Town Streets No Longer Paved With Gold

Bill Dupree grew up believing there was one path to prosperity in this tiny town. It’s a 1 1/2-mile journey--down into the darkness, down toward the center of Earth.

That’s where the gold is.

That’s also where the best-paying jobs have been for Dupree and others: 8,000 feet below in the Homestake mine, a presence here since the rollicking days of the Wild West when prospectors rushed in to pan for riches.

For more than a century, Lead (pronounced leed) has thrived as a company town tucked away a mile high in the towering pine and spruce trees that shade these Black Hills like an ebony curtain.

But times change, faraway financial markets change and now Lead, population 3,800, knows it must change too.

Sagging gold prices, which reached an 18-year low this year, coupled with a depleted mine that lost $23 million in 1997, have triggered huge layoffs at Homestake and forced folks to face what once seemed unthinkable: Gold, this town’s past and present, will not likely be its future.

“Yes, indeed, in the next 20 years, this will probably cease to be a mining community,” says local real estate agent Ed Carr. “It’s a real test of survival.”

In late January, the Homestake Mining Co. announced major cutbacks; its hourly work force has dropped from 695 to 325. Its total payroll, 400, is less than a third of what it was in the mid-’80s.

Already, the metamorphosis has begun: Lead is looking for new businesses. Unemployed workers are looking for new opportunities, an irony in a town whose very name is a mining term for the spot where the ore reaches the surface.

But since the cutbacks five months ago, only one in three has found work, and nearly half of those jobs were out of the area, says Aaron Carr, an employment specialist at the Career Learning Center in Rapid City, which helps displaced workers.

Many have discovered it doesn’t pay to stay.

Local salaries are about half the average $15-an-hour base wage for miners. Some of the biggest employers are casinos three miles down the road in Deadwood, the restored gambling town where Wild Bill Hickok wagered his last poker bet.

Some Homestake veterans already have moved as far as Puerto Rico, Florida and California. Others have resettled in Montana and Nevada, starting over in other mines.

Dupree and his wife, Cathy, who together had nearly 50 years of service at Homestake, recently moved to Nebraska, where he was hired by the Union Pacific Railroad.

At 43, Dupree, who grew up here, was reluctant to trade the comforts of these quiet hills, where he could snowmobile in winter and catch rainbow trout in summer, for the table-top flat, dusty, landlocked Plains.

“There’s a lot of sadness leaving all your friends and your family,” says the bearded Dupree, pacing an empty union hall where a bulletin board is plastered with job fair announcements. “Sure, I have some resentments. That was my livelihood. They pulled the rug out from under me.”

“When we were hired on, we thought we were going to be there for life,” he adds glumly. “You always thought your kids, your grandkids, would be there.”

But Homestake had no easy option, says Larry Mann, a company spokesman.

“Our choices were to close or make a conscious effort to maximize what was there and keep good employment for 400 for the rest of the life of the mine,” he says.

Homestake’s troubles stem, in part, from outside forces, notably world demand for gold: The price of an ounce, which peaked at $810 in 1980, now hovers around $300.

In Lead, meanwhile, Homestake’s production costs have soared. In the early 1970s, Mann says, the mine’s annual power bill was $850,000; today, that pays for just one month.

And with a 122-year-old mine that has been dug out like a watermelon chewed to its rind, blasting out gold has become more time-consuming and costly.

It now takes five tons of ore to produce a single ounce of gold, Mann says.

With about 2.7 million ounces of gold left, he estimates, at the current rate of production, Homestake has about 16 years of mining left unless more reserves are found.

But for Mike Feterl, the end already has come.

The 45-year-old father of four who donned hard hats and steel-toe shoes for 21 years lost his Homestake job, as did three brothers and a brother-in-law.

With a bad back, his choices were limited. After sending out resumes, panicking a bit and reviewing training programs, he plucked out a life-changing career. A few weeks ago, he began a two-year program to become a paralegal.

“I look on this as a blessing,” he says. “There is life after Homestake. Once you have deep roots and have been with a company 20 years, you’re scared to venture out because that security is there. But you can make it in the world if you want to. A lot of people are finding that out--only because they have to.”

Lead is discovering that too.

Homestake accounts for half of the property taxes, so the town is seeking new businesses to help compensate for future losses.

It hopes to reinvent itself as a tourist attraction by promoting its hills and streams and its colorful past when rowdy dance halls, opium smokers and Calamity Jane were fixtures in town. The local mining museum already attracts up to 50,000 visitors a year.

Some companies have expressed interest in relocating, but none will be another Homestake in size or salary.

“Homestake just took care of everything for this town,” says LeAnn Johns, director of the Twin City Area Development Corp. “They aren’t going to be there forever. That’s opened up people’s eyes. We’ve got to diversify to survive.”

It’s long overdue, says Harvey Lux, the town’s financial officer.

“We’ve been talking about that for the last 10 to 20 years, but we haven’t done anything about it,” he says. “Now, the time has come.”