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Mineral-Rich Federal Land Sold For $275 Babbitt Uses Idaho Example To Push For Mining Law Reform

Saying “my hands are tied” by a century-old law, Interior Secretary Bruce Babbitt reluctantly approved the sale of 110 acres of federal land in Idaho Wednesday for $275. It may contain $1 billion worth of minerals.

The land was conveyed to Faxe Kalk Inc., a Danish company, under an 1872 law that requires the government to sell federal mining rights for as little as $2.50 an acre.

Congress has sought for years to change the law, but under strong pressure from the mining industry, Western lawmakers repeatedly have blocked the legislation. Supporters of the law argue it helps to promote mining in the United States and preserve jobs.

In the Inland Northwest, where mine patents are commonplace, the industry contends that inexpensive patents are not the financial windfall that they appear. That’s because miners must spent thousands of dollars just to preserve their claims through so-called diligence work - proving that the minerals can be profitably mined.

Mining companies also need patents because they have trouble getting multimillion-dollar financing packages for projects on property they do not own.

But Babbitt, in conveying the federal tract in Idaho, said he finds making such deals “increasingly distasteful” and called the law - whose aim originally was to promote development of the West - as outdated and a rip-off of the taxpayer.

Under the law, mining companies receive title to the surface land and mineral rights for $2.50 to $5 an acre and pay no royalties on any hard-rock minerals they find.

The 110 acres in Clark County, Idaho, are believed to contain an estimated 14 million tons of high-quality travertine, a mineral used to whiten paper.

Last year, when American Barrick Resources Inc., a Canadian mining company, used the law to buy a mine with $10 billion in gold deposits for about $10,000, Babbitt called it “the biggest gold heist since the days of (outlaw) Butch Cassidy.”

“I find this process where my hands are tied by a law signed by Ulysses S. Grant increasingly distasteful,” Babbitt said at a news conference Wednesday. He spoke with Grant’s picture as a backdrop and signed the land title transfer with an antique dip pen.

He said that while Congress is cutting programs across his department, the government is losing $100 million a year in royalties from hard-rock mining.

Babbitt called an industry-supported mining reform bill before Congress “only cosmetic” and criticized a Senate proposal that would require the department to speed up approval of mining claims already in the pipeline.

Jack Gerard, a spokesman for the Mineral Resources Alliance, a mining industry trade group, called Babbitt’s news conference “a publicity stunt” that ignores efforts to reform the ancient mining law.