Mining Yields Debate on Land Use : Environment: Proposed legislation would prevent exploration and put area under National Park Service. Company officials fear being locked out of potentially rich mineral deposits.

Mining industry officials thought the president of Viceroy Resource Corp. had lost his mind last year when he committed to $4.4 million in environmental concessions before extracting a speck of gold from the company’s Castle Mountain project here.

In an unprecedented accord with the environmental community, D. Ross Fitzpatrick agreed to restore the 2,800-acre site after mining it and spend $1.3 million to protect the threatened desert tortoise. His company also became the first to build an enclosed cyanide leaching system in place of open storage ponds to prevent the poisoning of birds.

The settlement was hailed by environmentalists as an industry model and spared Viceroy costly delays and legal fees. It also cleared the way for the Canadian-based firm to pour the first 450-ounce gold brick last month at its mine site in the East Mojave Desert.

But Viceroy investors are not celebrating just yet.

Proposed legislation to protect the California desert--supported by those same environmental partners--would prevent Viceroy officials from further exploring an area that they believe is one of the country’s most lucrative gold camps.

“We can do a lot for this community economically and environmentally,” Fitzpatrick said. “We will leave this a better place than it is now. I don’t know why they don’t trust us.”

Viceroy’s future is at the center of the debate over how the California Desert Protection Act would affect the state’s mining industry. The California deserts, which cover 25 million acres, are considered a bountiful mineral repository that produces an estimated $1 billion annually or about half of the statewide total, according to the U. S. Department of Interior.

The desert bill approved by the House in November would protect 7.3 million acres by designating 77 wilderness areas and upgrading the Death Valley and Joshua Tree national monuments to national parks. More important for mining, the bill would convert the 1.5 million-acre East Mojave Scenic Area into a national monument, placing the area under the supervision of the restrictive National Park Service rather than the Bureau of Land Management.

The two sides have different visions for the future of the East Mojave, but their disagreement begins with the value of mineral deposits in the desert now.

The mining industry considers the East Mojave a mother lode--a 1990 study by the U. S. Bureau of Mines identified 701 mines and potential sites containing minerals valued at $5 billion. There are more than 10,000 mining claims in the East Mojave.

But environmentalists contend that operation of most of these sites is not economically viable.

“Overall, the potential supply of mineral resources vastly exceeds the demand,” said Jeff Olson, a resource economist with the Wilderness Society in Washington. “So, they remain undeveloped and they will probably remain undeveloped way into the future.”

The difference between active and potential desert mining activity is considerable--only seven mines employing 356 workers are operating within the acreage covered by the proposed legislation, according to a Times survey.

However, with rising gold prices and improved technology spurring a gold rush of sorts, mining companies are returning to desert sites for another look. The Viceroy mine, about 100 miles south of Las Vegas, is in the abandoned prospecting town of Hart.

Mining officials contend that the legislation would lock them out of the desert by placing wilderness territory and Park Service land off limits to all exploration. They prefer keeping oversight of East Mojave mining under the Bureau of Land Management as envisioned under alternative desert legislation supported by the Bush Administration.

Margaret Allender, a spokeswoman for the California mining industry, said the Park Service mandate would not allow any future mining activity, leading to layoffs once current operations cease.

“Mining by its nature depletes the resource it is using,” Allender said. “When that resource is depleted, there has to be land available to explore other areas and other deposits to continue to employ people.”

The proposed legislation has caused at least one firm, Homestake Mining Co. of San Francisco, to abandon a site in the California desert.

Homestake invests about $25 million a year in exploration activities in the western United States, Canada, South America and Australia. Between 1985 and 1989, the company spent $2.6 million searching for gold at 504 claims in the bill’s proposed expansion area in Death Valley and the East Mojave, said Mersch Ward, a Homestake official.

“It became pretty apparent that every place we wanted to go was under review and consideration (by the desert bill),” Ward said. “There’s no use pursuing discoveries if you are not likely to be able to develop them. We chose to pull back and not spend our money there. It’s easier to do business elsewhere.”

The desert bill’s proponents maintain that no miner would lose a job because the bill would allow all current valid claims to be fully explored. The proponents say the legislation is needed to prevent mining operations from further destroying the fragile desert ecosystem. At the Castle Mountain site, Viceroy plans to remove 9 million tons of rock a year by digging two 550-foot-deep pits covering 135 acres.

Environmentalists fear that without the desert bill the Bureau of Land Management would allow the scenic New York Mountains and Kelso Dunes to be excavated by companies holding mineral rights within these East Mojave landmarks. Another firm has proposed burying used tires in the area.

The mining industry faces heavy criticism from some lawmakers who are trying to repeal portions of the 1872 Mining Act. The law allows miners to stake claims on public lands for as little as $2.50 an acre without paying any royalties to the government.

Last year, a proposed moratorium on new mining claims on public lands passed the House and was narrowly defeated in the Senate, 47-46, before being scrapped by a House-Senate conference committee. Other proposals seek to increase fees and impose royalties on mine production.

Recently, the mining industry offered some alternatives to repealing the law, such as paying fair market value for land and strengthening reclamation standards.

No mining company has approached the commitment Viceroy made to restore its site in the East Mojave. Viceroy spent 2 1/2 years negotiating with environmentalists before agreeing to measures never before adopted by the industry.

