Archive for the ‘Mining Industry’ Category

Corporate Overkill

Friday, April 9th, 2010

There is so much corporate misbehavior taking place around us that it is possible to lose one’s sense of outrage. But every so often a company comes along that is so brazen in its misdeeds that it quickly restores our indignation.

Massey Energy is one of those companies. Evidence is piling up suggesting that corporate negligence and an obsession with productivity above all else were responsible for the horrendous explosion at the Upper Big Branch mine in West Virginia that killed at least 25 workers.

This is not the first time Massey has been accused of such behavior. In 2008 a Massey subsidiary had to pay a record $4.2 million to settle federal criminal and civil charges of willful violation of mandatory safety standards in connection with a 2006 mine fire that caused the deaths of two workers in West Virginia.

Lax safety standards are far from Massey’s only sin. The unsafe conditions are made possible in part by the fact that Massey has managed to deprive nearly all its miners of union representation. That includes the workers at Upper Big Branch, who were pressured by management to vote against the United Mine Workers of America (UMWA) during organizing drives in 1995 and 1997. As of the end of 2009, only 76 out of the company’s 5,851 employees were members of the UMWA.

Massey CEO Don Blankenship (photo) flaunts his anti-union animus. It’s how he made his corporate bones. Back in 1984 Blankenship, then the head of a Massey subsidiary, convinced top management to end its practice of adhering to the industry-wide collective bargaining agreements that the major coal operators negotiated with the UMWA. After the union called a strike, the company prolonged the dispute by employing harsh tactics. The walkout, marked by violence on both sides, lasted 15 months.

In the years that followed, Massey phased out its unionized operations, got rid of union members when it took over new mines and fought hard against UMWA organizing drives. Without union work rules, Massey has had an easier time cutting corners on safety.

Massey has shown a similar disregard for the well-being of the communities in which it operates. The company’s environmental record is abysmal. In 2000 a poorly designed waste dam at a Massey facility in Martin County, Kentucky collapsed, releasing some 250 million gallons of toxic sludge. The spill, larger than the infamous Buffalo Creek flood of 1972, contaminated 100 miles of rivers and streams and forced the governor to declare a 10-county state of emergency.

This and a series of smaller spills in 2001 caused such resentment that the UMWA and environmental groups—not normally the closest of allies—came together to denounce the company. In 2002 UMWA President Cecil Roberts was arrested at a demonstration protesting the spills.

In 2008 Massey had to pay a record $20 million civil penalty to resolve federal charges that its operations in West Virginia and Kentucky had violated the Clean Water Act more than 4,000 times.

And to top it off, Blankenship is a global warming denier.

Massey is one of those corporations that has apparently concluded that it is far more profitable to defy the law and pay the price. What it gains from flouting safety standards, labor protections and environmental safeguards far outweighs even those record penalties that have been imposed. At the same time, Massey’s track record is so bad that it seems to be impervious to additional public disgrace.

Faced with an outlaw company such as Massey, perhaps it is time for us to resurrect the idea of a corporate death penalty, otherwise known as charter revocation. If corporations are to have rights, they should also have responsibilities—and should face serious consequences when they violate those responsibilities in an egregious way.

A “Poster Child for Corporate Malfeasance”

Thursday, March 25th, 2010

One of the cardinal criticisms of large corporations is that they put profits before people. That tendency has been on full display in the recent behavior of transnational mining giant Rio Tinto, which has shown little regard for the well-being not only of its unionized workers but also of a group of executives who found themselves on trial for their lives in China.

The China story began last July, when four company executives — including Stern Hu, a Chinese-born Australian citizen — were arrested and initially charged with bribery and stealing state secrets, the latter offense carrying a potential death penalty. The charges, which most Western observers saw as trumped up, were made during a time of increasing tension between Rio and the Chinese government, one of the company’s largest customers, especially for iron ore.

Earlier in the year, debt-ridden Rio had announced plans to sell an 18 percent stake in itself to Chinalco, the state-backed Chinese aluminum company, for about $20 billion. Faced with strong shareholder and political opposition, Rio abandoned the deal in June 2009. The arrests may have been retaliation by the Chinese for being denied easier access to Australia’s natural riches.

Although Rio claimed to be standing by its employees, the case did not curb the company’s appetite for doing business with the deep-pocketed Chinese. Rio continued to negotiate with Beijing on large-scale iron ore sales. It seems never to have occurred to the company to terminate those talks until its people were freed. In fact, only weeks after the arrests, Rio’s chief executive Tom Albanese was, as Canada’s Globe and Mail put it on August 21, “trying to repair his company’s troubled relationship with China.”

Before long, Rio was negotiating with Chinalco about participating in a copper and gold mining project in Mongolia. One thing apparently led to another. In March 2010 — after its still-imprisoned employees had been officially indicted and were about to go on trial — Rio announced that it and Chinalco would jointly develop an iron ore project in the West African country of Guinea.

