Compiled by Al Gedicks, Exec. Secretary
WISCONSIN RESOURCES PROTECTION COUNCIL
210 Avon Street #4
La Crosse, WI 54603-3097
(608) 784-4399
Revised and Updated, August 1999
 

Environmental Aspects

Socio-Economic Aspects

Cultural Aspects

Sources

Note: Sources are footnotes indicated in report by ( number).

Socio-Economic Aspects

"A poll of Wisconsin residents indicated that more than half were against a proposed mining project at Crandon and less than a third were for it."

Results of a poll of Wisconsin residents conducted by Chamberlain Research Consultants.  October , 1997.

"If I were in their shoes - that is the people of Crandon - I wouldn't believe the numbers coming from Crandon Mining Co.'s predictions."(45) 

Prof. Bill Freudenberg, Rural Sociology, Univ. of Wisconsin, Madison, consultant to the Wisconsin Department of Natural Resources.

"The mining companies' economic growth projections weren't worth the paper they were written on." 

A former mayor of  Craig, Colorado, a coal boom town.(46) 

1. Will Mining Bring Economic Prosperity to Northern Wisconsin?

Exxon and Rio Algom have promised major economic benefits from mining jobs and taxes with no negative effects on the local economy either during or after the project. Unfortunatey, these rosy economic projections are not supported by evidence from other mining communities or from the track record of either Exxon or Rio Algom.

a. the predictions used to assess economic impacts are often just "shots in the dark." The literature on socio-economic projections has shown that the margin of error in the past commonly reaches average levels of 100 percent. The main reasons for this high margin are the lack of accurate data for exact employment, poor or inadequate baseline predictions, and assessing areas of impact which cross jurisdictional borders of communities with different decision-making powers.(47)   Neither Exxon/Rio Algom, nor its contractors have shown any evidence that the local labor force has the necessary job skills required by Exxon contractors. A number of recent studies of job growth show that, on average, only about 25% of new jobs go to local residents.(48) 

b. in making these rosy economic projections, CMC has defined the study area to include the entire three-county area including Forest, Langlade and Oneida counties. This broad choice of definition insures that the economic contribution of the project will appear much higher than it would if the analysis were done only on Forest County, only on Mole Lake, or any other subregion of the 3 county area. It also assures that the relative concentration of benefits in certain subareas will be disguised.(49)   For example, CMC says the project will be composed of "local area residents and workers that will migrate to the area."  CMC does not consider a third category, namely, workers who commute in to the study area to work. These workers, who commute in, but live elsewhere, do not contribute to the direct or indirect economic output of the study area. It is likely that most of the permanent employees will not live at Mole Lake, in the Towns of Lincoln or Nashville, or even in the whole of Forest County.

2. Mining Projects Are Often Associated with Rural Poverty

c. CMC's estimate of the number of in-migrants is based on the number of job slots open. But experience shows that major project areas attract many more than this number of people to relocate there. Mining communities frequently attract more workers than can be employed, creating high rates of unemployment in mining communities.(50)   The problem is that "as jobs develop in a fast-growing area, the unemployed will be attracted from other areas in sufficient numbers not only to fill those developing vacancies, but also to form a work-force that is continuously unemployed."(51) This is one of the reasons why resource extraction is closely related to increased poverty in the affected area. A study which looked at the counties of the northeastern U.S. found that unemployment in extractive-based counties was consistently higher than in other types of non-metropolitan counties.(52)   Median income levels are often lower than those in non-extractive based local economies.(53)   The weight of available evidence shows that areas dependent on mining have much higher levels of poverty than do other rural regions and communities.

d. Many of the 400 promised "permanent" jobs will likely go to skilled miners who migrate to the area in search of mining employment. As of September 1995, the White Pine copper mine/mill, which is the largest employer in the western Upper Peninsula of Michigan, laid off 1100 miners.(54)   These skilled workers will certainly be hired ahead of local people without this experience.