“We applaud their efforts,” said Deborah Reames, a staff attorney with the Sierra Club Legal Defense Fund, who negotiated the compromise. “The bottom line is Viceroy voluntarily agreed to do things that we don’t think we could ever have convinced the Bureau of Land Management to require of them.”

Viceroy agreed to deposit $2 million into a nature fund for environmentalists to spend on the East Mojave as they see fit. The firm also will fill two abandoned clay pits with leftover stone, establish a nursery for restoration of Joshua trees and barrel cactus and take several costly procedures to benefit the threatened desert tortoise. These include purchasing the nearby Walking Box Ranch to create Nevada’s first protected tortoise habitat, building 19,000 feet of fencing to keep tortoises out of the mine site and donating $200,000 to tortoise research.

The arrangement, however, was not embraced by everyone.

“The intriguing thing is that both Viceroy and the environmental groups got blasted by their own sides for entering into this agreement,” Reames said.

Some environmentalists looked askance at any deal that allowed massive excavation, while miners accused Viceroy of conceding too much. Their reaction was that “no mining company should have to give up more than what was necessary,” Fitzpatrick said.

With the go-ahead to begin production, Viceroy anticipates processing about $300 million in gold over the next decade, Fitzpatrick said. At the same time, the company is drilling 1,200-foot-deep holes on a nearby 31,000-acre claim to test for more lucrative deposits. It has budgeted $3 million for gold exploration this year.

Recent discoveries and exploration potential could extend the life of the mine--the largest in the East Mojave--as long as 40 years and yield a potential $3.5 billion in gold, Fitzpatrick said.

Now Viceroy is engaged in a race to validate the most lucrative of its 2,400 claims before passage of a desert bill. “We find ourselves in the position of finding gold now or losing it forever, which is not the way you’d like to do things,” said Harold Linder, a Viceroy geologist.

Fitzpatrick said he is frustrated by Democratic sponsors of the desert bill and environmentalists who insist that the entire Castle Mountain project be included in Park Service territory.

“A mine is not something that should be managed like a park,” Fitzpatrick said. “No matter how you cut it, it doesn’t make sense.”

Some leading environmentalists also challenge the wisdom of placing a major mine such as the Viceroy project under Park Service jurisdiction. These critics say they are unwilling to publicly voice their opposition for fear of losing their standing within the environmental community.

“A major mining operation shouldn’t be part of a national park because of the degree of human disturbance,” said one prominent member of the National Parks and Conservation Assn., a private educational group with 100,000 members. “Why should the National Park Service be deliberately saddled with the responsibility of overseeing that thing?”

In an attempt to place active mining claims outside the proposed East Mojave park boundaries, Rep. Richard H. Lehman (D-Sanger) last year introduced amendments that removed three companies from the House bill. But Viceroy was not among them.

Lehman said he sought to accommodate Viceroy by pulling 10,000 acres of the company’s 31,000-acre mining block out of wilderness territory and offering an additional three to five years to validate existing claims. But Viceroy officials rejected the proposal, Lehman said, hoping to avoid Park Service regulation altogether.

“We thought we were generous,” Lehman said. “They don’t want to deal with the Park Service. I feel if we give you the right to operate, you don’t have the right to choose your regulator.”

Fitzpatrick, however, said Lehman never made a specific offer to extend Viceroy’s exploration rights. He said that withdrawing 10,000 acres of wilderness area does not help Viceroy if the firm is not free to continue unrestricted exploration.

“It isn’t practical to legislate an exploration program,” Fitzpatrick said. “It just doesn’t work that way in the real exploration and mining world.”

Now Viceroy officials and environmental leaders find themselves back in their familiar adversarial roles, despite the historic agreement they negotiated last year. Within environmental circles, Viceroy is widely criticized for continuing to oppose the desert bill provision that would put the East Mojave under Park Service management.

Norbert Riedy, a Wilderness Society analyst who helped negotiate the environmental pact with Viceroy, said the mining company is “piecemealing us to death” by seeking to significantly expand its mining operations in the East Mojave.

“They are a foreign company,” Riedy said. “They are going to make a killing on the mine. They should leave well enough alone.”

Digging in the Desert

A total of 356 workers are employed by seven mining companies operating within the proposed boundaries of the California Desert Protection Act. Mine: Castle Mountain Firm: Viceroy Resource Corp. Location: East Mojave Mineral: Gold Employees: 180

Mine: Colosseum Firm: Colosseum Inc. Location: East Mojave Mineral: Gold Employees: 105

Mine: Morningstar Firm: Vanderbilt Gold Corp. Location: East Mojave Mineral: Gold Employees: 5

Mine: Billie Firm: American Borate Co. Location: Death Valley Mineral: Colemanite Employees: 50

Mine: Aiken Firm: Aiken Builders Products Inc. Location: East Mojave Mineral: Cinder Employees: 6

Mine: Crater Firm: American Sulfur Products Inc. Location: Death Valley Mineral: Sulfur Employees: 5

Mine: Ellie Firm: Ellie Mining Inc. Location: Death Valley Mineral: Iron and gypsum Employees: 5 SOURCE: Bureau of Land Management, Times survey of mining companies