments with new service needs, and casting a shadow over the future of the tourism industry.

Boom-bust cycle

Mining is very commonly associated with the boom-bust cycle. An artificial economic boom based on mining only sets up a community for a bust, usually making it worse off than before the mining started. You only have to look at the boarded-up homes in Upper Peninsula iron and copper towns, or depressed coal towns in Appalachia, to see what happens when the ore runs out. Rural counties with resource extraction have more unemployed people (and thus lower average incomes) than other rural counties, and that is while the mines are operating! (R. Krannic & A. Luloff, "Problems of Resource Dependency in U.S. Rural Communities," Progress in Rural Policy and Planning, 1991) After the mines close, some former boomtowns experience catastrophic unemployment. Six out of the ten counties with the greatest population loss in the 1980s had gone through through mining busts (USA Today, 4/23/91). People around the closed White Pine copper mine in the U.P. are so desperate for jobs they have accepted a project introducing sulfuric acid into the mine to leach out the remaining ore.

Boomtown costs

Mining projects have significant social and economic costs, which are usually underestimated by the mining company. Mines usually attract more workers than can be employed, and many of the unemployed workers linger in the area, causing increased social strains and taxing social service agencies. (Harvey Molotch, "The City as a Growth Machine: Toward a Political Economy of Place," American Journal of Sociology, 1976.) Sudden population growth also overburdens community services, such as sewers and roads,and causes increased prices for housing and land. This sometimes reduces real wages, and increases some property taxes. Exxon claims the Crandon mine will not 'place any direct requirements' for fire or police services on local towns, and does not address the new burdens put on local schools and wastewater facilities.

Outside jobs

Who will get the jobs anyway? Mining companies always claim their mines will create new local jobs, but they almost always end up going to outsiders. Exxon promises 400 permanent jobs, but there is no assurance that these jobs won't go to already skilled miners. For example, in September 1995, 1100 miners were laid off at the White Pine copper mine and mill in the U.P. (Milwaukee Journal-Sentinel, 7/13/95) Why would locals be hired when trained, experienced miners are available nearby?

Disrespect for workers

Even if you got a job with Exxon, the company is widely known for health and safety problems among its miners. It has had among the worst mine safety records of any underground coal companies in the country, sometimes even topping the list. ("Exxon Kills the Canary," Multinational Monitor, 10/90) In South America, Colombian coal miners who went on strike against Exxon over safety issues had tanks and armed troops turned against them. Ontario uranium miners at Rio Algom's Elliot Lake mines suffered from high levels of lung disease and cancer. (Report on the Track Records of Exxon and Rio Algom, Wisconsin Review Commission, 3/24/95) The companies seem to be less interested in its employees than in profits.

Stability of project

How stable is a mine project, especially one that is so controversial? The experience in White Pine shows what can happen to a community's job and tax base if it relies too heavily on a mine. Exxon says that the Crandon mine will operate for 30 years, but nothing would prevent it from shutting down earlier. The DNR has permitted the Ladysmith mine to speed up so it can close a year early. Exxon also has a reputation for investing heavily in huge resource projects, only to pull out suddenly when costs got too high. In 1982, Exxon pulled out of a huge Colorado oil shale project, laying off 2100 new employees, and turning its back on a local business community that had invested in new ventures . (A. Gulliford, Boomtown Blues: Colorado Oil Shale, 1885-1995) Unlike us, oil companies can afford to write off millions.

Metal price stability

The metals markets are not stable now, especially for zinc, the main ore in the Crandon deposit. The zinc market is in its biggest crisis in 60 years, partly due to reduced uses of zinc in automaking, and partly to the new cheap and vast supplies in the former Soviet Union and China. The zinc glut isn't ending any time soon, and industry journals only see the oversupply getting worse. (Northern Miner, 12/1294, 4/4/94) Exxon pulled out of the Crandon project in 1986, citing low metals prices, but the prices were the same when it resumed the project in 1993. Why would a community base its future on such a risky venture? Do we need mining when recycling options haven't been explored fully?

Tax revenues

Wisconsin citizens are relying on the company's good will when it comes to tax revenues. State laws require the company to pay a proportion of their profits in taxes, but only after expenses. The incentive is for the company to make their expenses look larger and their profits lower. ( In 1991, for example, Exxon Minerals said it lost $36 million.) (Forbes, 4/29/85, Exxon 1991 Annual Report, p. 26). With the low prices of zinc and copper, it isn't difficult to see ahead to a situation where the company pays no tax at all.

Clean-up costs

Any environmental damage from a mine quickly becomes a huge economic cost. The physical clean-up alone can cost millions, as Rio Algom has found out at a tin mine in Nova Scotia, or even billions, as Exxon found out after the Valdez oil spill damaged Alaskan fisheries. Simple upkeep of the mine site can also cost millions after the company has left, just maintaining the dump liner can cost $80 million over ten years, and it has to be maintained for 10,000 years! State law requires the company to post a bond as financial security for the mine reclamation. The company can underestimate these costs, which the Public Intervenor has admitted the state has no way to evaluate. (David Blowes comments on CMC mine waste studies, 7/26/95, p. 20; Matthew Weber memo to WDNR Secretary G. Mayer, 8/22/95, pp. 3-4)

Tourism industry

Most important, any environmental damage to the Wolf or Wisconsin rivers could not even be added up in dollars. Forest and Langlade counties are dependent on tourism for their very economic survival. Sportfishers, kayakers, canoeists, and cottage vacationers are precisely those tourists interested in a clean environment. Will a mining area continue to attract people who are trying to escape to the pristine and quiet Northwoods? None of Exxon's studies consider the long-term economic impact that would result from a mine leak. A waste spill could damage the tourism industry if even the tourist public perceives that harm has been done to the rivers.

Conclusion

We are taking a Wisconsin-based industry with a proven stability and track record, and trading it in for an outside industry with risky economics and (at best) a shaky track record. Around the Wolf , mining and tourism would find it difficult if not impossible to co-exist. Local people will get most of the pain and little of the gain from the mining boomtown effect. If the company pulls out because of high risks or costs, it will be local communities left holding the bag. To top it off, we are not guaranteed tax`revenues from the project, or the costs of services, social impacts, or post-mine clean-up. All in all, the Crandon mine sounds more like a gamble than a sound business investment. Exxon can afford to lose the gamble, but northeastern Wisconsin can't.


[Contents] [Continue]