POLICY, ECONOMICS, AND THE REGULATORY FRAMEWORK · 2007. 6. 1. · Mining Act on operators, St. Cloud mines zeolite, an inert absorbent material involving no chemical pro-cessing,

POLICY, ECONOMICS,AND THE REGULATORY

FRAMEWORKD E C I S I O N - M A K E R S

F I E L D C O N F E R E N C E 2 0 0 5T a o s R e g i o n

C H A P T E R T H R E E

Photo not available online

DECISION-MAKERS FIELD GUIDE 2005

C H A P T E R T H R E E84

Tailings ponds west of Questa, October 2002.

© A

DR

IEL

HE

ISE

Y

Photo not available online

The extraction of natural resources has been a his-torical and cultural way of life in New Mexico

and, including income from the Permanent Fund,contributes as much as 35 percent of the state's annualbudget. Oil and gas make the biggest contribution tothe Permanent Fund, but all extractive industries,including metal mining, industrial minerals, and sandand gravel, pay severance and resource taxes, whichaccumulate in the Permanent Fund and finance educa-tion. Most people understand that mineral productionin various forms is necessary to maintain our standardof living and provide the raw materials necessary tosustain the quality of life we all enjoy. On the otherhand, participants in the reform process includegroups who, on one side, believe that no extractiveindustry whatsoever is acceptable and, on the other,believe that there should be no regulatory constraintsof any kind. The reasonable objective should be toassure that environmental concerns are met in a man-ner that encourages sustainable mineral development.With regulatory oversight and modern reclamationtechnology, mining and environmental responsibilitydo not have to be mutually exclusive.

The two laws that contain the most rigorous require-ments on mining activities in the state are the WaterQuality Act and the Mining Act. Ground water qualityimpacts at mining operations are regulated under theWater Quality Act, administered by the New MexicoEnvironment Department. The department requiresmine closure plans, water treatment and contamina-tion abatement where applicable, with financial assur-ance, for operations expected to impact ground waterand surface water. For these operations, EnvironmentDepartment requirements are usually the most chal-lenging for mining operators to meet. This includesthe largest operations in the state. For mines that donot have significant water issues, the Mining Act recla-mation requirements are likely to be the most onerous.This category includes most medium-sized and smallmines in the state.

THE NEW MEXICO MINING ACT OF 1993

The New Mexico Mining Act is a Governor Bruce Kinglegacy and was carried by Gary King through an

eleventh hour legislative process in 1993. Reform waslong overdue, and many mining companies had failedto become proactive in their communities or wereunable to address citizens' concerns. Although theNew Mexico Environment Department had someauthority over the most blatant abuses of air andwater quality, for the most part, the hard rock miningindustry had operated with virtual impunity fromreclamation since Territorial times. Local groups wereinsisting on public oversight, and mining companieswere an easy and popular target.

The poster child for mining reform was the Ortizmine, an inactive gold operation near Cerrillos, with ascar visible from the state capitol and cyanide contam-ination reported in downstream ground water. SantaFe County reacted with a mining ordinance thatbecame a model for the state Mining Act ten yearslater. Elsewhere in New Mexico, environmentalactivists and citizens were concerned about publicsafety and were reacting to hazardous mine openings,abandoned mine sites, pollution, and the possibleeffect of some operations on general quality of lifeissues.

The resultant Mining Act of 1993 changed the waymining is done in New Mexico and continues toevolve administratively and through interpretation.The act was initially intended to assure reclamation ofdepleted or abandoned mines, but now it materiallyaffects all phases of permitting from explorationthrough mine closure and beyond. Excluded from reg-ulation under the act are sand and gravel operations,certain uranium processing, all of the coal and potashindustries, copper smelters, and recreational prospect-ing. Some of these industry segments are regulatedunder other federal, state, and public land require-ments. Included under the act are primarily miningand exploration activities for base and precious metalsand a wide range of industrial mineral operations.

Existing mines in 1993 were allowed to continueoperations if they were able to conform with the pro-visions of the act including achieving an approvedpost-mine land use and providing the state financialassurance in the form of bonds or other irrevocablesecurity to assure future reclamation. The act holdsmine operators responsible for public and private

An Industry Perspective on Mining inNew Mexico

Patrick S. Freeman, St. Cloud Mining Company

MINING IN NEW MEXICO

P O L I C Y , E C O N O M I C S , A N D T H E R E G U L A T O R Y F R A M E W O R K 85


86

lands and was retroactive for any mines operating forat least two years since 1970, which brought manyinactive and abandoned mines sites under the state'scontrol.

The regulatory process for bringing a new miningoperation into production or for expanding an exist-ing mine is much more restrictive and uncertain.Requirements include oversight from various regulato-ry agencies, environmental studies, public participa-tion, and a lengthy process of hearings, options forappeals, and possible lawsuits, some of which theapplicant pays for. A few companies have tried, but inthe final analysis, there has not been a new large mineoperation or a significant expansion of an existingmine since the act was promulgated in 1993.Organized exploration efforts for the regulated com-modities, which is a precursor to future mineral devel-opment, is virtually non-existent in New Mexico andwill not likely be resumed unless there is a reasonablecertainty that a potential discovery can be developed.Mining companies evaluate cost and risk and will ulti-mately take the path of least resistance. For now, thatpath leads away from New Mexico. The mines alreadyin production, when unable to expand or respond tochanging conditions, are more vulnerable to competi-tion, increased costs, and fluctuations in commodityprices.

In the decade before the Mining Act, ten or moreoperations were significantly expanded and newmines were brought on line. That decade saw thereopening of the Hurley copper smelter and theContinental mine, the SXEW investments at Chinoand Tyrone and at a number of new, smaller base andprecious metal mines, and exploration projects scat-tered across the state. Pinos Altos, Carrache Canyon,mines in the Lordsburg area, St. Cloud's silver mines,and exploration projects collectively provided eco-nomic development in many rural settings. By themid-1990s the industry experienced a downturn inmetal prices, and the added costs of the Mining Actand other regulatory impacts were too much to over-come. In 1999, for example, New Mexico lost 1,426high paying jobs and another $52 million in annualpayrolls from the copper industry alone. Many ofthese jobs, including the production equipment thatsupported the employment, were exported to neigh-boring states or foreign countries where higher-gradedeposits, fewer regulatory constraints, and lower costswere being offered. At the time the New Mexico mineswere being closed, Phelps Dodge, for example,acquired and operated new copper mines and asmelter in Arizona and invested heavily in South

American projects. The three principal coppersmelters that provided market outlets for much ofNew Mexico's mineral production, El Paso, Hurley,and Playas, collectively remain closed.

The impact of these mine closings on local govern-ments' ability to provide essential human services hasbeen particularly severe in small, rural communitiessuch as Animas, Lordsburg, and Questa. Grants, SilverCity, and other cities have been able to partially diver-sify their economic base beyond mining but are stilladjusting to reduced tax revenue and unemployment.

In the area of financial assurance for post-miningreclamation, New Mexico's requirements are generallymore onerous than those of other western states. Asan example, there was a long and more than $10-mil-lion process of hearings, appeals, studies, and admin-istrative review in determining Phelps Dodge's finan-cial assurance requirements for its Silver Cityoperations. At one point, environmental groups weresuggesting $1,200 million of irrevocable reclamationsecurity and, although the current assurance isapproximately one-third of that amount, it representsa substantial expense and ties up collateral that wouldotherwise be available for investment. The recentlyreopened Robinson copper mine in northern Nevadais similar in size, scope, and legacy impact to Chino atSilver City. Its joint financial assurance obligation withthe BLM and the state of Nevada is $18,100,000 orabout one-twentieth the requirement for Chino.Sumitomo, a former partner at Chino, recently paidPhelps Dodge to acquire their interest and relievethem of environmental obligations in New Mexico.

Once financial assurance is in place, there is disin-centive to incur the additional expense of the actualreclamation as this constitutes double jeopardy for theoperator. Further, the process for release of the finan-cial assurance, once reclamation is completed, is sub-ject to additional regulatory scrutiny and public inputand is by no means certain. For smaller operators thecosts for maintaining financial assurance and comply-ing with reporting obligations, coupled with the annu-al permit fees, can be more than the actual cost ofcompleting the reclamation. The catch is, reclamationcan't be completed until mining ceases.

As another example of the economic impact of theMining Act on operators, St. Cloud mines zeolite, aninert absorbent material involving no chemical pro-cessing, at a small and remote site in southwesternNew Mexico and is subject to the act. Essentially all ofthe reclamation that can be done, short of closing themine, has been completed. Maintaining financialassurance, annual permit fees, and administrative


oversight for reporting constitutes a 4-6 percent bur-den over gross operating costs, not including the actu-al reclamation that is routinely done. St. Cloud's prin-cipal competitor in Texas has no annual fee orreclamation assurance obligations whatsoever.Although this could change, New Mexico operatorsare currently at a disadvantage.

Enforcement and administration of the Mining Actis under the Mining and Minerals Division (MMD)Reclamation Bureau, consisting of about ten employ-ees. The bureau is responsive and professionallystaffed. The act, however, was not funded by the legis-lature and derives its operating budget from the regu-lated operators in the form of permitting fees, annualassessments, and penalties. With a declining base ofoperators, as existing companies fall victim to deplet-ing reserves and increasing costs, and as reclamationis completed and more inactive mines are released, thepool that funds the Reclamation Bureau is decreasing.The bureau's operating cost, on the other hand, hasmore than doubled since inception in 1993, and theremaining mines, bearing the brunt of these costs,find it increasingly expensive to remain open.

In cases such as San Pedro, Carrache Canyon, LittleRock, and others, MMD either issued permits or wasunable to proceed with the permitting process becauseother state agencies, such as the EnvironmentDepartment, or local ordinances, as in Santa FeCounty, blocked or hindered the process. In othercases, as with Copper Flat near Hillsboro, citizens'groups filed appeals and demanded more and morestudies until the operator succumbed to the processand withdrew from the state. In 1999 Chapman,Wood and Griswold, a consulting firm inAlbuquerque, was asked to review opportunities for apossible wallboard and soil amendment operation thatneeded a gypsum resource and the availability of natu-ral gas and transportation facilities, all of which areplentiful in New Mexico. The company envisioned a$60,000,000 project with employment for 60–100workers. The consulting firm outlined several likelysites, and one in southeastern New Mexico was partic-ularly attractive. When the New Mexico regulatorycomponent was described, the company took itssearch to Utah and Nevada.

Without a doubt, many good things might not haveotherwise been accomplished without the Mining Act.Commendable reclamation efforts under the actinclude clean-ups by companies who acquired proper-ties with abandoned or inactive mines but were notactually responsible for the prior disturbances. LacMinerals at the Ortiz operation near Cerrillos is a

prime example, but others include Rio Tinto andother owners of uranium properties near Grants andPhelps Dodge, which completed work at Pinos Altosand Hanover near Silver City and at Tererro nearPecos. St. Cloud conducted similar reclamation at SanPedro in southern Santa Fe County and at Lordsburg,including clean-up of a cyanide heap-leach facilityabandoned by a previous operator. Remaining opera-tors are now held to a higher standard, and mines aresafer, cleaner, and more responsive to citizen inputthan they have ever been.

A few existing mines were unable or unwilling tocomply with the Mining Act or the general regulatoryclimate and closed. Agronics, a small humate opera-tion near Cuba, and a garnet operation at San Pedroare examples. After spending millions, other promis-ing exploration or development projects bogged downin the permitting process and remain inactive. Thegold deposit at Carrache Canyon and copper depositsat Copper Flat near Hillsboro and at Little Rock nearTyrone are examples. Other operating mines have sim-ply succumbed to increased compliance and operatingcosts, including a mica mine near Velarde, which laterclosed as well. The state of the hard rock miningindustry in New Mexico is such that capital for devel-opment or expansion is difficult to obtain and recla-mation bonding and liability insurance are beyond thereach of many operators, particularly the smaller ones.

Some extractive operators have turned to commodi-ties not regulated under the Mining Act, such as sandand gravel, and continue to expand or add new opera-tions. A new aggregate operation at Lordsburg for rail-road ballast is an example. A call for increased regula-tory control of these producers by state agencies andcitizen's groups was initiated in 2000, and it will like-ly receive additional oversight in the future.

THE NEW MEXICO ENVIRONMENT DEPARTMENT

Throughout the evolution of the Mining Act, the NewMexico Environment Department has played a keyrole. The Environment Department, through itsGround Water, Surface Water, and Air QualityBureaus, administers regulations under the FederalEnvironmental Protection Agency, continues to permitcertain aspects of mining operations and fills in regu-latory gaps in the Mining Act. The EnvironmentDepartment uses its considerable technical resources,large staff, and “veto” power under the act to furtherassure that water and air standards are met and usesthis authority to leverage operators to achieve stan-dards that were not necessarily enforceable before the




promulgation of the act. For example, some closedmine operations had expired discharge plans with lim-ited obligations for capping tailing impoundments andground water monitoring. As a condition for approv-ing closeout plans and financial assurance packagesunder the act, some operators were held to higherstandards than were required under their original per-mits. Within the last decade the EnvironmentDepartment has also begun requiring “closure plans”with full financial assurance that covers all elements ofmine closure including reclamation, water treatment,and clean-up of any water contamination. Recentlythe Environment Department has also become muchmore aggressive in enforcing penalties and collectingincreased fees to fund the department's expandingactivities.

The Environment Department also oversees portionsof the Federal Superfund program. Clean-up of theCleveland mill tailings near Silver City and other worknear Pecos, for example, was initiated by companieswithin Superfund guidelines. These two exampleswould not have been covered under the act (pre-1973), had identifiable, responsible ownership andwere ineligible or too complex to be reclaimed underAbandoned Mine Land programs.

For the mining industry, the EnvironmentDepartment, however, has become a cumbersome andsometimes conflicting and duplicitous impairment forenvironmental compliance. The EnvironmentDepartment represents a bigger variable than MMDfor permitting because of the more subjective rules,time and cost to process permit applications, andselective enforcement. The complexity of the permit-ting, reporting, and compliance process within theEnvironment Department requires much more expert-ise than a typical small operator can manage or afford.

OTHER REGULATORY OVERSIGHT AND SUPPORT

As elsewhere, the Mine Safety and Health Administra-tion (MSHA) regulates worker safety, training, expo-sure limits, and related employment issues. The stateEngineer's Office controls, approves, and monitorswater consumption and allocation and the safety ofwater impoundments. There are emerging local regu-latory groups, for purposes other than conventionalzoning and land use. Bernalillo, Santa Fe, and RioArriba Counties and many tribal governments nowhave separate permitting and enforcement standardsfor extractive activities which, in general, are morerestrictive or cover other operations, such as sand andgravel producers, that are not fully addressed under

state authority. The Department of Game and Fish isalso represented under the act and reviews endan-gered species, wildlife, and the revegetation aspects ofmining in general before the issuance or modificationof permits. The Office of Cultural Affairs reviews min-ing permits for possible impacts on historical or cul-tural sites, cemeteries, or related sensitive areas.

For the pre-1973 abandoned mining properties notcovered by the Mining Act, the citizens of NewMexico are served by another group within MMD: theAbandoned Mine Land Bureau (AML). AML derives itsfunding from the federal Surface Mine Control andReclamation Act (SMCRA) of 1977. Coal mine opera-tors pay a reclamation fee of $0.35 per ton for surfacemined coal and $0.15 per ton for underground minedcoal, which is dispersed back to the states for worthyreclamation and safeguarding projects, including non-coal projects. The AML staff inventories, prioritizesprojects, and contracts safeguarding and reclamation.To date, major projects completed by AML includeabandoned and inactive coal mine sites at SugariteCanyon, Carthage, Yankee, and Madrid and hard rocksites at Cerrillos, Oro Grande, Cochiti, Organ,Deming, and elsewhere. Additional projects funded bySMCRA are planned and include Lake Valley andadditional work at Oro Grande and Sugarite Canyon.At least three of these restored sites, Sugarite Canyon,Cerrillos, and Lake Valley are, or will be, interpretivecenters, parks, and nature conservatories with eco-nomic development impact through tourism.

This reclamation work may improve the public per-ception of mining, provide some sustainable incomeproducing post-mine land uses, serve as a safety valvefor the protection of historical and cultural sites relat-ing to mining, and protect citizens from the hazardsoften found at abandoned sites.

The office of the State Mine Inspector, whoseinspection duties were primarily relegated to supportand accident investigations by MSHA, now providestraining to new mine employees and continuing edu-cation for experienced miners. This is an especiallybeneficial program for smaller companies that may nothave in-house training capabilities. It is not coinciden-tal that mine safety has dramatically improved in NewMexico.

The New Mexico Bureau of Geology and MineralResources, a division of New Mexico Tech, has consid-erable professional and technical resources. It serves asrepository of historical mining records, maps, andpublications; provides support, information and assis-tance, particularly to smaller operators, regulatoryagencies, and citizens' groups; and conducts research

88 C H A P T E R T H R E E


in various forms to serve the state's needs. The bureaualso helps companies interested in natural resourcedevelopment in New Mexico compile previous explo-ration information and access the latest technology,and it provides support for analytical, metallurgical,and marketing services.

OPPORTUNITIES DELAYED

Exploration, development, and utilization of NewMexico's hard rock mineral resources have gone intohibernation since enactment of the Mining Act of1993. Many companies have decided to work in lessregulated states or to accept political risk in develop-ing countries for the uncertainties of environmentaland permitting risks in New Mexico. Known depositsawait future development, and exploration potentialremains to be tested. Many of the abandoned proper-ties have been brought into compliance, and many ofthe environmental concerns at operating mines havebeen corrected. The act, with EnvironmentDepartment oversight, has corrected many environ-mental problems at mine sites, but now it serves as aneffective deterrent prohibiting expansion of existingoperations and the development of new projects.

Recently copper and precious metal prices haveimproved, and Governor Bill Richardson's administra-tion was able to complete a closeout plan and a finan-cial assurance package for Phelps Dodge in Silver City.This is the first bright spot for mining in many yearsand has allowed a partial resumption of operationswith some 150 workers being recalled.

Legislative revision of the Mining Act andEnvironment Department regulations, perhaps withbroader provisions to encompass all extractive activi-ties within New Mexico, will be necessary before ameaningful resumption of exploration and sustainablemineral development can resume.




total economic impact of mining to the state.However, a variety of data has been collected thathighlights the relative importance of the mining sec-tor. The data show that during the mid-1960semployment in the mining industry was about 3.5percent of all employment (excluding agriculture) inNew Mexico. (The mining category typically includesthe oil and gas industry, but for purposes of this dis-cussion, oil and gas numbers were omitted.) This per-centage has been dropping ever since, with the excep-tion of a one-year period beginning in mid-1979. Inspite of the drop in the percentage of employees in themining industry over the last forty years, the numberof employees rose from approximately 9,000 in themid-1960s to 16,500 in 1980, but has steadilydeclined to about 4,000 in recent years. Mining-relat-ed employment during the first half of 2004 repre-sents about 1.8 percent of all non-farm employeesstatewide. Nationally, mining is less than one-half ofone percent of all non-farm employment.

