Mining companies are notoriously poor with finances and Montanans have to look no further than one of the local mines to see an example of that. The tale of the Stillwater Mine also shows how reclamation bonds are never set high enough.
Recently, the Montana Department of Environmental Quality spent five years determining that the value of the reclamation bond for the Stillwater Nye Mine (the primary mine) was insufficient. According to the study released a month ago, the DEQ decided that the bond needed to increase by almost $2 million to more than $21 million in order to ensure compliance with the Metal Mine Reclamation Act.
The Stillwater Mining Company opened the Nye Mine in 1986, and costs have only increased since then due to inflation. So each time a mine is analyzed, it’s not surprising that the cost to reclaim it would increase over 30 years. And that’s the problem with bonds: first, they’re just estimates; and second, mining companies pay in today’s dollars but reclamation costs tomorrow’s dollars. Reclamation bonds are never sufficient so you can bet the bond set for Black Butte won’t be enough to begin with.
Then you have the problem of mining companies mismanaging their budgets. With the Stillwater Mine, the directors got greedy and tried to expand too fast, buying out-of-country projects. It took a stockholder revolt led by former Montana Gov. Brian Schweitzer to force the company to cut back as it teetered on the precipice of failure. Had that not happened, Stillwater Mining Company would have gone into bankruptcy like several other mining companies.
Stillwater Mining Company lost $270 million in 2013, so it had to do a big round of layoffs and buy-outs. Only now is it starting to recover although its first quarter report shows its debt is approximately $259.7 million, an increase from $255.8 million on December 31, 2015. Even so, the company is trying to expand again, although at least it’s staying in Montana.
It’s just one more cautionary tale as Montana watches the Smith River Mine inch toward getting its permit. Will the reclamation bond be enough for the projected 20-year life of the mine? Not likely. Will Tintina Resources make the same over-reaching mistakes as many other mining companies? Highly likely.
That’s why DEQ needs to set a high reclamation bond and high standards before the Smith River Mine starts polluting.