Financially troubled Morrison Knudsen Corp. has won a contract for the opening phase of environmental cleanup work at the Silver Valley’s defunct Bunker Hill mine complex.
“Every contract is significant,” company President Robert Tinstman said after Monday’s announcement that the one-time construction and engineering giant will handle the first $2.5 million phase of a project expected to cost as much as $115 million.
“This one is a part of the things that are very necessary as we clean up the mistakes of the past,” Tinstman said.
Along with the contract come assurances from officials that Silver Valley residents will get a share of employment and subcontracts.
The MK contract provides $2.5 million through the end of September for dismantling the zinc refinery and lead smelter that were at the core of the operation blamed for wide-spread environmental damage in the Kellogg area.
Tinstman said the second round of state and federal financing should total between $17 million and $28 million. It will focus on cleanup of toxic mine tailings in the area.
Corporate officials were optimistic that they can secure the entire environmental restoration project. Government officials say the work could total $115 million.
Gov. Phil Batt was at the announcement in a show of support for the 83-year-old Boise-based corporation. MK is trying to work its way out of a sea of red ink left by the maneuverings of ousted Chairman William Agee.
“MK has been an extremely valuable member of Idaho’s business community,” Batt said.
He noted that the company employs more than 1,100 Idahoans. “They’re good jobs, and I’d like to see them continue,” he said.
People in the depressed Silver Valley would like to see the cleanup create good jobs in their towns as well.
While MK is an Idaho company, few in the Silver Valley would consider the Boise giant a local contractor.
MK’s contract likely will provide many Silver Valley contractors with some work, said Herb Solum, a liaison between the Silver Valley Economic Development Corp. and the cleanup project.
Solum developed a list of local contractors and the equipment they could provide for MK.
“Often times these big contractors will need roads paved, snow plowed or even just a Cat (Caterpillar tractor) for a few hours,” Solum said. “You don’t go to Coeur d’Alene for that, so we can get it for them right here.”
Local contractors complained about not having the chance to bid on the big federal contracts. The Environmental Protection Agency held three seminars on how to bid on the contracts.
“Those high bonding and insurance requirements pretty much eliminates the small guys around here,” he said. “But I think there’ll be work for people around here from MK.”
The company - expected to announce $350 million in 1994 losses in the next several weeks - is trying to stave off seeking protection from creditors under federal bankruptcy laws by securing new capital. MK’s creditors hold more than $200 million in loans. The firm has won a reprieve against foreclosure until the end of July but must make $31 million in loan payments by then. And Tinstman has said additional capital has to be secured in the next six weeks.
If the company files for bankruptcy, the cleanup work still would be completed under receivership, officials said.
Tinstman said he expected to have about 30 MK employees at Bunker Hill for the initial phase, and up to 150 at the peak of the work. MK spokesman Rod Hunt said, “Every attempt would be made to hire locally.”
MK’s contract comes through the U.S. Army Corps of Engineers, which is handling this phase of the cleanup for the EPA. Though the state did not influence the selection, Mark Ohlstrom, project manager for the corps, said, “With the state of Idaho contributing 10 percent (of the project’s cost), it makes sense to use Idaho contractors.”
The corps already had a contract with MK through the corps’ Walla Walla district, which included some work at the Hanford Nuclear Reservation. So, in the interest of saving the time and money a new contract would take, the corps put the Bunker Hill work under that contract, Ohlstrom said.
The Batt administration’s Charles Moss said MK impressed the state with its work cleaning up radioactive tailings a few years back at Lowman, in southern Idaho. “That came in on time and under budget,” Moss said. “They did good work.”
Some of the structures at the Bunker Hill smelter site already have been demolished under emergency contracts issued by the EPA to stave off fire danger. MK now will be in charge of demolition and burial of the toxic remains, which will go in a landfill on the site and be capped. Eventually, portions of the reclaimed Bunker Hill site will be turned over to Shoshone County for industrial development, Moss said.