Wages in the mining industry are high when com-pared to other sectors. According to the New MexicoMining Association, the average employee earns morethan $53,000 a year, whereas the state average is lessthan $30,000. The New Mexico Department of Laborstatistics indicate annual average mining industrywages for 2003 were $54,392. The total economicimpact to the state, as determined by a 1999 study bya private consultant and based on 1998 data, is over$4.4 billion.

IMPACT OF NEW MEXICO'S BIG PLAYERS

Copper Copper was one of the first metals ever used.Because of its properties, including high ductility, mal-leability, and thermal and electrical conductivity, andits resistance to corrosion it is one of the most valu-able metals. Copper metal is generally produced froma multistage process that includes mining, concentrat-ing, smelting, and refining to produce a pure coppercathode. Copper is increasingly produced from acidleaching of ores.

New Mexico copper is used chiefly in the manufac-ture of electrical wire. Electrical uses of copperinclude power transmission and generation, building

Economic Impact of Mining on New Mexico

John Pfeil, Mining and Minerals Division, Energy, Minerals and Natural Resources Department

The wealth of the world will be found in New Mexicoand Arizona —Baron von Humboldt, 1803

It is difficult to overestimate the effect that mininghas had on the history and development of New

Mexico. The Cerrillos mining district located south-west of Santa Fe is the oldest European mining districtin the United States. Activity there predates mining inthe American colonies by at least one hundred years.The Spanish were mining in the area four hundredyears ago, and local pueblos have been miningturquoise in the Cerrillos Hills for at least one thou-sand years. Mining was important even then becauseit was one of the few activities capable of producing acommodity valuable enough to pay the high cost oftransport from remote Nuevo Mexico to Mexico City,more than 1,500 miles south. The promise of findinggold or silver deposits was one of the driving forcesbehind the Spanish colonization of New Mexico.Those expectations largely came to fruition during thenineteenth century and the first half of the twentieth.Since that time the trend has been decidedly down.Experts believe that there may be many factorsresponsible for this declining trend including worldmineral economics, the lack of undeveloped high-grade deposits, globalization, and a complex regulato-ry environment.

Although it is clear that mining has been a majorcomponent of New Mexico’s economy in the past, it isless clear what the economic impact of the miningindustry in New Mexico is today. In 2003 there were225 registered active, producing mining operations inNew Mexico. This includes five coal mines, threepotash mines/mills, one molybdenum mine, twomajor copper mines, forty industrial mineral opera-tions, and 175 aggregate operations. Operations onIndian lands are not included, but it is known thatone of the largest coal mines in the state, some indus-trial mineral, and many aggregate operations are locat-ed on Indian lands. Since 1998 the number of regis-tered operations has increased by about sixty, almostall in the industrial mineral and aggregate categories.

According to the Bureau of Business and EconomicResearch at the University of New Mexico, there havebeen no comprehensive studies done to determine the

90



wiring, telecommunication, and electrical and elec-tronic products. Copper is readily recycled, whichcontributes significantly to the copper supply. China isnow the world's largest consumer of copper. The priceof copper has risen dramatically from $0.69 perpound in August 2002, to $0.83 per pound in August2003, to $1.38 per pound in October 2004.

The world’s second largest copper producer, PhelpsDodge Mining Company, produces copper and basemetals principally in Grant County in southwest NewMexico and in Arizona. Collectively, Phelps Dodge'ssix mines in Arizona and New Mexico are capable ofproducing more than 2 billion pounds of copperannually and account for about 60 percent of totalU.S. copper production. The two active Phelps Dodgeoperations in New Mexico are Chino and Tyrone.

In 2004 Chino Mines Company (Chino), a divisionof Phelps Dodge, reactivated the Ivanhoe concentratorthat had been shut down since 2001. Chino reactivat-ed mining in the Santa Rita open pit in 2003 aftermining operations were idled in 2001. Production hascontinued at the Chino solvent extraction/electowin-ning (SXEW) plant throughout these periods. TheChino Smelter has been idle since 2002. With increas-ing copper prices in 2004 operations resumed andproduction increased at Chino. Employment rose atChino from 380 employees at the end of 2003 and isexpected to stabilize at slightly more than 600

employees by the first quarter of 2005. SXEW production at Phelps Dodge Tyrone, Inc.

(Tyrone) has remained steady during 2004, but themining rate and employment have increased since theend of 2003. Employment at Tyrone has increasedfrom 260 employees at the end of 2003 to about 380employees currently, with about fifty of that numberworking part-time at Tyrone. Between Chino andTyrone, approximately 400 employees will have beenrecalled or hired by early 2005.

Gold, silver, and molybdenum are produced asbyproducts of copper processing from Phelps Dodge

Economic impact of mining in New Mexico in 2002.

Summary of production rank, production value, employment,payroll, and revenue for mineral commodities in New Mexico in2003. Rank is based on quantity produced. State revenueincludes royalties/rentals from state trust land mineral leases;and severance, resources excise and energy conservation tax rev-enues. Federal revenue includes 50% state share of federal royal-ties (Onshore Collections in CY 2003). Source: Production rank

from U.S. Geological Survey (http://minerals.er.usgs.gov/miner-als) and DOE’s Energy Information Administration(www.eia.doe.gov). Employment includes direct and contractemployees. State revenue data from NM Tax and RevenueDepartment and the State Land Office; Federal data fromMinerals Management Service.

Jobs 6,000

Average salary $53,000

State average all jobs $29,000

Direct economic gain $982,000,000

Direct personal income gain $302,000,000

Direct in-state business income $451,000,000

Direct out-of-state business income $19,000,000

State & local gov. revenue $208,000,000

Total impact on NM economy $4,415,000,000

Source: New Mexico Mining Association and the National Mining Associaion

MINERAL PRODUCTION PRODUCTION EMPLOYMENT PAYROLL REVENUE GENERATED ($)RANK VALUE ($) ($) STATE FEDERAL

Coal 12 628,291,436 1,651 110,979,081 23,612,272 10,414,900

Copper 3 158,138,070 879 26,815,001 548,521

Gold - - - - 3,900

Industrial minerals - 153,198,856 663 18,708,370 941,640

Aggregates - 77,848,579 1,063 17,190,991 703,926

Molybdenum 5 15,800,000 165 7,000,000

Potash 1 202,166,863 824 47,249,963 1,456,772 2,376,622

Silver - - - - 1,763

Uranium - 32 1,000,000 232

Total 1,235,443,804 5,277 228,943,406 27,269,026 12,791,522



92

copper operations in Grant County. Production ofthese commodities was highest in the late 1980s andhas declined ever since. No byproduct gold, silver, ormolybdenum has been produced in the state over thepast several years. However, with rising metal pricesand the reactivation of the Ivanhoe concentrator,byproduct production resumed in 2004.

The economic impact of the copper industry toGrant County and New Mexico was examined in apaper commissioned by Phelps Dodge in 2002.According to that document the average wage of aPhelps Dodge employee is $50,734, more than twicethe average wage per job in Grant County. Wages andsalaries from Phelps Dodge represent almost 8 percentof the county’s total personal income. Phelps Dodgepurchased $43.6 million in goods and services from

other Grant County businesses and an additional $3.3million from businesses in New Mexico but outsidethe county. Phelps Dodge paid $6.7 million in stateand local taxes including: property taxes ($1.94 mil-lion); gross receipts/compensating taxes ($3.1 mil-lion); severance taxes on copper production ($.16 mil-lion); and fees, operating permits, licenses, and otherexcise taxes ($1.5 million). Total direct impact toGrant County was estimated at $80.5 million with anadditional $7.8 million to other counties in NewMexico. When indirect impacts are considered, theimpact to Grant County is estimated to be over $100million and the impact to the state of New Mexico isestimated at $144 million.

Molybdenum Molybdenum is a metallic element usedprincipally as an alloying agent in steel and cast iron.It enhances hardness, strength, toughness, corrosionresistance, and wear. These properties are achieved bycombining molybdenum with other metals includingmanganese, nickel, and tungsten. Molybdenum is alsoused in the development of catalysts, lubricants, andpigments.

The state’s only primary molybdenum producer isMolycorp’s Questa mine and mill in Taos County,which has operated sporadically since the early 1900s.Molybdenum is also produced as a byproduct of cop-per production at Phelps Dodge operations in GrantCounty. Additional workers were hired in 2004 atQuesta to meet the demands of the current market.The mine currently employs over 150 personnel withthe majority of the workforce from northern NewMexico. At least 50 percent of the work force reside inthe village of Questa. The average Molycorp employeeearns about $50,000 annually.

According to Molycorp the mine, on an annualbasis, has purchased goods, materials, and services inTaos County in the amount of $7 million and in NewMexico (particularly in the northern part of the state)in excess of $11.3 million. The direct economic bene-fit on Taos County alone is calculated to be more than$32 million. Taxes paid by Molycorp to the stateinclude $141,000 in property tax; $990,000 in salestax; and $31,000 in severance tax. Molycorp intendsto continue to be a direct participant in the economicstability of the local area, including assisting the vil-lage of Questa in its economic sustainability efforts.

Potash Potash is a mined salt containing water-solu-ble potassium. Potassium chloride (sylvite) and potas-sium/magnesium sulfate (langbeinite) are mined byunderground methods in Eddy and Lea Counties near

Trend information associated with several of the commodityattributes 1999–2003 including data for coal, copper, gold,industrial minerals, aggregates, molybdenum, potash, silver,sulfuric acid, and uranium. Although the figure demonstratesthat the trend over the five-year period is decidedly down,with increasing commodity prices the 2004 data will likelyreverse this trend.



Carlsbad. More than 75 percent of U.S. potash pro-duction comes from the Carlsbad potash district,where two companies operate three mines and employapproximately one thousand workers. New Mexicopotash is used primarily as an agricultural fertilizer;most is sold domestically to companies in Texas,Oklahoma, Kansas, and Nebraska. The estimatedpotash reserves in the district are very large.Worldwide demand is strong, inventories are low, andsupply is extremely tight. Pricing has increased to his-torically high levels. In recent years the industry esti-mates their annual economic impact to the state at$304 million: $80 million on materials, energy, andrelated taxes; $65 million for direct payroll; $150 mil-lion for indirect payroll; and $9 million for royalties,and property and sales taxes. More than 75 percent ofthe total ($231 million) goes to just Eddy County,where potash employs 12–15 percent of the availableworkforce.

Uranium Although the present economic impact isminimal, given rising prices and huge reserves, thepotential impact is huge. Since production started inthe late 1940s, the Grants uranium belt has been themost prolific producer of uranium in the U.S. Theboom years in the district were 1953–1980, whenapproximately 350 million pounds of uranium oxide(yellowcake) were produced. Uranium recovery opera-

tions declined dramatically after 1980 because of thedepressed uranium market that resulted from the liq-uidation of large government (cold war military)stockpiles. All uranium recovery in the state ceased inDecember 2002. Proposed operations in New Mexicoinclude Hydro Resources, Inc. (HRI), which intends tomine uranium by in situ leaching at Church Rock andCrownpoint in the near future. Rio Grande ResourcesCo. is maintaining the closed facilities at the floodedMt. Taylor underground mine in Cibola County.

According to HRI, interest in uranium production isreturning because inventories have become depletedand market prices are rising to economic levels thatreflect the cost of production. The price of yellowcakehas risen from about $7 per pound in 1994 to about$20 per pound in fall of 2004. The New MexicoBureau of Geology and Mineral Resources estimatesthat known resources could be as much as 600 mil-lion pounds. New Mexico is second only to Wyomingin uranium reserves. HRI estimates that nearly half ofthe known resources are recoverable using low-costin-situ leaching methods. In situ leaching involves thecirculation of ground water with a bubbled oxygen(club soda-like) mixture through a series of injectionand extraction wells that removes the uranium orefrom the sandstone orebody.

According to an Albuquerque Journal article(September 1, 2003) an international consortiumwants to build a billion-dollar-plus Lea County facilityto produce fuel for nuclear reactors. Louisiana EnergyServices (LES) announced that the $1.2 billion urani-um enrichment plant would be built off NM–176, 5miles east of Eunice, near the Texas–New Mexico bor-der. Construction could begin within three years if thepermit process goes smoothly. LES proposed movingthe operation to New Mexico after encountering com-munity resistance in Hartsville, Tennessee, where ithad proposed building the facility after meeting oppo-sition in Louisiana, its first choice. The planned LeaCounty facility would provide uranium for the U.S.nuclear industry, with oversight from the NuclearRegulatory Commission and the New MexicoEnvironment Department. The plant is expected toemploy from 200 to 400 people during constructionand about 250 during operation. The company saidthe annual payroll will be about $10 million, with anaverage salary of about $50,000.

Aggregate Aggregate mining provides the basic mate-rials for constructing and maintaining the infrastruc-ture of New Mexico. Over 14 million tons of aggregateare consumed each year in New Mexico, with 6.5 mil-

Production value, employment, payroll, and revenue gen-erated, shown by percentage, by commodity. This figureprovides some gage of the relative importance of the com-modities to each other, for a selected number of attributes.



94

lion tons consumed in Albuquerque and Santa Fealone. Every new home uses approximately 100 tonsof aggregate, every school or hospital uses from12,000 to 15,000 tons, and road construction requiresaround 8,000 tons of aggregate per mile of road. Inaddition to providing the basic building materials, theindustry provides high paying jobs for skilled employ-ment, funds for improving New Mexico’s schoolsthrough the mining of state land, and thousands ofdollars in taxes and permits. According to theNational Stone, Sand & Gravel Association, every $1million in aggregate sales creates nineteen and a halfjobs, and every dollar of industry output returns$1.58 to the economy.

Construction sand and gravel is one of the mostaccessible natural resources and a major basic rawmaterial. It is used mostly by the construction indus-try. Despite the low unit value of its basic product, theconstruction sand and gravel industry is a major con-tributor to and an indicator of the economic well-being of the state and the nation. According to theU.S. Geological Survey, New Mexico is a significantproducer of construction sand and gravel and dimen-sion stone.

Based upon preliminary U.S. Geological Surveydata, New Mexico was twenty fifth in rank (twentyfourth in 2002) among the fifty states in total non-fuelmineral production value and accounted for nearly1.5 percent of the U.S. total.

Can we expect the future to look like the past?How does economics of mining relate to sustainabledevelopment? Unfortunately, like many of life’s ques-tions, there are no clear answers. What is clear is thatto date there has been no comprehensive, impartialassessments performed and, without them, economicimpact is in the eye of the beholder. The highly paidmine worker or the profitable mine operator will haveone view of economic impact, whereas the environ-mentalist, the resident living next to an aggregateoperation, or the tourism-related businessman mayhave another.

With recent price increases there is reason to believethat the industry may make a comeback.Unfortunately, the boom and bust cycle of the miningindustry offers no guarantees that the comeback willlast. Our state is lucky in one regard: we possess andproduce significant quantities of aggregate, particular-ly sand, gravel, and crushed rock. Despite the low

Selected information on industrial minerals.

COMMODITY WHERE LOCATED USES COMMENTS

Perlite Rio Arriba, Socorro Building construction products and New Mexico is first in production. Most shippedhorticultural aggregate to west coast. Greece is primary competitor.

Gypsum Bernalillo, Sandoval Wallboard (typical home contains Centex is major player.more than 7 metric tons)

Pumice North central NM Building products New Mexico is third in production.Humate Sandoval, McKinley Soil conditioner Significant reserves exist. Salt Eddy Feedstock and highway deicingZeolite Sierra Pet litter, animal feed, horticultural New Mexico has largest zeolite mine in U.S.; first in

applications production.Mica Rio Arriba, Taos Joint compound, paint, roofing, New Mexico is third in production

drilling additives, rubber productsLimestone Bernalillo Cement Tijeras plant.Clay Northern NM (common clay) Adobe brick, brick, roofing granules, Fire clay is quarried for use in the copper smelter.

Luna and Grant (fire clay) and quarry tileIron ore Magnetite tailings in Used in steelmaking and to increase New Mexico is third in usable iron ore production.

Grant County the strength of cementSulfuric acid Grant County Copper recovery and a multitude Produced as by-product of copper smelting.

of industrial processesSand and Generally along Road and building construction Represents 35% of all aggregate production.gravel Rio Grande corridorCrushed Generally in eastern Road and building construction Represents 35% of all aggregate production.stone and western New Mexico



unit value of its basic products, New Mexico’s aggre-gate industry is a major contributor to, and indeed anindicator of, the economic well-being of our state.

The economic and statistical information presented herewas generated in both the government and industry sec-tors. Sources include the Mining and Minerals Division ofthe Energy, Minerals and Natural Resources Department,which collects and publishes statistical information relatedto the mining industry; the U.S. Geological Survey; severalof the larger operators in the state; the Bureau of Businessand Economic Research at UNM; and the New Mexicoand National Mining Associations.



96

source of 20 percent or more of labor earningsbetween 1970 and 2000. There are about one hun-dred such counties that could be identified out of the3,100 counties in the U.S. Data disclosure problemsprevented the identification of some mine-dependentcounties.

The U.S. mining-dependent counties are spread outover half of the American states but are geographicallyclustered in the Appalachian (Pennsylvania, WestVirginia, Tennessee, Kentucky, and Virginia) andMountain West states. The century-old copper minesof Upper Michigan, Montana, Utah, Arizona, and NewMexico are included, as are the new gold mines inNevada. The older coal mines in southern regions ofthe Great Lakes states (Illinois, Indiana, and Ohio) areincluded, as are the new open pit coal mines ofWyoming, Montana, Utah, Colorado, and NewMexico. The lead mines of the Ozarks in Missouri, theprecious metal mines in the Black Hills of SouthDakota and the Silver Valley of Idaho, and the ironfields of Minnesota are also included.

The question we sought to answer was whether thishigh degree of reliance on mining allowed these coun-ties to outperform those counties that did not relyheavily on mining. For those counties that weredependent on mining in the 1970s, we looked at theireconomic performance in the following decades:1980–1990, 1990–2000, as well as the two decadeperiod, 1980–2000. For those counties that weredependent on mining in the 1980s, we looked at theireconomic performance in the 1990–2000 period.Economic performance was measured in terms of thegrowth in the aggregate labor earnings of residents ofthe county, per capita income, and population. Inaddition, the level of per capita income at the begin-ning and end of the periods was analyzed.

The decade of the 1980s was not a good one formining-dependent counties. Labor earnings in thosecounties grew much more slowly than in other coun-ties, almost 60 percent slower. During the 1990s earn-ings were still growing more slowly in mining-dependent counties, 25–30 percent slower. For theentire period 1980–2000, aggregate earnings in min-ing-dependent counties grew at only half the rate ofother American counties.

