Securing environmental permits for SC gold mine aided sale of Kershaw site to Australian company

— When Romarco Minerals finally secured environmental permits for a large, industrial-scale gold mine in South Carolina, other mining companies paid attention — particularly an Australian corporation with expansion plans.

In July, OceanaGold revealed its proposal to acquire Canadian company Romarco Minerals and the Haile Gold Mine project near the town of Kershaw. Now, the company is nearing a shareholder vote to merge with Romarco and form a global corporation.

Many factors led to the $600 million agreement, but a key selling point was Romarco’s success in convincing regulators that the Lancaster County mine would adequately protect the environment. With state and federal permits in hand, Romarco became more attractive for acquisition, OceanaGold’s chief executive officer said this past week.

“Around the world, there are different issues in different places, and the biggest risk (to opening a mine) in the U.S. is getting a permit,’’ OceanaGold’s Mick Wilkes said in an interview with The State newspaper. “It takes so long. Once they had their permits, they obviously were of more interest to other companies like ourselves.’’

Environmentalists in South Carolina had speculated that the mine would be sold once Romarco, embarking on its first gold-digging project, obtained permission from state and federal regulators. Acquiring a site with gold deposits worth an estimated $2 billion made the Kershaw mine a natural target for acquisition by a more experienced mining company, they said.

The Haile Gold Mine, with pits of up to 840 feet deep, would be the largest open pit gold-digging operation in South Carolina history and the largest in the eastern United States. Work has already begun at the mine site.

Patrick Barkey, director of the University of Montana’s bureau of business research, said obtaining permits for gold mines is a rare accomplishment in some places as questions surround the environmental impacts nationally.

Mines for gold and other metals have a legacy of contaminating creeks with poisonous metals and acids. Two former South Carolina mines — in Chesterfield and McCormick counties — are today federal Superfund sites. An old mine in Colorado recently spilled contaminated water into a river, turning the water orange with pollutants.

“If you get the permits, then clearly you have removed a gigantic source of uncertainty,’’ said Barkey, whose research center studies economic issues, including energy and mining. “There are so many uncertainties when it comes to any kind of capital investment like that.’’

Romarco Minerals obtained the final permit — an approval to mine — from South Carolina regulators in November 2014. Within a month of the approval, Wilkes said he was on the phone with Romarco chief executive Diane Garrett about an acquisition.

“After they received their permits, I really pitched to her the vision of creating a high-class, very robust gold mine company,’’ said Wilkes, who flew into Columbia from Australia for a visit this past week.

Concerns about mine

It had taken more than three years to secure a federal wetlands permit for the proposed Haile Gold Mine, in part because the mine will have a substantial impact on the landscape near Kershaw.

Sean McBride, a spokesman for the U.S. Army Corps of Engineers, said the scope of the Romarco project caused his agency to move deliberately before ultimately issuing the wetlands approval a year ago. Romarco applied for the wetlands permit in 2011.

“The sheer magnitude of the project obviously affected that,’’ McBride said. “With something that big, we had to do our due diligence to inspect everything that was going on.’’

Up to 1,100 acres of wetlands could be affected by the Haile mine, including 120 acres that are expected to be destroyed. Miles of creeks also will be buried in waste rock. Those impacts are substantially larger than most development projects in South Carolina and rival the scale of a major interstate highway proposed for the Pee Dee region in the eastern part of the state.

The U.S. Environmental Protection Agency along with federal and state natural resources managers initially questioned the mine, but their objections cooled when, to offset the loss, Romarco agreed to protect from development about 4,700 acres of land. That protected property is in Lancaster and Richland counties. It includes the much-coveted Cook’s Mountain and Goodwill Plantation, undeveloped land along the Wateree River in Richland County that Romarco acquired for about $23 million .

The Corps said Romarco addressed all environmental concerns.

OceanaGold is a publicly traded company that operates three mines in New Zealand and one in the Philippines. In 2014, the company reported revenue of more than $500 million, with a net profit of more than $100 million. The Haile Gold Mine site could produce gold valued at $2 billion.

Many people in the Kershaw community support the Haile project because it promises more than 300 jobs in an area starving for employment. Their backing mirrors that of other mining communities, such as as Whitehall, Mont., which was examined last year in a mining series by The State newspaper. The owner of Whitehall’s Golden Sunlight mine announced last week it was laying off three-fourths of its workforce after three decades in Whitehall. The mine employed nearly 200 people last year.

Wilkes, however, said he’s optimistic about the future of the Haile Gold Mine in South Carolina, even as gold prices drop.

Wilkes, in Columbia for a conservation awards dinner partially sponsored by Romarco, said he expects the deal to acquire Romarco will be complete in October if shareholders from both companies approve the merger Sept. 28. During his stop in Columbia, Wilkes provided some details of his company’s mining plans. Among them:

▪  OceanaGold is looking to dig an underground shaft mine, in addition to the open pits at the Haile site. All work at Haile will be done with the latest methods to protect the environment.

▪  The life of the Haile Mine could be extended beyond the projected 15 years. The area between Columbia and Charlotte has other pockets of gold that could be mined, as could other areas in and around the Haile site.

▪  The company projects the Haile Gold Mine would provide up to half of OceanaGold’s worldwide production once it is fully operational after 2017.

Haile mine’s annual production

Wilkes said the South Carolina site could become the largest of OceanaGold’s gold mines across the world. OceanaGold, headquartered in Melbourne, Australia, is expected to produce about 400,000 ounces of gold this year from its existing mines.

The company expects worldwide production eventually to increase to more than 500,000 ounces annually, with the Haile site chipping in about 250,000 ounces., Wilkes said. OceanaGold also is looking at additional sites in the Philippines to mine gold and still wants to open a mine in El Salvador, he said.

Oceanagold has come under fire from environmentalists for its plan to dig an underground mine in El Salvador. The mine would be in a watershed that environmentalists say could be polluted by mining operations. Wilkes said that wouldn’t happen.

But he said OceanaGold’s fight in El Salvador will continue. The company is involved in legal action that could force El Salvador to pay it $200 million to $300 million if it can’t mine there. OceanaGold doesn’t want compensation, only the right to mine, Wilkes said.

In South Carolina, Wilkes said his company also wants to be a friend to the state, as is evidenced by his attendance at an awards luncheon put on by the Conservation Voters of South Carolina this past week in Columbia.

“We want to be a community partner in the whole process,’’ Wilkes said. “If the community doesn’t want you to be there, then you really don’t have a future.’’

This story was originally published September 19, 2015 at 9:31 PM with the headline "Securing environmental permits for SC gold mine aided sale of Kershaw site to Australian company."