Mining revival? Economic leaders, indicators point to potential for more good-paying jobs to boost Butte economy

2014-03-23T00:00:00Z Mining revival? Economic leaders, indicators point to potential for more good-paying jobs to boost Butte economy Montana Standard

Butte might never flash the boom-town badge it did decades ago when the “richest hill on earth” was indeed that.

But some say Butte is poised to be the epicenter of mining in southwest Montana once again, and with some nods from environmental regulators, that could seriously boost the local economy and grow the city.

They point to recent approval for expansion of the Golden Sunlight Mine in Whitehall, possible mining operations near Alder and the Highlands gold mining project south of Butte as potential boons that would pose few environmental risk or scars.

Jim Kambich, president and chief executive officer of the Montana Economic Revitalization & Development Institute (MERDI), says they could do more than just help Butte rebound from recent job losses.

“One of the things we think is real crucial is the mining part of economy that is here right now and some potential for it to grow and maybe give us a little more edge in growing our economy real quick,” he said.

Don Peoples, who was Butte-Silver Bow’s chief executive when mining operations shut down completely in the early 1980s and unemployment here soared, said the local economy has diversified and recovered since then.

A big part of that has been the 350 good-paying jobs that Montana Resources supports by mining here, he said, but there could be much more.

“We are miles ahead of where we were but what we really need is to create more work,” Peoples said. “People look at Butte-Silver Bow and its

population is flat. What we really need is to create more work.

“The key to growing the economy is basic-sector jobs and the one sector we think has great potential is mining,” he said.

That all sounds great, and

perhaps it would be, but some are wary of “no worries” promises.

“I do support mining in general, especially because of our situation in Butte,” said former state Rep. Fritz Daily, who spent years in the Montana Legislature weighing the pros and cons of mining. “It’s the economic engine that drives the train.”

He hopes the gold project in the Highlands south of Butte, for example, wins necessary permits and is successful – but not if it comes with a hefty environmental price.

“The benefits better far outweigh the environmental consequences,” Daily said. “I think as a community, we have overlooked the future sometimes and what might happen in the future. The environmental future is in jeopardy because of that.”

Mining still big economic driver

Peoples remembers when mining in Butte, which had been sliding for years, stopped all together in the early 1980s when the Atlantic Richfield Company completely shut down operations.

Unemployment soared to around 20 percent locally, he said. Around the same time, Northwestern Airlines took Butte off its map, ceasing its twice-daily flights in and out of the city. The Safeway Distribution Center shut down. There were other closings.

Montana Resources started mining the Continental pit in 1986, albeit on a much smaller scale than in years past. It did not mine from 2000 to 2003 but resumed when metal prices rose again.

Butte has since drawn manufacturers such as SeaCast and Renewable Energy Corp. and FedEx opened a distribution center here. Unemployment has been below 6 percent the past two years and population has grown slightly in each of the past seven years.

But there is still no bigger driver of the local economy than mining.

According to the Bureau of Business and Economic Research at the University of Montana, the largest basic industry in Butte-Silver Bow County and Anaconda-Deer Lodge County is still mining, accounting for roughly 28 percent of the economic base.

Worker earnings from mining plummeted in 2009 but have regained pre-recession levels.

In 2012, the average annual wage in the natural resources and mining field in Butte-Silver Bow County was nearly $95,000, according to statistics compiled by NorthWestern Energy economist John Kasperick.

The next-highest category was the federal government at $61,396, followed by manufacturing at about $54,000.

According to MERDI, mining by Montana Resources accounts for 22 percent of the local economy and 19 percent of the property-tax base for local government and public schools here. For each direct mining job, there are more jobs that support it.

“The impact it has on the community is unbelievable,” Peoples said.

The case for more mining

Mining advocates were pleased recently when the Montana Department of Environmental Quality issued guidelines for an open pit garnet mine at the Red Wash Hard Rock site near Adler, about 70 miles southeast of Butte in Madison County.

Garnet USA already has an operating permit for a processing facility and mining of nearby dredge tails.

The DEQ plan will require Garnet USA to include more groundwater monitoring at the Alder site and Alder Gulch processing plant, but MERDI says it could become the first new mining operation permitted in Montana in 25 years.

Mining backers also hope it could pave the way for the Butte Highlands Joint Venture Project, a proposed gold mining operation located in the mountains about eight miles south of Butte.

The project is a partnership between Timberline Resources Corp., which acquired the property in 2007, and ISR Capital, a private investment and merchant banking firm based in Boise, Idaho.

Timberline has conducted almost 20,000 feet of surface drilling exploration in the area, which is within the headwaters of three separate watersheds – Fish Creek, Moose Creek and Basin Creek.

If it gets the necessary permits, the venture expects to employ at least 50 people, with 120 or more jobs created to support the operation.

Steve Osterberg, vice president of exploration for Timberline, said the mine would operate for about 10 years. And, he said, it will be safe for the environment.

It would be an underground operation with any waste rock being back-filled into already mined tunnels and then cemented into place to assure stability. Ore would be trucked offsite and before discharge, water would be treated to DEQ standards.

“Montana has very stringent environmental regulations that must be complied with,” Osterberg said. “We must by law protect that water and that means we will have to treat the water to lengthy degrees before we are legal to release it to the surface.”

The project must not only be cleared by the DEQ, it must secure a route through the U.S. Forest Service for trucking ore. Between the agencies, the permitting process already has lasted more than four years.

There could come a point, Osterberg said, when the length and uncertainty of the permitting process causes investors to walk away.

He hopes the DEQ, now that it appears close to wrapping up permitting for the proposed Garnet mine operation, can now devote more time to permitting issues on the Highlands project.

Looking back, looking ahead

Daily, the former Butte lawmaker, said he believes farming, logging and mining can be done in environmentally safe ways. And he said he does not know much about the proposed Highland project.

But if that or other mining operations are not done safely, he said, the consequences could last for decades and stretch thousands of miles.

“That (Highlands) project sits right on top of the Continental Divide,” he said. “Whatever happens there is going to happen down the road and will happen all the way to the Pacific or Atlantic because you are right there at the headwaters.”

The economics of it all sounds great, but Daily says there is more to consider.

“As a county, I think we have overlooked the future and what might happen in the future and Butte has a history of fly-by-night outfits telling us they will do this and that and in the end it doesn’t happen.

“We have a history of that because we are hurting a little bit and we look forward to the jobs.”

Peoples said there is no disputing that Butte has suffered from environmental mining scars.

“But mining today is a lot different,” he said. “It has to be safe and you have to have mining. We (at MERDI) feel pretty strongly about that.”

The economic boost to Butte could be big.

“One mine is worth a lot of macramé shops,” he said.

But he and others at MERDI say the opportunity, including the Highlands project, won’t be there forever.

“The investors are going to say, ‘When am I going to start seeing a return?’ Peoples said.

If the permitting process drags on too long, he said, “the investors are going to say ‘my money can be used somewhere else.’”

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