Temper Mining Expectations

Expert: Temper mining expectations Dr. Thomas Power, a research professor from the University of Montana, addresses the crowd at UNM-Gallup Tuesday evening. Power gave a presentation warning against having unreasonable expectations of uranium mining’s economic impact. — © 2008 Gallup Independent / Brian Leddy
Copyright © 2008Gallup IndependentBy Elizabeth Hardin-BurrolaStaff writer

GALLUP — An economist from Montana has a message for any community considering mining — particularly uranium mining — as an option for economic development: There’s no such thing as a free lunch.

Dr. Thomas Michael Power, a research professor from the University of Montana’s Department of Economics, presented a public talk before a small audience at UNM-Gallup on Tuesday evening. Power’s presentation, “A Revival of Uranium Mining in New Mexico: Reasonable Expectations Versus Irrational Exuberance,” was sponsored by the New Mexico Environmental Law Center of Santa Fe.

Power stressed the idea that all economic development projects have a cost, and that communities need to take a realistic view of both the proposed benefits and the real costs of proposed projects. As an economist, Power said, he has tried to “take a hard-nosed view” of the benefits and costs involved in proposals to revive uranium mining in the American West.
Power said the enthusiasm for a return to uranium mining in New Mexico stems from a spectacular rise in uranium prices from 2002 to 2007. Based on a formula of multiplying the market price for uranium by the quantity of uranium in the ground in New Mexico, he explained, mining proponents have predicted that a return to uranium mining would provide “an economic bonanza” for the state in terms of billions of dollars worth of sales, and huge boosts to state employment, payroll, and taxes figures.

However, calling that formula “folk economic analysis,” Power said some important factors are missing from that picture. According to Power, the formula fails to take into account the labor-displacing technologies that have developed in the mining industry that cause the number of jobs to drop, it fails to include a realistic discussion of the costs of extracting and processing the mineral, and it fails to factor in the public costs of cleaning up the environment and providing public services.

The formula also fails to consider the “boom or bust” economic instability inherent in the mining industry, Power said. “Metal mining is notoriously unstable,” he said.
Booms and high mineral prices don’t last long, he added.Although mining jobs involve high-paying wages, he said, mining communities tend to not be prosperous. He attributed that to the unstable global mineral market, labor-displacing technology, environmental damage and pollutants, and the “boom or bust” nature of the industry.

New Mexico has about one-third of the uranium reserves in the United States, Power said, but the U.S. only has 7 percent of the world’s reserves, leaving the state with only about 2 percent of the world’s reserves. “New Mexico certainly doesn’t have a corner on the uranium market,” he said.

As for the labor-displacing technology, Power said today’s in situ leaching process is much less labor intensive than the uranium mining of the past. As a result, Power believes the level of employment and potential company payrolls will be much lower than in the past.
Power also discussed the issue of communities promoting economic prosperity without mining. “The New Mexico economy barely blinked,” he said about the state’s loss of 10,000 mining jobs over the last two decades. With economic diversification as the key, Power claimed jobs expanded statewide by 80 percent, real per capital income grew by 38 percent, and New Mexico’s population grew by 40 percent.

“There is life after mining,” Power said, if communities promote a diversified economy.
Although Power admitted the local economy of Cibola County took a serious dive during its last mining bust, he argued that the economies of both Cibola and McKinley Counties have improved in recent years through diversification.

As an economist, Power said, he believes caution is called for before people sacrifice “permanent, unique, and irreplaceable” characteristics of their home communities in exchange for “common and temporary” benefits of economic development projects like uranium mining.

Information: tom.power@mso.umt.edu