3. Mining Does Not Provide a Stable Economic Base for Communities

e. the sudden shutdown of the White Pine copper mine/mill illustrates the dangers of being dependent on a single industry. When a local economy (and the tax base) depend heavily on one industry, the economy in that area is unstable. Exxon says it will operate the mine for about 30 years, but the company is not prevented from shutting down before then. In Ladysmith, the Flambeau Mining Company, only in operation since 1993, has already received permission from the DNR to speed up production in order to shut down its mine a year ahead of schedule.

f. even if a worker has a secure job with Exxon, it is not clear that the employee's health and safety will be assured. In 1989, Exxon had the worst mine safety record among the 20 largest undergound mining firms in the U.S.(55) 

g. a huge project based on zinc, a metal in its "worst situation since the 1930s," is clearly not a stable or reliable investment.(56)   When Exxon withdrew from the Crandon project in 1986, it cited the low price of zinc, which at the time was selling for 44 cents a pound. But when the project was restarted in 1993, the price stood at 44 cents a pound.(57)  The Canadian industry newspaper The Northern Miner has extensively reported on the low price of zinc, due to a "gross oversupply," and the reduced use of zinc in auto sheeting. It has cited reports stating that "In the longer term, there are no real growth markets for zinc..use is forecast to fall.(58)  The economic collapse of the Asian economies has led to an oversupply of both zinc and copper and falling prices. "We didn't foresee prices this low," admits Patrick M. James, chief executive of Rio Algom.(59) 

h. in 1982, Exxon pulled out of a giant shale oil project near Parachute and Rifle, Colorado, after spending $400 million to get started. Overnight, 2,100 people lost their jobs, and 7,500 support workers faced an uncertain future. Local business people lost their shirts since they had invested heavily in the new business they expected. Even after Exxon's pullout, outdated job publicity continued to attract a transient unemployed population, and placed added burdens on social service agencies just as those services were being cut back.(60)  Big multinational corporations can afford to write off millions of dollars. Local communities can't.

i. In January, 1999,  the Mole Lake Sokaogon Chippewa Tribe, along with the Town of Nashville, the Menominee Indian Nation and the Lac du Flambeau Chippewa Tribe, received a $2.5 million grant from the federal government to create an Empowerment Zone to end povertry through economic development.(61)   This grant has resulted in the Northwoods Niijii (meaning friends) Empowerment Zone to offer long term sustainable jobs without the fear of a "boom and bust" economy, according to Nashville Town Chairman Chuck Sleeter.

4. Mining Projects have Significant Social and Economic Costs

i. CMC underestimates the public costs and overestimates the public benefits generated by the project. They say "The project is not expected to place any direct requirements for public services such as fire protection or security upon local governments in the area." This statement seems absurd on the face of it. A huge project like this will have major direct impacts upon municipal service costs. CMC's own data show that most schools are at or near capacity. If excess capacity is not available, the project will be responsible for significant public capital investment costs. The same is true for Crandon municipal wastewater treatment.

j. The best-documented side effect from mining is the boom and bust effect, wherby local communities gain from income during a mining operation, but expend their budgets supporting an increased population, and are left holding the bag after the company closes operations. These post-operation costs include physical clean-up (as in Rio Algom's shutdown of its East Kemptville mine in Nova Scotia(62), sudden large-scale unemployment, and an inability to pay for enlarged school systems and city services.

k. boomtown residents are more likely to experience "unusually high levels of life stress, which arise not only from the amount of change in their lives, but also from the deficits and frustrations resulting from overworked community services, family needs and difficulties, and a host of other stressors produced by the boomtown environment."(63) 

5. Economic Costs may Outweigh Economic Benefits of the Mine

l. although state law would require Exxon and Rio Algom to pay Wisconsin citizens a proportion of their profits after expenses, the company can find ways to make their expenses look larger and their profit look smaller. If the price of zinc and copper remain at current levels, or sink even lower, the company would not pay any tax!  Exxon Minerals Co. losses came to $430 million in 1980-85; in 1991 they lost $36 million.(64) 

m. a well-known impact of rapid population increase is inflation, especially in commodities such as housing and land. This, in turn, reduces "real" wages, and increases some property taxes. This especially affects those on fixed incomes, such as social security recipients. 

n. the present economies of Forest County and Langlade County are healthy, according to Exxon's own studies. The area's economy is boosted by tourism on the Wolf River, Rollingstone Lake, Pickerel Lake and other water bodies downstream from the proposed mine. If the mine comes, will the area still continue to attract people wishing to escape the busy city for the pristine quiet of the northwoods?

