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Eugene Weekly : Lead Story : 9.22.11

Nothing Gold Can Stay

Is mining in Oregon worth the costs?  Part I of II

by Camilla Mortensen

Compared to other Western states like Idaho and California, “on the whole Oregon is not very well endowed,” when it comes to gold, UO geology professor Mark Reed says. He says even Washington has more gold than Oregon. 

But thanks to our geologic history of volcanoes and mountain formation we do have the precious metal. And thanks to the skyrocketing price of gold — analysts predict an ounce of gold will sell for more than $2,000 before the end of the year — there’s a gold rush for Oregon’s public lands. Miners from California are flocking to southern Oregon’s rivers, and the first commercial gold mine in the state in a very long time has been proposed in Malheur County by a Canadian company.

Gold has been looking like a safe-haven investment these days while the stock market fluctuates wildly. On Sept. 6, gold went for $1,920.94 an ounce. With prices like that, it’s no wonder that people want to buy and sell gold plucked from the broken necklaces in your jewelry box or panned and stripped from Oregon’s pristine rivers and public lands. But gold can be volatile, in investments or the environment.



Drilling at Grassy Mountain in Eastern Oregon.  Photograph by Andy Gaudielle.

Mining for gold, precious metals and other hardrock minerals has a toxic legacy in the West. The mercury used to separate gold from the rocks and minerals still poisons streams and lingers around mining sites. Mercury mines such as the Black Butte mine outside of Cottage Grove, now a Superfund site, are believed to be a source of the high mercury levels that lead to warnings about eating some of Oregon’s fish. And the scars of open pit mines dot the Western landscape from mining companies scraping away the land and drenching the rubble with cyanide to leach out the gold. 

Modern mining companies say that this sort of contamination is a thing of the past. Andy Gaudielle is the project manager for a Canadian company called Calico Resources that is proposing the Grassy Mountain gold mine in Eastern Oregon. “Today’s mining is a lot different than it was 100 years ago, ” Gaudielle  says. “The mining industry has had a bad rap and deservedly so,” he admits, but Calico will use “new methods and new processes” to process 1,000 tons of rock per day to get at the 85,000 ounces of gold a year the company believes lies beneath Oregon’s soil. If gold stays at $2,000 an ounce, then that comes to $170 million worth of the precious metal a year. 

But conservationists and others aren’t so sure that the damage to the environment is worth the price, or if the gamut of permits that miners must run have any teeth in the face of the seemingly impregnable Mining Law of 1872. Lesley Adams of Rogue Riverkeeper says suction-dredge mining for gold in southern Oregon is suffocating aquatic life due to turbidity in the river, and the environment isn’t the only cost — cleaning up toxic mine wastes costs taxpayers billions. 

Chris Hansen of the Oregon Natural Desert Association (ONDA) says he is concerned about issues of water use, contamination and road building at Grassy Mountain. And everybody wants to know if the danger to the environment and cost to taxpayers is worth the money the mining will make for out-of-state companies.

 The Environmental Protection Agency has estimated that mining pollution affects 40 percent of Western watersheds, and 2011 Government Accounting Office testimony identified 33,000 abandoned hardrock mine sites in the West and Alaska that degraded the environment by contaminating surface water and groundwater or leaving arsenic-contaminated tailings piles. According to the EPA, the federal government spent at least $2.6 billion between 1998 and 2007 on cleaning up hardrock mines. Oregon alone has 5,827 abandoned hardrock mines, according to data gleaned from the Bureau of Land Management and Forest Service. 





Gold in hot water

UO professor Reed, who researches hydrothermal geochemistry, says Oregon’s geologic history of hot water is what brought gold to its mountains and streams. Oregon has three kinds of gold deposits, he says: veins in metamorphic rocks in southern Oregon’s Klamaths and in Eastern Oregon’s Baker City area; “placer deposits” from weathering and erosion of the metamorphic vein gold; and “veins in young volcanic rocks, such as the early Cascade volcanoes and other volcanic areas on the east side of the Cascades.” Oregon may not have a lot of gold, but what there is spreads throughout the state.