Mineral extraction activities pay among the highestwages available to blue collar workers, about

twice the average. In New Mexico in 2000, mineralextraction jobs paid $50,000 per year whereas theaverage wage and salary job paid $28,000. Giventhese high wages, one would expect communities thatrely heavily on mineral extraction to be unusuallyprosperous. That, in general, is not the case. Acrossthe United States, mining communities, instead, arenoted for high levels of unemployment, slow rates ofgrowth of income and employment, high povertyrates, and stagnant or declining populations. In fact,our historic mining regions have become synonymouswith persistent poverty, not prosperity: Appalachia(coal), the Ozarks (lead), and the Four Corners (coal)areas are the most prominent of these. Federal effortshave focused considerable resources at overcoming thepoverty and unemployment found in these historicmining districts. In addition, the Iron Range inMinnesota, the copper towns of New Mexico,Michigan, Montana, and Arizona, the Silver Valley ofIdaho, the gold mining towns of Lead and Deadwood,South Dakota, etc. are also not prosperous, vital com-munities. Over the last several decades some of theseareas have begun to recover as a result of the immigra-tion of new, relatively footloose residents and econom-ic activities, but that recovery is entirely non-miningbased.

The dramatic contrast between the wealth createdand the high wages paid in mining and the poor eco-nomic performance of mining communities needs tobe understood before expanded mineral extractionactivities can be safely promoted as a local economicdevelopment strategy. This paper looks at the actualperformance of mineral communities over the lastquarter century and then turns to an explanation forthat relatively poor performance.

CONTEMPORARY AMERICAN MININGCOMMUNITIES

In order to explore the contemporary local impact ofreliance on mining in the United States, we studiedthe economic performance of all U.S. counties wheremining (excluding oil and gas extraction) was the

The Economic Anomaly of Mining—Great Wealth,High Wages, Declining Communities

Thomas Michael Power, Department of Economics, University of Montana



same state. Of the twenty five states with mining-dependent counties, only four (Montana, Minnesota,Michigan, and Georgia) had per capita incomes in themining-dependent counties above the state's non-met-ropolitan average, and those incomes were only 3–11percent higher. Of those twenty five states with min-ing-dependent counties, nineteen saw per capitaincome in the mining-dependent counties deterioraterelative to the state non-metropolitan average between1980 and 2000.

Given this poor economic performance in U.S. min-ing-dependent counties, it is not surprising that popu-lation growth in these counties was negative duringthe 1980s and significantly slower than in the rest ofthe nation in the 1990s. For the 1980–2000 period,population growth in mining-dependent counties wasonly one-fourth to one-eighth of what was found onaverage in the other U.S. counties.

It is clear that over the last several decades, depend-ence on mining did not allow U.S. communities toperform better than other American communities. Infact, mining-dependent communities lagged signifi-

Per capita income also grew more slowly during the1980s in mining-dependent counties, about 30 per-cent slower. During the 1990s per capita income grewat about the same rate as in the rest of the nation, butfor the entire period, 1980–2000, per capita incomegrew about 25 percent slower. The level of per capitaincome was also lower in the mining-dependent coun-ties and, given that slower growth, the gap increasedrelative to the rest of the nation. In 2000 the incomeavailable to support each person in a mining-depend-ent county was about $9,500 per year below what wasavailable, on average, in other counties.

Most mining operations are located in non-metro-politan areas where average incomes, in general, arelower. If the mining-dependent counties are comparedonly to other non-metropolitan areas, it is still truethat the mining-dependent counties have lower percapita incomes and that they have lost ground relativeto other non-metropolitan counties over the last threedecades. This is also true for most mining regionseven if the mining-dependent counties are comparedonly with the other non-metropolitan counties in the

Growth in labor earnings and per capita income, mining-dependent relative to other U.S. counties.

Population growth and level of per capita income, mining-dependent and other U.S. counties.

LABOR EARNINGS PER CAPITA INCOME

1980–1990 1990–2000 1980–2000 1980–90 1990–2000 1980–2000Mining-dependent counties in 1970s 0.41 0.75 0.49 0.71 0.97 0.77

Mining-dependent counties in 1980s 0.41 0.69 0.46 0.72 0.95 0.76

Source: REIS CD-ROM; author’s calculations

POPULATION GROWTH LEVEL OF PER CAPITA INCOME

1980–90 1990–2000 1980–2000 1980 1990 2000

Non-mine-dependent counties 4.5% 11.2% 18.1% $ 10,201 $ 19,622 $ 29,548

1970s mining-dependent -3.0% 6.8% 4.6% $ 8,362 $ 13,595 $ 19,893

1980s mining-dependent -3.8% 5.5% 2.2% $ 8,390 $ 13,754 $ 20,099

Difference: 1970 mining-dependent and other counties -7.6% -4.4% -13.5% $ (1,839) $ (6,027) $ (9,655)

Difference: 1980 mining-dependent and other counties -8.3% -5.6% -15.8% $ (1,813) $ (5,874) $ (9,457)

Source: REIS CD-ROM; author’s calculations



98

cantly behind the average for the rest of the nation. These are not new results. U.S. Department of

Agriculture analyses have also pointed out the slowereconomic growth and lower per capita incomes inmining-dependent counties. In addition, a recentreport by the U.S. Census Bureau providing Profiles ofPoor Counties showed, when counties are classified bythe type of industry that dominates the local area,mining counties had the highest poverty rates of anyindustrial group and that poverty rate increased sys-tematically between 1989 and 1996.

might be expected. During the 1980s, for instance, thelayoff rate in the mining industry was the highest of allthe major industrial groups in the U.S., and the rate ofjob displacement in coal mining was much higherthan in mining as a whole.

The important point to be drawn from all of thesestatistical results from an economic development per-spective is that whatever might be said about theimpact of mining on national economic development,in the U.S. these mining activities, in general, have nottriggered sustained growth and development in thelocal regions were the mining took place. Closure ofthe mines often led to “ghost towns” and abandon-ment of the region. Where mining persisted overlonger periods, it did not trigger a diversification ofthe economy. Instead, as labor-saving technologiesreduced employment opportunities, the region aroundthe mines became distressed with high unemploymentand poverty rates. This was not just a historical prob-lem associated with nineteenth-century mineral devel-opments on the American frontier. ContemporaryAmerican counties that depend on mining continue toexperience the same results, lagging the national econ-omy.

EXPLANATIONS FOR THE POOR ECONOMICPERFORMANCE OF MINING COMMUNITIES

The explanation for this poor economic performancedespite the local economy's specialization in a veryhigh wage industry lies in the instability of employ-ment and income associated with mineral develop-ment activity. As the experience of the Silver City areaof Grant County, New Mexico, documents, mineral

Ratio of the unemployment rates in U.S. coal counties tothe statewide average unemployment rate, 1990–2000.

Unemployment is also higher in mining-dependentcounties in the U.S. For instance, unemployment ratesin coal-mining counties are significantly above theaverage unemployment rate in the state where thecounty is located. Averaged over the 1990–2000 peri-od and across all coal-mining counties, the unemploy-ment rate in those counties was 55 percent above thestate average rates. For some states, such as Arizonaand Virginia, the coal county unemployment rates aretwo to three times higher than the state unemploy-ment rates. Given the ongoing job losses in most coalmining counties due largely to labor-displacing tech-nological change, these high unemployment rates

Mining and smelting employment, Grant County, NewMexico.

Alabama 1.05

Arizona 2.64

Colorado 1.31

Illinois 1.50

Indiana 1.38

Kentucky 1.64

Montana 1.76

New Mexico 1.38

North Dakota 1.82

Ohio 1.75

Pennsylvania 1.44

Texas 1.23

Utah 1.73

Virginia 2.95

West Virginia 1.27

Wyoming 1.02

All U.S. coal counties 1.55

Source: U.S. Department of Labor; author’s calculations



local communities, adding still another source of eco-nomic instability. Finally, mineral extraction tends tobe land-intensive, imposing a disruptive footprint onthe natural landscape and contributing to significantenvironmental degradation. This makes mining-dependent areas less attractive places to live, work,and do business, depressing economic diversificationand development.

These well-known explanations for economic insta-bility in mineral-dependent economies lead investorsto be very cautious about the investments they makein areas dependent on mineral production. Sinceworkers, residents, businesses, and local governmentsdo not know how long the employment and payrollswill last, they reduce their risk by avoiding fixedinvestments that may be lost if the mineral industryenters a period of decline. As a result, mineral workerscommute long distances to jobs, maintaining resi-dences at some distance from the mineral develop-ment. Businesses are hesitant to develop local com-mercial infrastructure, and local governments arehesitant to finance public infrastructure with debt.The result is a less fully developed local economy andmore income leakage out of the local economy. Inshort, excess dependence on mineral developmenttends to constrain local economic development, lead-ing to the depressed economic conditions that havecome to characterize many mining-dependent areas.

The policy implications of this description of theproblem are straightforward. Continued dependenceon one industry is probably not a good economicdevelopment strategy. Diversification away from heavydependence on mining can reduce the vulnerability ofa community to the instability associated with mining.This is not to say that mining has to be abandoned.Rather, other sectors of the economy need to grow inrelative terms to provide productive balance to min-ing. In addition, attention to reducing and thenrepairing the environmental damage associated withmineral extraction is important in making the com-munity attractive to non-mineral economic activitiesand supporting such diversification. All of that, ofcourse, is very easy to say but difficult to implement.Understanding the source of the problem, however, isthe crucial first step in developing a solution.

This has helped copper mining companies controlcosts and remain competitive while processing lowerand lower grade ores. The downside of this growth inlabor productivity for workers and communities isthat the labor required per unit of production hasbeen cut to a third of what it otherwise would havebeen. Thus, even if production is stable, employmentcontinues to fall. Only constantly expanding mineraldevelopment can maintain stable employment, andthis is never possible over the long run. Another rea-son for declining employment and earnings in miningis that mineral deposits are always, ultimately,exhausted, and the industry has to shift to new geo-graphic areas. In addition, because of the high profitsthat are often associated with extracting gifts ofnature, there tends to be ongoing struggles betweenminers and mining companies over the sharing ofthose rents. This has led to often bitter and extendedstrikes and lockouts that have also taken their toll on

development almost always has a boom-bust aspect toit that is tied to the wide fluctuations in world com-modity prices. By 2001 almost two-thirds of the min-ing and smelting jobs that existed in 1981 in GrantCounty had disappeared. When mining-related jobsrepresent almost a third of all local jobs, such fluctua-tions in employment can have a devastating impact onthe community.

In addition, technological change is continuallyreducing the number of jobs associated with any givenlevel of mineral development. The productivityrecord, for instance, in copper mining over the lastquarter century is indicative of the mining industry asa whole. In copper, output per worker has tripled.

Copper mining productivity and labor intensity.



100

New Mexico is recognized for several economicallysignificant and even world-class metal deposits.

However, metals production in New Mexico has con-tinued to decline since maximum annual mineralsproduction was achieved in 1989. This decline is aresult of many complex and interrelated factors,including fluctuating commodity prices worldwideand the quality and quantity of known ore in thestate. Other factors that have hampered new minesfrom opening in the state include water rights issues,public perceptions, the state land moratorium, andthe complexity, cost, and length of time required tocomplete the entire regulatory process in the U.S. atlocal, state, and federal levels. All of these factors addto the cost of mining, not only in New Mexico butthroughout the world, and ultimately they determineif a deposit can be economically mined.

Metals deposits come in all types, shapes, and sizesand are based on geologic characteristics. The originof metal deposits in New Mexico is the subject of aseparate paper in this guidebook. The shape and sizeof metal deposits are defined by their spatial distribu-tion in the ground, tonnage, and grade, and are thesubject of this paper.

HOW DO WE DETERMINE THE GRADE OF METALDEPOSITS?

The term mineral resources refers to the assessed quan-tity of a commodity that is known to exist or can rea-sonably be inferred to exist from geologic criteria.Reserves are well-defined quantities of a commodity in

the ground that can be economically extracted at agiven time and cost. Grade is the term economic geol-ogists and mining engineers use to define the averagecomposition of the commodity in the deposit.

Resources and reserves are based on geologic char-acteristics, probabilities, and statistics. Geologists eval-uate all available information to determine if they haveadequate information to determine reserves orresources. Resources and reserves of metal deposits arenearly always determined by drilling and chemicalanalyses (assays) of the samples obtained fromdrilling. Statistics are applied to extrapolate the assaysover a given distance based on the spatial distributionof drill holes, resulting in the grade of the deposit. If agiven deposit covers approximately a quarter squaremile, one hundred drill holes in that area is betterthan ten drill holes. However, the cost of drilling onehundred holes is approximately ten times the cost of aprogram with only ten holes. Reserves and resourcesare the basis for determining if a deposit can be eco-nomically mined.

Companies typically report their reserves of activeoperations and operations in development in annualreports to the shareholders. Reserves must constantlybe re-evaluated as new information on the depositbecomes available, including subtraction of the annualproduction. It is important to remember that reservesare only estimates of the available ore in the groundand rarely equal the actual production, for three rea-sons: Recovery from the mill is less than 100 percent,statistical models fail to account for the natural hetero-geneities of the ore deposit, and recovery during min-

Significant Metal Deposits in New Mexico—Resources and Reserves

Virginia T. McLemore, New Mexico Bureau of Geology and Mineral Resources

Classification of identified mineral resources. Undiscovered resources are considered as hypothetical or speculative, toreflect varying degrees of geologic certainty. The determination of whether or not a resource can be classified as areserve depends upon the economics of production at a given time.

EC

ON

OM

ICS

OF

PR

OD

UC

TIO

NIn

cre

asin

g p

rofi

tab

ilit

y KNOWLEDGE OF RESOURCE OCCURRENCEIncreasing geologic certainty

Inferred Demonstrated

Economic Inferred resources Demonstrated reservesMarginally Inferred marginal resources Demonstrated marginal reserveseconomicSub-economic Inferred sub-economic resources Demonstrated sub-economic reserves



ing is less than 100 percent.Commodity prices fluctuate in the world economy.

However, costs of exploration and mining typicallyincrease every year. A company has to take this intoaccount in determining if a deposit can be economical-ly mined. Environmental and close-out costs are amajor economic consideration in determining if a minegoes into production. Current predictions indicate thatmetal prices will continue to increase in the nextdecade or so as world demand for metals increases.

WORLD-CLASS AND SIGNIFICANT METALDEPOSITS

Anomalous concentrations of copper, lead, zinc, gold,silver, and molybdenum are present to some extent inmuch of New Mexico and in many other places in theworld. A mineral deposit is any occurrence of a valu-able commodity or mineral of sufficient size and grade(concentration) to allow for economic developmentunder past, present, or future favorable conditions. Anore deposit is a well-defined mineral deposit that has

Mining districts in New Mexico with significant metal deposits.



102

been tested and found to be of sufficient size, grade,and accessibility to be extracted (i.e., mined) andprocessed at a profit at a specific time. Thus, the sizeand grade of an ore deposit changes as the economicconditions change. Mineral deposits and especially oredeposits are not found just anywhere in the world.Instead they are relatively rare and depend upon cer-tain natural geologic conditions to form. The require-ment that ore deposits must be extracted at a profitmakes them even more rare.

Statistical studies have shown that less than 5 per-cent of the total number of a specific type of mineraldeposit produces more than 90 percent of that com-modity or group of related commodities. Thesedeposits, so-called “world-class” deposits, are thelargest of the known deposits in the world in terms ofsize and grade. In New Mexico the copper deposits atChino and Tyrone are considered world class. Theterm significant mineral deposit includes world-classdeposits and other large deposits of economic impor-tance today. Significant metal deposits account formost of the world's production of a given commodity.Significant metal deposits are deposits of a size andgrade that would yield more than $500 million in rev-enues using current average metal prices. Metallicmineral deposits are typically found in large belts orprovinces, but only a few of those deposits are largeenough to be significant. Significant metal depositsensure that a company can continue mining economi-cally during bust cycles when the price is low. A com-pany requires large deposits to meet the increasingcosts of mining, refining, reclaiming, close out, andcontinue to make a profit for the shareholders.

Significant metal deposits in New Mexico, asdefined by the U.S. Geological Survey NationalMineral Resource Assessment Team, include depositswith at least:

• 2 short tons (58,333 ounces) gold• 85 short tons (2,479,166 ounces) silver• 50,000 short tons (100,000,000 pounds) copper• 35,000 short tons (70,000,000 pounds) lead• 50,000 short tons (100,000,000 pounds) zinc

Other significant deposits found in New Mexicoinclude:

• 1,000 short tons molybdenum• 100,000 short tons fluorite• 100 short tons tin• 1,000,000 long tons iron• 100,000 short tons manganese• 50 short tons tungsten • 20,000 short tons titanium

SIGNIFICANT DEPOSITS IN NEW MEXICO

Many significant mineral deposits in New Mexico willcontinue to attract companies to the state to developthese known deposits and explore for new ones.

Figures for reserves are only available for sixdeposits in New Mexico; three of these deposits arecurrently inactive.

At current reserves, mine life at the Phelps Dodgecopper mines at Chino and Tyrone is estimated to be5–15 years, if copper prices remain high. Resources atCopper Flat were estimated in 1995 to be 50,210,000million tons at 0.45 percent copper and 0.015 percentmolybdenum for a mine life (if this deposit goes intoproduction) of 10 years.

Molybdenum reserves and resources at Questa (as ofNovember 1999) were as follows:

• Proven reserves: 16,344,898 tons of 0.343 per-cent molybdenum sulfide at a cutoff grade 0.25percent molybdenum sulfide

• Probable reserves: 47,198,409 tons of 0.315 per-cent molybdenum sulfide

• Possible reserves: 3,223,000 tons of 0.369 per-cent molybdenum sulfide

At current proven and probable reserves, mine life atQuesta is estimated to be 20–35 years.

Industry and government in different parts of theworld sometimes use different units of measure. Justto clarify:

One ton (short ton) = 2,000 lbsOne long ton = 2,240 lbsOne metric ton (tonne) = 2,205 lbs (1,000 kg)

Most mining companies today use short tons (tons),but government statistics both in the U.S. and abroadare given in metric tons. The term long ton is archaicand seldom used today.

Units of Measure



Significant metal deposits in New Mexico, by district, based on past pro-duction and known resources or reserves. Asterisk (*) denotes those dis-tricts whose significance is primarily based on known resources or reserves.

Other economic factors must be considered before mining of most of thesedeposits can occur. Dagger (†) denotes districts in Taos County. Productionfrom the Chuska district has been only from uranium deposits.

DISTRICT MINE OR YEAR OF YEAR OF ESTIMATED IS THERE SIGNIFICANT DEPOSIT INITIAL LAST CUMULATIVE FUTURE COMMODITIES

PRODUCTION PRODUCTION PRODUCTION POTENTIAL?