o. none of the studies being done by Exxon and its contractors consider the potential long-term environmental damage to the economy of the area. A dollar amount cannot be put on the loss if our tourism industry is affected by harm to our resources. A waste spill could not only damage the resources, but cause expensive legal battles.

p. Wisconsin taxpayers who live nowhere near the mine would have to foot the bill for the costs of the perpetual monitoring and maintenance of the state's largest toxic waste dump at the headwaters of the Wolf River. Replacement costs for the dump's liner could reach $800 million over a 10,000 year period.(65)   The Public Intervenor noted that Wisconsin has no way of evaluating whether Exxon's estimates for the costs of reclaiming the mine are accurate. Exxon has every incentive to underestimate these costs so they can reduce the size of the bond they have to post as their financial security for reclamation.(66) 

q. When Rio Algom closed its Poirier copper and zinc mine in Quebec, they avoided spending $1.2 million to clean up the toxic wastes left at the site by selling the mine to the brother-in-law of a government official for $1 in 1985.(67)   Nine years later, when the government official was convicted of a breach of trust, Rio Algom agreed to take responsibility for cleaning up the site. To date, the site is still one of the province's worst toxic waste dumps. 

r. the bust that followed the mining and lumber booms in northern Wisconsin communities earlier in this century would be repeated during the bust phase of a gigantic Crandon mine. At this point almost all mining  towns face a pattern of unemployment and swollen public service expenses, problems which are almost impossible to solve.

6. Exxon/Rio Algom have undermined local democracy by negotiating in closed door sessions with local units of government for advance permission to mine through a local agreement.

s. Citizens in the Town of Nashville objected to the closed door negotiations but their protests were ignored. Among the major problems local citizens had with the local agreement was the attempt to exempt the mining company from all town zoning ordinances, regulations and laws and to limit the powers of local government and the courts to directly or indirectly prohibit mining. In the election after the agreement was signed, four out of the five board members who had signed the agreement were replaced by anti-mining candidates. Local citizens also filed a lawsuit seeking to overturn the local agreeement. Just before the lawsuit was scheduled for trial in June, 1999, the former town board offered to settle out of court by admitting their violations of the open meetings law. The details of the written admission are still being worked out, but the bottom line is that their admitted violations will be accepted by the Court as findings of fact and conclusions of law. Once this agreement is signed, the Wisconsin Resources Protection Council plans to ask the judge to reconsider his earlier ruling that he would not void the local agreement.

t. In September 1998 the town of Nashville rescinded the local agreement with Rio Algom's Nicolet Minerals Company.(68)  Without this agreement from the town, the state cannot grant a mining permit to the company. As soon as the town board voted to scrap the local agreeement, Rio Algom filed a "Notice of Claim" saying the town's cancellation of the agreement was illegal. In direct correspondence with Nashville citizens, the company implicitly threatened to bankrupt the town through litigation.(69)  The Nashville town board and a majority of its citizens are committed to protecting the town's environment, and the health and safety of its citizens by standing up to Rio Algom. The town has established a legal defense fund to help cover the legal expenses necessary to defend itself. They have also established a web site called "Nashville Wisconsin Under Siege!" at http://www.nashvillewiundersiege.com/index.html  Tax deductible contributions may be made to Town of Nashville Legal Defense Fund, c/o Chuck Sleeter/Joanne Tacopania, P.O. Box 106, Pickerel, WI 54465. 

u. the Town of Nashville has responded to the lawsuit filed against it by Rio Algom by countersuing the company and removing the case to Federal Court in Milwaukee. The town charges that the local agreement was the result of a conspiracy by the mining company and the town's former attorney (Kevin Lyons) to defraud the town of its zoning authority over the proposed mining operations. The town alleges in its countersuit that Kevin Lyons agreed to recommend approval of the local agreement by the former town board in return for the mining company's agreement to pay him over $350,000 in past due legal fees and expenses supposedly incurred while representing the town.(70)
 

Environmental Aspects

Socio-Economic Aspects

Cultural Aspects

Sources