San Juan County copper mine on track to reopen after abrupt shutdown in March

(Zak Podmore | Tribune file photo) Heap leach pads at the Lisbon Valley Mining Company's copper mine facility in eastern San Juan County in October 2019. The company, which had its permits revoked in March, will likely resume mining operations this fall.

Utah’s second largest copper mine is set to reopen this fall after narrowly avoiding a systems breakdown that could have spilled sulfuric acid into the environment in March.

The Utah Division of Oil, Gas and Mining (DOGM) revoked Lisbon Valley Mining Company’s permits and issued a full reclamation order in April when state regulators had to use bond money to assist with an emergency situation at the mine.

Inspectors have been visiting the facility every week or two since the order — which requires reclamation to be completed by next September — was issued, according to DOGM’s Deputy Director of Mining Dana Dean.

“That order is still in place today,” Dean said, “[but] it may not be there much longer.”

The mining company reapplied for the permits needed to resume operations in July when it submitted a 98-page notice of intent to commence large mining operations to the state. DOGM officials gave the company tentative approval of its application and requested numerous changes.

A comment period was announced in local and state newspapers, Dean said, but the agency received no public comments on the matter before the window closed last month.

“The reclamation order itself will be rescinded once they get a permit back into place,” she said, adding that a few final changes are still needed but approval is likely if the company posts the required bond.

The Lisbon Valley Mine in San Juan County has produced copper on and off for over a century, and it still has considerable copper reserves in its deposits. As recently as December, the company, which had permits from federal and state agencies to operate on public and private land near the Utah-Colorado border, was planning to expand using new in-situ extraction methods that involve pumping an acidic solution into the shallow aquifer to dissolve copper deposits.

But in the first weeks of the coronavirus pandemic, an investor pulled support for the company, and managers were temporarily unable to meet payroll. The circulation systems associated with the facility’s nearly 1,000 acres of heap leach pads began to fail and the company’s director George Shaw sent a letter to DOGM requesting “immediate assistance” to keep sulfuric acid and other chemicals from being released into the environment.

A small portion of the company’s $6.1 million bond held with the surety company Sompo International was used to stabilize the situation at the heap leach facility, and Dean said the company has since been paying for reclamation efforts without using bond money.

In a letter submitted to the state, Shaw said the company found a new financial backer and is ready to resume operations once permits are finalized. According to records released by the Small Business Administration, Lisbon Valley Mining Company received over $1 million in loans in April through the federal Paycheck Protection Program that was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Shaw did not respond to an emailed request for comment.

As part of the company’s new permit application, the bond that is required under state law to ensure funds are available for reclamation if a mining company defaults on its permit is being revised to accurately reflect estimated cleanup costs.

“As the division, we’re definitely doing what we need to do to protect the state by asking for an accurate bond,” Dean said. “We always want people to be successful with their businesses, but our job is to protect the state if something does go wrong.”

Even before the pandemic, Lisbon Valley Mining Company was struggling due to low global copper prices and a trade dispute between the United States and China. Four contractors have sued the company in district court over the last year for allegedly failing to pay invoices for equipment and machinery used at the mine.

The Utah State Tax Commission has filed multiple tax liens against the company since November, and the company has failed to pay the majority of its property taxes to San Juan County since 2014. Last month, Shaw called into the San Juan County Commission meeting and requested the commissioners waive $312,000 in interest, fees and penalties owed on the company’s $1.4 million in outstanding property taxes.

The commissioners agreed to Shaw’s request after San Juan County Administrator Mack McDonald stated the mine could hire between 50 and 95 employees by the end of the year. The commission also granted Shaw a similar waiver last year.

On Tuesday, the county commission sent a letter to the Bureau of Land Management (BLM) supporting the mining company’s request to modify its plan of operations to allow for an additional 28 acres of mining within the previously approved 4,480-acre mine plan boundary.

“San Juan County has been and continues to be a supporter of mining operations at the Lisbon Valley Mine," the commission wrote. "This operation has been an important contributor to the county economy through tax revenues and jobs for county residents.”

“The BLM appreciates this company practicing responsible mining while considering other resources and uses to fulfill our multiple-use mission,” said BLM Moab Field Manager Nicollee Gaddis-Wyatt. “We strive to make well informed decisions and we welcome public comments on the Plan Modification to gather all the information needed.”

The BLM’s public comment period is open through Oct. 29.

Zak Podmore is a Report for America corps member and writes about conflict and change in San Juan County for The Salt Lake Tribune. Your donation to match our RFA grant helps keep him writing stories like this one; please consider making a tax-deductible gift of any amount today by clicking here.