Few of us are very good at predicting the future. Just ask any bookie. But no matter how cloudy your crystal ball is, you can take comfort in the fact that the predictive abilities of Western hard rock mining companies are even worse.
A report released in December 2006, by the natural resources consulting firms Kuipers and Associates of Butte, Mont., and Buka Environmental of Boulder, Colo., for the environmental group Earthworks looked at the water quality predictions made by Western mining companies for environmental assessments prior to their mining operations. They then compared these predictions with what the actual water quality was after mining was under way.
And guess what? In nearly every assessment, the mining operators predicted that there would be no impact or minimum impact to water quality as a result of their operations. But about three-quarters of the time, these predictions were wrong, resulting in either surface or groundwater quality deterioration in excess of established water quality standards.
The report looked at 183 major modern-era hard rock mines in 14 states — Alaska, Arizona, California, Colorado, Idaho, Michigan, New Mexico, South Carolina, South Dakota, Utah, Washington and Wisconsin. The majority — 178 of the 183 — were located in Western states. The report developed “case studies” for 25 of the mines based on a number of criteria. “The characteristics of the case study mines were similar to those of all mines with reviewed EISs (environmental impact statements),” the report said.
Comparison of Predicted and Actual Water Quality at Hardrock Mines is a detached examination of the impact of hardrock mines on water quality, chock full of facts, refreshingly free of hysteria. The report was released in early December, but attracted very little media attention, perhaps because it is so densely packed with data that it defies easy summation.
But the report makes chilling reading. Hecla Mining’s Grouse Creek Mine in Idaho, for instance, predicted no impacts to water quality prior to mining. In fact, the mine’s tailings impoundment leaked into groundwater, exceeding standards for aluminum, copper, arsenic, selenium, silver, zinc and cyanide.
Barrick Gold’s Golden Sunlight Mine in Montana predicted the risk to groundwater was slight. The actual result was contamination of downgradient wells with cyanide and copper. Or TVX Gold’s Mineral Hill Mine in Montana predicted no impacts to water quality. But they ended up exceeding standards for cyanide, nitrate, manganese, sulfate, arsenic and total dissolved solids.
This litany of water quality failures goes on in numbing detail for 277 pages — not even including the statistical and detailed information in two appendixes available online.
Seventy-three percent of the mines in the study predicted in advance that they would have little or no adverse effect on surface water quality after they had taken steps to mitigate their impact. But after mining started, 60 percent of the mines had exceeded surface water quality standards. The numbers are similar for groundwater impacts: 77 percent predicted low impacts, but 52 percent of the mines actually exceeded groundwater quality standards.
In other words, a person who knew nothing about either hard rock mining or water quality would have a more accurate prediction rate simply by flipping a coin than the combined wisdom of some of the West’s hard rock mining companies. There are, after all, only two possible outcomes: either water quality gets worse, or it doesn’t. If you flip a coin, you’ll predict the correct outcome half the time. But the mining companies, after careful technical analysis, were right only about one-quarter of the time.
To what can we attribute this less-then-mediocre performance? A cynic — not that there are any cynics here — might conclude that in predicting that their mines would not have negative impacts on water quality, the companies were simply telling regulators what they wanted to hear.
Alan Septoff, research director of Earthworks, the group that commissioned the study, says, “There’s a perverse incentives structure set up. The people who make the predictions are in the employ of the prospective mining operators, who want a prediction that will allow a regulator to sign off. As long as this incentive is in place, you’re going to get these predictions … No matter how well intentioned you are, you can’t be responsive to your shareholders and responsive to the public interest.”
He adds, “The public needs to be represented by somebody who puts the public interest first, which is not the mining companies.”
In a white paper on the issue, Septoff wrote, “100 percent of mines predicted compliance with water quality standards before operations began … 76 percent of mines studied in detail exceeded water quality standards due to mining activity.”
Indeed, a mining company whose business and investment decisions were right only about 25 percent of the time would not be in business for long. Which got me thinking: Maybe the problem is simply that poorly-managed hard-rock mining companies made poor predictions about the impact of their operations on water quality. In other words, maybe this environmental indifference was simply an extension of endemic bad management.
The report listed detailed analyses of 71 mines, which were covered by 104 environmental impact statements: Where they were, who owned them, what their water quality predictions were; and what the actual water quality was. So I looked at two measures of management quality often used by investors — earnings per share and return on equity — to see how company management rated. Then I looked at predicted and actual water quality to see if there was a correlation between good company management and good water quality prediction.
Sure enough, a company with good management was more likely to be in the ballpark with its water quality predictions than a company with bad management. Bankrupt Asarco’s Ray Mine in Arizona made no predictions about water quality, but after mining showed significant exceedences in both groundwater and surface water.
Newmont Mining, which rates high in the management scales I used, predicted no impacts to water quality for its Mesquite Mine in California, and no impacts were seen at the time of the Kuiper and Buka study.
The correlations weren’t perfect, of course. Barrick Gold is a well-run mining company, but showed significant exceedences of numerous water pollutants after saying that there would be no impact from its McLaughlin Mine in California. But in Barrick’s defense, the water quality at the site was already poor before mining began.
The report is one more weapon in the arsenal of those calling for the long-overdue reform of the 1872 Mining Law. At the very least, we should have people peering into the crystal ball who are not financially invested in the outcome.
Dan Whipple is a guest columnist for New West writing from Broomfield, Colorado. Find his “Due West” columns at www.newwest.net/duewest.