EDITORIAL PAGE — Under siege

We’ve mentioned in the past that there once was a time when few professional investors would touch any mining stock with projects south of the Rio Grande in Mexico. Now, we read that some money managers won’t invest in a mining stock unless the company has projects south of the famous waterway.

That’s the word from Donald Coxe, president of Harris Investment Management and a columnist for the The Globe and Mail. His comment vis-a-vis the relative merits of investing north or south of the Latin watercourse came from a conversation he had with a well-known Canadian fund manager whose successes have included Vengold.

This remarkable turn of fortunes has been documented week after week in our pages. But what can you expect when a deposit such as Windy Craggy in British Columbia goes undeveloped because of political intervention or when U.S. Interior Secretary Bruce Babbitt publicly assaults the 1872 Mining Law, the patenting process and mining companies?

It speaks volumes when a company like Echo Bay Mines must, for all intents and purposes, plead its case for mine development in Alaska. A top company executive did just that in a recent speech that, interpreted by the anti-mining lobby, probably reads like a not-so-veiled threat. We quote: “If government regulators and anti-development groups won’t let us develop our North American properties, Echo Bay won’t die. We’ll do what my grandfather did in Kansas a hundred years ago. We’ll move the wagons elsewhere, where we’re welcome.”

Taken purely from the economic point of view, it’s utterly illogical not to welcome mine exploration and development. Consider the numbers (all are in U.S. dollars) published by the Arizona Mining Association following a study it had commissioned on the economic impact of the state’s copper industry in 1993:

* state and local tax payments amounted to $123 million;

* federal tax revenues totaled $97 million, or almost $520 per acre used in producing copper;

* copper workers earned $472 million in 1993 and rank as the highest-paid workers in the state;

* the industry bought $864 million worth of goods and services from other state businesses.

In sum, the Arizona copper industry contributed $1.5 billion to the Arizona economy in 1993. (This kind of a study, we feel, should be done state-by-state — or, in Canada’s case, province-by-province — as a means of acquiring ammunition in the continuing battle against anti-development forces.)

Yet in spite of its being such an economic cornerstone to the state of Arizona, the mining industry feels it is under siege. Presenting its study in abbreviated form in a recent issue of Concentrates, published by the American Mining Congress, this is how the association assessed the current situation: “However, the long-term future of Arizona mining depends upon reasonable access to public lands to locate and develop new mines as current deposits are depleted. This access issue, along with security of tenure, is in jeopardy with the current Congressional debate over reform of the Mining Law of 1872.”

No wonder the industry is heading south (and east and west). But, perpetual optimists that we are (and with the advantage of long experience behind us), we believe that, in time, ordinary Americans and Canadians will come to their senses. They just need enlightenment and real facts, as in the Arizona study.