History repeating itself? New claims may mean gold mining again at Zortman Landusky

State has spent more than $30 million cleaning acid mine drainage, but new company may take different approach

By: - December 12, 2021 10:07 am

Landusky water treatment facility shown in 2004 (Courtesy Bureau of Land Managment).

After more than $30 million in environmental clean-up from toxic mining tailings and debris, Owen Voigt understands why folks are nervous about any future mining activity at Zortman and Landusky, two small sites near the Fort Belknap tribal reservation.

Most people’s understanding of mining is something from a history book about Butte — dirty, smoke-clogged air blackening out the midday sun. But Voigt, whose background is in cleaning up toxic mine sites and recovering minerals, said that modern mining isn’t like that, and wants people to know that any possible gold mining would be different.

The possibility of gold mining again at the deeply polluted site wasn’t supposed to happen, federal officials say. The Bureau of Land Management had planned to keep it ineligible for mining due to the toxic acid mine drainage from previous gold mining. But because of a 48-hour lapse in federal paperwork, and private lands that have been held by Montana resident Luke Ployhar for nearly 20 years, mining at the defunct Zortman Landusky sites could resume, which tribal leaders say could once again endanger their water and land.

Ployhar and Voigt, who have established the Blue Arc Mining corporation which is pursuing the new mine permits, aren’t responsible for the toxic mess left when the Pegasus Mining Company went bankrupt, leaving millions in clean-up for the state to deal with. A poisonous chemical soup created by cyanide leaching, a process used to extract gold from ore, threatened groundwater. The state and federal government have spent years remediating the site.

Complicating the politics of Zortman Landusky is that Phillips S. Baker, Jr., the CEO of Hecla Mining, has proposed new mining operations in the Cabinet Mountains in northwest Montana. Environmental groups and several Native nations are suing the state’s Department of Environmental Quality to enforce its “bad actor” laws, which prohibit the state from issuing new mining permits to individuals or companies who fail to clean mining sites. Baker was the vice president and chief financial officer for Pegasus when it filed for bankruptcy in 1998, leaving the state with at least $30 million in cleanup of the acid mine drainage at Zortman Landusky that will likely continue forever, by the state’s own account.

While Baker and Hecla’s new proposal have no connection to Zortman Landusky, it complicates the politics because the site stands as the primary reason behind the state’s bad actor law and serves as an example of how mining done poorly can threaten the environment nearby indefinitely.

A 48-hour window

It’s easy to see why tribal leaders and environmental groups have raised eyebrows about the renewed interest in the now-idled mines that border the reservation. The Bureau of Land Management originally issued an order in 2000 that stopped mineral extraction on the property so that it could remediate nearly 3,600 acres of public land, made toxic by acid mine drainage.

By federal rule, the department was able to renew the ban on mineral extraction – essentially a mining ban – for three consecutive five-year periods, for a total of 20 years. Al Nash, spokesperson for the BLM in Montana, said it was preparing to submit an additional 20-year moratorium for the land in the Federal Register, which is the federal publication where notices, rules and executive orders are printed. By law, those federal orders and notices must be published there before they’re valid, serving as an official public notice.

However, Nash said that due to the different regions and staff members involved, the review process was delayed at several points, which led to a two-day gap in October 2020.

Ployhar has owned the private property portion of the mine for more than 20 years, buying it in a bankruptcy sale, and researching the property. As Pegasus went bankrupt, they cut corners. But the minerals, chiefly gold, which were mined when Pegasus was operating, are still there. Because of the gold still in the ground, Ployhar and Voigt believe the mines could once again become a massive regional economic engine if done the right way.

Ployhar said he can understand the timing looking suspicious, but he said it’s just a matter of doing his homework. He called the BLM, found the date the permits were set to expire, and then prepared his paperwork because he suspected the federal agency might not extend the 20-year moratorium.

“I just picked up the phone. There’s no conspiracy,” Ployhar said. “It’s called due diligence.”

BLM spokesman Nash confirmed that where some see conspiracy, something much less exciting was at work.

“It was never our intent at any point to let it lapse,” Nash said. “The decision-making processes didn’t occur in a timely fashion, and it lapsed for 48 hours during that time the new claims were made. (Ployhar) had a focus on that area, and when he had an opportunity, he jumped.”

History repeating itself?

The Fort Belknap Indian Community has filed a request with the Department of the Interior’s Inspector General to investigate the timing.

“Because it takes a great deal of preparation and effort to properly file a mining claim, the very brief lapse in the withdrawal and the coordinated filing of mining claims warrants a thorough investigation,” said Fort Belknap President Andrew Werk, Jr.

Fort Belknap represents the Assiniboine and Gros Ventre Tribes. Werk has been joined by Earthworks, Montana Trout Unlimited and the Montana Environmental Information Center in the request to investigate the timing

The tribes are understandably worried: The one fact in this situation that is not disputed is that acid mine drainage – what happens when water meets with other exposed minerals and creates oxides and sulfides that poison water and turn lands barren – will continue for decades, if not forever.