Mogollon 1875 1969 >$25,000,000 possible gold, silver

*Steeple Rock Carlisle, 1880 1993 $10,000,000 yes gold, silverCenter, Jim Crow,Summit

Elizabethtown-Baldy 1866 1968 $10,000,000 no gold, silver*Jicarilla Jicarilla placers 1850 1957 $165,000 possible gold

New Placers 1839 1968 $5,750,000 unlikely gold

White Oaks 1850 1953 $3,100,000 possible gold, silver

*Nogal-Bonito Rialto, Vera Cruz 1865 1942 $300,000 possible gold, silver, molybdenum

Chloride Flat Boston Hill, 1871 1946 $13,000,000 no gold, manganeseChloride Flat iron

Chloride St. Cloud 1879 1988 $20,000,000 possible silver

Georgetown 1866 1985 $3,500,000 no silver

Kingston 1880 1957 $6,600,000 no silver

Lake Valley 1878 1957 $5,400,000 no silver

Bayard 1902 1969 >$60,000,000 no gold, silver, copper,lead, zinc

*Burro Mountains Tyrone, 1879 present >$2,000,000,000 yes gold, silver, copper, lead, Little Rock, fluoriteNiagra

*Fierro-Hanover Cobre, 1889 1980 >$2,000,000,000 yes gold, zinc, copper, ironHanover Mountain,Continental

*Pinos Altos Piños Altos 1860 1997 >$11,000,000 yes gold, silver, copper, lead, zinc

*Santa Rita Chino 1801 present >$2,000,000,000 yes copper, gold, silver

*Lordsburg 1870 1999 >$60,000,000 yes gold, silver, copper, lead

Willow Creek Pecos 1927 1944 $40,000,000 no gold, silver, copper, lead, zinc

Nacimiento Nacimiento 1880 1975 $1,500,000 unlikely gold, copper

*Old Placers Cunningham 1828 1986 >$4,000,000 yes gold, copperHill, Carache Canyon, Lukas Canyon, San Lazarus

*Santa Fe Jones Hill 1956 1957 $1,000 possible gold, silver, copper, lead, zinc

*Hillsboro Copper Flat, 1877 1982 $8,500,000 yes copper, molybdenum, gold,Mesa del Oro silver

Magdalena 1866 1970 $25,045,999,616 no gold, silver, copper, lead, zinc

*†Questa Questa, Log Cabin 1918 present >$100,000,000 yes molybdenum

†Picuris Harding, 1902 1955 $3,000 unlikely tantalum, beryllium, lithium, Champion, copperSpring Gulch

Zuni Mountains 1905 present $5,050,000 unlikely fluorite

Fluorite Ridge 1909 1954 $2,790,000 unlikely fluorite

*Capitan Mountains Capitan 1960 2000 $500,000 yes ironMountains

*Victorio Gulf Minerals 1880 1959 $2,330,700 possible beryllium, molybdenum, tungsten

*Taylor Apache 0 possible berylliumWarm Springs

*Pajarito Pajarito 1952 1952 $100 unlikely yttrium, zirconium

*Chuska Sanostee 1952 1982 $8,000,000 unlikely uranium, iron, titanium, zirconium, thorium

*Taylor Creek 1919 1969 $7,500 no tin



104

Estimates of ore in the ground or resources havebeen reported for additional deposits in New Mexicoduring the exploration phase of those deposits. Thesefigures are not considered reserves because they arebased on insufficient or uncertain information or theyhave not been updated to reflect economic conditionsin 2004. However, these resource figures serve as anapproximation of what could be in the ground.

Molybdenum and copper deposits in New Mexico. Mill reserves are the ore that is sent to the mill for concen-tration; leaching reserves are the ore that is produced by solvent extraction electro-winning (SXEW) of the rockpiles (also known as heap leaching).

Average copper (COMEX) and molybdenum (average PlattsMetals Week) prices by year, through 2004.

MINE MILL RESERVES % COPPER % MOLYBDENUM LEACHING RESERVES % COPPER(million tons) (million tons)

Chino 182,100,000 0.61 .02 239,000,000 0.42Tyrone — — — 252,200,000 0.31Niagra — — — 500,000,000 0.29Cobre 57,600,000 0.55 — 77,000,000 0.26

YEAR COPPER MOLYBDENUM($ per pound) ($ per pound)

1989 1.25 3.401990 1.19 2.851991 1.05 2.301992 1.03 2.211993 0.85 2.321994 1.07 4.511995 1.35 8.081996 1.06 3.791997 1.04 4.311998 0.75 3.411999 0.72 2.652000 0.84 2.562001 0.73 2.362002 0.72 3.772003 0.81 5.322004 1.28



Early miners did not worry about environmentalissues and were not subject to governmental regu-

lation as we know it today. Their greatest concern wassimply getting authorization to explore the land forminerals, and, if they were lucky enough to find adeposit of value, to open up a mine. The Mining Lawof 1872 was the first major law that establishedrequirements that would-be miners must follow todevelop a mine in the U.S., even though theserequirements addressed access rather than environ-mental protections.

Many years passed before significant concern wasraised over mining's effects on the land and its people.This eventually led to modification of the 1872Mining Law and the passage of other laws specificallytargeting certain resources such as water and air.Additional requirements were established through fed-eral and state land management agencies, includingthe U.S. Forest Service, the U.S. Bureau of LandManagement, and the New Mexico State Land Office,which sought to address multiple land use needs onpublic lands. State laws were enacted to fill the gapsor tailor protections to the needs of our state. All ofthese efforts are designed to protect those who may beadversely affected by mining. Such adverse impactscan be caused by land disturbance, air and water con-tamination, surface and ground water use, noise, dust,blasting, truck traffic, and local infrastructure use,among others.

CURRENT REGULATORY FRAMEWORK

Today the regulatory framework that applies to miner-al exploration, development, and mine closure is acomplicated and often confusing web of requirementsestablished by a wide variety of entities and agencies.Most are managed by federal, state, or local govern-ment bodies and are implemented as either land man-agement or resource protection strategies. Furthercomplicating this issue, almost all mining operationsare different, creating different issues that trigger dif-ferent sets of requirements. In some cases complexsites can require years for full authorization to beginmining.

Federal Requirements

There are three main types of federal government reg-ulations: land management, resource protection, andcitizen protection. Federal lands are subject to require-ments designed to allow the land to be used for min-ing and then returned to the government for otheruses. The exception to this is certain minerals that fallunder the 1872 Mining Law, which allows transfer offederal land to private citizens through the patentprocess. Currently there is a moratorium on patentinglands, and no lands have been so transferred in morethan a decade. Both federal land management agen-cies, the U.S. Department of Agriculture's ForestService and the U.S. Department of the Interior'sBureau of Land Management have regulations address-ing operational and reclamation requirements thatmust be met as a condition of approval to initiatemining. As land management agencies, these entitieshave a vested interest in how the land will be usedduring mining, and how it will be left after miningceases and the land is available for other uses. Theserequirements are broad in scope and may cover manyaspects of the operation. They are likely to be themost comprehensive requirements imposed by thefederal government.

Minerals on federal lands are divided into three cat-egories: salable, leasable, and locatable. Different pro-cedures must be followed for each type of mineral.Salable minerals include most sand, gravel, and otheraggregates, and sales contracts are established thatallow extraction. Leasable minerals include coal andpotash, where leases are obtained and royalties paidon commodities produced. Locatable minerals, alsoknown as “hardrock” minerals, include gold, copper,mica, and other metallic and non-metallic minerals.For these commodities, the 1872 Mining Law allowsaccess to federal lands by staking mining claims.Regardless of mineral type, almost all mines now musthave detailed mine plans that specify how and wheremining will be conducted, how contamination will beavoided, and how the site will be reclaimed after min-ing ceases. Bonding (also called financial assurance) isrequired for almost all operations and consists offinancial resources being provided by the operator to

An Overview of the Regulatory Frameworkfor Mining in New Mexico

Douglas Bland, New Mexico Bureau of Geology and Mineral Resources



the federal government to cover reclamation costsshould the operator be unable to perform the reclama-tion. The opportunity for public input is usuallyincluded.

Resource protection laws address one particularresource, such as water quality, air quality, or endan-gered species. These laws apply to a wide variety ofindustries that may trigger their provisions. In somecases individual states have passed their own laws

addressing the same resource. If an individual federallaw has a primacy clause, the state may take overadministration of the law if the state passes a compa-rable law, and the federal government often providesfunding to implement the program. Primacy clausesusually require that the state law must be at least asstringent as the federal counterpart. For example, theNew Mexico legislature passed the Water Quality Act,and obtained primacy for managing certain ground

This table contains the most common federal permits and requirements, but is not intended to be a complete list of all that may be applica-ble to mining operations. Not all permits and requirements listed in this table will apply to all operations. Requirements will vary depend-ing on circumstances. Agencies should be contacted for further details. Federal requirements that are managed by State agencies throughprimacy programs are not in included in this table, but are listed in the following table.

FEDERAL PERMIT REQUIREMENTS FOR MINING OPERATIONS IN NEW MEXICO

AGENCY PERMIT NAME DESCRIPTION

U.S. Forest Service, Saleable minerals: sales Saleable minerals include common varieties of sand, gravel, stone, Southwest Region contract, prospecting permit, pumice, pumicite, cinders, and clay, however certain uncommon 505-842-3292, and or a free use permit varieties of these minerals are classified as locatable. Sales contracts Bureau of Land Mamagement contain operational and reclamation requirements, and the 505-438-7400 payment of a percentage of sales value.

U.S. Forest Service, Leasable minerals: leases, Leasable minerals include potash, sodium, native asphalt, solid and Southwest Region prospecting permits and semi-solid bitumen, bituminous rock, phosphate, sulfur, and coal. 505-842-3292, and licenses Leases contain operational and reclamation requirements and Bureau of Land Mamagement payment of royalties.505-438-7400

U.S. Forest Service, Locatable minerals: notice Locatable minerals generally include metallic and nonmetallic Southwest Region of intent, casual use (BLM) minerals not listed above as either saleable or leasable. “Significant 505-842-3292, and and plan of operations disturbance of surface resources” triggers requirements to minimize Bureau of Land Mamagement adverse environmental impacts where feasible, and reclamation 505-438-7400 with financial assurance (bonding) is required.

Nuclear Regulatory Commission Various permits and licenses Required for uranium milling and processing facilities including in 301-415-7000 situ leaching operations.

Army Corps of Engineers, Clean Water Act Required for any discharge of dredged or fill material into waters of Albuquerque District Section 404 permit the United States, including wetlands, most road construction 505-342-3282 involving water crossings, and dam construction.

Environmental Protection Agency Clean Water Act National Required for any discharge of pollutants from a point source into Region 6 Pollutant Discharge waters of the United States. “Pollutants” are defined as any material 214-655-6444 Elimination System permit that is added to water that changes the physical, chemical, and/or

(NPDES) biological nature of the receiving water.

Department of Labor, Mine Safety Requirements for health and A variety of requirements designed to ensure safe working and Health Administration safety of miners conditions for miners at mine sites and on-site processing facilities. South Central District Applies to all mine types.214-767-8401

Department of Justice Requirements for Addresses safety issues and requirements related to explosives use Bureau of Alcohol, Tobacco, authorization to and blasting on the mine site.Firearms and Explosives use explosives505-248-6544


water quality programs covered by federal statutes.Citizen protection laws address the health and safety

of mine workers and other citizens. These includeprograms administered by the Mine Safety and HealthAdministration designed to ensure a safe work envi-ronment for miners. Another such entity is theNuclear Regulatory Commission, which addressesissues associated with radioactive materials and radia-tion safety.

State Requirements

New Mexico has the same three main types of regula-tory requirements as the federal government: landmanagement, resource protection, and citizen protec-tion. The State Land Office has land managementrequirements that must be followed in order to mineon state-owned lands. All minerals are managedthrough leases, although requirements differ depend-ing on commodity, location, and site-specific issues.Reclamation plans are required on all leases.

The state has many resource and citizen protectionlaws, regulations, permits, and requirements managedby a variety of agencies. Regulated resources, materi-als, and facilities include surface and ground waterquality and quantity, drinking water, air quality, haz-ardous waste, solid waste, storage tanks, culturalresources, endangered and threatened plant and ani-mal species, and public utilities. Not all of theserequirements will apply to each operation as condi-tions and circumstances vary widely. Some require-ments are met through permits issued by an agency,such as a mining permit approved by the Mining andMinerals Division and a ground water discharge per-mit issued by the Environment Department. In othercases the operator must be aware of and in compli-ance with regulations even though permits are notissued, including cultural resource protection, workersafety, and certain endangered species requirements.

For many mining operations, the most comprehen-sive requirements will likely be found in the MiningAct of 1993, and if ground water is impacted, theWater Quality Act of 1967. The Mining Act focuses onwhat will happen to the mine property after miningceases, and the permit outlines site-specific proce-dures to be followed that will establish a post-mineland use for each property. Financial assurance mustbe provided. The Water Quality Act requires groundwater discharge permits to protect subsurface waterresources. Discharge permits contain operationalrequirements to prevent ground water contamination

during operations, and closure plans that are designedto ensure reclamation that also prevents contamina-tion. Financial assurance may be required for this per-mit as well. Abatement plans may be required forexisting contamination.

Local Requirements

Counties and cities also regulate certain aspects ofmining operations. Many local jurisdictions have zon-ing laws that identify appropriate uses for specificlocations, and such areas will have restrictions on cer-tain activities. In addition, ordinances may apply thataddress certain activities. Controlled actions mayinclude traffic, noise, times of operation, as well asprohibiting mining altogether in certain areas. SeveralNew Mexico counties now have mining ordinancesthat specifically address if and how mining is author-ized. Generally, local requirements are superseded bystate and federal requirements if those requirementsaddress the same specific areas of regulation, but localgovernments may “fill in the gaps” where no state orfederal regulation exists.

Enforcement and Appeals

The agency responsible for implementing the regula-tions or establishing the permit is also responsible forenforcing them to ensure compliance. Methods forenforcement vary according to policies of the agencyand the provisions outlined in the statutes and regula-tions. Notices of violation, fines, and corrective actionplans are some of the methods used to address com-pliance problems.

Most decisions made by regulatory agencies can beappealed. Appeals may be made by the mining com-pany involved or by citizens concerned with the oper-ation. The venue for appeals varies widely, and maybegin with an official within the agency itself, reviewby an overseeing body such as a commission or board,or it may go directly to court. Often, several additionallevels of appeal are available including a State DistrictCourt, the Court of Appeals, and State SupremeCourt. In some cases later appeals may be heard basedon the hearing record developed at an earlier appeal;new testimony is not taken at these later appeals. Iffederal lands are involved, the decision may beappealed through the federal court system.

(Continues on page 110)

P O L I C Y , E C O N O M I C S , & T H E R E G U L A T O R Y F R A M E W O R K 107



ST

AT

E P

ER

MIT

RE

QU

IRE

ME

NT

S F

OR

MIN

ING

OP

ER

AT

ION

S I

N N

EW

ME

XIC

O

AG

EN

CY

PE

RM

IT N

AM

ED

ES

CR

IPT

ION

EN

ER

GY

, M

INE

RA

LS &

NA

TU

RA

L R

ES

OU

RC

ES

DE

PA

RT

ME

NT

MIN

ING

AN

D M

INE

RA

LS D

IVIS

ION

Min

ing

Act

Rec

lam

atio

n Pr

ogra

mVa

riou

s m

inin

g an

dC

ompr

ehen

sive

per

mit

s w

ith

clos

eout

pla

ns r

equi

ring

rec

lam

atio

n, f

inan

cial

ass

uran

ce a

nd p

ublic

50

5-47

6-34

00ex

plor

atio

n pe

rmit

spa

rtic

ipat

ion.

Inc

lude

s m

inim

al im

pact

and

reg

ular

per

mit

s fo

r ne

w a

nd e

xist

ing

min

es. D

oes

not

appl

y to

agg

rega

te a

nd s

ome

indu

stri

al m

iner

als.

Min

e R

egis

trat

ion,

Rep

orti

ng &

Saf

egua

rdin

gR

egis

trat

ion,

rep

orti

ng &

Fo

rms

requ

ired

for

init

ial r

egis

trat

ion,

ann

ual o

pera

tion

s in

form

atio

n, a

nd s

afet

y m

etho

ds u

sed

at

505-

476-

3400

safe

guar

ding

req

uire

men

tscl

osur

e. A

pplie

s to

all

com

mod

itie

s.

Coa

l Pro

gram

Min

ing

and

expl

orat

ion

Com

preh

ensi

ve o

pera

tion

s an

d re

clai

mat

ion

perm

its

for

all c

oal o

pera

tion

s re

quir

ing

post

-min

e50

5-47

6-34

00pe

rmit

sla

nd u

se d

esig

nati

on, b

ondi

ng, a

nd p

ublic

par

tici

pati

on.

FO

RE

ST

RY

DIV

ISIO

N

Env

iron

men

tal R

esou

rce

Ass

essm

ent

Bure

auSc

ient

ific

stud

ies

&

Perm

its

for

prot

ecti

on o

f th

reat

ened

or

enda

nger

ed p

lant

spe

cies

.50

5-47

6-33

25tr

ansp

lant

atio

n pe

rmit

s

EN

VIR

ON

ME

NT

DE

PA

RT

ME

NT

WA

TE

R &

WA

ST

E M

AN

AG

EM

EN

T D

IVIS

ION

Gro

und

Wat

er Q

ualit

y Bu

reau

Gro

und

wat

er d

isch

arge

C

ompr

ehen

sive

per

mit

s re

quir

ing

prot

ecti

on o

f gr

ound

wat

er q

ualit

y th

roug

h m

onit

orin

g,

505-

827-

2918

perm

itpr

even

tion

of

cont

amin

atio

n, r

ecla

mat

ion,

aba

tem

ent,

and

rem

edia

tion

. Req

uire

d fo

r op

erat

ions

th

at m

ay im

pact

gro

und

wat

er q

ualit

y.

Haz

ardo

us W

aste

Bur

eau

Haz

ardo

us w

aste

per

mit

R

equi

red

for

the

tran

spor

tati

on, t

reat

men

t, s

tora

ge, a

nd d

ispo

sal

505-

428-

2500

and

hand

lers

per

mit

of h

azar

dous

was

te.

