3/20/2013 by Ron Brochu

Proposals to streamline Wisconsin’s mining regulations remained contentious this year, with environmental politics dominating one arm of the debate and economic factors guiding the other.

Two distinct plans emerged. Senate Bill 1, authored by Republicans, heavily reflects reforms sought by Gogebic Taconite, the company that seeks to mine the Penokee Range. Those reforms are strongly favored in Iron County, where most of the mining would occur, but they have faced harsh criticism by State Sen. Bob Jauch, D-Poplar, who represents the district.

“While last year’s (bill) was written by the company, this latest version of the GOP backed bill has clearly been written for the company,” Jauch wrote in a Jan. 16 condemnation of SB 1.

The other plan, advanced by State Sen. Tim Cullen, D-Janesville, and supported by Jauch, was criticized by mining supporters. In a Jan. 30 news release, Kelly Klein, who directs the Iron County Resource Development Association, discounted the alternative measure.

“I don’t think a mining company would want to invest in the state if this became law. An application for a permit is never deemed complete under this proposal, and a company would wait years before they could even submit it,” he said.

The debate became even more intense when Republicans scheduled just one hearing on SB 1, with Democrats complaining the session was held in Madison, far from the affected residents. Klein, however, said it wasn’t too far for residents of Iron County.

“We had a busload of people go down to Madison to testify,” he told BusinessNorth. Further, he was critical of a subsequent “listening session” that Cullen and Jauch held Feb. 9 in the city of Ashland.

“Most people over here didn’t feel it was an official hearing, but more of an anti-mine rally,” Klein said in an interview. More appropriately, he said, a hearing should have been held in Hurley, near the proposed mine, not in Ashland, which is 40 miles away.

The debate advanced another notch Feb. 18 when a group of 20 municipal and county officials signed a letter asking Superior Days officials to delete mining from their 2013 agenda. The request came even though Superior Days delegates weren’t advocating a position either for or against mining. Notably, not one of the signatories resided in Iron County, although some were from Superior, 100 miles from Hurley.

Coincidently, those who signed the letter resided in Ashland, Bayfield and Douglas counties – the only three counties Jauch carried during his 2010 election. All of the less populous rural counties within his district – Iron, Barron, Burnett, Polk, Sawyer and Washburn – were carried by Republican opponent Dane Deutsch.

Beyond politics

While environmental arguments received numerous headlines, news about Iron County’s economic situation has been sparse. State and federal statistics, however, speak loudly about why Iron County residents support mining. According to studies conducted by the U.S. Census Bureau and Wisconsin Department of Workforce Development:

• Iron County’s average income ranked 70th on the list of Wisconsin’s 72 counties.

• Its population also ranked 70th.

• About 45 percent of residents commute outside of Iron County to work, with 26 percent commuting to Michigan.

• For more than 20 years, the county’s jobless rate has ranged from 2 to 7 percent higher than Wisconsin’s average.

• Iron County has the lowest labor force participation rate in Wisconsin, at 49.3 percent. The rate declined by 9.3 percent between 2000 and 2010.

• Government funds allocated for Social Security and medical services was nearly double state and U.S. averages.

• By percent, Iron County lost more residents than any Wisconsin county between 2000 and 2010.

• Iron County’s median age was the highest statewide.

“Of those who graduate from high school, about 10-12 percent actually stay here,” Klein said, suggesting an iron mine might reverse that trend.

As the name implies, Iron County is no stranger to iron mining. Between 1885 and 1964, 18 million tons of ore were mined before deposits could no longer compete against taconite.

Economic data demonstrates the substantial benefits generated by mining. In a measure of overall economic activity, Iron County’s annual total was $120 million in the most recent American Community Survey. It was higher in adjacent Ashland County at $744 million. In comparison, the city of Virginia alone generated $833 million in trade, while Hibbing produced even more – $928 million. Beyond revenue generated directly from mining, Klein said Iron County would benefit from spinoff business.

“There would be companies like Caterpiller and providers of service for big equipment such as motor shops and welding shops – even businesses like food service,” he said.

“I think our business community has been really supportive – nearly 100 percent support mining,” Klein added.

The Ladysmith experience

The boom-and-bust nature of mining has prompted some opponents to suggest it would provide just a temporary lift to northwestern Wisconsin’s economy. Others contend it would come with a cost, harming the area’s existing tourism industry.

The same arguments surfaced in neighboring Rusk County when Flambeau Mining Co. proposed to open a non-ferrous minerals mine near Ladysmith. Although controversial, the project received state and federal permits and operated between 1993 and 1997.

“The mine was the biggest tourist attraction in Rusk County when it was operating,” said Andy Alberado, who directs Rusk County Development. According to Flambeau Mining Co., it attracted 100,000 visitors.

“More visitors logged in there than at the county’s official visitor’s center,” noted Al Christianson, Ladysmith city administrator, who helped negotiate terms of the agreement between Flambeau, the state and city. From the start, a portion of Flambeau’s taxes were reinvested into long term economic development initiatives.

“Rusk County owned some decrepit old manufacturing facilities acquired by tax title. We rehabilitated those buildings, thinking if we attracted new users, it would create alternate jobs for miners who would be laid off in the future. We had so much success with two initial buildings that we decided to construct some new ones,” Christianson said. To date, 13 buildings have been built, purchased or renovated using tax payments from Flambeau.

“Ladysmith alone takes in about a third-of-a-million dollars annually in lease or sale revenue from those buildings, and it’s been more than 15 years since the last ore was shipped,” he said.

Like the mine proposed by Gogebic Taconite Co., the Flambeau project was strongly opposed by environmentalists. Nonetheless, the entire site was returned to its original condition. When challenged by a 2012 environmental lawsuit, Flambeau’s reclamation was deemed “exemplary” by U.S. District Court Judge Barbara Crabb. Today, the site is used by bird watchers and has trails for walking, skiing and horseback riding.

Community leaders only made one mistake, Christianson said.

“We failed to understand the significance of the mining assets that would be left behind. We didn’t take advantage of millions of dollars of facilities that were taken apart and scrapped, including a state-of-the-art water treatment plant. People need to get involved in mine design up front to take advantage of opportunities that will exist later,” he said.

Christianson offered some advice to those involved in the Gogebic proposal: Municipalities should receive a share of a property or equivalent tax. Gov. Scott Walker opposes a tonnage tax for minerals removed by Gogebic.

“With the Flambeau project, there was concern raised that mining company accountants would be able to manipulate their books such that they wouldn’t show a profit at the end of the year and wouldn’t have to pay income taxes. Flambeau guaranteed us they would not only pay taxes, but would pay the maximum allowable taxes, and in fact, that’s exactly what they did,” he said.

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