The Crested Butte News Serving the Gunnison Valley since 1999
It will be up to Congress
While nothing is set in stone, negotiations are under way to keep Mt. Emmons molybdenum-mine-free forever. Under a general concept agreed to by the mining company, local environmental organizations and the town of Crested Butte, the decades-old controversy over extracting moly from Red Lady could likely end with U.S. Energy Corp. walking away with rights to other federal lands worth tens of millions of dollars.
Responsibility for running the water treatment plant located on the flank of Mt. Emmons would then shift to some sort of local control. Running that plant costs about $1.8 million annually.
If all, or at least most of the pieces of the complex jigsaw puzzle can come together by the end of this year, mining on Mt. Emmons might be prohibited in perpetuity by the U.S. Congress.
While the details are far from being defined, the various parties involved in the talks, including U.S. Energy, the town of Crested Butte, the High Country Citizens’ Alliance, the Red Lady Coalition and both of Colorado’s U.S. senators, are optimistic something can be worked out under the broad concept.
Negotiations have been taking place since last June. U.S. Energy announced Monday in a press release that it is open to some sort of “land exchange or similar process with the United States for the mining claims associated with the Mt. Emmons Project.”
What everyone wants and what Congress needs to do…
During a conference call with investors on Tuesday, May 15, U.S. Energy CEO Keith Larsen said it was possible a Mt. Emmons land exchange could be tied in legislatively with a similar land exchange between the state of Wyoming and land located inside the Teton National Park.
“Bringing in the Wyoming land exchange with this proposal in a single bill could include the Wyoming congressional delegation as a co-sponsor of the necessary legislation,” U.S. Energy president Mark Larsen explained later in a phone interview with the Crested Butte News. “That would then have cross-party sponsorship with both Democrats and Republicans advocating the preservation of two crown jewel properties. Given the state of Congress at the moment, that could be important.”
During the Tuesday call with investors, Larsen admitted that the molybdenum mine situation could be dragging down the company’s stock price, which was sitting at about $2.36 this week. “People might see the mine as a negative, and pursuing this land exchange could help ease the minds of investors,” he said.
The ultimate goal from the other partners involved in the talks is to have Congress approve a “mineral withdrawal” for Mt. Emmons as part of the deal. That would essentially prohibit mining on Mt. Emmons forever unless another Act of Congress is passed to open it up to mining once again.
The mineral withdrawal and land exchange legislation could be introduced by Colorado’s U.S. Senators Mark Udall and Michael Bennet. Udall sits on the Senate Energy and Natural Resources Subcommittee on Public Lands and Forests.
“Realistically, I’d give the odds of this deal at least 50-50,” said Larsen. “It will basically come down to Congress and the administration. The challenge will be Congress. It’s tumultuous and there is a lot of division between the two parties right now.”
The essential elements of the deal
Basically, the parties have agreed to pursue a deal where U.S. Energy would be traded a significant amount of land rights to give up its right to mine the estimated 22 million tons of high grade molybdenum ore located in Mt. Emmons. U.S. Energy has 25 patented mining claims representing 365 acres of land and mineral rights. It has an additional 160 acres of land owned by the company. U.S. Energy also holds approximately 1,353 unpatented mining and mill-site claims associated with the mining project, constituting approximately 9,395 acres in the area.
As it is shaping up in the early stages, the deal would involve some sort of federal land exchange where the U.S. Energy claims and land west of Crested Butte would revert to the U.S. Forest Service in exchange for land of equal value going to U.S. Energy.
An official federal appraisal determining the value of the U.S. Energy property would have to be conducted in the near future but the mining company says, based on its recent appraisals, the value is somewhere between $50 million and $100 million. U.S. Energy also says that as part of the deal it needs to have a third party entity take over operation of the water treatment plant located on its property; the exchange must be “substantially” completed by the end of 2012; the company will continue to pursue its current permitting efforts for full mine development; and shareholders “receive significant value” as part of the exchange.
Larsen said Tuesday that land associated with coal mining in the Powder River Basin of Wyoming has been looked at as part of the possible land swap along with possible credits with the U.S. government for future oil and gas leasing bids. “That area in Wyoming is already an active mining district. We wouldn’t mine it ourselves. We’d monetize it and sell the rights to a coal mining company.”
Local impact
Locally, the trade-off for ending the threat of mining to the town’s watershed would be assuming the operation of the water treatment plant. Currently, U.S. Energy operates the plant that treats water discharge from the old Keystone mine on the Mt. Emmons property. The parties are exploring a process to allow a third party entity such as a newly formed special district to take over operation of the water treatment plant.
Crested Butte Mayor Aaron Huckstep said, “A solidly functioning water treatment plant is in the best interest of the entire upper valley, not just the town. There are several options to find the best route to run the plant but we need to find an equitable way to fund its operation costs.
