Wharf Mine Bond Requirements Set Example for Keystone XL Enviro-Fund?

Last updated on 2013.06.11

South Dakota's Board of Minerals and Environment has given Wharf Resources permission to continue the legacy of General Custer and expand its gold mining operations near the base of Terry Peak here in the Black Hills. Mr. Mercer reports that the state is requiring significant financial assurances from Wharf to clean up possible environmental problems the expansion may cause:

Wharf, owned by Canadian-based Goldcorp, however, will need to post financial assurances totaling more than $63.6 million before being allowed to proceed.

That is nearly $40 million more than the bonding that has been posted for Wharf's present operations.

The expansion permit contains numerous new conditions aimed at further protecting the environment.

...The expansion permit requires that state regulators give clearance before Wharf can proceed to each new phase of the plan. Wharf plans to reclaim each affected area after mining is finished there.

...The purpose of the bonds is to provide the state Department of Environment and Natural Resources with sufficient cash to perform the work in returning the site to natural-like conditions and taking care of it for the next 50 years.

The new amounts are $32,873,000 for reclamation and $30,783,000 for post-closure needs [Bob Mercer, "Wharf Wins State's OK to Expand Gold Operations near Terry Peak," Mitchell Daily Republic, 2011.11.19].

BME imposed these strangely non-job-killing regulations to prevent adding to the "legacy of pollution" produced by past mining operations in the Northern Hills. These gold mining operations expose iron pyrite and other sulfide-bearing minerals to air and water. Those exposed sulfide rocks oxidize, producing acid, which isn't good for plants and critters.

Wharf has a history of environmental violations, but none since 2008, when the company got new management that apparently takes environmental management seriously.

South Dakota is requiring Wharf to bank $63.6 million for reclamation and clean-up despite the fact that the state's position is that the environmental risk from Wharf's expansion is minimal:

Mike Lees, a hydrologist for the state minerals and mining program, said Wharf hasn't had any significant acid-rock drainage problems during more than two decades at its current site.

Lees told the state board Wharf's new proposal isn't likely to lead to acid generation. "In my opinion, this issue has sort of been blown out of proportion," he said.

...[BME member Lee] McCahren said, "There's been no real harm" from the past environmental violations and noted the clean record since 2008. "That bespeaks good work," he said [Mercer, 2011.11.19].

So Wharf has shown improvement in its environmental stewardship. A state expert says the risk is "blown out of proportion." A BME members says we can trust Wahrf to do good work. But we still require $63.6 million in the bank to make sure any potential problems are taken care of.

Turn now to another Canadian exploiter of South Dakota's natural resources, tar sands pipeliner TransCanada. Its Keystone 1 pipeline crosses over 200 miles of eastern South Dakota prairie, streams, and wetlands. Keystone XL would cross and concomitantly imperil an even greater length of West River. The company tricked us into believing Keystone 1 would leak maybe once every seven years, when in fact the Keystone system sprang 33 leaks in its first year of operation, including leaks at all four South Dakota pumping stations. TransCanada has demonstrated an inability to do honest math.

Yet when the South Dakota Public Utilities Commission allowed TransCanada to run its first pipeline through our state, the PUC required $15 million in bonds for road repair, but none for environmental security. Governor Daugaard currently opposes requiring any further safety assurances from TransCanada for its proposed Keystone XL pipeline. The South Dakota Legislature has consistently defeated pipeline taxes to create pipeline cleanup funds, and even legislators like Rep. Don Kopp who support both the pipeline and environmental protections have sought to cap such cleanup funds at $30 million, less than half what we are asking from the much more localized threat posed by Wharf mining operations.

Letting Wharf carve up more of Terry Peak may not be the wisest environmental decision, but South Dakota at least has the wisdom to require Wharf to put up the cash to clean up its possible messes. When the Keystone pipelines pose at least as much risk to South Dakota's environment and financial well-being, we should require at least as much accountability from them.

Update 2011.11.26 15:16 MST: The South Dakota Field Office of the federal Bureau of Land Management is taking public comment as it studies the environmental impact of Wharf's proposed mining expansion. BLM will take your comments until December 27:

The Miles City Field Office is assisting the South Dakota Field Office on this project so comments may be mailed to: Jon David, Miles City Field Office, 111 Garryowen Road, Miles City, MT 59301-7000 or emailed tojdavid@blm.gov. Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment -- including your personal identifying information -- may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

For more information contact Jon David at (406) 233-3665.