Wisconsin Review Commission Report
on the Track Records of Exxon and Rio Algom

CONTENTS

W.R.C. Panelists & Testifiers

INTRODUCTION

Background on the Commission
Company Histories
FINDINGS
Summary of Findings
Impacts on the Environment
Impacts on the Economy
Impacts on Indigenous Cultures
Impacts on Democracy
CONCLUSION
Recommendations
For More information

State government:
Douglas LaFollette, Wisconsin Secretary of State, Madison
Tribal government:
Ron Hill, chair, Oneida Environmental Resources Board, Oneida
Small business:
Jamee McCabe, Wolf River Territory business association, White Lake
Environmental groups:
Becky Leighton-Katers, director, Clean Water Action Council, Green Bay
Labor:
Bill Neuhaus, former UAW Local 1007 President, Union Grove
Church:
Rev. Fred Trost, Wisc. Conference United Church of Christ, DeForest
Farmers:
John Kinsman, president, Family Farm Defenders, LaValle
Sport/recreation:
Mike Svob, secretary, Trout Unlimited (Wolf River chapter), White Lake
Women's groups:
Mary Martin, director, Wisconsin Women's Network, Madison
Civil rights:
Anthony Lincoln, Wisconsin NAACP, Madison
Youth/high school:
Kelli Dwyer, student and Young Women's Agenda 2000, Elk Mound (Unable to attend, but reviewed testimony)
International residents:
Miguel Chango, Ecuadoran Quichua, Madison

Alaska:
Dune Lankard, Eyak Rainforest Preservation Fund,
Cordova (on Exxon Valdez oil spill)
Sarah James, Gwich'in Native elder,
Arctic Village (on Arctic National Wildlife Refuge oil drilling)
Colombia:
Armando Valbuena Gouriyú, Wayuu (Guajiro) Indian community,
Sintercor union organizer (on Exxon's El Cerrejón coal mine)
Ontario:
Keith Lewis, Serpent River Ojibwe band council leader
(on Rio Algom's Elliot Lake uranium mines)
New Mexico:
Ester Yazzie, Diné (Navajo) Nation
(on uranium leases in Four Corners region)
Wisconsin:
Al Gedicks, executive secretary, Wisconsin Resources Protection Council,
LaCrosse (offering wrtten documentation from elsewhere)



Thanks to Tupac Enrique for Spanish translation, and to the Indigenous Environmental Network and Midwest Treaty Network for facilitating testifiers' travel.

BACKGROUND on the COMMISSION

The Wisconsin Review Commission (WRC) is a project enabling the public to track the activities and records of corporations operating in our state. The purpose of the panel - which represents a cross-section of Wisconsin civic leaders - is to meet and hear public testimony about the activities of firms based in or operating in Wisconsin.

The WRC citizens' panel has members from state government, tribal government, labor, churches, farmers, small business, sport/recreation interests, women's groups, environmental organizations, civil rights groups, high school students, and international residents (see the listing below). The panel will draw up reports that are distributed to the media, government officials, and the public.

The WRC operates as a non-governmental 'watchdog' over practices of corporations operating inside Wisconsin, and the track records of the same companies outside our state. It seeks to educate Wisconsinites about the impact of corporate decisions on their lives, and issues recommendations pertaining to those impacts. While large companies have the financial means to present their perspectives, few public resources are put into examining other possible angles on their proposals. The WRC is one avenue that citizens have at their disposal to look at the "other side of the story" - in particular the perspectives of others who have already experienced company practices.

Hearing on Exxon and Rio Algom

The Wisconsin Review Commission held a testimonial hearing on two mining corporations on June 18, 1994, at the Mole Lake Sokaogon Chippewa Reservation, near the town of Crandon in Forest County. Secretary of State Douglas LaFollette chaired the session of the Commission. The WRC panel heard testimony on the track records of Exxon Minerals Co., and the Canadian mining firm Rio Algom. The two companies are jointly proposing a zinc-copper sulphide mine on land adjacent to the June 18 hearing site, through their wholly owned subsidiary Crandon Mining Company (CMC).

Testifiers were from areas directly affected by previous Exxon or Rio Algom operations, such as Colombia, Alaska, Ontario, and New Mexico (see the listing below). Testimony focused on the Exxon Valdez oil spill, coal and uranium mining, metallic mining, oil drilling, and other subjects. Panelists had an opportunity to ask questions of testifiers, whose comments were incorporated into sections of this report. Crandon Mining Company officials were later given a chance to review and comment on the initial draft of this report.

