When Pegasus Gold filed for bankruptcy and abandoned Beal Mountain in 1999, the company left a contaminated, leak-prone mine that’s been a financial strain on taxpayers ever since.
So far, cleaning up pollution from the Beal Mountain gold mine has cost the public about $13 million, but the tab to fully restore the land could cost another $39 million.
“We just don’t have enough money,” said Mary Beth Marks, a federal employee who is coordinating the cleanup.
The lack of money illustrates what happens when private companies fail to leave adequate funding to clean up when they finish mining. Gold mines use toxic chemicals, such as cyanide, and unearth enough rock to release hazardous metals into rivers and groundwater.
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So before mining companies begin digging, government regulators require them to post bonds that can be cashed in if the companies fail to restore the sites. Bonds work kind of like deposits people make when they rent apartments. If a tenant damages an apartment, the landlord can keep the deposit to pay to fix the mess.
But when mining companies don’t leave enough money, taxpayers often are stuck with staggering bills and years of work to protect the environment.
It’s a problem Montana continues to deal with as the state tries to clean up a string of open-pit mines that launched in the 1970s and 1980s, only to shut down abruptly amid bankruptcy filings more than 15 years ago. All of the mines were run by Pegasus.
Pegasus posted at least $58 million as assurance that its four open-pit mines would be cleaned up if the company did not or could not do so, according to state and federal agencies and environnmental groups. But cleanup efforts have cost the public at least $40 million extra for work not covered by the bonds, according to Montana regulators and environmental groups that track mining issues.
“The hard lessons we learned was that we were under-bonding for the reclamation of mines,” said Herb Rolfes, a supervisor in the Montana Department of Environmental Quality’s mining division.
The problem isn’t unique to Montana.
Two abandoned gold mines in South Carolina are now federal Superfund sites, in part because state regulators say the owners left less than $2 million to repair damage from mining. In addition, South Carolina regulators learned 14 years ago that a hazardous waste dump near Lake Marion, whose owners filed bankruptcy, hadn’t left enough cash for a cleanup.
Catherine Templeton, who heads the S.C. Department of Health and Environmental Control, said her agency is now negotiating with the owners of a proposed open-pit gold mine over the amount the company must post.
Miners need state and federal permission to dig what would be the largest open pit-gold mine in South Carolina history. The mine would disturb more than 2,600 acres and include a mining pit 840 feet deep.
Romarco Minerals, a Toronto corporation, has proposed $43 million to restore the Lancaster County site if for some reason the company can’t do that when it closes. But DHEC staff members say Romarco needs to put up nearly twice that amount, whether through a bond or another financial mechanism.
Templeton said South Carolina has learned from past failures to require adequate bonds.
“If you are going to leave it worse than when you found it, we want financial assurance on the front end,” Templeton said. “Clearly that was not the priority of this state a decade ago, or two decades ago.”
Jim Arnold, a senior vice president with Romarco Minerals, said the company knows it will have to post a bond and DHEC will make the final decision on the amount.
“You can’t mine without it,” he said. “It’s a significant cost. It is a chunk of your change.”
National forest cleanup
In Montana, the Beal mine area is filled with old equipment, pipes and waste ponds.
Piles of rock dug up to extract gold are covered beneath grassy areas and surrounded by the pine-dominated mountains of the Beaverhead Deer Lodge National Forest. A 300-foot-deep mining pit remains open, which officials say could be a hazard to the public.
Like many mines in the West, the Beal site was developed on public land because of an 1800s-era law that encourages metals mining on federal property. It operated from 1989-99.
The $500,000 allocated each year for the U.S. Forest Service to clean up the site is used mostly to pump and treat contaminated groundwater from an old ore processing area. That prevents the tainted water from spreading to groundwater or creeks on surrounding parts of the national forest.
Water treatment, however, does little more than maintain the site. To actually clean it up would take the $39 million Marks doesn’t have, according to a 2010 consulting report for the Forest Service. Pegasus left $6.3 million for a cleanup.
Some of the Beal mine’s water pollution problems are tied to two waste-rock areas where toxic metals washed off the rocks. In one spot, miners covered a spring with rock that still contained metals from years of gold mining. A creek nearby that receives seepage from groundwater then showed elevated selenium levels, the 2010 Forest Service evaluation study said.
An 8.2-mile stretch of German Gulch Creek has for years been on a list of contaminated waters that need attention in Montana. Although water quality has improved somewhat, the creek isn’t safe for drinking and it isn’t ideal for aquatic life, records show. Selenium, one of the pollutants of concern in German Gulch, is suspected of poisoning a genetically pure strain of cutthroat trout. Selenium can affect the ability of trout to reproduce.
Consultants say cleansing the site could be done if the Forest Service removes some of the waste rock atop the nearby spring, regrades the area and installs a new synthetic liner. But that could cost $14.4 million.
Another improvement would be to remove waste rock from another area, where cyanide was doused on ore to separate gold from the rest of the rock. Installing a concrete wall and establishing a new synthetic liner also would help. But doing all that could cost another $24.1 million, the 2010 study said.
Until money can be found for a major cleanup, the Forest Service has closed off the German Gulch area to protect the public, even though the forest is public land.
Marks, a U.S. Forest Service scientist, said hard rock mines need to provide adequate bonds to protect the environment and public health. Mining companies often assure people they’ll protect the environment, but regulators who set the bonds need to be wary, she said.
“Back when they were permitting this mine, no one had this experience and envisioned these problems,” Marks said. “My only words of advice are, ‘When you estimate the bond, don’t succumb to pressure from companies to lower the amount.’ I know the pressure is there.”