AMC Mining Convention Reflects Improved Industry Outlook

Though the mining industry is beset with problems-a broad slump in metal prices, a rash of acquisitions and takeover attempts, rising capital costs, and an aggressive Canadian energy program-there was an under-current of optimism at the 1981 AMC conference that's been missing at industry meetings in recent years. The industry anticipates a turnaround in the 1980s, buoyed perhaps by the new spirit of cooperation from the Reagan administration. For the first time in years, it appears that Washington and the mining industry share mutual goals for developing the nation's resources. A number of prominent Reagan officials were on hand during the three-day conference in Denver, September 28-30, to reassure conferees that restrictions plaguing energy and minerals development would be eased. Interior Secretary James Watt and other government speakers promised cooperation in bringing balance to federal public lands policies, a review of regulations that have hampered the industry, and prompt action on domestic minerals policy. Daniel N. Miller, Jr., assistant interior secretary for energy and minerals, said, "It is our intent to dismantle the overhearing bureaucracy that has stifled mineral and energy exploration. We know that Interior's rules have shackled the mining industry in recent years, and we know that those rules must be eased." Miller noted that the administration will not permit mining on national park lands or wildlife refuges, but added that "we must assess a variety of uses of public lands ... we will restore lands to multiple use where practical." EPA administrator Anne Gorsuch assured industry representatives that the administration intends to work within environmental laws and with Congress to review and revise water, soil, and air pollution policies. "We have a strong commitment to see that there are major mid-course corrections" of air regulations, Gorsuch said. Support from these "new friends in Washington" will be crucial in light of the serious problems pressuring the industry. Copper prices have plunged to almost three-year lows and prices for molybdenum, gold, and silver have slumped. Earnings are down and today's high interest rates prevent a quick turnaround. Companies are on edge after the recent takeovers of Kennecott, St. Joe Minerals, and Texasgulf Though the companies may benefit from the major injection of capital that large energy firms can provide, many observers fear the new parent companies won't be willing or able to survive the cyclical metal markets. Arco and Gulf Resources, for example, have been criticized for closing Anaconda's Montana copper facility and the Bunker Hill unit in Idaho, respectively. Canada's national energy program has brought additional pressure on the industry. This policy, which emphasizes Canadian majority ownership of the country's energy sources, resulted in acquisition of Texasgulf's Kidd Creek lead-zinc-silver complex by Canadian and French interests. In response, the American Mining Congress adopted two resolutions on takeovers. One calls for the US government to review laws regulating tender offers and takeovers "to better ensure that principles of fairness and sound investment policy govern such transactions.'' The other asks the government to demand "fairness and reciprocity" as a basis for US policy governing international trade in minerals and investment relations with other countries. AMC's shopping list included four other priority goals, aimed primarily at the Interior Department: • Prompt implementation of Interior's efforts to bring order and balance to rules governing access to public lands for exploration and development. • Statement by the President of a comprehensive and coherent domestic minerals policy. • Amendment of the Clean Air Act to remove impediments to productivity and barriers to economic development that are not necessary to essential goals of the act. • Development of new approaches to better achieve worker health and safety in the most cost-effective manner without penalizing productivity. Almost 6000 mining industry executives attended the 1981 convention-the largest in AMC's 84-year history. As in years past, the conference offered a wide spectrum of presentations-nearly 100 papers in 26 sessions-ranging from commodity forecasts to the latest technical achievements. New Administration Stockpile Goals The minerals availability session included a presentation on management of the minerals stockpile by Paul K. Kruege r of the Federal Emergency Management Agency. Krueger notes that rather than providing incentives for development of a domestic raw materials industry, the government has "a history of providing disincentives to industry." In mining industries, he adds, the rate of productivity growth has been -6% over the last six or seven years. Krueger feels there will be a major change under the Reagan administration. In March 1981, FEMA began the first purchase program for the national defense stockpile in over 20 years. The stockpile is sadly out of balance, Krueger adds. Stockpile materials are