FIE

LD

OP

ER

AT

ION

S D

IVIS

ION

Dri

nkin

g W

ater

Bur

eau

Con

stru

ctio

n ap

prov

al f

or

App

rova

ls a

ddre

ss m

axim

um c

onta

min

ant

leve

ls a

llow

ed, r

epor

ting

, pub

lic n

otifi

cati

on, r

ecor

d-50

5-82

7-75

36ne

w o

r m

odifi

ed p

ublic

ke

epin

g an

d w

ater

sup

ply

cons

truc

tion

.w

ater

sup

ply

syst

ems

Rad

iati

on C

ontr

ol B

urea

u U

rani

um a

nd t

hori

um io

n A

ddre

sses

pro

cess

ing

and

hand

ling

of r

adio

acti

ve a

nd n

ucle

ar m

ater

ial t

hat

is g

ener

ally

not

50

5-47

6-30

81ex

chan

ge e

xtra

ctio

n lic

ense

,co

vere

d by

the

fed

eral

Nuc

lear

Reg

ulat

ory

Com

mis

sion

.ra

dioa

ctiv

e m

ater

ial l

icen

se

EN

VIR

ON

ME

NT

AL

PR

OT

EC

TIO

N D

IVIS

ION

Air

Qua

lity

Bure

au

Con

stru

ctio

n an

d op

erat

ing

Ens

ure

that

air

pol

luti

on s

ourc

es m

eet

appl

icab

le r

egul

atio

ns a

nd w

ill n

ot e

xcee

d am

bien

t 50

5-82

7-14

94pe

rmit

sco

ncen

trat

ion

stan

dard

s fo

r ai

r po

lluta

nts.

Doe

s no

t ap

ply

to B

erna

lillo

Cou

nty,

whi

ch h

as it

’s ow

n pr

ogra

m.

Solid

Was

te B

urea

uR

egis

trat

ion,

and

Sol

id W

aste

A

ddre

sses

tra

nsfe

r, p

roce

ssin

g, t

rans

form

atio

n, r

ecyc

ling,

com

post

ing,

or

disp

osal

of

solid

was

tes.

505-

827-

2775

Faci

lity

perm

it

Petr

oleu

m S

tora

ge T

ank

Bure

au

Tank

reg

istr

atio

n, c

losu

re,

Add

ress

es in

stal

lati

on, o

pera

tion

, clo

sur e

, inv

esti

gati

on, a

nd c

lean

up o

f si

tes

wit

h ab

ove-

grou

nd

505-

984-

1741

inve

stig

atio

n, r

ecla

mat

ion

and

unde

rgro

und

stor

age

tank

s.

Occ

upat

iona

l Hea

lth

& S

afet

y Bu

reau

M

iner

hea

lth

and

safe

ty

Ens

ures

a s

afe

wor

k en

viro

nmen

t in

fac

iliti

es n

ot r

egul

ated

by

the

fede

ral M

ine

Safe

ty a

nd H

ealt

h 50

5-82

7-42

30re

quir

emen

tsA

dmin

istr

atio

n. G

ener

ally

app

lies

to o

ff-si

te m

ills

and

proc

essi

ng p

lant

s.

Not

all

perm

its

and

requ

irem

ents

list

ed in

thi

s ta

ble

will

app

ly t

o al

l ope

rati

ons.

Req

uir e

men

ts w

ill v

ary

depe

ndin

g on

cir

cum

stan

ces.

Age

ncie

s sh

ould

be

cont

acte

d fo

r fu

rthe

r de

tails

.

OF

FIC

E O

F S

TA

TE

EN

GIN

EE

RW

AT

ER

RIG

HT

S U

NIT

Wat

er R

esou

rce

Allo

cati

on P

rogr

amPe

rmit

to

appr

opri

ate

the

Nec

essa

ry f

or a

ny p

erso

n, f

irm

, or

corp

orat

ion

or a

ny o

ther

ent

ity

that

des

ires

to

use

any

of t

he

505-

827-

6120

publ

ic s

urfa

ce o

r un

der-

surf

ace

or u

nder

grou

nd w

ater

s of

the

Sta

te o

f N

ew M

exic

o (e

stab

lish

wat

er r

ight

s). U

nder

grou

ndgr

ound

wat

ers

of t

he

perm

it n

eede

d on

ly in

OSE

-dec

lare

d w

ater

bas

ins.

Stat

e of

New

Mex

ico

Wat

er R

esou

rce

Allo

cati

on P

rogr

am

Min

e D

ewat

erin

g pe

rmit

Ens

ures

tha

t m

ine

dew

ater

ing

does

not

impa

ir e

xist

ing

wat

er r

ight

s. D

oes

not

requ

ire

or e

stab

lish

505-

827-

6120

wat

er r

ight

s.

Wat

er R

esou

rce

Allo

cati

on P

rogr

am

App

rova

l of

drill

hol

e A

ppro

vals

ens

ure

that

wat

er e

ncou

nter

ed d

urin

g dr

illin

g ac

tivi

ties

is c

onfin

ed t

o th

e aq

uife

r in

50

5-82

7-61

20pl

uggi

ngw

hich

it w

as e

ncou

nter

ed. G

ener

ally

, no

spec

ific

proc

edur

es h

ave

been

est

ablis

hed.

Wat

er R

esou

rce

Allo

cati

on P

rogr

am

Lice

nse

for

wat

er w

ell

Req

uire

s id

enti

ficat

ion

of e

quip

men

t, p

erm

its

for

each

wel

l, re

cord

kee

ping

, and

fili

ng o

f dr

illin

g 50

5-82

7-61

20dr

iller

slo

g w

ith

OSE

. Req

uire

d fo

r al

l wel

ls d

rille

d in

dec

lare

d w

ater

bas

ins.

DE

PA

RT

ME

NT

OF

GA

ME

AN

D F

ISH

Con

serv

atio

n Se

rvic

es D

ivis

ion

Scie

ntifi

c co

llect

ion

perm

itPe

rmit

allo

ws

the

taki

ng o

f en

dang

ered

wild

life

for

scie

ntifi

c an

d/or

edu

cati

onal

pur

pose

s.

505-

476-

8101

ST

AT

E L

AN

D O

FF

ICE

505-

827-

5750

Leas

es a

nd p

erm

its

for

Add

ress

ope

rati

on, r

ecla

mat

ion,

and

clo

sur e

req

uire

men

ts, a

nd in

clud

es f

ees

and

rent

als.

App

lies

pros

pect

ing

and

expl

orat

ion

to a

ll co

mm

odit

ies.

HIS

TO

RIC

PR

ES

ER

VA

TIO

N O

FF

ICE

Offi

ce o

f C

ultu

ral A

ffair

sVa

riou

s pe

rmit

s fo

r E

nsur

es t

he p

rote

ctio

n, p

rese

rvat

ion,

and

app

ropr

iate

tre

atm

ent

of h

isto

ric

or p

rehi

stor

ic r

uins

50

5-82

7-63

20ar

chae

olog

ical

inve

stig

atio

ns

and

mon

umen

ts, a

nd a

ny o

bjec

t of

his

tori

cal,

arch

aeol

ogic

al, a

rchi

tect

ural

, or

scie

ntifi

c va

lue.

on

sta

te-o

wne

d la

nds

Hum

an b

uria

l exc

avat

ion

perm

its

appl

y to

all

land

typ

es.

PU

BL

IC R

EG

UL

AT

ION

CO

MM

ISS

ION

505-

827-

6942

Cer

tific

ate

of p

ublic

R

equi

red

of a

ll ju

risd

icti

onal

pub

lic u

tilit

ies

to o

pera

te, c

onst

ruct

, or

exte

nd a

ny p

lant

or

syst

em,

conv

enie

nce

and

nece

ssit

y,

exce

pt f

or a

n ex

tens

ion

wit

hin

or t

o a

terr

itor

y al

read

y se

rved

by

it.

and

loca

tion

per

mit

NE

W M

EX

ICO

BU

RE

AU

OF

MIN

E I

NS

PE

CT

ION

505-

835-

5460

Und

ergr

ound

min

e di

esel

Va

riou

s eq

uipm

ent

and

proc

edur

al r

equi

rem

ents

tha

t m

ust

be f

ollo

wed

to

assu

re t

he h

ealt

h an

d eq

uipm

ent

perm

its,

and

sa

fety

of

min

e pe

rson

nel.

cert

ifica

tes

for

coal

min

ers





the same recommendations listed above also shouldbe followed. Know the regulations that apply. Developa good working relationship with the mining compa-ny, if possible. Discuss concerns and how they mightbe addressed with the agency that regulates the activi-ty in question, as agencies that do not have jurisdic-tion over your particular concern can do little in areasoutside of their control. If it is determined the opera-tion is in violation of certain requirements, you maywant to stay involved in the remedy to ensure theproblem is resolved to your satisfaction. Legal assis-tance, which can be costly, may be retained to helpyou determine the best way to work through theseprocesses. If you wish to formally appeal certainactions, legal documents will usually need to be pre-pared and filed.

HOW DO I WORK WITHIN THIS MAZEOF REGULATIONS?

Miners

The first thing that must be done, no mat-ter what your interest, is to become gener-ally familiar with the basic requirementsthat apply to the activity in question andthe agencies that implement them. If youare a mine operator or prospector, you willneed to identify all the requirements thatmay apply to your proposed operation. Ifyou are acquiring an existing operation,you should do the same thing. Permittingcan be costly and time consuming. TheMining and Minerals Division offers a freepublication titled Permit Requirements forEnergy and Minerals in New Mexico thatwill help you get started.

Next, you should contact all agenciesyou believe could be involved with yourproject. Allow plenty of lead time, espe-cially for those agencies that have exten-sive permitting or approval requirements.Discuss your particular operation withthem so together you can plan a course ofaction to authorize mining and maintaincompliance. If you suspect some of therequirements may be duplicated by anoth-er agency, ask how best to coordinateactions to minimize duplicative efforts, and ask theagencies if they can help you with this. Work hard todevelop one comprehensive mining plan that meetsthe needs of all agencies, including those that mayhave overlapping requirements.

If you are aware of outside public interest in yourproject, meet with them early on to hear their con-cerns, and work with them to resolve the issues.Otherwise, you may become more familiar with regula-tions that deal with appeals than you might wish.Taking additional time up front to address publicissues virtually always saves time in the long run, evenif you don't end up in court. Above all, be patient, pro-fessional, responsive to requests for information, andquestion requests that you don't understand or seemout of line.

Citizens

If you are a member of the public that is concernedabout an existing or proposed mining activity, many of

The above list of permits and compliance requirements for theMolycorp molybdenum mine, Questa, New Mexico, is an exampleof the permits that an individual mine must obtain to operate.

AGENCY REQUIREMENT OR PERMIT

NEW MEXICO ENVIRONMENT DEPARTMENT

GROUND WATER QUALITY BUREAU

Discharge permit-1055 for mine siteDischarge permit-933 for tailings facilityDischarge permit-132 for mine site sewage lagoonsCommunity Right-to-Know requirements for chemical storage

AIR QUALITY BUREAU

702 Air Permit 201-M-1

RADIATION CONTROL BUREAU

Radioactive Materials License GA139-13

HAZARDOUS WASTE BUREAU

Hazardous Waste ID # NMD002899094

DRINKING WATER BUREAU

Monitoring

PETROLEUM STORAGE TANK BUREAU

Record keeping (underground fuel tanks)

NEW MEXICO STATE ENGINEER OFFICE

Tailings dams inspection & reportingWater consumption documenting, reporting and dam safety

NEW MEXICO MINING & MINERALS DIVISION

Mining Act existing mine permit & closeout plan

Registration & annual reporting

U.S. ENVIRONMENTAL PROTECTION AGENCY

NPDES permit # NM0022306 for discharges to Red RiverNPDES multi-sector storm water general permit # NMR05A913

U.S. BUREAU OF ALCOHOL, TOBACCO, FIREARMS & EXPLOSIVES

Explosives and blasting requirements

Regulators

If you are a regulator, most of the above recommenda-tions should still be followed. It is helpful to knowabout requirements beyond those you administer,especially those that may overlap, duplicate, or berelated to yours. For these, volunteer to work with theother agency to streamline the process. It is importantto educate and assist those attempting to learn aboutor become involved in activities you regulate. Alwaysmaintain the goal of trying to resolve the issues toeveryone's satisfaction, don't just focus on a solutionthat meets your own agency's requirements. Makesure you include all the appropriate parties whendeveloping solutions.

Mining has been a fundamental part of life in NewMexico for a long time, and will continue to play asignificant role for a long time to come. Even if mostmining in the state ceases, we will be addressing envi-ronmental and reclamation issues associated withclosed mine properties for many years. Regulation ofthese sites has steadily increased in the past fewdecades because of increased concerns over the effectsmines have on our world. Although a stable andunchanging suite of regulations would help minersand concerned citizens alike to understand and workwithin the regulatory scheme, regulatory requirementswill change in the future in response to changingneeds and values of society, and changing mining andreclamation methods. We should consider how pro-posed regulatory changes fit into the existing schemeof requirements, and what effects the proposedchanges will actually have on the industry, the envi-ronment, and the public. It is incumbent on all stake-holders to consider carefully what regulations are inthe best interest of all of us, not just our own interestgroup, now and in the future.




112

New Mexico was among the last states in the Westto adopt a non-coal mining regulatory law when

the New Mexico Mining Act was enacted in 1993.While New Mexico was late in regulating hard rockmining, the New Mexico Mining Act of 1993 is amore comprehensive and detailed law than moststates. The purposes of the Mining Act of 1993include “promoting responsible utilization and recla-mation of lands affected by exploration, mining or theextraction of minerals that are vital to the welfare ofNew Mexico.” The act establishes requirements for abroad range of “hard rock” mines to obtain permits,meet certain standards, develop an approved reclama-tion plan, and post financial assurance to support thereclamation plan.

WHAT IS COVERED?

The act requires all mining operations to obtain per-mits and meet certain requirements. Whether you areor are not subject to the act depends largely on thedefinitions of mining and minerals in the act. Mining isdefined as “the process of obtaining useful mineralsfrom the earth's crust or from previously disposed orabandoned mining wastes, including exploration,open-cut mining and surface operation, the disposalof refuse from underground and in situ mining, min-eral transportation, concentrating, milling, evapora-tion, leaching and other processing.” Minerals aredefined as “a nonliving commodity that is extractedfrom the earth for use or conversion into a saleable orusable product.”

The following commodities and facilities aredeclared exempt from the act: “clays, adobe, flag-stone, potash, sand, gravel, caliche, borrow dirt, quar-ry rock used as aggregate for construction, coal, sur-face water or subsurface water, geothermal resources,oil and natural gas together with other chemicalsrecovered with them, commodities, byproduct materi-als and wastes that are regulated by the nuclear regu-latory commission” and hazardous waste. Someexemptions are designed to avoid duplicative regula-tion of a commodity or facility already regulatedunder a different federal or state law, such as coal,water, oil, gas, hazardous waste and NRC facilities.

However, certain commodities, such as sand, gravel,and other construction materials, caliche and potash,are largely unregulated under state or federal law. Inthe end, the Mining Act covers most traditional hardrock and industrial minerals including gold, silver,copper, lead, molybdenum, perlite, zeolite, silica, andgarnet.

The Mining Act applies not only to all mines operat-ing when the act was passed and to all future mines,but it also covers some mines that were no longeroperating at the time the act became law. The defini-tion of “existing mining operation” includes any“operation that produced marketable minerals for atotal of at least two years between January 1, 1970,and the effective date of the New Mexico Mining Act.”Therefore, a mine that produced marketable mineralsfor two years in the 1970s but was shut by the timethe act passed in 1993 is still covered.

WHO REGULATES?

Two government entities are at the center of the NewMexico Mining Act: the Mining Commission and theMining and Minerals Division (MMD) of the NewMexico Energy, Minerals and Natural ResourcesDepartment. The Mining Commission is charged withdeveloping the rules necessary to implement theMining Act and hearing appeals of permitting andenforcement actions by MMD. The MiningCommission consists of eleven members, fourappointed by the Governor and seven ex officio. Theseven ex officio members represent different govern-ment entities. The appointed members, consisting oftwo voting members and two alternates, “shall be cho-sen to represent and to balance environmental andmining interests.”

The Mining and Minerals Division is charged withadministering and enforcing the Mining Act and theMining Commission's rules. The MMD director hasbroad authority under the act, including the obliga-tion to decide on all permit applications and decidewhen to take enforcement action against someone vio-lating the act or rules. The MMD director is requiredunder the act to cooperate with other state and federalagencies that have responsibilities connected to min-


The New Mexico Mining Act—A Primer

Bill Brancard, Mining and Minerals Division, Energy, Minerals and Natural Resources Department

113


P O L I C Y , E C O N O M I C S , A N D T H E R E G U L A T O R Y F R A M E W O R K

In 1990 while serving as a state repre-sentative I was approached by con-

stituents who were concerned by a newmining proposal in the Ortiz Mountainsnear Cerrillos. This proposal called forextraction of gold from low-grade orevia a large open-pit mine and cyanideheap leaching. Local residents wereconcerned about the impact this wouldhave on their quality of life and envi-ronment. I found that New Mexico wasone of only two states that did not reg-ulate the reclamation of hard rock openpit mines. Therefore, it was virtuallyimpossible to address the long-termimpact of such mining operationsthrough state action. This discovery ledme to introduce legislation to addresstheir concerns.

Traditionally, a bill in the legislaturethat impacts the environment will bereferred to committees with widely dif-fering views regarding the importanceof environmental protection. Therefore,passage of the Mining Act required sup-port from a broad range of interests andlittle or no stringent opposition fromany major interest group.

From my perspective the primarygoal of the legislation was to requirehard rock miners to consider, from theinception of a project, the environmen-tal impact of the operation on sur-rounding communities (primarilypotential pollution of water resourceswith acid drainage or toxic materials)and to develop a reclamation plan toleave an economically or environmen-tally sound site when done. I also feltthat mines that had been operating formany years might not be able toreclaim their sites to a “green field” sta-tus upon the completion, because whenthey were planned, they were notrequired to carry out their operationsunder such a regulatory scheme. I didnot want regulations to stop mining asa viable industry within the statebecause of its economic importance. Ialso believe that reclamation of existingmine sites will generate positive eco-nomic activity in mining communities,

and that industry has an obligation toprotect people and the environment inareas where they are making a profitthrough mineral extraction.

The first piece of legislation I intro-duced regarding mine reclamation in1991 was based on experience that thestate had gained through the regulationof surface coal mines and from the reg-ulation of landfills. Testimony wasgiven at legislative hearings by expertsand concerned citizens. In the finalanalysis, it was not possible to steer thisfirst attempt successfully through thelegislature. However, the concept wasreferred to an interim committee fordetailed study between sessions, and amoratorium was placed on new opera-tions within the state until the subjectcould be studied and a solution couldbe crafted.

During the summer all interestedparties worked diligently trying tomodify the language of the initial bill tomeet our diverse needs. Hundreds ofhours of work were contributed by rep-resentatives from industry and publicinterest groups to craft a compromisesolution. We returned to the legislature,and the bill moved further through theprocess, but we were still unable toreach consensus with legislators. Thebill failed, and everyone agreed to con-tinue to work for another summer.