Metamorphic rocks are basically rocks that were changed by pressure. Reed says the metamorphic gold was “cooked out” of the submarine volcanic rocks as they were created in an ancient subduction zone. Gold, as well as many other metals such as copper, lead and zinc, is transported in hot water and carried by sulphurs, Reed says. As the hot water goes through the rock it takes gold with it. So a vein of gold basically follows the flow of ancient hot water through faults and cracks in rock. 

When a vein of gold “is weathered and eroded, then it forms grains that are eroded into streams and rivers,” Reed says. That gold forms placer deposits, which is what miners hunt for when they pan for gold, and what suction dredge miners are searching for when they suck up gravel from riverbeds. 

“Molecularly, on a placer deposit, the gold isn’t tied up with anything,” says Gary Lynch, assistant director of Mineral Land Regulation and Reclamation at Oregon’s Department of Geology and Mineral Industries (DOGAMI). 

DOGAMI is one of the many agencies that oversee permitting for mining in Oregon. Mining can take place on public or private lands. What kind of permits and from what agency depends on where the mining is; what kind of mining; how big the operation is; if it uses explosives and whether it’s on land or in the water, as well as a host of other factors. 

For the most part gold mining in Oregon takes place on public lands where it is governed by the General Mining Law. Unlike other resource extraction activities, such as logging, the public doesn’t benefit from this type of land use and historically taxpayers have had to foot the bill for any resulting environmental degradation. Illegal placer mining pits dug by miner Cliff Tracy near Sucker Creek, a critical coastal coho salmon habitat in southwest Oregon, cost taxpayers $24,000 to repair. Tracy was convicted on charges of misdemeanor illegal mining, but, thanks to the General Mining Law, that doesn’t stop him from being able to file further mining claims. 

Lynch says that while miners and mining companies pay fees to maintain their unpatented mining claims, the fees  “are not a huge amount of money by any means.” Claims that have been patented — meaning the miner has given evidence of a “viable economic deposit” there, filed a patent (for as low as $5 an acre) and now owns that land — do not result in ongoing fees. 

Congress has passed a moratorium on new mineral patents every year since 1994, which has held them at bay. Lynch says that “this all stems ultimately from the General Mining Law of 1872.” That law basically views mining as the “highest and best use” of federal lands, making mines very difficult to stop.

According to the Pew Campaign for Responsible Mining, mining of hardrock minerals including gold, uranium and other metals under the General Mining Law is “virtually unchanged since it was signed by President Ulysses S. Grant to promote development of the West.” 

The Pew campaign says that companies — even foreign-owned ones, like Calico Resources — are allowed to take approximately $1 billion annually in gold and other metals from public lands without payment of a royalty and estimates that taxpayers lose at least $100 million a year while at the same time paying billions of dollars to clean up the toxic aftermath. The Obama administration has made attempts to update the law, but so far has not succeeded.





Sucking nuggets

Lynch says a lot of the mining that’s been going on in Oregon’s rivers is hobby mining. But Lesley Adams says that hobby mining is making southern Oregon look a lot like the proverbial wild, wild West. In one incident, miner Ronald Spears shot an ATV rider point blank in the arm after the rider and his friends drove in and out of Spears’ mining camp. The ATV driver, Gregory Graybill, lost his arm. 

 “Vocal groups of miners believe the 1872 mining law is the only one they have to adhere to,” Adams says.

Much of the mining on the Rogue is suction-dredge mining. Adams describes this kind of mining as “essentially taking a big vacuum” and sucking up gravel and sediment from the river bed. A diver swims along under water, sucking up gold, along with the sediments and sometimes tiny young fish, using a large hose powered by a gas engine. The resulting mix is drawn across riffles in a sluice box that sits on a raft or pontoon, and the heavier gold sinks down while the rest is spewed back into the river.

Concerns about mining are both social and environmental. The Rogue River, for instance, is popular with fishermen and rafters. “On a social level what I’ve been hearing for the last two years is increasing frustration by rafters, fisherman and raft guides trying to negotiate through suction dredgers,” Adams says. In addition to not enough environmental regulation of the mining — the Department of Environmental Quality (DEQ) doesn’t have the staff for enforcement — Adams says there’s not enough police power to keep miners from illegally digging into stream banks. Pete Frost, an attorney with the Eugene-based Western Environmental Law Center, says Oregon State Police troopers “have expressed concerns about the nature of the kind of people” they have to deal with. 