When that trial began a couple of weeks later, the Rio managers admitted guilt, but not to the more serious charge of stealing trade secrets. Instead, they said they had engaged in bribery — but as recipients rather than payers. While the four defendants may have been guilty of some impropriety, it is likely that the admissions were a calculated move to gain a lighter sentence in a proceeding whose outcome was predetermined. And that was the case in large part because their employer decided that its business dealings were more important than demanding justice for its employees.

Rio is no more interested in justice when it comes to its operations outside China. It has been accused of human rights violations in countries such as Indonesia and Papua New Guinea. And it has a track record of exploiting mineworkers in poor countries such as Namibia and South Africa while busting unions in places such as Australia. Recently, Rio showed its anti-union colors again in the United States.

On January 31 its U.S. Borax subsidiary locked out more than 500 workers at its borate mine in Kern County, California. The workers, members of Local 30 of the International Longshore & Warehouse Union had the audacity of voting against company demands for extensive contract concessions. The company wasted no time busing in replacement workers.

In a press release blaming the union for the lockout, U.S. Borax complained that ILWU members earned much more than workers at the company’s main competitor Eti Maden. The release conveniently fails to mention that Eti Maden’s operations are in Turkey.

Also missing from the company’s statement is the fact that the biggest driver of demand for boron – a material used in products ranging from glass wool to LCD screens – is the Chinese market. If U.S. Borax busts the ILWU in a way that keeps down boron prices, then the ultimate beneficiary may be Rio Tinto’s friends in China.

It is no surprise that mining industry critic Danny Kennedy once wrote that Rio Tinto “could be a poster child for corporate malfeasance.”

The Corporate Crime Fighting Budget

Friday, February 27th, 2009

The call to boost taxes on the wealthy to start paying for healthcare reform is not the only refreshing thing about the budget outline just released by the Obama Administration. There is also a marked shift toward tighter regulation of business. Here are some features of what might be called the Corporate Crime Fighting Budget:

Cracking down on corporate polluters. The Environmental Protection Agency—a joke during the Bush Administration—is slated for a 34 percent increase in funding. This would result in a hike in the budget for core functions such as enforcement to $3.9 billion, an all-time high for the agency.

Cracking down on abusive employers. Obama wants the Department of Labor—another agency enervated by the Bush crowd—to get a smaller increase than EPA, but the additional funds are intended to rebuild DOL’s responsibilities in workplace monitoring. The budget document proposes to “increase funding for the Occupational Safety and Health Administration, enabling it to vigorously enforce workplace safety laws and whistleblower protections, and ensure the safety and health of American workers; increase enforcement resources for the Wage and Hour Division to ensure that workers are paid the wages that are due them; and boost funding for the Office of Federal Contract Compliance Programs, which is charged with pursuing equal employment opportunity and a fair and diverse Federal contract workforce.”

Prosecuting white-collar crooks. The section on the Justice Department in the budget document says that the Administration will seek [not yet quantified] “resources for additional FBI agents to investigate mortgage fraud and white collar crime and for additional Federal prosecutors, civil litigators and bankruptcy attorneys to protect investors, the market, the Federal Government’s investment of resources in the financial crisis, and the American public.”

Thwarting purveyors of tainted food. The Administration plans to “take steps to improve the safety of the Nation’s supply of meat, poultry and processed egg products and to ensure that these products are wholesome, and accurately labeled and packaged.” The proposed budget for the Agriculture Department “provides additional resources to improve food safety inspection and assessment and the ability to determine food safety risks. This will lead to a reduction in foodborne illness and improve public health and safety.” The Food and Drug Administration, which is under the auspices of the Department of Health and Human Services, would also get a hike in funding.

Restricting plunderers of national resources. The section of the budget document on the Interior Department outlines the Administration’s intention to rein in the windfalls long enjoyed by extraction companies with leases to drill and mine on public lands. The plan includes “a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes that have given oil companies excessive royalty relief” as well as the imposition of user fees and more realistic royalties for oil and gas drilling on federal lands.

Controlling drug and healthcare price gouging. The general framework for healthcare reform released by the Administration as part of the budget document contains plans to slow down the growth in Medicare costs. This includes a proposal to force providers of privatized coverage under the name of Medicare Advantage to participate in competitive bidding. Medicare drug costs would be reined in by tightening oversight of Part D spending and by preventing brand-name pharmaceutical companies from paying generic drug producers to keep their low-cost products off the market.

To these should be added tax proposals that would put an end to various boondoggles that have enriched oil companies, hedge funds and other anti-social elements. Some of Obama’s proposals (especially regarding healthcare) do not go nearly far enough, but the budget as a whole represents a major break from the priorities of the Bush Administration. Though you would hardly know that from the geeky, matter-of-fact way it is being promoted by Budget Dirtector Peter Orszag (photo).

