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Mine shutdown means lost jobs, economic uncertainty

Federal regulators’ decision to shut down the Lucky Friday Mine’s main shaft was greeted with confusion and concern Wednesday in Idaho’s Silver Valley.

Officials at Hecla Mining Co., which operates the underground silver mine, said it will take a year to clean the shaft to regulators’ specifications. The mine will be closed during that time, resulting in the layoffs of more than 200 employees and contractors.

Federal inspectors closed the shaft last Friday, citing a buildup of sand and cement on the shaft’s walls. The deposits could break off and “potentially fall thousands of feet down the shaft and cause serious damage,” said Amy Louviere, a spokeswoman for the Mine Safety and Health Administration, or MSHA.

Hecla CEO Phil Baker said it will take about 12 months to power wash the deposits from the walls of the mile-deep shaft, which is used to transport workers and materials in and out of the Lucky Friday. The company is evaluating whether to appeal MSHA’s closure order.

“We believe the shaft is safe,” Baker said Wednesday. “It’s been inspected on a weekly basis for 30 years.”

The shaft closure order follows a troubled year at the Lucky Friday Mine in Mullan, Idaho, which is in the midst of a $200 million expansion. The mine had two fatalities in 2011, an arson fire and a Dec. 14 rock burst that trapped seven workers who were later rescued.

Dick Vester, Wallace’s mayor, had mixed feelings about the latest news from the mine.

“Everybody in our community supports anything that will help make mining safer,” he said. “It’s a small community, and we all know the individuals that died. But from what I’ve heard, the repair stuff has nothing to do with the accidents that happened.”

In interviews, Baker emphasized that “this is not the same rock-burst issue” that trapped and injured miners in December, including one who suffered a broken pelvis.

The two fatalities took place earlier in the year. Larry “Pete” Marek, a miner, died during an April 15 cave-in at the Lucky Friday, and Hecla faces up to $1 million in penalties for the accident, which MSHA officials said resulted from inadequate ground support. Hecla is contesting.

In November, contract employee Brandon Gray died of injuries after being engulfed in moving rock as he tried to unplug a bin. His safety harness failed to retract.

Federal inspectors flagged the buildup problem on Dec. 20 during a mine safety inspection that followed the rock burst. The shaft was closed after a second inspection Friday showed serious hazards were still present, said an MSHA official, who would only speak on background.

“Imagine if some loose material fell thousands of feet down the shaft and hit the cage with miners inside,” the official said.

The MSHA official also said that projections of a yearlong shutdown are Hecla’s estimates, not the agency’s. “I think it’s premature to speculate on how long the mine will be shut down,” the official said.

Baker described the sand and cement deposits on the shaft walls as “millimeters to a couple of inches” thick. Sand and cement are piped into the mine to plug underground excavations, and when the pipes leak, sand and cement build up on the walls of the 18-foot diameter shaft.

The shaft has been in operation since 1983. In addition to weekly inspections by Hecla, federal regulators inspect it four times per year. Baker said he knew of only one incident where falling debris struck a worker in the shaft – “it cut someone’s hand or someone’s face.”

The Lucky Friday’s managers had deployed workers to remove the loose material MSHA had cited in the inspection, Baker said. The managers thought that would satisfy MSHA’s concerns about the shaft, but realized Monday night that an extensive cleaning would be required, he said. Workers will have to stand on a platform to power wash the walls of the shaft.

He said Hecla officials are not aware of any other mines being required to clean their shafts. “We believe there are no hazards … that would affect the conveyance of men and materials,” he said.

Financial analysts involved in a conference call Wednesday clearly were dubious of the order, but Baker turned aside that speculation.

“With respect to attributing some larger intent to MSHA, I wouldn’t suggest they have any intent to do anything other than what they’re mandated, which is to ensure we have safe operations,” he said. “While we may disagree, we wouldn’t suggest that they have any bad intent on their part.”

Hecla expects to spend about $20 million to clean the shaft and keep the Lucky Friday open on a care and maintenance basis until the mine can reopen. Hecla has other mines, but expects to produce 2 million fewer ounces of silver in 2012 with the Lucky Friday closed.

The Coeur d’Alene-based company’s stock tumbled on the news to its lowest price on the New York Stock Exchange in nearly two years, closing at $4.61 per share Wednesday, a 21 percent drop.

“It’s certainly a huge economic blow to the Silver Valley,” said Vester. “Without a doubt, there’s been some economic diversification over the years … but people still think of this as a mining camp.”

The Lucky Friday is one of the Silver Valley’s largest private employers and pays top wages. With silver at record prices, expert miners can earn more than $100,000 per year in wages, production bonuses and benefits. In Shoshone County, the average wage in the mining industry was $70,700 in 2010, compared to $29,000 for all other industries.

About 185 Lucky Friday employees and 50 to 75 contract workers will be laid off during the closure. Hecla anticipates offering some of the workers temporary jobs at its other mining operations in Alaska, Colorado and Idaho. Baker estimated 40 to 50 people might be redeployed in that fashion.

The mine has been closed since the Dec. 14 rock burst, though Hecla had been able to access some portions of the mine.

Company officials had planned to reopen the Lucky Friday in about two months, after a 750-foot bypass around the rock-burst area had been completed.

While some miners might leave the Silver Valley during the Lucky Friday’s shutdown, Baker said he’s optimistic that many will return when the mine reopens.

Many of the Lucky Friday’s employees are second- or third-generation Silver Valley miners. They want to live and work in the Coeur d’Alene Mining District, Baker said.

Spokesman-Review City Editor Addy Hatch contributed to this report.

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