More details of ID cobalt mine 'deal'

Earlier we had a conversation about the Idaho Conservation League’s decision to cut a deal green-lighting a cobalt mine near Salmon, Idaho.  Details of that deal were promised today (Monday) :

Formation Capital and Idaho Conservation League Reach Agreement on Conservation Programmarketwire

Mine, environmentalists hail ID cobalt mine deal – Todd Dvorak – AP

It appears that the company has agreed to post the bond the Forest Service was asking for and contribute $150,000 annually to watershed restoration projects for which the ICL and the mining company will meet annually to solicit suggestions from agencies and tribes and distribute monies.  In exchage ICL will not litigate and will highlight the positives of the mine in the media.

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Brian Ertz posted above. This is my addition . . . Ralph Maughan

The article below was put up on the Idaho Statesman web site at 11:30 PM Monday (by Rocky Barker).

Mine company attracts a green partner. The Idaho Conservation League says it was won over by a commitment to cleanup at the new cobalt mine. By Rocky Barker. Edition Date: 08/19/08.

An interesting new items from Barker’s piece. An appeal of the project comes not from a conservation group but other mining companies. Barker wrote that Noranda and three other mining companies who are responsible for cleaning up the nearby old Blackbird cobalt mine have appealed.

The waters from the new mine and the old bleeding mine all run into Blackbird Creek. A spokeman for Noranda said that they can’t distinguish an increase in pollution by its source. Therefore, if Formation Capital’s mine causes an increase in pollution it can’t separated from the continuing historic pollution and  all 4 companies. will end up being responsible for it.







  1. Brian Ertz Avatar

    it be interesting to know if because they can’t distinguish between existing and new pollution — whether the new mine would be held equally liable for any future pollution from the old mine as well – i.e. will the old mines attempt to draw Formation Capital into a share of existing cleanup responsibility, or avoid any share of financial culpability for future cleanup citing Formation Capital’s new presence.

  2. Alan Gregory Avatar

    Anything for a buck. The land is about to take yet another hit … and this one will hurt. Big time.

  3. matt bullard Avatar
    matt bullard

    The agreement for bonding in perpetuity in this case, while required by the forest service, goes beyond that requirement, so the way that the bonding issue was framed above is misleading. From Rocky’s article, “The additional funding is a commitment beyond federal requirements.”

  4. Kristin Avatar

    Apparently Formation also runs the Sunshine mine in Shoshone County. Does anyone here have knowledge of how that mine is run?

  5. Ralph Maughan Avatar

    The Sunshine mine has had many owners over the years. It is ancient, very deep; but I don’t know how it has been run since Formation has taken it over.

  6. Brian Ertz Avatar

    matt bullard,

    the suggestion that the mine is going to pay “in perpetuity” is misleading. can you say “bankruptcy” ? it’s my understanding that bankruptcy could reasonably be intuited to be an integral part of the mining industry’s formal business plan.

    also, did you not read what Rocky wrote about the additional mines ? What does it mean for Formation to promise to pay “in perpetuity” if the water gets poisoned by their mine when there is no way to prove which mine is liable for the additional pollutants ? Unless, of course, the mine agrees to cleanup of all pollutants – but that’s not the case – that’s why the other mines are litigating.

    Either of these facts alone – and certainly both combined – make the suggestion of “perpetuity” a wholly unconvincing prospect – IMO.

    P.S. I’ve got to admit – my favorite part of the deal is how nice Formation Capital and ICL’s logos look right next to each-other on Formation Capital’s press releases.

  7. matt bullard Avatar
    matt bullard

    My understanding of how bonds work is that the bond money is fronted should something like bankruptcy happen. Is that not the case?

  8. Brian Ertz Avatar


    it most certainly is the case – from my understanding – and that’s what the FS goes for anyway. But this is a fixed amount – it’s too often the case that the fronted $ doesn’t cover the extent of cleanup “in perpetuity”. The commitment “beyond” what was required that’s being touted was to pay for cleanup in perpetuity – that would/should include any cleanup beyond the bond after the mine shuts down – i.e. the mine is allegedly committing to any money necessary beyond the bond. but the point is – that “beyond” legally required money “in perpetuity” is not assured – there’s no way to assure that liability should the bond run out and the company declare bankruptcy. And there’s no way to differentiate liability between the other mining operations. These conditions make it a pretty safe bet for Formation Capital — there are plenty of avenues out of fulfilling the commitment made because of the obscurity between other mines and timeframe associated with “perpetuity”. They get their “green” mine now – and is often the case with mines — by the time anything goes wrong, we’ve all forgotten about the “deal” – the bond is dried up – and bankruptcy looks pretty good.