Report criteria

This report concentrates not on the general histories and practices of Exxon and Rio Algom, but on the aspects of their track records that may pertain to their proposal for the Crandon mine. The public concerns over the mine can be roughly divided into four categories:

• First, would the mine be safe for the environment? The Crandon Mining Co. contends that the mine will be constructed in such a way as to ensure safe operation, while opponents fear negative impacts on surrounding groundwater and downstream waterways.

• Second, would the mine help Wisconsin's economy? The Crandon Mining Co. foresees adding to local employment and financial stability, while opponents contend that mining operations have brought instability to local economies, especially those reliant on resources or tourism.

• Third, will the mine detrimentally affect Native American culture? The Crandon Mining Co. promises to work together with the affected tribes, while some tribal leaders have voiced fears for wild rice beds and cultural sites.

• Fourth, how do resource extraction projects affect Wisconsin's institutions of democracy? The companies assure citizens that they will be responsible neighbors, while opponents point to alleged undue influence of mining firms over the governmental process.

There are many conflicting opinions over the Crandon mine controversy. These will not be examined in depth in this report. But since the major points of this controversy revolve around impacts on the environment, the economy, indigenous cultures, and the democratic process, it is fair for the WRC to examine the companies' track records using these criteria. This report is divided into these four sections, followed by a listing of panel recommendations.

(Note: Since this report was issued, J. Wiley Bragg has been replaced as public relations director by Rio Algom official Richard Diotte, and Jerry Goodrich was replaced as CMC President by Rodney Harrill, an Exxon official who formerly headed the Carter Mining Co. in Gillette, Wyoming.)

Exxon

Exxon is the nation's largest and the world's second largest oil corporation (after Royal Dutch/Shell), and is headquartered near Houston, Texas. Founded in 1863 as John D. Rockefeller's Standard Oil Company, it later changed its name to Esso and, in 1972, to Exxon. Its divisions and affiliated companies operate in more than 80 countries. In 1993, the company earned $5.3 billion in profits and $111 billion in revenues. In recent years, Exxon has recorded higher production earnings than any competitor (Wall Street Journal, 9/19/94). Its 1993 revenues alone are larger than the Gross National Products (GNPs) of 165 out of the world's 192 independent countries (Britannica Book of the Year 1994, pp. 792-96). Most of Exxon's sales come from production, refining, and transportation of oil. The value of Exxon's energy reserves in the U.S. alone, based on the 1980 world oil price of $33 a barrel, exceeds $1.3 trillion (Bartlett, Philadelphia Inquirer, 12/7/80).

Exxon is also one of the world's biggest producers of coal, uranium, copper, and other minerals. It entered the mining industry in 1965 by buying up privately owned coal fields in the U.S. Exxon's principal foreign coal reserves are in northern Colombia, South America, where one-half of all Latin American coal reserves are located. The El Cerrejón mine is one of the richest coal fields in the world, located in the middle of the Wayuu (Guajiro) Indian region. A national furor arose in 1980 over the Colombian government's giveaway of the coal to Exxon's wholly owned subsidiary, the International Colombia Resources Corporation (Intercor). Officials of the Colombian state agency Carbocol resigned in protest over the agreement (Colombia Report, p. 10). The mine became a major issue in the 1982 Colombian presidential election. (Gutierrez, p. 72) Crandon Mining Co. President Jerry Goodrich was Vice President of Operations at El Cerrejón.

Founded in 1980, Exxon's wholly owned subsidiary Exxon Coal & Minerals Co. sank approximately $760 million in five years into copper and other minerals. Exxon invested heavily in copper mining in Chile, only five years after a military junta overthrew a democratically elected government. From 1968 to 1984, it also invested heavily in uranium mining. It leased Indian lands in the Southwest for uranium, and in 1972, it began operation of one of the largest uranium mines and mills in the U.S., at Highland, Wyoming (Cook, Forbes, p. 72). Crandon Mining Co. public relations official J. Wiley Bragg was at the forefront of similar but failed efforts to secure uranium leases in New Jersey and northeastern Minnesota in the early 1980s. (Duluth News Tribune, 2/25/81, New York Times, 8/24/80)

