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Babbitt Reluctantly Gives Away Billions Worth of Mining Rights

December 1, 1995

WASHINGTON (AP) _ Decrying ``billion dollar ripoffs,″ Interior Secretary Bruce Babbitt reluctantly turned over to a private company an estimated $2.9 billion worth of mining rights for $1,745.

The sale was required by a mining law enacted 123 years ago to promote development of the West.

``This process has gone from distasteful to obscene,″ Babbitt declared Friday at a news conference where he dramatized his outrage by rolling onto the stage a large Christmas-wrapped box with ``$2.9 billion″ stamped on the side.

``In the spirit of the Christmas season I’m delivering a gift to the mining industry,″ Babbitt said before renewing his attack on the 1872 Mining Act, which requires the sale of federal land for mining for as little as $2.50 an acre.

An agreement signed Friday transferred ownership of 347 acres in the Coronado National Forest near Tucson, Ariz., to ASARCO Inc. in exchange for $1,745, he said.

Under the law, the company will be free to mine extensive reserves of copper and silver believed to be located in the region. The law requires no royalty payment to the government on minerals that are extracted.

Dale Dixon, manager for development at ASARCO Inc. said the purchase is not the deal Babbitt portrays. He said the company already has spent $15 million in exploratory drilling and may spend as much as $500 million for a full-fledged mining facility. If the mine is worth as much as is anticipated, operating costs would be more than $1 billion for the life of the mine, he said.

Nevertheless, Dixon said it is anticipated that a substantial amount of minerals _ primarily copper _ are beneath the 347 acres. ASARCO, based in New York City, also has mining operations elsewhere in Arizona, Missouri and Tennessee, and owns a 63 percent interest in the largest copper mine in Peru.

Babbitt for more than two years has lashed out at the 1872 law, which also has been under attack for years by members of Congress. There are more than 600 land purchase requests _ or ``patents″ _ in the pipeline awaiting Interior Department action.

Under a proposal for mining reform offered by the Clinton administration last year, ASARCO would have had to pay the surface value of the land, about $347,000, and a 4 percent royalty before mineral processing, Babbitt said. He said that would have produced $100 million in estimated revenue from royalties over the life of the mine.

Last September, Babbitt conveyed ownership, including mineral rights, of 110 federal acres in Idaho to a Danish company, Faxe Kalk Inc., for $275, although the land is believed to contain $1 billion worth of minerals.

Congress has put a moratorium on such sales, but several hundred pending applications are so far along in the process that they have been exempted by the congressional action.

Meanwhile, Republicans in Congress, primarily from Western states, have crafted a mining reform proposal as part of the pending deficit-reduction that they say would end the most outlandish giveaways sanctioned by the 1872 law.

Babbitt called the Republican proposal _ which has been endorsed by the mining industry _ ``sham mining reform″ that will do nothing to ensure the government gets a fair return from selling mining rights on federal lands.

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