Shining Future, Tarnished Past 

Digging up the pasts of the new Troy and Rock Creek mine owners

On an unseasonably warm and foggy night in the quiet town of Noxon, local residents and environmentalists from as far away as Spokane and Sandpoint, Idaho gathered for their first face-to-face public meeting with the new owners of the Troy Mine and the Rock Creek mine project, who visited this pristine region on the edge of the Cabinet Mountain Wilderness in order to put a brand-new face on an old and familiar story.

The 70 or so residents who gathered in the Noxon public school gymnasium were understandably skeptical. Ever since Sterling Mining Co., a newly formed Montana corporation, announced last month that it had purchased the Troy and Rock Creek mines from New York-based Asarco for $20 million, the people of Sanders County have been asking who the new owners are and what this transfer of power—and environmental liability—means to their community.

By now, the average resident of this region could have earned a master’s degree in environmental science doing little more than tracking Asarco’s progress on the Rock Creek mine. Already in its 13th year of the state’s permitting process, Rock Creek has sparked a veritable war of attrition between environmentalists and the mining industry over the environmental impacts this project may pose, including groundwater contamination, nutrient loading into the Clark Fork River and Lake Pend Oreille 25 miles downstream, the dumping of heavy-metal-laden tailings, degradation of habitat for the grizzly bear and bull trout, and the as-yet-uncompleted remediation of the Troy mine site.

Although Sterling is a new, privately held corporation, among mining industry watchdogs the players are well-known. Its group of investors is led by former Montana Gov. Tim Babcock, who for two decades was a chief opponent of responsible mining regulations and who once worked for a Canadian mining firm to try to put a mine on the outskirts of Yellowstone National Park. More recently, Babcock tried to strip from the books I-137, the voter-approved initiative that in 1998 imposed a statewide ban on all cyanide heap-leach mining.

“This mine will be a real boon to this community,” Babcock told the Noxon audience. “If there are any negatives, I don’t know what they are.”

That, however, depends upon who you ask. Among the other familiar faces in Sterling’s group of investors is its chairman and CEO Frank Duval. In 1974, Duval and fellow investor Hobart Teneff (another Sterling principal) co-founded Pegasus Gold Co. and its subsidiary, Zortman Mining, a company that the Sandpoint-based Rock Creek Alliance once called “the poster child for regulatory inadequacy.”

No neophyte to the mining industry, Duval has been involved in several mining projects in Montana and Idaho that have fallen into financial insolvency. Among the largest is Bunker Hill, a 21-square-mile project that is one of the largest and most complex federal Superfund sites in the nation. Duval and his partners re-opened the Bunker Hill site in 1988 and less than a year later, filed for bankruptcy protection, leaving Idaho’s Shoshone County with a tax liability bill that exceeded $2 million.

According to the Rock Creek Alliance, Duval also served as president of the Star Phoenix Mine in Idaho’s Silver Valley. In 1991, less than two years after the mine re-opened, Star Phoenix filed for Chapter 11 bankruptcy protection. Among its creditors were 100 miners who sued the company for more than $500,000 in back wages.

At last week’s meeting, Babcock admitted that “[Duval] has had some successes and some failures,” but assured the audience that “we will have no problem financing this kind of project” once they take care of what he called “the small detail of the permitting process.”

Babcock added that a timetable for reopening the Troy Mine will be determined by silver and copper prices, which will need to rise in order to make the operation profitable. (Troy operated from 1981 until 1993, when a collapse in world commodity prices forced its closure.) Babcock could not say, however, what Sterling plans to do with the two mines if commodity prices dip once again.

The Noxon meeting also raised questions about who is now responsible for reclamation of the Troy mine. In Sterling’s Oct. 19 press release, Babcock states, “Asarco will continue its commitments to reclamation responsibilities at Troy.” However, at the Noxon meeting, Asarco’s project manager for the Troy Mine, Dave Young, said that Sterling is now responsible for reclamation, with Asarco having transferred its state-held reclamation bond of $2.75 million into the name of Sterling.

This is an important development, notes Dori Gilels of the Rock Creek Alliance, in that mining reclamation bonds have a notorious reputation for being woefully inadequate for covering the cost of environmental cleanups, thus raising the question of whether Sterling has the financial resources to perform the reclamation if the Troy mine is not profitable.

“Sterling Mining Co., and particularly Tim Babcock, really have no conception of what the Rock Creek Mine proposal is, where it’s at in the EIS [Environmental Impact Statement] process, what kind of questions need to be answered,” says Gilels. “This was an opportunity for Babcock to talk to folks about Sterling, and in my opinion he failed miserably.”

“I think that Asarco as far as I know has had a favorable acceptance in the community,” says Babcock. “And I hope we can do better. I’m sure we can.”

But regardless of Sterling’s attempts to allay their fears, it will undoubtedly be the people of Sanders County who decide whether Sterling presents them with the promise of a shining future or the woes of a tarnished past.

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