 “This kind of mining is often described as ‘recreation,’” Frost says, “but with the price of gold is where it’s at, it’s a business venture.” Frost is the attorney for a current lawsuit against Oregon DEQ challenging its general permit that authorizes suction-dredge operations throughout much, though not all, of the state.

And it is indeed a business venture. Washington developer Dave Rutan has a patented mining claim on the Chetco River in the Kalmiopsis Wilderness. Rutan filed plans saying he would move 470 cubic yards of gravel a year with suction dredges. Conservationists have fought that plan, and the Chetco wound up on American Rivers’ Top 10 Endangered Rivers list in 2010. 

So far Rutan’s plans have been stymied, but Frost says he continues to watch the situation on the Chetco, though he hasn’t yet filed a case. Congressman Peter DeFazio and Sens. Ron Wyden and Jeff Merkley have introduced legislation attempting to protect the river as part of a trio of bills to protect natural resources in Oregon. 

According to records from the Department of State Lands there are several thousand active suction-dredge miners in Oregon. Miners say that suction dredging is actually good for rivers. The mercury used in gold mining in the late 1800s still lurks in Oregon’s rivers, and miners say they are sucking the stuff out with the suction dredges. Adams, however, says suction dredging in fact “disturbs a lot of land and sediment, increasing the potential to release metals and mercury in the water.” California put a moratorium on suction-dredge mining while it evaluates the environmental impacts and the $2 million a year cost to taxpayers of the practice. As a result Adams says miners are crossing the border into Oregon. 

Salmon is the other big issue when it comes to hoovering up the riverbed in giant vacuums. One concern is that miners move the rocks and cobbles of the river, disturbing habitat. Tailings from the dredging are appealing to fish for egglaying, but Frost says the dredging makes the gravel that salmon and other fish lay their eggs in unstable and more prone to being scoured away when high water comes. The dredging also stirs up sediments, which can negatively affect fish and amphibians. Timing is another factor, Frost says. Suction-dredge mining is not supposed to take place during salmon spawning season, but Adams says, “We see pictures posted in the fall, winter and spring on mining blogs.” 

“They literally posted photos of illegal activities,” she adds.





All that glitters

For Calico Resources, a publicly traded company in Canada, the gold is looking shiny and its webpage is full of enthusiasm. Former actress Terri Anne Welyki, who once appeared as “Swim Beauty number one” in the sci-fi film Deadly Skies and “Pearl Girl” in Hollow Man 2, and is a former Crest White Strips model, is the face of the glitter as the press contact as well as its vice president of corporate development. 

A company called Seabridge Gold actually owns the Grassy Mountain project, which Calico is optioning. Project manager Gaudielle says, “We have an agreement with them, paying them in shares of our stock and if we decide to build a mine, we pay them with stock or net income.”

But the risks to water and the environment make Calico appear a little less glittery to Chris Hansen, Owyhee coordinator for ONDA. Water is a hot commodity in dry Eastern Oregon, and the proposed Grassy Mountain gold mine will require water for its mining and processing. “We have water rights at the property as per Oregon law,” says Gaudielle, who adds that a water handling system will be designed into the process, under state and federal review.

Gaudielle of Calico says, “We are evaluating mining it as an underground mine, where we put either a shaft or ramp by the deposit and extract the minerals from underground, and hoist it to surface.” He adds that “it would be very difficult to permit an open pit mine in Oregon right now. That’s our spin on it.”

Hansen says the fact that Calico Resources is not proposing an open pit mine — as previous companies have done for that site in the past — and that the gold mine will be all underground mining and backfilling makes it “a little more palatable from that perspective.” That said, he adds, “There is still a lot of concern from our point of view.”

About 40 percent of the rock removed from the mine would be mixed with cement and used to backfill the mine, according to Gaudielle. Vaughn Balzer, who works in reclamation at DOGAMI, compares the process to an earthworm moving through the earth, “chewing at one end and spitting out at the other,” filling in its tunnel as it goes. 