Following Exxon's 1975 discovery of a major zinc-copper deposit next to the Mole Lake Sokaogon Chippewa Reservation, the Engineering and Mining Journal suggested that "Exxon may become a significant producer of copper and zinc at facilities based on the massive sulphide deposit discovered by the company at Crandon, Wisconsin (Neesham, p. 55). Exxon USA described the deposit as possibly one of the ten largest known metallic deposits in North America (Dorgan, Capital Times, 5/14/76). The deposit rests at the headwaters of the Wolf River watershed, a large drainage area that supports unique and delicate habitats, such as trout streams, wetlands, and wild rice lakes. After facing a decade of strong local opposition, Exxon withdrew from the project in 1986, citing depressed metal prices. In August 1992, Exxon Coal & Minerals announced a partnership with Phelps Dodge Mining Co. to reopen the Crandon project, but Phelps Dodge withdrew after only four months. In September 1993, Exxon announced its intention to mine with a new partner - Canada-based Rio Algom - in their newly created partnership, the Crandon Mining Company .

Rio Algom

Rio Algom is a Toronto-based mining company with interests in copper, molybdenum, coal, tin, potash, uranium, as well as an international metals distribution business. Until 1992, Rio Algom was a Canadian affiliate of the world's largest mining company, the London-based Rio Tinto Zinc (RTZ) corporation. In 1955, RTZ acquired a substantial interest in several Ontario uranium mines near the north shore of Lake Huron, collectively known as Elliot Lake. During the U.S. nuclear weapons buildup of the 1950s-60s, there were 12 mines in the region employing over 10,000 workers (Kilgour). These mines were combined under Rio Algom mines in 1960, and over the next 30 years were identified with one of the world's most notorious controversies over radioactive contamination of the environment. In 1990-92, the share of copper in the company's mining profits rose from 31% to 42%, while uranium slipped from 54% to 31% (Northern Miner, 4/5/93).

In 1991, Rio Algom set aside $80 million to cover the cleanup costs at the abandoned Elliot Lake uranium mines. The following years RTZ sold its 51.4% stake in Rio Algom, explaining that it wanted to avoid competition with other North American interests such as its Kennecott Copper affiliate (operator of Wisconsin's Ladysmith mine). However, a number of industry experts interviewed by the Canadian mining newspaper The Northern Miner say that more important are "the potential liabilities related to the decommissioning of Rio's Elliot Lake, Ontario uranium mines". (7/13/92).

Richard J. Barnet and Ronald E. Muller, Global Reach: The Power
of Multinational Corporations(New York: Simon & Schuster,
 1974).
Donald Bartlett and James Steele, "Energy Anarchy," Philadelphia  
Inquirer, December 7-13, 1980.
Colombia Report, "Colombian coal for Exxon: El Cerrejon".
(February 1981).
Britannica Book of the Year 1994, Encyclopdia Britannica Inc.

James Cook, "Exxon proves that big doesn't mean rigid," Forbes, 
April 29, 1985.
Mike Dorgan, "Ore find raises concerns," Capital Times, Madison, 
May 14, 1976.
Duluth News-Tribune, "Exxon Bids for Uranium in Midway," 
February 25, 1981.
Alberto Rivera Gutierrez, "Exxon and the Guajiro," Cultural 
Survival Quarterly (Cambridge, Mass.:Summer 1984)
Peter Kennedy, "Elliot Lake liability prompted Rio Algom sale,  
analysts say," Northern Miner, July 13, 1992.
Art Kilgour, A History of Uranium Mining in Elliot Lake, 
Ontario. Birch Bark  Alliance, Trent, 1980.
Roger Moody, The Gulliver File: Mines, People, and Land: 
A Global  Battleground (London: Minewatch, 1992).
Robin Neesham, "Exxon emerging as a major mining firm," 
Engineering & Mining Journal, July 1978.
New York Times, "Hunt for Uranium Upsets 2 Rustic Towns in 
New Jersey" Aug. 24, 1980, p. 25
Parting Company, "RTZ Plays Pilate," London, Winter 1993

Caleb Solomon "Exxon's real problem: many of its oil fields 
are old and declining," Wall Street Journal,
 September 19, 1994.
John Soussan, Primary Resources and Energy in the Third World 
(New York: Routledge, 1988).