Perseverance is an important compo-nent in the recipe for success. Duringthe 1993 legislative session virtually allof the interested parties made a com-mitment to find a viable solution. Ourworking group, which included legisla-tors, industry representatives, and com-munity activists, met on many eveningsafter the regular business of the legisla-ture had ended. We would talk andnegotiate and threaten until midnightor later. Then someone would declarethat they had to get some sleep, and wewould adjourn. Simultaneously, the billwas moving through the committeegauntlet, and after each hearing wewould modify language to meet con-cerns expressed at the last hearing or to

address concerns we knew would beraised by members of the next commit-tee.

In every difficult endeavor, there is aseminal moment when success is finallyachieved or calamity prevails. In ourcase this occurred near the end of the1993 legislative session. Our group hadreached agreement on virtually every-thing that was possible. Still thereremained a few issues where compro-mise seemed impossible, primarilyfinancial assurance. We were meetinglate in the evening around the giantround conference table in the gover-nor's office. I was surprised whenGovernor King came into the room andstarted to shake hands and slap backsof everyone in the room. He told us heappreciated all the hard work, then heleft. Suddenly, he poked his head backthrough the door and said, “Oh yeah,one more thing, no one leaves this yearuntil we have a bill!” That night wereached agreement on our final draftand appeared in the legislature as a uni-fied group. Legislators appreciate hav-ing all major interest groups agree thata complex bill is acceptable, and thebill passed easily. Needless to say, thegovernor signed the bill too.

I have found that no complex pieceof legislation can be implemented with-out some difficulty. One of the key pro-visions of the Mining Act provided flex-ibility to the Mining Commission toaddress issues such as financial assur-ance, considering actual conditions fac-ing each operation. The membership ofthe commission is diverse, so all inter-ested parties have a voice in the deci-sion-making process. This flexibilityhas been beneficial to all concerned.The approach outlined in the MiningAct and enforced through current regu-lations has allowed for continuingreclamation at current sites, and we aremaking strides toward protection ofour New Mexico communities.

A Brief History of the New Mexico Mining Act

Gary King



ing facilities. In particular, the director must conferwith the secretary of the New Mexico EnvironmentDepartment on proposed rules and proposed closeoutor reclamation plans for new or existing mines.

WHAT ARE THE REQUIREMENTS?

The requirements for a mining operation under theMining Act depend on how the operation is classified.The major categories of operations are existing miningoperations, new mining operations, and exploration oper-ations. Within each of these categories, there is a sub-category of minimal impact operations. The act providesthat reduced requirements should be applied to “oper-ations that have minimal impact on the environment.”Generally, minimal impact mining operations are 10acres or less in size, and minimal impact explorationoperations are 5 acres or less in size.

The Mining Act required all existing mining opera-tions to submit a permit application by December 31,1994, and then submit a “closeout plan” by December31, 1995. The closeout plan is the core of the existingmine permit. The plan must demonstrate the work tobe done to reclaim the permit area “to a condition thatallows for the reestablishment of a self-sustainingecosystem on the permit area following closure,appropriate for the life zone of the surrounding areas.”This reclamation standard must be achieved unless theoperator can show that it conflicts with an approvedpost-mining land use, or can demonstrate that recla-mation of an open pit or waste unit “is not technicallyor economically feasible or is environmentallyunsound.” With the closeout plan, an operator mustfile financial assurance with the director sufficient toallow the state to hire a third party to complete theclosure and reclamation requirements of the permit.An approved existing mine permit applies for the lifeof the operation.

The permit application process for a new miningoperation is more complex. The application must con-tain considerable detail both on the nature andimpacts of the proposed operation and on the back-ground of the mine owners and operators. The appli-cant must collect at least twelve months of environ-mental baseline data on the permit area. The baselineinvestigation must provide information on (and thepermit application must assure that) the operation andreclamation of the facility protect human health andsafety, wildlife, cultural resources, and hydrologic bal-ance. The Mining Commission rules require that anew mining operation employ best management prac-tices, which include designing the operations to avoid

or minimize acid drainage and other impacts toground and surface water, to control erosion, and touse contemporaneous reclamation when practicable.

The director cannot issue a new mining permitunless he or she can find that the reclaimed operationwill achieve “a self-sustaining ecosystem appropriatefor the life zone of the surrounding areas” unless con-flicting with a post-mining land use (no other waiversallowed), that the proposed reclamation is economi-cally and technically feasible, and that all environmen-tal requirements can be met without perpetual care. Inaddition, the operator or owners cannot fail any of thebad actor tests established under the act and the rules.A new mine permit has a maximum term of twentyyears with ten-year renewal periods.

A permit for an exploration operation is the simplestto obtain. Exploration permits are valid for one yearand may be renewed. Exploration operations mustreclaim any disturbed areas within two years aftercompletion of the operation.

WHAT IS THE ROLE OF THE PUBLIC?

The New Mexico Mining Act provides substantialopportunities for the public to participate in the majoractions. Public notice is required on applications forthe issuance, renewal, or revision of permits; for vari-ance or standby requests; and for the release of finan-cial assurance. The act requires that notice be provid-ed in several manners, including mailing to allproperty owners within a half mile of the operation, tolocal governments, and to those citizens on lists main-tained by MMD; posting in four conspicuous placesincluding the facility entrance; and publishing a noticein a local newspaper. The notice provides citizens withan opportunity to comment on the proposed actionand to request a public hearing.

Any person who is adversely affected by any order,penalty assessment or permit action taken by theMMD director can appeal to the Mining Commission.The commission will then conduct an evidentiaryhearing on the appeal. The commission decision canbe appealed to the District Court.

Finally, the Mining Act is unique among NewMexico environmental statutes in allowing a “citizensuit.” A citizen with an adversely affected interest cansue any person who has allegedly violated any rule,order, or permit issued under the act, or sue theEnergy, Minerals and Natural Resources Department(EMNRD), the Environment Department, or theMining Commission for violating the act or for failingto perform any non-discretionary duty under the act.

115


P O L I C Y , E C O N O M I C S , A N D T H E R E G U L A T O R Y F R A M E W O R K

follow the Mining Act rules. The greatest challenge in agency coordination has

been the relationship between MMD and theEnvironment Department. As mentioned earlier, MMDmust obtain a determination from the secretary of theEnvironment Department that a proposed closeoutplan for a new or existing mine will achieve compli-ance with all applicable environmental standards. Inparticular, if a mining operation has potential ground-water contamination concerns, the EnvironmentDepartment will require that the operator obtain a dis-charge permit with a “closure plan.” The closure planattempts to ensure a long-term solution to any groundwater pollution concerns. Like the MMD closeoutplan, the closure plan will establish reclamationrequirements because in many cases the EnvironmentDepartment has determined that the best way to pre-vent long-term water contamination is through recla-mation.

While the closure and closeout plan requirementsappear to establish duplicative and possibly conflict-ing mandates for the operators, the agencies and oper-ators have managed to lessen the conflicts. Mine oper-ators will often submit one plan to both agencies. Theagencies will then negotiate with the operator, andamongst themselves, to establish one set of require-ments for the reclamation of the facility. The agencieswill also allow the operator to provide financial assur-ance that satisfies both permits. After the plans areapproved, the agencies then continue to coordinate onthe implementation and enforcement of the plans.

While the agencies have had success in avoidingduplicative and conflicting requirements, the processof agency coordination, both for state and federalagencies and for the operators, consumes considerabletime and resources. The issue remains as to whetherthe work of the agencies can be streamlined further.Toward that end, there have been sporadic investiga-tions into modifying the statutory framework, agencystructure or staffing arrangements to combine, re-dis-tribute or change these elements to simplify require-ments and to reduce or eliminate duplication. Theseinclude combining MMD and EnvironmentDepartment ground water regulatory programs, keep-ing them legally separate but housing them in thesame location, or modifying the controlling statutes toeliminate duplicative requirements.

Financial Assurance

The Mining Act requires that each operator post, priorto obtaining a permit, financial assurance (FA) “suffi-

A citizen suit cannot be commenced if the agencieshave undertaken and are “diligently prosecuting” anenforcement action.

WHAT ARE SOME CURRENT MINING ACT ISSUES?

The implementation of the Mining Act over the pastdecade has triggered numerous disputes over theinterpretation and impact of the act. Some disputeswere ultimately resolved by agency actions and someby court decisions. What follows is a discussion of afew of the major issues that remain at the forefronttoday.

Agency Coordination

At the time the Mining Act was passed, mining opera-tions were already subject to a number of regulatoryregimes. These included water and air quality rules ofthe Environment Department and the federalEnvironmental Protection Agency (EPA), and, if themine was on public land, the rules of land manage-ment agencies such as the Bureau of LandManagement, the U.S. Forest Service, and the StateLand Office. Both the environmental community andthe mining community were concerned about thecoordination of Mining Act requirements with those ofother agencies. The environmental community fearedthat the various agencies would not interact and thatserious concerns could fall into the cracks betweenregulatory programs. The mining community fearedthat the agencies would issue duplicative and conflict-ing requirements that would be costly and time con-suming for the companies.

The Mining Act attempted to address the concernsof both groups. On the one hand, the Mining Act per-mits are treated as umbrella permits that require theoperator to have obtained all other necessary permitsand to obtain a determination from the EnvironmentDepartment that the permitted mining activities willachieve compliance with environmental standards. Onthe other hand, the act also imposes requirements onall permitting agencies regulating mining operations tocoordinate with each other and to avoid duplicativeand conflicting requirements and permit administra-tion.

The Mining and Minerals Division has made somestrides in coordinating with other agencies.Agreements have been reached with the BLM and theU.S. Forest Service that establish processes for cooper-ation on mines on federal land. The State Land Officemodified their rules to largely require their lessees to



cient to assure the completion of the performancerequirements of the permit, including closure andreclamation, if the work had to be performed by thedirector or a third party contractor.” The act also pro-hibits the operator from using “any type or variety ofself-guarantee or self-insurance.” These strict require-ments have resulted in some of the largest financialassurance amounts in the United States: The threelargest mines in the state have FA obligations thateach exceed $100,000,000.

Traditionally, mines have relied on surety bonds asthe primary form of FA. However, changes in theinsurance industry have made surety bonds very diffi-cult and very expensive to obtain for mining compa-nies. As a result, both the agencies and the operatorshave become more creative and flexible to meet FArequirements. The Mining Commission recentlyamended their rules to allow additional forms of FA,including trust funds, and to allow mechanisms suchas “net present value.” Recent large FA submittals haveincluded a package of instruments, including trustfunds, guarantees, collateral and letters of credit.Companies have also been more willing to acceleratetheir reclamation work to decrease their FA obliga-tions.

Issues still remain about the use of certain FA mech-anisms. Most notable are the concerns about whethercertain types of guarantees, such as those provided byparent companies, violate the Mining Act's prohibitionon self guarantees.

HAS THE MINING ACT BEEN A SUCCESS?

The legislature established a goal of promotingresponsible utilization and reclamation of landsimpacted by mining while also recognizing that min-ing is vital to New Mexico. Thus, success can bemeasured by seeing whether the state can requireresponsible mining and reclamation while not killingthe hard rock mining industry in New Mexico.

For existing mines, the act has, up to this point,largely been a success. Reclamation plans have beenapproved and financial assurance has been provided atalmost all of the state’s existing mines. This is aremarkable feat considering that these mines werelargely developed prior to the Mining Act without anyplans for reclamation. At the same time, the state'slargest mines remain operational and the act has notprevented the permitting of mine expansions. Therecent increases in world commodity prices has result-ed in significant increases in production and employ-ment at existing mines, and facilitated the commence-

ment of major reclamation projects. For new mines, the impact of the Mining Act is

harder to judge. A number of new mines havereceived permits under the act. However, the newmines have been fairly small, and no new large metalmine has been permitted under the act. New Mexicois not alone in this regard. Few new large metal mineshave opened anywhere in the continental U.S. inrecent years. Metals mining is now a global industryand, for the past few decades, companies have beenlooking to foreign jurisdictions with large untappedhigh grade deposits and lower costs.

Still, some in industry will argue that the increasedrequirements for new mines imposed by the MiningAct and by other agencies discourage perspective minedevelopment in New Mexico. On the other hand,environmentalists might argue that if the act preventsmarginal operations from coming to New Mexico, thatmay also explain why New Mexico has avoided thedisasters such as Summitville, Zortman/Landusky, andother mine bankruptcies, which have left most west-ern states with considerable exposure for reclamationand environmental cleanups.

A 2004 study by the Fraser Institute, a free marketthink tank in Canada, offers some evidence about howthe mining industry views the attractiveness of NewMexico compared to other jurisdictions. Mining exec-utives were surveyed concerning both the policy cli-mate and the mineral potential of various jurisdictionsaround the world, and their responses were used tocreate several indices. The institute compared theexecutives’ attitudes about the mineral potential of ajurisdiction, both with and without their current regu-latory requirements, to create a “Room forImprovement” index. The four jurisdictions with themost room for improvement were U.S. states:Montana, California, Alaska and Colorado. By com-parison, New Mexico was considered to have relative-ly little need for improvement, finishing eleventh ofthe fourteen U.S. states.


The New Mexico Mining Act (Mining Act) waspassed by the New Mexico legislature in 1993.

New Mexico was one of the last states in the West topass a mine reclamation act. The New Mexico legisla-ture wanted to address environmental issues related tomining that are not specifically covered by otherstatutes and create legislation that would take intoaccount the environmental health and productivity oflands impacted by mining long after mining hadceased. The intention was to ensure reclamation ofdisturbed lands to a condition that provides for a ben-eficial post-mining use. Three of the most importantconcepts embodied in the Mining Act are:

• The mine area will be reclaimed so that it is envi-ronmentally stable following closure

• The reclaimed mine will support a beneficialpost-mine land use

• The establishment of a self-sustaining ecosystem

These three concepts are developed as requirementsin the Mining Act and drive a mine operator's plan-ning for eventual closure and reclamation of a miningoperation. Knowing these requirements exist, a mineoperator can plan ahead and design the mining opera-tion in such a way as to facilitate closure and theestablishment of a post-mine land use. Future plan-ning then becomes an essential part of the miningoperation and becomes a major economic driver in amine operator’s decision to proceed with mining.Closure is defined as the various steps to be taken toestablish a beneficial post-mine land use, while recla-mation can be defined as the steps to be taken to stabi-lize the site and mitigate the impacts of mining on theenvironment.

RECLAMATION TO AN ENVIRONMENTALLY STABLECONDITION

Before receiving an approved permit, a mine operatormust prove to the Environment Department that hehas met all state and federal environmental laws relat-ed to air and water quality. The secretary of the


Environment Department will then issue a determina-tion stating that the permit applicant has demonstrat-ed that the activities to be permitted or authorized areexpected to achieve compliance with all applicable air,water quality, and other environmental standards ifcarried out as described in the closeout plan. Thisdetermination will address applicable standards forair, surface water, and ground water protectionenforced by the Environment Department or forwhich the Environment Department is otherwiseresponsible. The operator must also prove to theMining and Minerals Division (MMD) that thereclaimed operation will be stable from a mass stabili-ty and an erosional point of view. Where acid-produc-ing materials are present, the operator must addressthese in a way that prevents or reduces impacts to theenvironment. Where wildlife habitat is to be the post-mine land use, potential hazards to wildlife must bemitigated at the site.

POST-MINE LAND USE

A post-mine land use is defined in the Mining Act Rulesas a “beneficial use or multiple uses, which will beestablished on a permit area after completion of amining project” and is required by law. It is to beselected by the mine operator, who must gain concur-rence from the landowner, and approval from theMining and Minerals Division director at the time thatthe reclamation plan is approved. The most commonpost-mine land use designations for New Mexicomines are wildlife habitat, livestock grazing, and com-mercial/industrial. Other post-mining land use cate-gories include cropland, pastureland, forestry, residen-tial, recreation or tourism, water managementresources, and scientific or educational. Before releaseof financial assurance and from further responsibilitiesunder the Mining Act, the operator must meet criteriaor standards that demonstrate that the particular typeof post-mine land use proposed will be achieved atthe site.

SELF-SUSTAINING ECOSYSTEM

The Mining Act requires that a mine operator establish

Planning for Mine Closure, Reclamation, and Self-SustainingEcosystems under the New Mexico Mining Act

Karen Garcia and Holland Shepherd, Mining and Minerals DivisionEnergy, Minerals and Natural Resources Department


a post-mine condition that allows for a “self-sustainingecosystem” unless it conflicts with another type ofapproved post-mine land use. A self-sustaining ecosys-tem is defined in the Mining Act as “reclaimed landthat is self-renewing without the need for augmentedseeding, soil amendments, or other assistance ormaintenance, and which is capable of supportingcommunities of living organisms and their environ-ment. A self-sustaining ecosystem includes hydrologicand nutrient cycles functioning at levels of productivi-ty sufficient to support biological diversity.” Many ofthe post-mine land uses commonly chosen by themine operator, such as grazing land or wildlife habitat,are compatible with the requirement to establish aself-sustaining ecosystem. This is because once themine operator has taken the initial steps toward recla-mation, such as regrading, placement of soil cover,soil preparation, seeding, and mulching, the reclaimedproperty should be self maintaining. After reclama-tion, a period of monitoring the vegetation ensues toprove to the state that the reclamation goals estab-lished in the permit have been met.

As with many hard rock mining laws across theWest, the goal is to require operators to return theland to some semblance of what it was, or to createsome other beneficial use, and not simply leave it asan area that has been disturbed by mining. This doesnot involve “restoration,” which requires putting itback the way it was. It does, however, mean “reclama-tion,” which means that the area will be stable, self-

sustaining, and environmentally sound. It is under-stood by regulators, as well as operators, that this taskis often easier said than done. Creating a self-sustain-ing ecosystem out of disturbed mined land can bevery costly as well as very challenging.

The science of reclaiming disturbed land (reclama-tion science) has been in existence for over twenty-five years. It has changed and evolved over time asresults of scientific studies become available. In gener-al, reclaiming a mine site involves grading or recon-touring the disturbed land, employing erosion con-trols on recontoured slopes, placement of topsoil orcover material, and possibly adding soil amendmentssuch as fertilizer or organic matter. The site is thenseeded and sometimes planted with woody plantseedlings. The MMD requires the use of plant speciesthat are adapted to the site. These are typically nativespecies, but may include drought resistant non-nativespecies as well. A mixture of grasses, herbaceousplants, shrubs, and trees may be required to ensure aself-sustaining and diverse plant community similar toadjacent plant communities. The MMD, in consulta-tion with the operator, establishes what the vegetationstandards and goals will be for successful revegetation.Numerical standards for a percent plant cover, diversi-ty, and density values are written into the mine permitso that the operator knows what must be achieved tomeet the Mining Act requirements for revegetation.The standards are designed to meet site-specific con-ditions of a particular mine site. After seeding, a peri-od of monitoring follows to determine that the site is


The Las Conchas pumice mine in the Jemez Mountainseast of Santa Fe. The mining operation did not include useof chemicals or mining below ground water and wastherefore more conducive to easy reclamation.

