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Mining Giant Gets U.S. Gold Bonanza for a Mere $9,000

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TIMES STAFF WRITER

In what he called a “historic giveaway,” Interior Secretary Bruce Babbitt on Monday reluctantly gave a Canadian mining giant clear title to harvest one of the world’s richest veins of gold from U.S.-owned land in return for a payment of only $9,000 to the federal Treasury.

The agreement, ordered by a federal judge, could mean huge profits to American Barrick Resources Corp. Interior Department officials estimated the value of gold on the land that Barrick got Monday at $8 billion to $10 billion.

Babbitt said the deal underscores the need to reform the 19th-Century law governing mining on national lands--an initiative high on the Clinton Administration’s agenda.

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“Many mining companies are not paying their fair share,” he said, standing beneath an enlarged check for $10 billion that was written out to Barrick and signed by “The American People.”

“They’re ripping off the American people fair and square. But it is a rip-off and it ought to be changed,” he said.

Babbitt called the Barrick patent “the biggest gold heist since the days of Butch Cassidy.” And Leon E. Panetta, director of the Office of Management and Budget and a past supporter of mining reform, noted that the $9,000 patent fee that Barrick will be obliged to pay “is less than they charge players for fighting during a game” in the National Basketball Assn.

Monday’s patent approval came after Babbitt failed to win legal support for a proposed moratorium on the awarding of mining patents until a complex and controversial reform bill can be passed. Legislation is heading toward a House-Senate negotiation in coming weeks. But strong opposition from Western senators, who support mining interests, promises to turn the issue into a political firestorm pitting rural industries against urban environmentalists and their allies in the Interior Department, including Babbitt.

Barrick’s patent claim for about 1,800 acres of federal land in northeastern Nevada had to be approved without delay, a federal judge ruled in April. Interior officials said more than 500 other patent requests, many of them lucrative but none as valuable as Barrick’s, have been filed with the Interior Department. In the wake of the Barrick decision, officials said those patents may legally have to be approved under current mining law.

Under the law, firms like Barrick, which is based in Canada but has a U.S. subsidiary, may mine valuable hard-rock minerals ranging from gold to uranium on American federal lands for a onetime patent fee of between $2.50 and $5 an acre. The law provides for no royalties--charges based on the percentage of the value of the minerals that are extracted--to be paid to the federal government.

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The law also allows anyone--from independent prospectors to land speculators to mining conglomerates--to patent land, a practice that makes the holder of the patent the owner in perpetuity of land that once belonged to the federal government.

According to the Mineral Policy Center, a watchdog group lobbying for mining reform, the law, largely unchanged since 1872, has spawned a network of roughly 550,000 abandoned mines on federal lands across the country, many of which are leaching cyanide, arsenic, cadmium and lead into nearby streams and lakes. And it has fostered a taxpayer-sponsored giveaway that continues to make mining companies--most of them foreign--rich while leaving taxpayers with a cleanup bill of between $33 billion and $77 billion.

Babbitt called the 1872 mining law “an artifact of a bygone era” when lawmakers believed that subsidies should be offered to companies and individuals willing to settle the American West and exploit its natural resources.

A House bill would dramatically change the 1872 law, imposing an 8% royalty on the value of hard-rock minerals extracted from federal lands and ending the practice of patenting. The bill, passed in a historic vote last November, would use the collected royalties, projected at between $50 million and $130 million annually, to establish a fund to clean up environmental contamination left behind by thousands of mining operations. Babbitt has praised the House bill and offered firm Administration support for reform efforts.

A Senate proposal would impose lower royalties and allow mining firms to deduct the cost of mining operations from the value of the minerals they mine in calculating royalties to the U.S. government. On Monday, Babbitt said that the draft Senate proposal backed by Sen. J. Bennett Johnston (D-La.) “represents some very interesting progress.”

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