Mining Companies in Cabinet Showdown

Mining companies in Cabinet showdown
By MICHAEL JAMISON of the Missoulian

LIBBY - Back in mid-October, a long letter arrived at Kootenai National Forest headquarters complaining that a planned mine would jeopardize grizzly bears and mountain lakes, and warning that forest officials had not done enough to gather public comment.

The 18-page letter, with 100 additional pages of exhibits, cited both state and federal law at length - and demanded that the hardrock mining project be more carefully scrutinized.

But the letter, and many more before it, did not come from the environmental community. It came from another mining company.

In recent months, two mining companies, each racing to be first in line to dig silver and copper from beneath the Cabinet Mountains Wilderness, have been locked in battle, each accusing the other of professional sabotage.

“It's absolutely unprecedented,” said Glenn Dobbs, president and CEO of Mines Management Inc. “It is without parallel, in my experience.”

“I've never seen anything like it, not in all my 30 years in the industry,” agreed Bill Orchow, president and CEO of Revett Minerals Co. “I have never seen one company attack another's project this way.”

Beyond concurring that their feud is both unique and worrisome, Dobbs and Orchow don't agree on much else.

Orchow wants to mine under the wilderness from the west, Dobbs from the east.

Both say that from an environmental and legal standpoint, there is room for both mines. But both also suspect that from a political and social standpoint, so much industry in one wild pocket may well prove impossible.

One mine will be tough enough to sell, they said. Two might be one too many.

And so this gloves-off race to be first in line, because with metals prices at record highs, neither can afford to wait.

Complicating the dispute are conflicting messages from government regulators. The state of Montana says Dobbs has a perfectly good permit and environmental review, but the U.S. Forest Service says he has no project to go with those documents. Is it even possible, Dobbs wonders, to have a permit for a project that doesn't exist?

That, finally, may be the multimillion-dollar question to which everyone involved would like a very speedy answer.

“The window of opportunity is right now,” Orchow said. “Right now. There's a lot at stake.”

Glenn Dobbs is a careful man, as meticulous in his dress as in his choice of words. As he steps off a charter plane and eases into a conference room chair, he introduces himself in a most unlikely way: “I'm just a poor, old hardrock miner trying to build a mine.”

It is a mine Dobbs inherited a few years back from Noranda Inc., the company that first explored the Montanore project east of the Cabinet Mountains crest. Located south of Libby, the project has been active for decades.

Noranda dug tunnels, tested soils and ores, wrote geotechnical reports, conducted metallurgical studies, completed environmental studies and secured permits.

And then the company up and left, abandoning the project in the fall of 2002 amid metals prices too weak to justify further investment.

That's where things get confusing. Noranda - and before them Borax - had been leasing many of their claims from Mines Management, a tiny family-run company that had existed over in the Spokane area since 1947, but had never done much beyond collect rent on a few remote mining claims.

“There was a stipulation to the lease agreement,” Dobbs said. “If Noranda walked away, they had to return the claims to Mines Management.”

They also had to turn over the intellectual property - all those scientific studies and permits and such - “and that,” Dobbs said, “is how a little company ended up with a huge project.”

A huge project with a 14,000-foot tunnel that stopped, unfortunately, an estimated 2,000 feet short of the ore body. Seems Noranda had troubles in the early 1990s with bad water quality in the tunnel, and chose to shut down rather than treat the effluent.

Now Mines Management owns the project, inheriting not only the tunnel but the state permit allowing them to dig those remaining 2,000 feet. And in the last days of 2004, Dobbs and company began processing the paperwork to re-open that tunnel.

A few miles away, on the other side of the mountain, Bill Orchow had been busy. In the years after Noranda abandoned the Montanore project, his Revett Minerals came up with a plan of its own, and claims of its own.

Called the Rock Creek project, it would tap what is essentially the same wilderness ore body, but from the west. Revett worked with state and federal agencies to line up permits for an exploration tunnel into the mountainside.

At one point, Orchow expressed some interest in buying the Mines Management project, and later he sat in on many of the 40 or so meetings to discuss combining the operations in some sort of joint venture.

But those plans collapsed and “we considered the Montanore project abandoned,” he said. “We were busy doing our own thing. We assumed Montanore was finished.”

So did the Forest Service, which has on record several Noranda documents, dating to the fall of 2002, announcing Montanore's abandonment.

“They walked away from the project,” said Paul Bradford, Kootenai National Forest supervisor. “At that point, it was no longer a project.”

But the state believed otherwise. All that polluted water was still in the old Montanore tunnel, and someone was going to have to clean it up. Noranda would not be released from its state permits, despite the company's desire to abandon the project.

“We certainly never considered the project abandoned,” said John North, chief legal counsel for the Montana Department of Environmental Quality. “And within a couple of months, we started hearing from Mines Management that they were going to move ahead and take over where Noranda left off.”

