Homer Alaska - Business

Story last updated at 8:54 PM on Wednesday, February 9, 2011

End-users among Pebble project's foes



By Andrew Jensen
Morris News Service-Alaska

Editor's note: This is the second in a two-part series looking into the rhetoric and the realities of both sides of the Pebble mine debate. Part 1 ran in the Feb. 3 issue.

In the effort to stop development of the Pebble mine, a showdown between developers and environmental groups was entirely predictable.

What has made the Pebble project unique is the opposition from end-users who rely on the very same minerals locked inside the deposit west of Iliamna in Southwest Alaska.

Copper, the main product Pebble would produce if developed, is an irreplaceable component of microprocessors. One of the top known opponents of the Pebble project is Intel co-founder Gordon Moore, who has funded at least $10.3 million worth of grants aimed at protesting the mine.

Gold is a significant part of the deposit, with an estimated 94 million ounces. Gold is a crucial component of microprocessors, but 80 percent of the resource goes into jewelry.

More than 70 jewelry retailers have signed onto Earthworks' "No Dirty Gold" campaign, with dozens of others signing a "Bristol Bay Protection Pledge" to not buy gold from Pebble.

In making the case against Pebble, however, opposition groups like Earthworks and some organizations funded by Moore's foundation are making a case against all mining. The strategy essentially boils down to all mining pollutes, and therefore Pebble is guaranteed to pollute the Bristol Bay watershed.

The extreme rhetoric about mining raises questions, though, about logic and consistency.

"It's exactly counter-intuitive to the thing that gained (Moore) his wealth: being able to access the resources that make the technology that generates his wealth to do the conservation," said Yale ecology professor Oswald Schmitz, who co-wrote an article in April 2010 examining the global tension and moral questions surrounding resource extraction as it relates to Pebble.

"You're bolstering conservation on the one hand while defeating the purpose on the other," Schmitz said. "We're not impugning him for it, but we're saying people don't try to draw these global connections and don't necessarily see the contradictions that they make in terms of their life choices and what they vote for."

Trout Unlimited's Alaska head Tim Bristol said Schmitz's take on Moore is "one way to look at it."

"That's one way I've heard proponents of Pebble put it," Bristol said. "It's also trying to learn lessons of the past and making sure if we are going to do a massive development project, we're going to do it in a place with the least amount of negative impact. If you want to pick a place more difficult to protect the environment and a huge wild fishery ... you couldn't pick a worse spot."

Following the "all mining pollutes" argument to its logical conclusion would mean no mine could be built anywhere — and if no mine can be built safely, how do we get the resources needed for both the essentials of life and our modern conveniences?

Then there is consistency. Is it consistent for groups to routinely oppose resource extraction in the United States while relying on the Internet and must-have gadgets like the Apple iPhone to spread their conservation message? Or to push for a renewable energy economy that if realized would require tons of copper to create smart grids and connect remote wind farms to urban areas?

Is it consistent from a human rights perspective to shift pollution-producing and labor-intensive activities into the Third World, where environmental and social protections are more lax where they exist at all?

Intel found itself square in the middle of just such a battle in summer 2010, when activists launched attacks on the company for what they alleged were behind-the-scenes lobbying efforts to weaken the Conflict Minerals Trade Act.

The bill would have required third-party supply chain auditing to ensure minerals such as the high-value tantulum (used in virtually all high-tech gadgets and smartphones) were not coming from Congo, where mining has funded a war since the late 1990s.

The act would have eventually banned imports traced to the Congo, which Intel and other industry groups successfully lobbied to eliminate when the law was folded into the Dodd-Frank Financial Reform Bill.

In Dodd-Frank, gold was added to the list of potential "conflict minerals" companies must attempt to ensure aren't sourced from the Congo. The Securities and Exchange Commission estimates the reporting requirements will apply to nearly 6,000 companies of the more than 13,000 that file reports with the SEC.

From Earthworks' perspective, there is no "good" gold mine, so even jewelers that signed the "No Dirty Gold" pledge are still using "dirty gold" whether it comes from Pebble or not.

"It's tough to point to a gold mine that we could say, 'Look, here's an example of good practices,'" said Scott Cardiff, who heads the "No Dirty Gold" effort. "Unfortunately, we can't allow ourselves to do that until there's a third-party system for ascertaining that. Until that system is in place, which is in the works through the Initiative for Responsible Mining Assurance, we're not prepared to point to a particular mine as an example of good practices."

The Conflict Minerals regulations also have exposed another part of the industry supply chain that calls into question whether the "No Dirty Gold" campaign is anything other than easy public relations.

Tiffany & Co. senior vice president and general counsel Patrick Dorsey wrote to the SEC Sept. 29 that, "The lack of any identifying characteristics means that the Company, and any other purchaser of refined gold bullion, cannot identify where the gold 'originated.' Given the continuous process involved in the refining of gold, the Company does not believe that even the smelter could certify as to the countries of origin of any specific gold bullion that it has refined."

Tiffany CEO Michael Kowalski said Dorsey's comments reflect the difficulty of sourcing all gold with "100 percent certainty," but that he was confident Tiffany could exclude Pebble gold were it ever in production.

Tiffany has been one of the biggest stars of the "No Dirty Gold" campaign and, like Intel, positions itself as a good corporate citizen. It also sources the majority of its gold and silver from Bingham Canyon mine near Salt Lake City, Utah.

Currently at the top of Earthworks' website is a fact sheet on Bingham Canyon — part of its latest call for Walmart to stop labeling its "Love, Earth" line as sustainable, partially because it sources from the mine — that cites a variety of air and water pollution problems at the operation.

Although Tiffany describes Bingham Canyon as practicing "high standards" for social and environmental responsibility on its website, Cardiff said Earthworks won't make a similar call on Tiffany as it has with Walmart.

Kowalski said his company disagrees with the Earthworks characterization.

Problems at Bingham are "largely historic, legacy issues," Kowalski wrote, "and (Kennecott Utah Copper Corp.) has and continues to act responsibly to address these issues. While much work remains to be done, we have been unable to identify a mining operation that we believe has a superior record in this regard, nor a better current operating record."

Kowalski noted that Bingham does not use cyanide it its gold processing and said Tiffany and the mining industry regard the Environmental Protection Agency's Toxic Release Inventory -- which pegs Bingham as the nation's No. 2 polluter -- as "inappropriate and misleading measure of the environmental impact of mining operations."

"We believe it is far more desirable," Kowalski wrote, "to source precious metals from a historic mining operation that is making a major effort to address legacy problems than to source from a new mine that threatens a pristine wilderness and the salmon fishery dependent upon it."

It shows the polarized nature of the conservation versus extraction debate that even companies who largely align themselves with environmental groups struggle to meet their standards. Schmitz said a national conversation on resource extraction can't take place when it's framed in such stark choices.

"What they need to do," he said, "is change the rhetoric."

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