Last week, in anticipation of the formal public hearing on the EPA cleanup in the Silver Valley, we received a postcard mailing purportedly from “Citizens for a Prosperous Silver Valley” critical of the EPA proposal. The return address was a box in a Coeur d’Alene UPS Store, and we couldn’t find any further information about this alleged group of so-called citizens.
Without any explanation, the postcard’s very first claim is that the “over-reaching and expensive approach will threaten hundreds of current and future mining jobs in the Silver Valley.” The postcard also calls into question the EPA plan saying “EPA wants taxpayers to buy into and pay for a massive expansion that will cost billions of dollars and take a very long time to implement.”
Coincidentally — or not — the positions on the postcard tracked those of Hecla Mining employees who turned out at the public hearing. The large Silver Valley mining concern runs the Lucky Friday mine near Mullan.
The unspoken truth is that Hecla has already been found by a federal court judge to be liable for 31% of the cleanup costs. However, Hecla has not settled this claim with EPA. So Hecla is motivated to minimize projected cleanup costs, so as to minimize their ultimate exposure.
Moreover, Hecla has been criticized for playing fast and loose with required corporate reporting of its cleanup liabilities. (See: Robert Ropetto, Silence is Golden, Leaden, and Copper: Disclosure of Material Environmental Information in the Hard Rock Mining Industry, 36-38, (2004).)
Hecla’s recent report states:
Hecla Limited currently estimates the range of its potential liability for both past costs and remediation (but not natural resource damages as discussed above) in the Basin to be $65.6 million to $93.6 million (including the potential range of liabilities of $60 million to $80 million for Basin cleanup, and $5.6 million to $13.6 million for the United States’ past cost claims), with no amount in the range being more likely than any other at this time. Hecla Limited has accrued the minimum liability within this range, which at June 30, 2010, was $65.6 million.
The problem for Hecla, though, is that all estimates of the upper basin cleanup are nearly $1.3 billion. The lower basin cleanup has barely begun. Also, another mining operation, ASARCO, recently settled with EPA for some $482 million. The federal judge that held Hecla responsible for 31% of the cleanup had held ASARCO liable for only 22%.
Yet, Hecla is a company that paid their CEO nearly $3 million in total compensation last year, has $197 million in cash on its balance sheet, and just posted its second highest gross profit and cash flow from operating activities in Hecla’s 119-year history. In a recent article, Hecla President and Chief Executive Officer Phillips S. Baker, Jr. said, “Our mines, operating management and orebodies combined with current prices allowed Hecla to generate an extraordinary amount of cash flow for the amount of production.” (Meanwhile Hecla’s quarterly report notes that they do not expect to contribute to the employee pension plan this year, and just recently saved $9 million on eliminating a post-retirement medical plan.)
So while the proposed EPA cleanup is, indeed, expensive, and it will, indeed, take a long time to implement, the taxpayers aren’t necessarily going to be on the hook for all the costs. When Hecla finally pays what it owes, the taxpayer burden will be dramatically reduced.
UPDATE 2/25/2011: Hecla announced today that it has reached a tentative agreement to pay $263 million as settlement of its cleanup claims.