Project stability

The economic stability of any large-scale project is of foremost concern to a state or community. No town wants to pin its hopes on a shaky investment, only for the project to collapse due to high costs or market fluctuations. However, the larger the corporation, the more easily it can gamble on high-risk projects. Exxon, in particular, has a history of using its oil windfall profits to initiate new megaprojects, only to drop them later. Former Exxon chairman Clifton Garvin admitted in 1984, "We're not interested in being in businesses long-term that don't meet the kinds of return criteria we see in oil and gas." (Kirkland, Fortune, 7/23/84). Exxon Nuclear Co. suddenly closed its uranium mines that year, after losing $211 million in less than a decade. Similarly, Exxon Minerals Co. losses came to $430 million in 1980-85. (Forbes, p. 72, 4/29/85). Rio Algom has also operated with a large deficit, with its British Columbia copper-molybdenum holdings keeping its financial head above water (Moody, Plunder, p. 135).

When Exxon withdrew from the Crandon project in 1986, it cited the low price of zinc, which at the time was selling for 44 cents a pound. But when the project was restarted in 1993, the price stood at 44 cents a pound. (Milwaukee Journal, 12/11/86, Wall Street Journal 11/8/93) The Canadian industry newspaper The Northern Miner has extensively reported on the low price of zinc, due to a "gross oversupply", and the reduced use of zinc in auto sheeting. It has cited reports stating that "In the longer term, there are no real growth markets for zinc....use is forecast to fall" and "Unless zinc prices collapse (which is not an impossibility) the situation is nowhere near a resolution" (Northern Miner, 12/12/94, 4/4/94). These reports do not even take into account the new sources of metals such as copper and zinc now accessible in the former Soviet Union, which can only add to the global zinc glut. Due to this oversupply, Western zinc output fell nine percent in 1993. (Northern Miner, 1/24/94) A huge project based on zinc, a metal in its "worst situation since the 1930s", is clearly not a stable or reliable investment (Engineering & Mining Journal, 3/94, p. 19).

Firings of workforce

Exxon invested at least $404 million in the $5 billion oil shale project in Colorado, only to withdraw in 1982, before the project was planned to begin. Over 2000 workers found out from news reports that they were laid off. Other workers who had been promised jobs arrived to find out that the jobs no longer existed. Even after Exxon's pullout, outdated job publicity continued to attract a transient unemployed population, and placed added burdens on social service agencies just as those services were being cut back. (Gulliford, p. 199).

Two other cases in Nova Scotia point to the riskiness of metallic mine projects. Exxon's Esso Minerals opened the Gay Mills lead-zinc mine in 1979, but closed it after only two years due to shaft flooding, and many workers were laid off. (Canadian Mining Journal, p. 69) Rio Algom raised CAN$157.5 million in 1982 to acquire the East Kemptville zinc deposit. Though the mine was projected to run for 17 years, production halted after only five years when tin prices fell dramatically. (Gulliver File, 648)

Armando Valbuena Gouriyú, a former employee at Exxon's El Cerrejón mine in Colombia, testified that the miners resented their treatment by Exxon. Gouriyú testified that many workers (including himself) have been laid off due to union organizing efforts - especially when two-year contracts were being negotiated. A 1990 mineworkers strike, largely based on working conditions, was declared illegal by the Colombian government. (Multinational Monitor, 5/90)

Occupational health and safety

Even if a worker has a secure job with Exxon or Rio Algom, it is not clear to us that the employee's health and safety has been held in high regard. In 1989, Exxon had the worst mine safety record among the 20 largest underground mining firms in the U.S. (Multinational Monitor, 10/90). Gouriyú testified that Exxon's lobbying actually weakened Colombian worker safety laws. He said of the mine, "The machinery is very dangerous. Workers lose arms, legs, fingers, their lives. They breathe coal dust and have nose problems, allergies, lung problems, silicosis." (Isthmus, 7/8/94). Secretary General Pedro Galindo of the Federation of Petroleum Workers, which represents 12,000 Colombian members, said in 1990, "There are serious problems with the Exxon mine. In the last four years, 32 workers have died there. We don't know the reason. The worker is normally working, suddenly he becomes paralyzed and in a few days he dies. This happens only in the Exxon mine."(Multinational Monitor, 12/90)

Keith Lewis, a former miner at Rio Algom's Elliot Lake uranium mines, testified that "many of these people paid the price in a tough, rough, and dangerous business. Fingers and thumbs were lost.....I have asthma and chronic bronchitis." Lewis also detailed cancers, respiratory illnesses, and degenerative diseases among members of his community who worked in the mines in the 1950-70s. His testimony is backed up by reports from the Ontario Workman's Compensation Board (1969) and the federal government's Royal Commission on the Health and Safety of Workers in Mines (1976), showing abnormally high levels of lung cancers among Elliot Lake workers, from both dust exposure (silicosis) and radiation. The Ontario Ministry of Health (1972) reported that these lung cancer death rates exceeded the average population rate by 300 to 500 percent. (Moody, Plunder, pp. 127-30).