  9. Brian Ertz Avatar

    the sweet deal for Formation Capital is that it’s posting a bond that will last a lot longer because it can claim, whether it’s the case or not, that the poison comes from the other mines – offset expenditure. That’ll draw the bond out longer — and this mine has ICL publicly invested in the idea that the poison wasn’t Formation Capital’s making — this will keep Formation Capital with the greenwash it needs to keep regulators on the other guys/ the heat off of them.

  10. TPageCO Avatar

    Pollutant mixing is a difficult, if not impossible, issue to fix. Hopefully, EPA would have some sort of agreement with all the companies involved that would clearly spell out what happens during the cleanup of the entire area. It would also cover decreased flows (thus increased concentrations) and potential catastrophic incidents.

    I haven’t seen the agreement, but I would hope that all of Brian’s concerns regarding “in perpetuity” are included. Granted, there have been very few mines around the west that have been cleaned up – even fewer that have come close to approximating previous conditions, but still, these are not new issues with respect to cleanup agreements.

    Conceptually, I don’t have a problem with ICL supporting mining in an area that’s pretty trashed already. Justin Hayes is a smart guy, after all. My experience working with mining and water quality issues in Colorado has taught me that EPA has lots of leverage, depending on political support from above – much more than a 3rd party. It’s just whether they choose to use it.

  11. ben otto Avatar
    ben otto

    According to the Formation Capital Corp website the individual mines seem to be held as individual wholly owned subsidiary companies. This structure would allow for Formation to sell of the mine to another buyer fairly easily. I still wonder if ICL’s deal binds any successor owners of the Idaho Cobalt Project.

    I believe these points remain valid :
    A. Whats with ICL still trying to claim credit for the mine agreeing to the bond the Forest Service was already demanding?

    B. The pittance of a Conservation Action program fund, which, mind you, Formation Capital controls with only advice from others. What happens to this fund when Formation divests itself? And also where does it actually say $150,000 per year. The Press Release says Formation “will fund this program with an initial $150,000 this year and fund the program each year thereafter per this agreement”. This does not mean $150,000 per year. Has anyone seen the actual agreement, or just the Press Releases?

    C. Future clean up of water is only funded “in the event that water treatment is needed to meet water quality standards after mine closure” according to the Press Release. Even Ace reporter Rocky Barker in his article said the watershed is currently polluted, the waste streams from the old and new mines will mix and, the cause of future pollution cannot be differentiated between new or old.

  12. kt Avatar

    Somebody really needs to dig deeper in the backroom and other deals here. Who ARE the other investors in this? Any Idaho politicians or their allies? How does Walt Minnich, including with his current political aspirations, enter into this all? Counterpunch recently had an article about wheeling and dealing with other industries he had been involved with in the past.

    How much will Cecil Andrus be paid for his service on the Bord of Directors? Is this ICL payback to Andrus for Andrus’ appearance in the Boulder-White Clouds Info-mercial that has been playing for 3/4 of a year now on public television in Idaho at 10-11 at night? The Info-mercial promotes the Boulder White Clouds Bill with its land disposal, chopping off of part of the Sawtooth NRA making it easier to kill wolves, and release of 80,000 acres of Wilderness Study Areas.

    Is this embrace of “green” mining also an effort to gain favor with that great protector of mining interests – Harry Reid? OR wide stance Larry Craig? So some Bills that ICL favors advance in the legislative agenda? See . Is CIEDRA really dead, or this mining greenwash deal part of its resurrection?

    I think TU for a while was embracing mining companies. I have not been following it all lately, but they seem to have backed off a bit. I recall a deal made in Nevada where Barrick Goldstrike as “mitigation” for mining was working with TU to build cow fences on lands where Barrick held the BLM lands grazing permit. INSTEAD of getting the cows off – they were facilitating grazing destruction of the uplands, while “saving” riparian strips – a strategy of disaster for sage-grouse, antelope etc..

    WHAT happened to the days of “mitigation” being industry having to acquire private land as habitat – or do something else of real significance?

  13. Ralph Maughan Avatar

    Just a note KT and all. CIEDRA is dead for the year.

    A new version will likely be introduced to a heavily Democratic congress, and I expect many of its problems will have to be corrected for it to advance.

  14. kt Avatar

    Let’s hope so. I wonder why the July 2008 “Update” then, asking folks to contact Larry Craig?

    AND check this out:

    Check this out:

    Butch Otter, Dirk Kempthorne, Larry Craig and the late Helen Chenoweth all LOVE Formation Capital. Our Lady of the Canned Salmon is smiling back upon this deal from the Great Beyond!

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Brian Ertz