Ouray Silver Mines wants to reopen a mine that produces silver, gold, lead and copper and would bring 152 jobs to Ouray County, along with, its proponents say, a 10 to 20 percent boost to the county’s tax base.
But that mine is on hold, due to issues with water quality at a nearby creek tied to the mine that the mine owners say they have worked on for 18 months without any concerns raised by CDPHE until now.
Sneffels Creek, the surface water source near the mine, is about halfway between Ouray and Telluride, as the crow flies. The creek has a long history with mining, going back 140 years.
The mine dates back to 1876 and ran until its mill burned down in 1912. During its early operations, the mine produced 25 million ounces of silver.
Sneffels Creek joins up with another creek and then into Canyon Creek downstream, and then into the Uncompahgre River. Briana Greer, an environmental consultant with Ouray Silver Mines, said when the water originating in Sneffels Creek reaches the Uncompahgre, water quality in that river improves by 50 percent. It’s better water quality than area drinking water, she told the committee.
The idea of starting the mine back up for its silver, gold, zinc and copper began in the 1980s. The mine passed through numerous hands until 2014, when Fortune Minerals of Canada bought it hoping to mine its silver veins. But the company couldn’t sustain production and defaulted on its loans. The chief investor, Lascaux Resource Capital of New York, took over the mine and renamed it Ouray Silver Mines.
Mine CEO Brian Briggs told the General Assembly’s interim Water Resources Review Committee Wednesday that the company has invested $70.5 million to get the mine up and running, and it will take another $36 million to get up to full production. The payoff? Fourteen million ounces of silver, which costs $7.89 per ounce to mine and can bring in about $17 per ounce on the market. The mine also has rich veins of gold, lead and zinc, and the company expects a net a profit of around $76 million, along with 152 well-paying jobs for experienced miners, according to Briggs.
A fifth-generation Ouray native, Briggs has several decades experience in mining, called Ouray “a very, very good mine, the best I’ve every worked on for economic results.”
Ouray County could benefit more than just how the mine will improve its tax base. Briggs explained that Ouray has no gravel pits or other sources for road base. So mine tailings and waste rock, which metallurgical tests show are “benign,” are ground up by the company and provided to the county for road base.
Starting up an old mine has not been without its problems. According to a chart from the company, lead, zinc and cadmium discharges briefly exceeded state standards in 2014, leading to a violation notice last year from CDPHE. Lead discharges exceeded the standards again this past summer due to the failure of a lining in a mine tunnel that is being replaced.
Then there’s the water quality issue, and that’s delaying the mine’s startup.
The mine’s previous owner had a permit to discharge water to Sneffels Creek. The new owners set up a passive water system that could discharge either to surface or to groundwater (underground) water sources.
Briggs explained to the committee that the passive system is not only one for today’s mining but for 50 or 60 years from now. Briggs said the system, which has been piloted in Wyoming, for example, should prevent the kinds of problems that happened at the old Gold King Mine near Durango two years ago, when contractors for the Environmental Protection Agency accidentally released more than a million gallons of toxic mine waste into the Animas River.
In the mine’s passive system, used mining water is passed through a clay liner that contains fabric with peat moss to absorb metals and then a layer of topsoil. “It makes a tremendous impact on the three metals we’re concerned about: cadmium, lead and zinc,” Briggs said.
The hangup has been just who’s in charge of making sure the system is in compliance at the CDPHE. Briggs said the mine had provided quarterly updates, explaining the passive system, to CDPHE’s enforcement division. In November 2016, the mine owners applied for a termination of its surface water discharge permit, believing it was no longer necessary since the passive system was discharging its water into underground water sources.
In July, CDPHE denied the request, stating the surface water interacts with groundwater sources. “We can’t confirm” whether that’s true, Briggs said.
That left the owners in a pickle – tear up the previous system? Install a new one? “If they want us to discharge into surface water we’ll do that,” Briggs said. But he also appeared to be frustrated that after 18 months of telling CDPHE what they were doing that the agency came back and said that system doesn’t work.
Installing another system will take another year, Briggs said.
The story from CDPHE is a tad different. In a September 3 letter to Sen. Don Coram, R-Montrose, CDPHE’s Karin McGowan said the mine had an active permit for a surface water discharge. “They are not waiting for a new permit, but may be frustrated because they have not been able to successfully modify their permit because they have not provided the necessary information needed to execute a modification. We are currently working with them to get the necessary information needed,” McGowan wrote.
McGowan further added that the mine changed its manner of discharge, from surface to groundwater, without notifying the division.
The September, 2016 notice of violation was for discharging to a new location without a permit, effluent violations, and administrative violations, McGowan pointed out. “The facility has consistently failed whole effluent toxicity testing permit requirements,” she wrote. The 2016 notice pertains to a 2014 discharge, when the mine was owned by Fortune Minerals, in which water contaminated with lead, cadmium and zinc was dumped at a rate of 400 gallons per minute into Sneffels Creek for about 18 hours.
Briggs told the committee CDPHE has never even visited the site, despite numerous requests by the mine owners…
In a statement, CDPHE spokesman Mark Salley told Colorado Politics that most enforcement is completed through evaluations of self-reported data. “Resource limitations makes it impossible to visit every site on an annual basis and hence permittees are put on a schedule for inspection,” he said.