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More on Eco-Imperialism

There was an excellent article in Real Clear World this weekend covering Senator Cantwell’s plea to have the EPA override the environmental permitting process, while emphasizing points Resourceful Earth has been making: you can’t build stuff without digging minerals up out of the ground.

As I told the U.S. House Sub-Committee on Minerals and Energy Policy at its May 2011 hearing on Critical Metals, there are any number of countries that will be happy to feed our copper fix: We could buy copper from Russia, Angola, Afghanistan, DRC Congo or China – including in all likelihood copper mined from reserves in the Tibet Autonomous Region. There’s also copper in Pakistan and Iran. With the exception of Pakistan – rated “Partly Free” – all of the latter group are rated “Not Free” in the current Freedom House index.

Are we OK with “blood copper” supporting our windmills, our solar panels and our cellphones? Do we think these mines would pollute less or be policed more stringently than U.S. mines?

This is the serious discussion we need to have – not feel-good policy-posturing.”

Wishing your environmental problems out of your own country doesn’t mean they go away. On the contrary, these projects now often take place in countries with fewer environmental and safety reviews. I don’t agree per se with the implication that a transition to a green economy is “necessary,” though it certainly undermines the argument of those who oppose the permitting of mining projects yet continue to insist that we need to massively scale up renewable energy, as windmills require massive amounts of copper, etc. if they are going to be built.

The article also touches upon the wider macroeconomic effects of allowing elected politicians to wield obscure parts of the law to shut down projects:

And the danger is far larger than the derailment of just one mine. Mix the Cantwell approach with traditional “Senatorial courtesy,” and any U.S. project – and the millions and even billions of investment riding on it – would be a single senator away from sudden death at any moment. It’s a little like the judge presiding over a trial cutting off the witness on the stand in mid-sentence, and saying: “OK, I’ve heard enough. Let’s just stop here and go with the death penalty.”

For companies in the mining sector, the trial metaphor is apt. There’s a process in place, which in the case of mining projects involving federal lands, includes both state and U.S. Government review. In the case of the Alaskan copper project, no less than 67 federal, state and local agencies are involved in the permitting process. With potential projects already running this governmental gauntlet, do we really want to throw in a “sudden death” provision?

This is important. Companies must often invest significant sums of money into projects that are still uncertain to be profitable, with the understanding that over the long run the company will invest in more projects that make money than projects that lose money, or they will go out of business. As politicians gain the ability to unilaterally shut down projects without following the normal procedural routine (in this case, studying the area and allowing the permitting process to proceed) it makes companies less likely to invest in these projects in the first place, as they are more likely to be unprofitable if they can be shut down at a moments notice.

This is similar to what the EPA did to Shell earlier this year. In the long run, it will drive mining companies to move their capital and expertise to projects overseas.

 

 

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