“There are multiple water treatment systems to collect and treat contaminated run-off from the mines, totaling nearly a half billion gallons of water per year,” Werk said. “Clean-up activities at Zortman/Landusky have been, and continue to be time consuming, costly and a great burden to the Fort Belknap Indian Community and the people of Montana.”

They’re worried that resuming the mining activities will lead to the same result – further toxic waste and a company that will leave when they run out of money or gold.

“Zortman Landusky didn’t fold because they ran out of gold, they failed because of economic issues with their parent company,” Nash said. “But filing a claim does not mean developing a claim.”

But Voigt said that mining techniques, even available to Pegasus in the late 1980s, have changed dramatically. Ployhar said that open-pit mining, like the type that took place in the past at Zortman Landusky, is probably not likely. Rather he sees a future in underground mining.

Voigt runs a separate business that has reclaimed and remediated old sites, turning them from toxic back into a natural state. Both men said that it may seem counterintuitive, but resuming mining on the private land may help curb future pollution by using different mining techniques that were unavailable. For example, the cyanide leaching process is no longer the most efficient way of processing ore. And, it’s likely that any ore taken from the mine would be processed off-site. Moreover, underground mining now uses a technique of adding waste rock, lime and other materials to create an impermeable product that’s put back into the earth, lessening the likelihood of exposing minerals to air and water as in open pit mining, where they can combine for toxic runoff.

Nash said even though the claims are valid because of the lapse, it doesn’t mean the federal government will rubber-stamp whatever plans Blue Arc Mining has.

“There’d be an extraordinarily high bar here to meet – including bonding and environmental considerations,” Nash said, noting the millions of public dollars that are still being spent to clean the site. “It would be an extraordinary financial hurdle to get us to a place where we might give serious consideration for exploration there.”

Back to the future

While Werk and the other organizations have vowed to contest the new mining operation, even they admit the claims are likely valid. The BLM and the state’s DEQ have also said that even though the bureaucratic processes were in motion at the federal level, the lapse is likely legitimate and the claims likely valid. Even though the notice was eventually published 48 hours later, Blue Arc LLC., Ployhar’s company, will likely be allowed to proceed through the processes, which, as Werk pointed out, are extensive.

Ployhar said drilling records and the materials that Pegasus left have been studied and even digitized. And, he said as a native Montanan from the Lewistown area, he’s got the same concern about bad actors in mining.  He said the records, which include drilling reports from extensive sampling coupled with modern techniques, could make Zortman Landusky much more precise rather than just stripping away a mountain in an open-pit fashion.

Ployhar sees mining with “surgical precision” as a win for the community. It would create good-paying jobs, the state would make revenue from taxing the mine, and some of the mitigation would shift to the mine and newer techniques.

Voigt said many of the techniques Pegasus used are no longer part of industry standards. For example, open pit cyanide leaching is no longer legal. And, he said that a lot of the remediation money wasn’t spent by taxpayer dollars, rather money the government had in the form of taxes on the mining companies.

He also said everyone – from the tribes to the government to Ployhar — has one other thing in their favor: time.

“We’re years away from it all, and we’re going to chew the sandwich one bite at a time,” Voigt said.

For right now, the conversation hasn’t even begun, Ployhar said.

“Nobody’s talked to me. No one from the tribe has reached out,” Ployhar said. “It’s all through the grapevine and right now, it’s been between them and state. We’re not doing anything wrong. This is on private property, just like you have your house. Eventually, we’ll have these long, extended conversations.”

Ployhar said the property has more than 1.2 million ounces of proven gold reserves.

“Who wouldn’t look into that?” Ployhar said. “Pegasus did a terrible thing.”

He admits it’ll be an uphill battle to convince the state, federal and most important, local leaders that mining can be done safely where so much destruction has already taken place.

“But they never got to the depth we’re looking at, and this isn’t open-pit mining,” Ployhar said. “And, we’re not Pegasus. You mean to tell me there’s no way to do this? There’s no way to get around safely? Well, as long as we follow the law and follow proper mining techniques, I have to believe there’s a way.”

Nash also said part of the BLM’s mission is to consider different uses for public lands.

“As stewards of public lands, we had a responsibility to protect the public,” Nash said. “But a portion of that is to make resources available when appropriate.”

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Darrell Ehrlick
Darrell Ehrlick

Darrell Ehrlick is the editor-in-chief of the Daily Montanan, after leading his native state’s largest paper, The Billings Gazette. He is an award-winning journalist, author, historian and teacher, whose career has taken him to North Dakota, Minnesota, Wisconsin, Utah, and Wyoming. With Darrell at the helm, the Gazette staff took Montana’s top newspaper award six times in seven years. Darrell's books include writing the historical chapters of “Billings Memories” Volumes I-III, and “It Happened in Minnesota.” He has taught journalism at Winona State University and Montana State University-Billings, and has served on the student publications board of the University of Wyoming.

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