Mines Management, he said, “fell into the Noranda permit, and that permit is still valid.”

The stage, then, was set for a showdown.

Mines Management felt it had a viable project that pre-dated the Revett proposal. The state seemed to agree.

Revett felt it had a project unchallenged by any predecessor, because Montanore had been abandoned. The federal government seemed to agree.

Thing is, when it comes to mining there's a first-in-line, first-in-right sort of approach. Who was first?

“We're in there,” Orchow said. “We have the technical wherewithal, the financial wherewithal, and we have the staying power. We think we're in there.”

“The permits we're working under clearly predate any action by Revett,” Dobbs countered. “We believe anything proposed at Rock Creek should be viewed in light of Montanore.”

Last year, the U.S. Fish and Wildlife Service issued a decision that the Revett project would not overly affect protected grizzly bears. The document - which was required to include all “cumulative effects,” including other projects in the area - did not mention Montanore.

“We're a mile and a half away,” Dobbs said, “and they acted like we don't exist. The Forest Service has made a very bad decision, and they know that. They have a serious problem, and Revett has a serious problem,” because mining opponents could use Montanore's omission to challenge the federal decision.

Dobbs figures the only way for Revett to get out of that mess is “to kill Mines Management and the Montanore project. That's what they're trying to do.”

Dobbs, for one, wants his mine included in the Rock Creek discussion, because that lends legitimacy to his position that Montanore is an ongoing project.

At about the same time the federal government was issuing decisions on Revett, the state was issuing extensions to Mines Management's old permits, allowing them to extend that abandoned Noranda tunnel.

“They can't do that,” Orchow said. “The permit is invalid. It was abandoned years ago.”

Orchow wants Mines Management to begin from scratch, because mining opponents could use Montanore's admittedly unorthodox inheritance to challenge both mines, arguing inconsistency in the permitting process. Where Revett labored through permitting, Mines Management seems to be sailing through.

And that, the men said, is how each came to be sounding like environmental opposition when discussing the other, how they came to be undermining each other all the way to the nation's capital, and how that 120-page letter from Revett's lawyers came to land on Bradford's desk in the Kootenai forest headquarters.

“From a federal standpoint, when Noranda abandoned the project, that basically closed the book,” Bradford said. “That dropped the project out of the pipeline for first-in-line, first-in-time. That's where we are.”

As for the state's position to the contrary, “I don't have an opinion regarding what the state has done,” he said.

“Noranda had a valid exploration permit, and that permit remains valid,” North said. “The Montanore project is very much alive.”

Revett's Rock Creek project is not included in the original Montanore biological review, because Montanore came first.

Mines Management's Montanore project is not included in the latest Rock Creek biological review, because the Rock Creek mine plan came first.

“It's a very, very interesting deal, that's for sure,” Dobbs said. “Personally, I don't think you can have a permit and an environmental review, but not have a project. You can't un-ring the bell.”

He would untangle the mess by acknowledging his own project. Orchow would unravel it by voiding the permit.

“Personally, I have no idea where this is headed,” North said.

Not a few figure it's headed for the courts. Both companies have lobbied hard against the other, firing letters to both state and federal regulators, each challenging the permits and processes of the other.

Revett has hinted at suing the state over Mines Management's permits. Mines Management has hinted at challenging the federal ruling that ignored Montanore when assessing Revett.

It's feasible environmentalists could take up both sides, making for some strange bedfellows, indeed. Many of the accusations Revett makes against Mines Management, in fact, are the same accusations environmentalists make against Revett.

Meanwhile, Dobbs is pumping water and drilling on a $30 million project that isn't, and the state says that's OK, because he's exploring, not mining. Orchow is preparing to do the same on a decision that ignores Dobbs, and the federal government says that's OK, because Dobbs doesn't exist.

Each thinks the other is in violation of the law, and it seems certain someone, somewhere will be sued.

“That's where we are,” admitted Bradford.

At one point, everyone hoped to resolve the matter by merging the companies, or at least hammering out a joint venture. Now, however, it seems too much bad blood has spilled for such reconciliation, and that leaves both projects in limbo.

It's hard to say, now, who's on offense, and who's on defense.

“Does it matter?” Orchow wondered.

Orchow, in letters to the Forest Service, accuses Dobbs of being illogical, of answering serious legal questions with “a bombastic response that is intended to obfuscate.”

Dobbs, in a letter to Orchow, complains of the “absurdity and audaciousness of Revett's attacks on Mines Management.”

Both cite “blatant and obvious attempt(s) to disrupt another company's progress.”

“We can get along, or we can fight,” Dobbs said recently. “Right now, it looks like we fight.

“I'm telling you, this is unprecedented. This doesn't happen in the mining industry.”

But the companies are dug in, and deeply.

“We're in this for the long haul,” Orchow said. “We will develop Rock Creek. We will. Whether there's one mine or two mines or 20 mines, we're only worried about one mine.”