The rest of the mine tailings would be dry stacked (dewatered instead of stored in a pond) and put on the ground, changing the contour of the land, Gaudielle says. Calico has stressed that the mine will be consistent with “‘sustainable development’ principles,” but Hansen says that’s greenwashing: “How taking vast amounts of dirt and soil from the earth is going to be environmentally friendly, I don’t know.”

Gaudielle also stresses Calico management’s history of safety — “There’s always hazards involved in a mining operation,” he says. A Northwest News Network investigation into the Lucky Friday silver mine collapse in Idaho that killed a miner in April revealed that hazardous conditions in the mine could have been prevented. It doesn’t put confidence in federal oversight that a federal Mine Safety and Health Administration report on a previous, similar accident at the mine that could have prevented the lethal collapse apparently never made it from the federal agency to the mine managers. But Gaudielle says Calico will promote a safety culture, and he says the mine could employ more than 100 people in Malheur County.

Gaudielle also points to awards the management group has won in its mining of one of the largest surface coal mines in the U.S., a mine called Black Thunder in Wyoming owned by Arch Coal. Arch Coal is one of the coal companies that has controversially been attempting to build a coal export terminal on the Columbia River just as Oregon strives to go coal-free.

Calico has begun core-drilling exploration on the site. Gaudielle says, “One drill rig is running on the site, and a second is on its way.” The company got its permits from DOGAMI to begin exploration but still would have to get permits from state and federal agencies like the BLM and the DEQ to develop the mine. This particular site has been drilled and explored for gold many times over the years, according to a technical report on Calico’s website. Grassy Mountain contains an estimated more than 900,000 ounces of gold. That’s more than $1 billion worth of gold for Calico at today’s prices.

“Right now we control about 3,800 acres of federal land through unpatented mining claims and three patented claims of about 61 acres that the core deposit sits on,” Gaudielle says. “We also have leased about 1,300 acres of private land that is very near the project.” He says the company hopes to process the gold on a mill site very near to the mine, “depending on the permitting process.”

Processing the gold is where the nasty chemicals like mercury and cyanide come in. In the past, gold from open pit mining was processed by heap leaching. Balzer says that process involved piling the ore on plastic- or clay-lined pads then dripping cyanide over the gold. But he says he believes Calico Resources plans to use a closed-tank system for its processing and chemicals.

Hansen says, “They have said it’s going to be a closed loop process, but it’s a pretty heavily intensive chemical process.”

Gaudielle says that he thinks Oregon’s law, similar to that of other Western states when it comes to chemical process mining, is strong enough. “Oregon has a mining law that was legislated in the 1990s for hardrock mining and as far as I know it has not been tested,” he says, adding, “So it’s sort of an open question. But our feeling is that we are able to meet all the requirements.”

Mines like Grassy Mountain must post bonds in case they go bankrupt or pack up and leave. 

Hansen says it’s not just the mining itself that is a concern for the environment. He cites road building as a problem as well. “It’s a basic conservation biology issue — any time you have roads cutting off a wildlife corridor or migration, that’s going to limit their migration and cause undo stress on the species,” Hansen says.

Gaudielle says that Calico will meet all permitting regulations and “work to mitigate any concerns that the public has,” which includes, he says, working with ONDA. “We are seasoned, experienced mine builders,” Gaudielle explains. “We intend to operate the mine as part of the community.”

Professor Mark Reed at the UO has his own concerns about mining.  “We don’t really use gold for much,” he says. “It’s used for a store of value, a place to put money.” But other things that mining gives us, “copper, silver, lead, zinc — do have applications we make use of daily,” he says. “This for me always raises the question of damage to environment versus our apparent need for the material.”

According to the 2011 GAO testimony on abandoned mines, “one factor that contributes to costs for reclamation of federal lands disturbed by mining operations is inadequate financial assurances required by BLM.” The GAO reported that the “financial assurances that were provided for 52 operations were about $61 million less than needed to fully cover estimated reclamation costs.”

Reed says, “No mine for any of these metals should be operated unless it’s rich enough and large enough to truly pay the environmental costs. That calls for such a high standard of evaluation up front, before it’s mined, that it’s pretty hard to execute, which is not to say it can’t be done.”

He says, “You can never truly pay for all of those costs, there’s always going to be some sort of environmental degradation even if you use every known way to prevent it.”

Part 2 will address a proposed uranium mine in Eastern Oregon.