The Las Conchas mine following reclamation. The site wascontoured and seeded with native vegetation so that itblended in with the surrounding ecosystem after only afew years of average rainfall.


self-sustaining. The Mining Act requires that a mini-mum of twelve years pass before final surveys are con-ducted to determine the success of the reclamationand whether the mine operator has met the permitrequirements. If the post-mine land use is designatedas wildlife habitat, MMD will require wildlife monitor-ing during the period following reclamation. Theoperator must demonstrate that wildlife is using thesite and that there is nothing detrimental to wildliferemaining from the mining operation. To ensure thesite is conducive for wildlife use, MMD encouragesmine operators to leave features in place that wildlifespecies may use. This may include leaving a fewpower line poles for raptor perches and large boulderpiles for small-mammal habitat.

PLANNING FOR CLOSURE

Once a post-mine land use has been chosen by theoperator and approved by MMD, he can take stepsthat will help him achieve the post-mine land useeven while the mining operation is underway. Forexample, if the approved post-mine land use allowsfor the establishment of aself-sustaining ecosystem,the mine operator mustthink about the best place-ment (location, size, andshape) and engineeringdesign for open pits, wastedumps, leach pads, minebuildings, and infrastruc-ture such as roads, rails,pipelines, and electricalfacilities. If these mineunits already exist, theoperator must think aboutwhat the time frame will befor reclaiming them. Will ittake one year or ten years?What units will be reclaimedfirst? What resources does theoperator have to perform thereclamation, including manpower, equipment, and financial resources? Planningahead can save a significant amount of time andmoney in the long run and can increase chances ofsuccessful reclamation and eventual financial assur-ance release. A well-planned mining operation willinvolve some reclamation while the operation is stillactive. This is called concurrent reclamation, and itallows the operator to keep the financial assurance

and overall reclamation costs to a minimum. If a mineoperator waits until closure to start reclamation, it willincrease the time required to obtain financial assur-ance release and can tie up financial resources formany years after closure.

Most mining operations require one or two years forreclamation. In New Mexico, however, some of thelarger, more complex operations will take many yearsbecause of the immense size of the disturbance creat-ed by mining, often into the thousands of acres. Thelarger mines contain some of the most challengingenvironmental conditions and began operations longbefore the Mining Act was enacted. Often these sitesrequire unusual or unique reclamation approachesbecause of steep terrain or acid-generating materials inthe waste piles. In some cases acid drainage fromthese waste piles either is contaminating ground wateror has the potential to contaminate ground water inthe future. Some of these waste piles will requirewater treatment for many years after reclamation iscomplete.

While existing mines struggle to mitigate environ-mental impacts that occurred before the 1993 Mining

Act, there are still opportu-nities to plan for closure,especially for new unitsand mine expansions. Theoperators should anticipatethe conditions that new orexpanded mine operationswill create and take stepsto mitigate environmentalimpacts before they occur.

For example, if a mineplans to locate a new wastepile or leaching facility onthe mine site, it can con-struct the pile at the finalreclamation slope anglethat is conducive for plantestablishment, eliminatingcostly double handling(regrading) of the materialat a later time. This would

involve designing and constructing new facilities, fromthe ground up, for future reclaimed slopes of 3:1 orless, instead of building slopes at angle of repose(approximately 1.3:1). Once operations at the facilityare complete, the pile then would be covered withsuitable growth medium and seeded. If acid drainageis expected to flow out from the pile, a liner thatmeets environmental standards should be placed


The Chino copper mine, a portion of which is shown here, cov-ers over 9,000 acres and exemplifies the monumental chal-lenges for reclamation facing some mining companies.


under the pile to ensure capture of the acidic drainageand protection of ground water. Before placement ofthe liner, topsoil salvage from the area can save costsassociated with hauling soil cover from anothersource.

Many of the larger, complex mining operations arecurrently conducting scientific studies to determinethe best way to reclaim steep slopes, acid-producingwaste rock piles, acid or high-metal tailings ponds, orlarge open pits. The studies will be a valuable tool indetermining the best approach for reclamation suc-cess. The reclamation plans for these sites are dynamicand can be changed as new information and newtechnology become available.

The increased awareness of modern society on envi-ronmental conservation, along with the impacts ofmodern mining techniques on the environment, haveput new demands on the mining industry to “thinkoutside of the pit,” so to speak. Turning a mined land-scape into one that will become a self-sustainingecosystem, or other acceptable post-mine land use,takes not only a willingness to educate oneself on thescience of ecology and reclamation but also a commit-ment to the concept of returning the land to a benefi-cial use once mining is complete.




L egal mechanisms and safeguards for financialassurance should not be considered valid until

actually tested and proven. As New Mexico decisionmakers consider the topic, it may be instructive toreview the recent experience of another western min-ing state. Montana's plan for financial assurance before1998, based on the conventional scientific and eco-nomic wisdom of the time and designed to shieldMontana taxpayers from liabilities, received its firstmajor test following a corporate bankruptcy, and theplan was found inadequate.

The Montana Department of EnvironmentalQuality's (DEQ) Environmental Management Bureau(EMB) administers the state's Metal Mine ReclamationAct. Under this act, operating permits have beenrequired for metal and stone mining operations inMontana since the state constitution was enacted in1971. Operators are required to post performancebonds to guarantee reclamation of mine sites; reclama-tion standards and the language of the law haveevolved over time, with the late 2004 version being:

82-4-338 Performance bond. (1) An applicant for anexploration license or operating permit shall file withthe department a bond payable to the state ofMontana with surety satisfactory to the department inthe sum to be determined by the department . . . . Inlieu of a bond, the applicant may file with the depart-ment a cash deposit, an assignment of a certificate ofdeposit, an irrevocable letter of credit, or other suretyacceptable to the department. The bond may not beless than the estimated cost to the state to ensure com-pliance with Title 75, chapters 2 [Air Quality] and 5[Water Quality], this part, the rules, and the permit,including the potential cost of department manage-ment, operation, and maintenance of the site upontemporary or permanent operator insolvency or aban-donment, until full bond liquidation can be effected.

Performance bonds are typically submitted as suretypolicies, letters of credit, certificates of deposit, orcash. Please note that the act does not specificallymention corporate guarantees, and as a matter of poli-cy, the state to date has not accepted any. From time

to time until 1998, it was necessary for the state toforfeit bonds to use for reclamation of mine or explo-ration sites abandoned by operators, but these projectsgenerally involved financial assurance ranging from afew hundred to a few hundred thousand dollars.

In the mid-1990s Pegasus Gold was a medium-sizedgold producer, with mines in Idaho, Nevada, andMontana and a wide-ranging global exploration pro-gram. Pegasus had six mines in Montana, includingfour heap-leach gold operations at Beal Mountain,Basin Creek, Landusky, and Zortman, where the com-pany had pioneered heap-leach technology inMontana starting in 1979. In 1997 the company suf-fered a series of financial setbacks from a steadilyweakening gold price, diminished cash flow from theMontana operations due to exhaustion of permittedreserves, and, above all, disastrous losses from a newoperation in Australia that failed to perform as expect-ed. Pegasus went into Chapter 11 bankruptcy in mid-1997, booked a loss of more than $500 million for theyear, and went into Chapter 7 bankruptcy in January1998. Over the next few months, the mines that stillhad positive cash flow were spun off into a new sub-sidiary, Apollo Gold, and the state of Montana and itsfederal partners were handed the responsibility forreclaiming the four heap-leach properties. The insur-ance companies that had provided the bulk of thefinancial assurance for the properties in the form ofsurety policies had the option to carry out the workthemselves, but declined. Each of the mines hadunique problems.

BEAL MOUNTAIN

Beal Mountain was a 1,470-acre property with twoopen pits and a single 75-acre leach pad containing15 million tons of rock at an elevation of 7,500 feet.At the time of the bankruptcy, mining operations werecomplete, but gold recovery was continuing. In 1997the bond had been reduced from $11.9 million to$6.3 million in recognition of partial pit backfill andother reclamation work completed. The approvedplan included treatment of the pad solution withhydrogen peroxide to break down residual cyanide,followed by land application of the treated water. After

Financial Assurance and Bonding: What Happens WhenBankruptcy Hits

Warren McCullough, Montana Department of Environmental Quality



122

negotiations with the surety company Safeco in May1999, DEQ received a lump sum of $6.3 million aspart of a settlement agreement, which stipulated thatany unused funds would eventually be returned toSafeco. The money was immediately invested in astate-controlled interest-bearing account. Then, work-ing with a court-appointed bankruptcy trustee and theU.S. Forest Service, DEQ began to implement theapproved reclamation plan. It didn't work.

When the first batch of water from the pad wastreated with hydrogen peroxide and land applied, allthe plants in the test area died. After extensive analysisand greenhouse testing, DEQ learned that the padwater had evolved from a simple cyanide solution into160 million gallons of water with 1,300 ppm thio-cyanate, a potent herbicide resistant to conventionalcyanide treatment. Over the next several years, awhole series of unanticipated events and develop-ments followed:

• A $1 million biotreatment system based on ananalogue in British Columbia was ultimately con-structed to process the pad water to reduce thio-cyanate and nitrate. The system worked reason-ably well, but was very temperamental and proneto “crashing.”

• The sensors designed to measure water level inthe pad were not calibrated properly. Days afterBeal was shut down for one winter to conservecosts, the heap overflowed, creating negativeheadlines for DEQ and forcing expensive year-round operation.

• The high-altitude, thin-soiled land applicationarea at Beal was not suitable for the high waterapplication rates necessary to empty the heapbefore it could evolve to a more acidic condition,leading to violations of surface water standards.

• The leach pad solution did continue to evolvegeochemically; the thiocyanate level decreased toa trace, while ammonia and nitrate levelsincreased. The biotreatment plant crashed, andDEQ actually had to buy thiocyanate to jumpstart the treatment process.

• Mineralized rock in place and in surface dumpswas found to contribute unacceptably high levelsof selenium to a local stream with a recoveringwestslope cutthroat trout population.

• An environmental group filed suit against theU.S. Forest Service and DEQ over the violations

and the department's issuance of a discharge per-mit to itself.

• The suit was rendered moot when the U.S.Forest Service took the site under CERCLA(Superfund) and assumed management responsi-bility.

• In spite of a synthetic cap and soil cover placedover the heap, the water level in the pad isrebounding, and the treatment plant must bestarted once again. Miscalculation of draindownhas been a common problem.

To date, long-term water treatment issues linger atBeal after the expenditure of more than double theface amount of the bond. Additional funding for thesite came from interest on the bond money, gold salesshared by the trustee, millions in supplemental fund-ing from the U.S. Forest Service (USFS), and $2.5 mil-lion in reclamation bonds sold by DEQ under authori-ty granted by the state legislature in 2001.

ZORTMAN/LANDUSKY

Permits for mining and heap leaching of oxide goldores on private and Bureau of Land Management(BLM) land at Zortman and Landusky in the LittleRocky Mountains were issued in 1979. As miningcontinued until 1990 at Zortman and 1996 atLandusky, the pits were deepened into sulfide ores,and acid rock drainage was noted around 1992. Alawsuit over water quality violations led to a consentdecree among DEQ, the Environmental ProtectionAgency, Pegasus Gold, and its sureties before thebankruptcy, requiring the company to buy zero-coupon bonds to create a trust fund to provide forlong-term water treatment after 2017.

DEQ had calculated performance bonds for earth-moving work totaling about $30 million based on theprojected condition of the mines at the end of aplanned and approved expansion. The price of goldfell, however, and the expansion was canceled asuneconomic. A recalculation shortly after the bank-ruptcy projected a shortfall of about $8 million, butthe agencies received only an additional $1.05 millionfrom the bankruptcy court while the corporate officersresponsible for the company's problems received $2million in “golden parachutes.” Zero-coupon bondsthat had been purchased were insufficient to createthe full trust fund, but there was no company left, andthe sureties took advantage of an error in the consentdecree language to stop any further payments. Full



• Site maintenance and water treatment costs con-tinue in bankruptcy. Laws and financial assurancemust be designed and written to allow regulatoryagencies immediate access to funds.

• Insurance companies may prefer protractednegotiations or litigation to settlement of multi-million dollar claims.

• If reexamination of an approved reclamation planafter bankruptcy or site abandonment revealspreviously unaddressed issues, the public maydemand additional environmental analysis, evenif there is no responsible party to pay for it.

• Financial assurance should be written to reflectinvolvement of federal partners.

• Financial assurance should be written to excludeline-item limitations on costs, and agenciesshould attempt to collect bond amounts as lumpsums to be placed in interest-bearing accounts.

• It is extremely difficult in the current economicclimate for even financially stable companies toobtain surety bonds. Agencies should be flexible,creative, and reasonably patient as companies tryto establish acceptable guarantees for reclama-tion.

• Indirect costs (administrative overhead, engineer-ing design, inflation, contingencies, etc.) are amuch larger part of total reclamation costs thanDEQ previously assumed.

• Real-world emergencies will continue to occurunder agency management.

• The geochemistry of solutions in leach pads, tail-ings impoundments, and waste dumps may con-tinue to evolve during reclamation, complicatingtreatment and increasing costs.

• When bond calculations include a componentfor long-term water treatment, DEQ runs the cal-culation out to one hundred years. Projectedexpenditures beyond one hundred years have lit-tle effect on a present-value figure.

• Bankruptcy trustees serve different masters andmay sell equipment or facilities needed at the sitefor reclamation.

• Agencies must be creative when faced with finan-cial assurance shortfalls. Grants or supplementalfunding may be available from federal partners

funding of the trust would require an up-front invest-ment now of more than $11 million, a sum that issimply not available to the state.

The consent decree also provided a yearly paymentof $731,000 from the sureties for water treatment onsite until 2017. A court-appointed site managementcontractor and bankruptcy trustee burned through thefirst year's budget in 3–4 months, leading to DEQ'sdismissal of the contractor, who in turn filed a lawsuitagainst the agencies and a successor contractor. Sixyears of water treatment experience since then haveshown the pitfalls of including calculations with lineitem amounts in agreements. Until the agreement wasrenegotiated in 2004, the sureties refused to pay morethan the line item amount for any category in the cal-culation, even when other categories were underspent,and actual yearly costs ranged from $750,000 to$950,000. The total projected water treatment short-fall from the end of 2004 until 2017 is about $7.5million.

The validity of the approved reclamation plans atthe time of the bankruptcy was questioned almostimmediately by tribes on the adjacent Fort BelknapReservation and environmental groups, which ulti-mately led to a supplemental environmental impactstatement paid for by the Environmental ProtectionAgency. The agencies' record of decision selected alter-natives that could be largely paid for with the knownfunding, rather than the optimal alternatives identi-fied. This led to another lawsuit, which lingers on,even though good engineering, additional funds fromthe BLM, and favorable bids from contractors haveactually allowed the agencies to implement most ofthe optimal alternatives. In spite of reclamation todate, water quality in a drainage that flows onto thereservation continues to deteriorate. The BLM hastaken Zortman/Landusky under their CERCLA author-ity, but there is yet another lawsuit over water qualityissues to be contested.

The dirt work reclamation was largely completed bythe end of 2004, but only about $2 million of theoriginal bonds remained unspent. More than $6 mil-lion in supplemental funding has come from the BLMand state Resource Indemnity Trust grants, but signifi-cant projected long-term shortfalls remain, with nosolution in sight.

LESSONS LEARNED

Lessons learned by state and federal regulators fromsix years of hands-on experience directing mine recla-mation projects include the following:

(EPA, BLM, USFS). In 2002 Montana sold $2.5million in state general obligation bonds to fundreclamation at Beal Mountain.

CORPORATE GUARANTEES

Two recent corporate histories involving prominentcompanies in Montana will help illustrate why thestate does not wish to hold corporate guarantees formine reclamation. For years, Montana PowerCompany (MPC) was a solid, secure, dividend-payingutility company. A few years ago the company divest-ed itself of its traditional assets, including coal-firedand hydroelectric power units, transmission systemsfor electricity and natural gas, and oil and gas produc-tion. The proceeds of the divestitures were all plowedinto telecommunications, particularly fiber optictransmission lines. That overbuilt market collapsed.The company went into bankruptcy, and the remain-ing assets were liquidated for pennies on the dollar.The company that purchased the transmission systemsalso went into Chapter 11 bankruptcy, although it hasrecently reorganized and emerged. A corporate guar-antee from MPC for anything would have been worth-less.

Stillwater Mining operates two platinum groupmetal mines on the JM reef, a world-class mineraldeposit in Montana's Stillwater Complex. Althoughthe stock traded in the upper $40 range only a fewyears ago, a free-fall drop in palladium prices andhuge capital costs drove the stock down below $2.50in early 2003. The company was widely believed to beon the verge of bankruptcy, which was averted onlyby a takeover and infusion of capital by Nor'ilskNickel, a major Russian mining company.

Such huge and sudden variations in overall value,especially in corporations perceived as solid, with sub-stantial assets, have convinced Montana regulators ofthe need to avoid corporate guarantees. Had corporateguarantees been in place from Pegasus Gold, the stateof Montana, with a limited industrial base and fewerthan a million people, would have faced a total recla-mation shortfall on the Pegasus properties alone ofmore than $75 million.

124





Hard rock mine operators face significant chal-lenges in establishing financial assurance for New

Mexico mining operations under the New MexicoMining Act and the Water Quality Control Act. Thesechallenges include obtaining approvals of the scope ofwork for future mine closure and reclamation fromthe two state agencies that administer these laws,developing and obtaining approval of cost estimates,determining the amount of financial assurance basedupon the cost estimates, and establishing financialassurance mechanisms. The Chino and Tyrone mines,operated by Chino Mines Company and Phelps DodgeTyrone, Inc., respectively, are the two largest hard rockmining operations in New Mexico, and their experi-ences are representative of these challenges.

CALCULATION OF FINANCIAL ASSURANCEAMOUNT

The Chino and Tyrone mines are “existing miningoperations” as defined by the New Mexico Mining Act.These mines were developed, operated, and most oftheir current footprints in place decades before theMining Act was enacted. Open pit mining began atChino in 1910 and at Tyrone in the late 1960s. Thislong history results in special challenges, includingenvironmental impacts that occurred before environ-mental regulations were established, and the applica-tion of new closure and reclamation requirements andperformance objectives to facilities designed and con-structed before these requirements were established.For example, these mines were designed with steeppit and stockpile slopes to minimize the footprint ofthe mine. Installation of soil covers as part of reclama-tion to reduce infiltration of precipitation and toestablish vegetation requires that slopes be flattenedby regrading at substantial cost.