Highlights from the Report Findings:

Alaska After assuring Congress they could handle a possible spill emergency in Alaska, Exxon went about scrapping some safeguards, and never even built some others it had promised. When 11 million gallons of oil were spilling into Prince William Sound six years ago, Exxon's J. Wiley Bragg was there - not there to help, but to manage public relations (his initial job at Crandon Mining Co.). When Bragg said Exxon did not have enough containment booms to prevent the spill from spreading, the manager of emergency services in Seldovia threatened to arrest him, saying, "I personally feel that every Exxon employee should be brought here and put in a jail cell." President Bush's Secretary of Transportation said, "The industry response to the Valdez spill was zero on a scale of one to ten."

Colombia Exxon's huge coal mine - the largest in South America - was managed by Vice President of Operations Jerry Goodrich (the first Crandon Mining Co. president). The El Cerrejón mine has brought well-documented damage to the semi-arid region, including coal dust contamination, groundwater loss, and a fatal miners' illness .

Ontario Serpent River Ojibwe band councillor Keith Lewis testified on Rio Algom's Elliot Lake uranium mines. He said the Serpent River used to be one of the greatest sturgeon producing rivers in the province, but that ancient fish has all but disappeared due to radioactive and heavy metal poisons from the mines, and the only reason walleye are still present is that the river is stocked for sportsmen.

Wyoming Exxon's Highland uranium mine tailings pond was criticized by the state Department of Environmental Quality for numerous infractions. Jackrabbits nearby absorbed 26 times more radiation per pound than recommended levels for humans.

Colorado After the largest spill of radioactive uranium oxide in history, Exxon employees arrived on the scene. According to state officials after the 1977 spill, Exxon employees were not only improperly instructed, but inadequately trained and equipped for their clean-up mission.

Colorado In 1982, 2000 construction workers heard on the radio that they were laid off from a multibillion-dollar oil shale project, due to poor financial planning by Exxon.

Nova Scotia Rio Algom has still not cleaned up its East Kemptville tin mine, posing a threat to the multimillion dollar lobster industry. Exxon laid off miners when its Gay Mills lead-zinc mine closed prematurely in 1981.

Alaska Native Eyak fisherman Dune Lankard testified, "I never believed once that anyone could ever kill the ocean. So when it happened, I was in shock. How do you compensate somebody for taking everything away from you?" Commercial fisherman lost millions from cancelled salmon and herring runs; 1994 net permits cost one-sixth the pre-spill permits. Exxon was fined $5 billion in punitive damages for economic losses from the spill.

Ontario Lewis testified that he is one of many former Elliot Lake miners who now have serious health problems such as asthma, bronchitis, or cancer. The provincial Health Ministry admits the miners' lung cancer rates are 300 to 500 percent above that of the normal population.

Colombia Exxon's El Cerrejón coal mine has earned it a place on Survival International's Top Ten list of the corporate violators of Native rights. Wayuu Community leader Armando Valbuena Gouriyú testified that the mine has brought cultural devastation to the Wayuu (Guajiro) Indians - including the excavation of cemeteries for a rail line - while providing few jobs to the Native people.

Ontario Rio Algom (along with its parent company Rio Tinto Zinc) is also on the Survival International Top Ten list, because of its Elliot Lake uranium mines. Lewis testified that the company blasted a spiritual site, and added, "They have given money to the white municipalities which have a larger population... They say to the people of Serpent River who live downstream.... you people are crazy."

Alaska Exxon once told the natives of Alaska that the oil industry would have a positive effect on "the unique environmental conditions of the tribes." Lankard testified, "After the Exxon Valdez spill, Exxon said - 'We will make you whole again'. No one has made us whole." Government studies showed that within a year after the spill, subsistence harvests had declined 77 percent in 15 Native communities. The Eyak criticized Exxon for desecrating cultural sites and human burials during the clean-up.

Chile Exxon was the first multinational to make a mining deal with the military junta, which had violently ousted the elected government five years before.

Colombia Gouriyú, a former Exxon employee and union official at El Cerrejón, testified, "I know Exxon very well in Colombia. Exxon will follow the law; they made the law in Colombia." On three separate occasions, Exxon got the government to call in troops and armored vehicles against strikes by its employees. Workplace organizers like Gouriyú were fired after they brought up safety concerns.