Budget documents are, of course, merely wish lists conveyed by the executive to the legislative branch. In the short term, the main impact of Obama’s blueprint will be to launch a massive wave of business lobbying. Now it is up to Congress to resist the entreaties of those paid persuaders and make it clear that the days of unchecked corporate giveaways have come to an end.

The Ugly Chinese?

Thursday, August 7th, 2008

When we hear about poor third world workers being exploited by a rapacious foreign corporation, we tend to assume the company is based in the United States, Europe or Japan. An article in the new issue of Bloomberg Markets magazine is the latest indication that we probably need to add China to that mental list.

Young Workers, Deadly Mines is a remarkable exposé by Simon Clark, Michael Smith and Franz Wild about child workers in the Democratic Republic of Congo (DRC) in central Africa. The DRC, formerly Zaire, is a mineral-rich country that suffered for more than a quarter-century under the kleptocratic Mobutu regime and then endured years of civil war that involved several neighboring countries. Some foreign companies enabled the violence by continuing to purchase gold and diamonds from militia groups.

Clark, Smith and Wild show that foreign business interests are once again profiting from the misery of the people of the DRC. The problem is concentrated in the Katanga region, which contains large deposits of copper and cobalt, two substance very much in demand on the international market. There, “freelance” miners, including young children, work crude, hand-dug mines to extract ore that is sold to middlemen, who in turn sell to nearby smelters run by Chinese companies such as Zhejiang Huayou Cobalt Nickel Materials Co. (logo). The cobalt is shipped to China and is ultimately sold to companies such as Sony and Samsung for use in making cellphone batteries. The child workers, toiling in hazardous and unsanitary conditions, earn the equivalent of about $3 a day.

The article reports that more than 60 of Katanga’s 75 mineral processing plants are owned by Chinese companies and some 90 percent of the region’s mineral output is sent to China, whose fast-growing economy has an insatiable appetite for raw materials. The Bloomberg Markets article notes that Chinese extractive companies are operating in a number of other African countries aside from the DRC, such as Zambia, Niger, Sudan, Ethiopia and Zimbabwe.

The latest Fortune Global 500 list contains 29 corporations based in China, including three with revenues in excess of $100 billion. We need to know a lot more about companies such as these and how they are behaving abroad as well as at home.

Giant Mining Firm’s Social Responsibility Claims: Rhetoric or Reality?

Friday, August 1st, 2008

The recent decision by the U.S. Supreme Court to slash the damage award in the Exxon Valdez oil spill case and the indictment of Sen. Ted Stevens on corruption charges are not the only controversies roiling Alaska these days. The Last Frontier is also witnessing a dispute over a proposal to open a giant copper and gold mine by Bristol Bay, the headwaters of the world’s largest wild sockeye salmon fishery. Given the popularity of salmon among the health-conscious , even non-Alaskans may want to pay attention to the issue.

The Pebble mine project has been developed by Vancouver-based Northern Dynasty Ltd., but the real work would be carried out by its joint venture partner Anglo American PLC, one of the world’s largest mining companies. Concerned about the project and unfamiliar with Anglo American, two Alaska organizations—the Renewable Resources Coalition and Nunamta Aulukestai (Caretakers of the Land)—commissioned a background report on the company, which has just been released and is available for download on a website called Eye on Pebble Mine (or at this direct PDF link). I wrote the report as a freelance project.

Anglo American—which is best known as the company that long dominated gold mining in apartheid South Africa as well as diamond mining/marketing through its affiliate DeBeers—has assured Alaskans it will take care to protect the environment and otherwise act responsibly in the course of constructing and operating the Pebble mine. The purpose of the report is to put that promise in the context of the company’s track record in mining operations elsewhere in the world.

The report concludes that Alaskans have reason to be concerned about Anglo American. Reviewing the company’s own worldwide operations and those of its spinoff AngloGold in the sectors most relevant to the Pebble project—gold, base metals and platinum—the report find a troubling series of problems in three areas: adverse environmental impacts, allegations of human rights abuses and a high level of workplace accidents and fatalities.

The environmental problems include numerous spills and accidental discharges at Anglo American’s platinum operations in South Africa and AngloGold’s mines in Ghana. Waterway degradation occurred at Anglo American’s Lisheen lead and zinc mine in Ireland, while children living near the company’s Black Mountain zinc/lead/copper mine in South Africa were found to be struggling in school because of elevated levels of lead in their blood.

The main human rights controversies have taken place in Ghana, where subsistence farmers have been displaced by AngloGold’s operations and have not been given new land, and in the Limpopo area of South Africa, where villagers were similarly displaced by Anglo American’s platinum operations.

High levels of fatalities in the mines of Anglo American and AngloGold—more than 200 in the last five years—have become a major scandal in South Africa, where miners staged a national strike over the issue late last year.

Overall, the report finds that Anglo American’s claims of social responsibility appear to be more rhetoric than reality.  Salmon eaters beware.