Stability of local economy

A major concern along the Wolf River is the stability of the tourism-based economy. Rafting, fishing, and other water-based recreation brings in millions of dollars to the local area, and benefits the rest of Wisconsin. If pollution from the Crandon mine damages the river - or even is even perceived as damaging the watershed - serious economic repercussions would follow for the area that would more than offset any economic gains from mining. Again, the track records of Exxon and Rio Algom contain infamous cases of damages and threatened damages to marine-based economies.

In Nova Scotia, Rio Algom still has not carried out a clean-up of its East Kemptville mine, and the 300-400 feet of tailings. Water flowing through the tailings carry heavy metals and toxic chemicals into the Tusket River, which flows to the Atlantic Ocean. Nova Scotians for a Clean Environment has "grave concerns about the multi-million dollar lobster industry situated at the mouth of the Tusket River if the flow of metals downstream is not stopped." Rio Algom has said that once the mine is sold, they will not accept any responsibility for damage at the site. (Parting Company, p. 14).

The 1989 Exxon Valdez oil spill devastated the livelihood of commercial fishermen in the Prince William Sound area and beyond. Documented lost income for individual plaintiffs in the ensuing suit against Exxon totalled $2.9 billion, including $166 million directly from lost salmon and herring fisheries . In 1994, seine (net) permits cost one-sixth what they did before the disaster five years before. Local towns lost about half their revenues from taxing the fish catch (Sound Truth, p. 50).

The spill cancelled the 1989 salmon and herring runs, and runs again failed in 1992-93 after contaminated offspring matured. The Alaska Department of Fish and Game stated that "it is probable the extremely low returns of salmon in 1993 are symptomatic of widespread ecological damage within Prince William Sound." Government studies of salmon documented negative effects on egg mortality, emergence, growth, and escapement, in contradiction to Exxon studies that claimed a rebounding of the resource. (Sound Truth, pp. 33-35, 76-77) Officials from the National Oceanic and Atmospheric Administration (NOAA) specifically challenged Exxon's study criteria. (Council on Economic Priorities, p. 4). The government studies convinced a jury in 1994 to penalize Exxon for five billion dollars in punitive damages (New York Times, 9/17/94). It is noteworthy that current Crandon Mining Co. public relations manager J. Wiley Bragg was brought to Alaska as a regional representative to help Exxon with public relations after the Valdez disaster.

Boom and bust

The best-documented economic side effect from mining is the boom-and-bust effect, whereby local communities gain from income during a mining operation, but expend their budgets supporting an increased population, and are left holding the bag after the company closes operations. These post-operation costs include physical clean-up (as in Nova Scotia), sudden large-scale unemployment, and an inability to pay for enlarged school systems and city services. Several researchers have noted that boomtown residents are more likely to experience "unusually high levels of life stress, which arise not only from the amount of change in their lives, but also from the deficits and frustrations resulting from overworked community services, family needs and difficulties, and a host of other stressors produced by the boomtown environment." (Weisz, p. 55).

Exxon operated two coal mines near Gillette, in Wyoming's Powder River Basin. One mental health expert noted that during the 1974-78 boom period, the town had a 101% increase in admissions to a local mental health center, and a 610% increase of Campbell County resident admissions to the state mental hospital, while the county's population increased 62%. (Weisz, p. 55).

After Exxon pulled out of the Colony oil shale project in Colorado, a shopping center developer sued for $58 million on the grounds that Exxon misled it to believe the project was going ahead . The town of Parachute had to mothball its half-million dollar water treatment plant because it was no longer needed (Daily Sentinel, 8/8/82, 5/1/83). The miles of new roads built in anticipation of the boom now require regular maintenance, but funds have been severely reduced. There were 1600 foreclosures in 1985 alone, and high unemployment led to depression, loss of self-esteem, spouse and child abuse, and suicide (Gulliford, p. 199) "I've learned one thing from this," said County Commissioner Jim Drinkhouse, "the next corporation that comes into Garfield County will not only pay to come in - they will pay to leave." (Daily Sentinel, 5/5/82).