Another major challenge is the Mining Act require-ment to establish financial assurance based upon the“worst case” scenario. These worst case assumptionsare that the mine operator will go bankrupt at thepoint in time when closure and reclamation costs arethe highest, and that the state will have to hire a third-party contractor to conduct the work. Although pro-

viding maximum protection to the state, theseassumptions result in financial assurance requirementsthat can substantially exceed the estimated cost for theoperator to conduct closure and reclamation at theend of mine life.

Some mines are required to provide financial assur-ance for long-term water treatment. In the case of theChino and Tyrone mines, as well as the Continentalmine (final permit revision pending), the state hasrequired financial assurance for water treatment for aperiod of a hundred years. It can be challenging toestimate the volume of water that will require treat-ment, the quality of that water, and treatment costsover such a long period. Long-term closure and recla-mation plans take several years to implement andmust be adjusted for cost inflation. Furthermore, theamount of financial assurance required is based upon“net present value.” Initial financial assurance amountsmay be reduced based upon an expectation of futuregrowth of the principal amount over time throughinvestment. This concept was specifically approved bythe Mining Commission in changes to the Mining ActRules made in late 2003.

For the largest mines in the state, the process ofdeveloping closure and reclamation plans, estimatingthe cost of conducting those plans, and determiningthe required amount of financial assurance took aboutten years following the passage of the Mining Act. Thetotal amount of financial assurance required of thetwo largest mines (Chino and Tyrone) combinedexceeded $450 million. The next task was to establishfinancial assurance mechanisms for such largeamounts.

COST AND AVAILABILITY OF FINANCIALASSURANCE MECHANISMS

The New Mexico Mining Act allows the use of a vari-ety of financial assurance mechanisms, including sure-ty bonds, letters of credit, cash certificates of deposit,trust funds, collateral, and third-party guarantees.Until the last few years, surety bonds were the mecha-nism of choice for many financial assurance require-ments, particularly for larger operators. Surety bondscould be obtained in large face amounts by financially

Financial Assurance for Hard Rock Miningin New Mexico

Ned Hall, Phelps Dodge Corporation


healthy companies for relatively modest annual premi-ums. Beginning in 2001 the market for surety bondsfor mine closure and reclamation changed dramatical-ly, with many insurers withdrawing from the marketentirely. Consequently, surety bonds became (andremain) difficult to obtain and, when available, aremuch more expensive. Insurers may also require sure-ty bonds to be secured by pledges of specific assets.

Letters of credit issued by banks can be used asfinancial assurance. However, letters of credit usuallyare issued for terms of one year or less and commandsignificant premiums, resulting in high carrying costs.They generally are not suited to large, long-termfinancial assurance obligations.

The New Mexico Mining Act allows “third-party”guarantees as financial assurance. Third-party guaran-tees may be accepted if they are issued by corpora-tions that meet strict financial tests designed to ensurethat sufficient assets will be available to cover closureand reclamation costs. However, following the MiningCommission's 2003 amendments to the Mining ActRules, third party guarantees now may cover a maxi-mum of 75 percent of the total financial assuranceamount for a mine.

The loss of surety bonds as a viable financial assur-ance mechanism, coupled with the limits on the useof letters of credit and the limitation of third partyguarantees, has resulted in the need for cash and otherassets to be pledged for substantial portions of NewMexico financial assurance obligations. The MiningAct Rules, passed in 1994 as a requirement of the1993 Mining Act, did not contemplate large amountsof financial assurance being covered by cash and lim-ited cash mechanisms to certificates of deposit subjectto the $100,000 FDIC-insured limit. To provide amore suitable mechanism for larger cash deposits, theMining Commission amended the rules in 2003 toallow for trust funds. Following this amendment,Chino Mines Company established a trust fund forone-third of its financial assurance obligation, orabout $64 million, and Tyrone is obligated to provide$27 million in cash funding to a trust fund.

The Mining Act also allows for collateral, includingreal property, as financial assurance, as long as the realproperty is not within the permit area of the miningoperation. Mine operators who have lands outside thepermit area may prefer to pledge those assets to covera part of their financial assurance obligation ratherthan cash, because the use of cash to cover financialassurance obligations precludes the use of the pledgedcash for other investments, including the expansion of


mining operations. The pledge of real property forfinancial assurance, however, has proven to be time-consuming and costly. Transaction costs have includedappraisals, appraisal reviews, environmental assess-ments, surveys, title insurance, and other costs typicalof a large real-estate transaction. Tyrone's proposal topledge collateral for a portion of its financial assuranceobligation is still in process.

CONCLUSIONS

Establishing financial assurance for New Mexico's twolargest mines has been a technical, procedural, andfinancial challenge. As long as this process has taken,it is not yet over. The permits for these mines requireadditional studies of the mines, including studies ofthe performance of various closure and reclamationtechniques and the feasibility of alternative closureand reclamation measures. The plans must be re-eval-uated and adjustments may be required after the stud-ies are completed. In addition, closure and reclama-tion work is now underway on inactive portions ofthe mines. This will require adjustments in theapproved cost estimates and financial assurancerequired, in order to reflect the work that has beenperformed.

Financial Assurance—The Requirements

Douglas BlandNew Mexico Bureau of Geology and Mineral Resources

Financial assurance, also known asbonding, can be required for clo-

sure and reclamation of New Mexiconon-coal mining operations by severalstate and federal agencies, dependingon jurisdiction and potential environ-mental impact. State financial assur-ance requirements are established bythe State Land Office for operations onstate-owned land, by theMining and MineralsDivision (MMD) for obliga-tions under the New MexicoMining Act, and by the NewMexico EnvironmentDepartment for addressingexisting or potential groundwater impacts. Federalfinancial assurance require-ments are imposed by landmanagement agencies if themining operation is on landmanaged by either the U.S.Forest Service or the Bureauof Land Management.

The Mining Act requires that finan-cial assurance be posted before anypermit is approved for an explorationor mining operation. An exception ismade for general permits and minimalimpact exploration permits, miningoperations that in general excavate lessthan 50 cubic yards of material peryear, and exploration operations thatdisturb less than 5 acres of land. Thefinancial assurance amount is based onthird-party costs to perform the close-out or reclamation plan if the operatoris unable or unwilling to perform thesetasks. If the operator performs recla-mation covered by the financial assur-ance, he may reduce the amount offinancial assurance posted with MMD.Forms of financial assurance acceptedby MMD include cash, surety bonds,letters of credit, collateral, trust funds,

and third-party corporate guarantees. The Environment Department may

require financial assurance associatedwith ground water discharge permitsissued under the Water Quality Act.Discharge permits are required for anyoperation that may have an impact onprotected ground water resources, gen-erally defined as those that contain less

than 10,000 parts per million of totaldissolved solids. The EnvironmentDepartment generally accepts financialassurance instrument types similar toMMD. Most mining operations that aresubject to financial assurance for a dis-charge permit are also required to sub-mit financial assurance to MMD, eventhough they may be required for differ-ent aspects of reclamation becauseEnvironment Department requirementsfocus on water quality protection andMining Act provisions ensure the re-establishment of a beneficial post-mineland use. These two agencies haveagreements that allow one financialassurance package to be posted thatmeets the needs of both agencies, andthey coordinate establishment of theamount, management of the financialassurance, and expenditure, if needed.

The State Land Office requires finan-

cial assurance for all types of miningconducted on state-owned lands.However, the state land office does notrequire duplicate financial assurancefor mining activities covered by finan-cial assurance posted with MMD.

The federal land management agen-cies, the U.S. Forest Service (USFS)and the Bureau of Land Management

(BLM), each have three cate-gories of mining operations.They are salable, leasable, andlocatable minerals. Federalfinancial assurance is requiredfor salable and leasable min-erals. Both the USFS andBLM have their own regula-tions that apply to locatableminerals, which are furthersubdivided into operationsthat require casual use, noticelevel, or plan of operationspermits, depending on theamount of disturbance and

environmental impact anticipated. Allof these require financial assuranceexcept casual use. Financial assuranceinstrument types allowed are similar tothose accepted by MMD, except thatcorporate guarantees are not accept-able. A joint powers agreementbetween the USFS, BLM, and MMDhas been adopted to address financialassurance requirements where there isoverlap between them, but conflictingrequirements have prevented coordina-tion of joint instruments between theEnvironment Department and the fed-eral agencies at this time. Fortunately,there are few instances where this hasbeen an issue. To date, no mines havedefaulted under the Mining Act orWater Quality Act requiring reclama-tion managed by the state using forfeit-ed financial assurance.

Financial assurance posted under the New Mexico Mining Act. Jointagency agreements may be between the New Mexico EnvironmentDepartment, the U.S. Forest Service, the Bureau of Land Management,or a combination of these. Data from the New Mexico Energy, Mineraland Natural Resources Department.

FINANCIAL NUMBER TOTAL JOINTASSURANCE OF POSTED AGENCYTYPE MINES AGREEMENTS

Certificate of deposit 18 $448.701 6Surety bond 23 $88,827,858 7Cash account 5 $82,043,304 3Letter of credit 11 $8,693,351 4Collateral 2 $8,564,315 2Corporate guarantee 5 $475,011,015 4





128

This paper explores some factors that influence the avail-ability of water for future mining. Allocation of water islargely a legal matter, but my perspective is that of a geol-ogist and an observer, not an attorney; nothing that followsshould be thought of as legally authoritative, nor as legaladvice.

Mining enterprises always require water. The usesvary widely: dust suppression, milling and pro-

cessing, conveyance of tailings from mills, recovery ofmetals by leaching, dewatering of underground work-ings, and reclamation of mined lands. Apart from sim-ple dewatering, most of these uses can lead to relative-ly high depletion—most of the water is lost toevaporation, rather than returned to the surface wateror ground water system.

New Mexico's mining industry (which includes oiland gas extraction) has accounted for 1.5 to 2 percentof the state's total water use, in terms of depletions(water actually lost to evaporation) in recent decades.(Published state engineer statistics do not separate outoil and gas activities.) The value of water used in min-ing, in terms of share of the “gross state product,” isrelatively high. In 2000, for example, the gross stateproduct in New Mexico from all economic activityamounted to an average of $20,000 per acre-foot ofwater depleted in all uses. The mining category con-tributed $103,000 per acre-foot; the correspondingfigure for irrigated farms was about $347 per acre-footof water depleted.

At first glance New Mexico's water law, evidentlydesigned to regulate water in irrigation agriculture,seems to fit the mining industry poorly. Water rightsare nominally perpetual, tied to specific lands andpoints of diversion (either surface water diversions orwells), as long as beneficial use is made of the water.But mining is almost by definition temporary in anyparticular place. The water use would presumably endwhen the ore, coal, or industrial-mineral deposit isexhausted and reclamation activities completed. Onthe other hand, long dormant periods governed bychanging commodity prices are typical of mining.New mining activity is commonly initiated in estab-lished districts.

Water produced for uranium mining and millingincreased from zero in 1950 to a peak that may havebeen near 20,000 acre-feet per year in about 1980,but was about 2,600 acre-feet in 2000 and has beennegligible (except for reclamation activities) since2002. The pumping was largely for milling and fordewatering underground workings, with the waterdischarged to the surface drainage. The uraniumindustry probably over-appropriated the BluewaterBasin for some period, in the sense that depletionswere sufficient to cause significant lowering of groundwater levels. All of this would be primarily of histori-cal interest, except that other users are now consider-ing the water rights established during the uraniumera, whatever they may in fact be, and uranium pro-duction itself may emerge again as energy demandscontinue to rise.

Copper production in southwestern New Mexicohas needed water for much longer, since about 1804.Water produced for the minerals industry in Grantand Hidalgo Counties was about 8,700 acre-feet in1962, of which about 5,300 acre-feet were depleted.The corresponding figures for 2000 were 25,800 acre-feet and 21,300 acre-feet, but between 1962 and 2000there were major changes in the patterns of pumpingfrom surface water and ground water sources. In TaosCounty, molybdenum mining and milling has requireddiversions of as much as 9,400 acre-feet per year (in1976), but water requirements have varied widelydepending on the status of operations. In 2002 diver-sions were about 2,700 acre-feet, and they have notbeen above 6,000 acre-feet since 1991. These kinds ofvariations lead to complicated questions about the realmeanings of the water rights involved.

The “use it or lose it” aspect of our water law wouldappear to mean that a mine operator, having onceacquired a water right, must find a home for it insome other beneficial use when mining ceases, or risklosing the value it represents. In actuality, many otherwater uses share the impermanent character of min-ing. Water rights for agriculture are “not necessarily”forfeited during periods of non-use when irrigatedfarmlands are under the acreage reserve program orconservation program provided by the Soil Bank Act,

Will There Be Water to Support Mining’sFuture in New Mexico?

John W. Shomaker, John Shomaker & Associates, Inc.



and, in general, “forfeiture shall not necessarily occurif circumstances beyond the control of the owner havecaused non-use.” This provision would appear toapply to mining, but there are few guidelines for itsapplication.

Our water law does not distinguish among benefi-cial uses, regardless of their relative values to the com-munity, and so would not particularly favor miningover some lesser-value use. On the other hand, high-value uses can justify the purchase of rights and thetransaction costs relating to new appropriations ortransfers of existingrights, whereaslower-value usesmay not be able to.This may be anadvantage for min-ing, but would notentirely offset theloss of value attrib-utable to a long anduncertain adminis-trative process.

The conventionalpermitting processof the state engineercan consume a greatdeal of time andseems to differfrom environmen-tal and land-use permits in that the outcome is lesspredictable. Compliance with regulations, howevercomplex and burdensome, will lead to a permit fromthe Environment Department, but a state engineerpermit may simply be denied if the applicant hasfailed to prove that no existing right would beimpaired at some time in the future, or that the pro-posed project is not detrimental to the public welfare.It may not be as easy to demonstrate the future effectsof ground water pumping as it is to assume an obliga-tion to conduct an operation in some particular way. Atrend toward a somewhat different policy seems to beemerging, in which the state engineer is willing toissue a permit, and somewhat more quickly than inthe past, but sets conditions that represent a continu-ing obligation of the permittee to keep existing userswhole.

Mining projects have commonly been controversial,and in some cases the state engineer administrativeprocess, which must take the public welfare intoaccount, has been the forum for presenting a case

against a project even though the effects of its pro-posed water use have been small. The scope of publicwelfare issues is not defined, however, and may bevery broad if opponents of a project are creative.

New Mexico has been engaged in regional waterplanning since 1987, and a statewide water plan is inthe making. Unfortunately for mining, of course, as-yet undiscovered mineral deposits can't be representedin the plans, nor can the water plans anticipate pricechanges that would trigger reopening of former opera-tions. One of the principal functions of the regional

plans is to provideguidance to the stateengineer as to eachregion's understandingof the public welfare. Ifpotential mining is notspecifically dealt within a regional plan, is anew mining project atsome disadvantage,simply because it couldnot be defined inadvance and has notbeen examined throughthe public-welfare lens?

The state legislaturein 1980 recognized thatmining (uranium min-ing in particular) would

better contribute to the economy if water could bepumped from underground workings, even thoughthe water might not be put to any beneficial use (asrequired under a conventional water right), and insti-tuted the Mine Dewatering Act. Mine dewatering wasaccepted as a beneficial non-use. The act actually wentmuch further and provides for a sort of condemnationprocess in which any new user, not limited to mining,may take the water needed, as long as existing users'rights are kept whole through a “plan of replacement”approved by the state engineer. The Mine DewateringAct is still in place but has been little used.

Mining commonly is distant from major streams, sothat simply transferring irrigation rights upstream ordownstream to serve them is less a consideration thanthe potential for “local impairment” in the form ofincreased drawdown in wells. In such a case, a plan ofreplacement under the Mine Dewatering Act mightinclude providing water, or payment of the incremen-tal increase in costs of pumping. Even though themines themselves may be away from major streams,

Water depleted in mining uses (including oil and gas) in New Mexico.



130

many years. The current status of these permits andrights may be described differently by people in themining industry and on the state engineer's staff.Probably in some cases the applicant corporations nolonger exist. It seems likely that the energy resourcesof the basin will be of economic interest again, howev-er, and resolution of these cases will be necessary.

Much of the new mining in New Mexico is likely tobe in the form of sand-and-gravel or crushed-rockoperations. These tend to be near urban areas,because markets are primarily in building and high-way construction, and transportation is relativelyexpensive. Permits relating to zoning and land use areprobably more of a concern than the availability ofwater. Water requirements are relatively short term,governed by a typical operation's reserve life of per-haps twenty years, and with little land-surface recla-mation (and therefore irrigation) required, at least fornow on private lands. Requirements for reclamation,and therefore for water, seem likely to increase in thefuture, even on non-public lands.

depletions of water still influence the amounts ofwater available for delivery to Texas or Arizona underinterstate stream compacts, and transfer of existingsurface water rights is likely required to offset theseeffects.

Water rights acquired for mining, either by applica-tion for a permit to appropriate water and then per-fecting the right by using water, or by simply declar-ing the existence of a right that had been establishedbefore the state engineer asserted jurisdiction over theparticular ground water basin, have an importantvalue on a mining company's balance sheet. However,such water rights may not be as fully defined as wouldbe desired today. Are rights perfected under permits toappropriate from the state engineer of equal statuswith rights that have been adjudicated in court? Arerights automatically valid for post-mining closure andenvironmental reclamation needs, even if those useswere not specifically described in the original permitapplication, license, or declaration? Do such rightshave the same status and value as irrigation rights (forexample) when the mining-related uses are finally atan end? Policies or litigation may be necessary toanswer these questions.

If beneficial use is “the basis, the measure and thelimit” of a water right (in the words of the NewMexico Constitution), what proportion of a waterright would remain valid for future transfer to anotheruse if the water requirement in the mining usedeclines over time? What if a large part of a right isunused for many years more than the four-year statu-tory period, after which the state engineer may serve anotice warning of possible forfeiture? If a water rightmust continue to be available for post-mining envi-ronmental uses for a long time, but water is not actu-ally put to beneficial use, would some part of the rightbe deemed abandoned? How long will a water right,established or acquired for mining, continue to bevalid if the mining company chooses to hold it inanticipation of reopening of the mine? And how longwill the right continue to be valid if not transferred toanother use?

In the San Juan Basin, many applications to appro-priate ground water were filed by uranium and coalcompanies decades ago; some were approved and per-mits issued, and some are still pending, but in manycases no water has been used for years. A number ofrights, established by drilling of exploration wells, orby actual operation for some period, were declared byuranium and coal companies before the state engineerasserted jurisdiction but have not been exercised for

POLICY, ECONOMICS, AND THE REGULATORY FRAMEWORK · 2007. 6. 1. · Mining Act on operators, St. Cloud mines zeolite, an inert absorbent material involving no chemical pro-cessing,

Documents