“We haven’t pinned down the geographic parameters of any special district and it might end up being another mechanism,” continued Huckstep. “The first order of business would be to perform the due diligence on the plant itself to find out exactly the costs involved to run the plant and find out the state of the facility. It came on line in 1982 and might need some significant upgrades. We need a clear picture of what it means to take responsibility of the plant. It’s important that we do our homework. The important piece is that we work in the best interests of the entire upper valley and find the best route forward.”
Reason for optimism
The environmental community agrees with that plan. “This is the closest thing to a solution we have seen in 35 years,” said HCCA executive director Dan Morse. “We are very pleased to be at this point. There is still lots of work to be done and we are interested in doing that work.”
As for the water plant, Morse agrees an evaluation of the plant and its associated costs must be done. “A real understanding of that plant is an important piece of the deal,” said Morse.
Larsen said the integrity of the plant is good. “It’s operated 35 years without a violation,” he said. “We’ve done several upgrades over the years and while some equipment could probably be upgraded, it is in good shape.”
Morse said the idea of stopping mining forever on Red Lady is important for his organization. “If the community is going to this amount of effort there needs to be a significant guarantee that a mine will be out of the equation,” he explained. “Congress has the authority to take lands off the table for mining through a mineral withdrawal.”
Such action is actually part of the 1872 Mining Act, according to Morse, and has happened in locations like wilderness areas, watersheds and recreation sites that need protection from mining and its impacts.
For HCCA, Morse said, getting the mining claims back into the hands of the public has been important. “The Forest Service is aware of the discussions and have an interest in the issue,” he said. “That seems the most likely place the land will end up.”
HCCA will be keeping an eye on any land that ultimately becomes part of an exchange. “HCCA has a job to do and we want to make sure something egregious isn’t happening to whatever land might be in the trade. I’m sure U.S. Energy probably feels the same way. They don’t want to trade one controversy for another.”
The mining company officials agree with that sentiment but until a deal is signed, they plan to continue moving forward with a plan to mine Red Lady. “We will continue to work on the plan of operations for the Mt. Emmons mine, which we plan to submit in the first quarter of 2013,” said Larsen. ”This dual path approach provides us with time to continue to gauge the likelihood of a federal land exchange, while preserving our rights to advance the project towards the permitting process and the resumption of our project marketing efforts at the beginning of 2013. At the same time, it is encouraging to see parties with opposing views come together to develop creative and mutually beneficial solutions. U.S. Energy appreciates the efforts of all the stakeholders in this project to respect and accept different perspectives, and find common ground.”
The Red Lady Coalition (RLC) is also optimistic about current progress. “The Red Lady Coalition is pleased with the direction of the discussions with U.S. Energy Corp. We anticipate that a permanent solution to mining on Mt. Emmons will have a positive economic impact on the entire Gunnison-Mt. Crested Butte community. To that end, RLC intends to continue with Phase II, the surveys-primary data collection, and Phase III, the economic impact scenario analysis, of our Socioeconomic Study,” said RLC chairman Bill Ronai.
Congressional support is the key
Senator Michael Bennet took some credit in convening the stakeholders that led to this potential agreement and feels confident there is potential to strike a deal. “The announcement from U.S Energy, the town of Crested Butte and local conservation groups represents a welcome step forward in the ongoing dialog over the future of Mt. Emmons outside Crested Butte,” stated Bennet. “I look forward to working with the local community, conservation groups and U.S. Energy to find common ground that will allow Mt. Emmons to remain pristine while respecting U.S. Energy’s property rights. While there are still significant details to discuss before an agreement is reached, I stand ready to help facilitate an amicable solution in any way possible—including the introduction of legislation in Congress.”
U.S. Senator Mark Udall also has been actively involved. “This is an encouraging development in the discussions surrounding the future of Mt. Emmons,” Udall said. “I am committed to help all interested parties reach an agreement to move forward that satisfies the needs of U.S. Energy and the community. This is a special area in Colorado, and I look forward to continuing my role in facilitating this dialogue.”
Keep it positive
Huckstep is pleased to hear that, since he said the next logical step is introduction of federal legislation to facilitate the deal. “Overall, we’re very pleased with the discussions which have been cooperative and productive,” summed up Huckstep. “Everyone sitting at the table is very optimistic with the direction this is taking. We all know there is lots of heavy lifting still to be done but everyone involved is willing to do that work.”
Larsen emphasized that while the company’s preference “is to develop a mine that would bring a lot of jobs to the area, we are willing to give this a shot. We sat down, broke bread and came to a workable understanding. Our board wants substantial progress by the end of the year and it’s a tall order. But the important thing is that we are all on the same page and we all want to see resolution.
“The discussions have been very amicable from the beginning,” Larsen continued. “It’s been good to get to know these people. It’s been an enjoyable experience. We are working toward a common goal and we’re going to tee it up and go with the legislative route and hope it gets done.”