Gouriyú testified about the El Cerrejón operation, "It took 4000 workers to build the mine. Two years later, they were laid off....Ten years later, the problems from the transformation of the economy has created unemployment, violence, prostitution, and a black market." Keith Lewis similarly testified that at Elliot Lake, mining companies had "little qualm about leaving behind environmental degradation and social disruption - the boom-and-bust cycle....The town of Elliot Lake had up to 20,000 at one point in 1960, it dwindled to 3000-4000......In terms of the unemployment rate, it stayed the same. Even after the two companies came and there was this incredible boom period where money is being injected into all sorts of places (except to the Indian and local populations)...the dynamic that followed was that miner and skilled technicians and whatever was required in terms of running these operations came with them."

Diné (Navajo) tribal member Ester Yazzie testified on the side effects of uranium leasing in the Southwest, "Our people do not understand the corporation language...They don't understand why a corporation wants these raw resources. They know it's dangerous. All we know is that we are pressured by economic development, to earn money... Because we were never educated about it, today we're still struggling with the hazards of it."

Areas of concern

While North American mining companies have started to address the economic instability caused by some large-scale mining projects, Exxon and Rio Algom appear to lag behind. The economic promises of mining are not only called into question by potential environmental damage, but by potential negative impacts to local economies even if the mine is 100 percent clean. These negative impacts have occurred during the operations, but especially after a company pull-out.

It also appears contradictory for a firm to express an interest in boosting local employment, when it has exhibited a lack of concern for its own workforce, or for the previous economic base of local communities.

Finally, unstable market prices seem to make any zinc mine a real economic gamble at this time. The huge zinc reserves in the U.S. appear to contradict the claim that our country needs new metallic mines in order to prosper. A more solid investment could perhaps be found in metallic recycling, which cuts waste instead of creating it. Northern Wisconsin needs a serious dialogue about similar economic options that can promote a stable growth in jobs.

Stephen N. Branch, "Esso's Gays River Mine Newest Nova Scotia 
Lead-Zinc Producer" (Canadian Mining Journal, Apr.1980)
James Cook, "Exxon proves that big doesn't mean rigid," 
Forbes, July 23, 1984.
Council on Economic Priorities, "America's Least Wanted: The 
1993 Campaign for Cleaner Corporations," N.Y., Nov./Dec. 1993.
Daily Sentinel, (Grand Junction, Colorado)



Engineering & Mining Journal, "Zinc: Major Mine Production 
Cuts in 1993", March 1994.
Andrew Gulliford, Boomtown Blues: Colorado Oil Shale, 1885-1985.
University Press of Colorado, 1989.
Isthmus newsweekly (Madison), "Minding the Mine: Inter- 
view with Armando Valbuena Gouriyú", July 8-14, 1994.
Richard I. Kirkland Jr., "Exxon rededicates itself to oil,"  
Fortune, July 23, 1984.
Roger Moody, The Gulliver File: Mines, People, and the Land: 
A Global Battleground (London: Minewatch, 1992).
Roger Moody, Plunder! (London: PARTiZANS/CAFCA, 1991).


 
Multinational Monitor, "Exxon Kills the Canary," October 1990



Multinational Monitor, "Cartel Politics in Colombia: An Inter-
view with Pedro Galindo", December 1990.
Northern Miner, "Car design and metals", December 12, 1994.



Northern Miner, "A near-hopeless zinc situation", April 4, 1994.



Northern Miner, "Post-Cold War blues", Jan. 24, 1994.



Riki Ott, Ph.D., Sound Truth: Exxon's Manipulation of Science
and the Significance of the Exxon Valdez Spill (Anchorage 
Greenpeace, March 24, 1994).
Parting Company, "RTZ Plays Pilate," London, Winter 1993.



Keith Schneider, "Exxon is Ordered to Pay $5 Billion for Alaska 
Spill", New York Times, September 17, 1994.
Steve Schultze, "Exxon shelves mining plan," Milwaukee Journal, 
December 11, 1986.
Wall Street Journal, "Cash prices in metals", November 8, 1993.



Robert Weissman, "Exxon crushes Colombian strike," Multinational 
Monitor (May 1990).
Robert Weisz, "Coping with the Stresses of a Boom: Mental Health 
Alternatives for Impacted Communities," in Joseph & Judith 
Ann Davenport (eds.) The Boom Town: Problems and Promises 
in the Energy Vortex. Laramie: University of Wyoming, 1980.