Robert LaVenture: Hecla faces backlash for mismanagement from shareholders and communities

In March 2017, about 250 members of USW Local 5114 were forced to strike over unfair labor practices at Hecla Mining Co.’s Lucky Friday mine near Mullan, Idaho.

The company’s one-sided concessionary demands would have cost more than money – with management demanding the ability to assign and schedule work without considering seniority or the health and safety of the miners involved. In recent negotiations, the USW bargaining committee proposed a compromise on this issue that would have given management additional flexibility regarding work assignments while respecting the seniority rights of members of Local 5114.

The system in place proved reliably and consistently productive for Hecla and its investors, with close to 3.6 million ounces of silver production from Lucky Friday in 2016, its last full year of operation with the union-represented workforce. The mere 169,000 ounces of silver from the mine in 2018 represent more than $50 million in forgone production.

Even after proposing a fair resolution to the company’s most significant contract demand and addressing other issues raised by management, Hecla remains attached to proposals that members of Local 5114 rejected each time they were presented for a vote. The USW will continue its good faith efforts to resolve the outstanding issues at the bargaining table and hopes to do so before the company is further harmed by bad choices from its executive leadership.

Hecla’s problems extend far beyond Lucky Friday. Recently, Hecla Chief Executive Phillips Baker Jr. could not hide when analysts peppered him with questions about the company’s dismal financial performance during a call to report first-quarter earnings. Baker offered little information about operating losses incurred at Nevada facilities that Hecla purchased in 2018 for about $462 million in cash and stock, but he announced layoffs and curtailments while management investigates what went wrong – again.

On May 24, shareholders filed a class action lawsuit in the Southern District of New York that claims the company violated federal securities law and accuses Hecla, Baker and other executives of defrauding investors by misrepresenting the conditions and potential for profits of the Nevada mines when they were acquired in 2018.

Meanwhile, outside of Mullan and Nevada, Baker’s leadership has had consequences for Hecla shareholders still waiting for signs of progress on the company’s “Montanore” project.

In March 2018, the Montana Department of Environmental Quality officially gave Baker a “Bad Actor” designation, which prohibits individuals and companies who failed to clean up old mines from opening new mines, thus placing on hold all Hecla’s proposed developments while the state seeks to recoup tens of millions of dollars in environmental cleanup costs on behalf of taxpayers who were left holding the bag when Pegasus Gold went bankrupt in 1998. It was a mining company where Baker served as chief financial officer before eventually joining Hecla in 2001 with several executive titles, CFO among them.

For thousands of years and to this day, the Tlingit village of Angoon on Admiralty Island has harvested wildlife from the coastal waters for subsistence and commercial purposes. A 2018 study by Oceanus Alaska, on behalf of the Friends of Admiralty Island, found that after 36 years of operation at Hecla’s Greens Creek Mine:

• Every station sampled in nearby Hawk Inlet showed elevated toxic metals levels, compared to the pre-mining baseline;
• Mercury levels were found to be up to 73 times higher than the baseline;
• Manganese levels were found to be up to 646 times higher than the baseline;
• The average increase for the 11 metals sampled was 73 times original baseline highs;
• Crabs, clams, cockles and mussels showed elevated concentrations of arsenic, cadmium, copper, lead (except clams), nickel (except cockles) and selenium, compared to data on the same species elsewhere in Alaska; and
• A harbor seal harvested by Angoon subsistence hunters one-half mile from the mine outfall pipe was shown to have mercury levels in its liver of 222 parts per million, the second highest level of mercury ever found in an Alaskan seal.

Considering Baker’s track record and Hecla’s current financial trajectory, lawmakers and taxpayers in Alaska and everywhere Hecla operates should demand proof that Hecla can stand behind its environmental cleanup obligations.

Please join the USW, shareholders, environmentalists and elected officials to demand accountability from Hecla because workers, our families and communities cannot afford further mismanagement.

Robert LaVenture is director of United Steelworkers District 12.