Northwest Indian tribe strikes historic deal for mining its mountain

Barring any unexpected delays, one of the biggest mining companies in the United States is about to gain approval for a business agreement unusual in the history of dealings between American Indians and American multinationals.

The company, AMAX Inc., plans to start a joint venture with Washington State's Colville Indians aimed at reducing a mountain of molybdenum to an open pit, creating one of one world's largest molybdenum mines. Moly, as it is conveniently called, is a soft, gray metal vital to the defense, aerospace, and energy industries; as an alloy it both hardens and lightens steel. It first came into widespread use in making armor plate during World War I; nowadays, it is used in jet engines, oil pipelines, space vehicles, and nuclear reactors -- just to name a few -- and the company is the world's biggest producer. In 1979, 40 percent of the world supply came from the corporation's mines.

What is different about the pending business agreement is that the Colvilles, who number about 6,200, have with considerable economic and legal savvy struck a deal that will likely be a model for resource-rich, money-poor tribes throughout the West. Rather than simply leasing the land to AMAX, the Colvilles have insisted upon a partnership, one that breaks radically from the traditions -- and abuses -- of the past when the federal Bureau of Indian Affairs negotiated mineral leases providing very poor royalties. The BIA leases sometimes left the tribes complaining that the white men got the jobs, money, and minerals while the Indians got only the scarred hillsides.

The AMAX agreement is so good that Dale Kohler, one of the colville tribal councilmen, said enthusiastically that "we're going to have it copyrighted." He added: "I think it will be a landmark event in the history of Indian tribes and the mining industry. The [agreement] will be emulated by other tribes who have similar resources on their land."

The tribal newspaper has exulted that the pending deal will turn the 2,200 -square-mile reservation into an "economic colossus" in the Northwest, an exaggeration, probably, but one with enough truth to be impressive, coming from a reservation that teetered on economic and social extinction just a decade ago.

The AMAX-Colville partnership includes provisions that address many of the Indian's historical complaints:

* In place of a system of royalties that does not change regardless of increases in the value of the ore being mined, the agreement allows the Indians to choose which of three formulas they want to use to decide how much money AMAX should pay them once the mine starts operating (now predicted to be in early 1986). A minimum $5 million a year is guaranteed; the other options (5 percent of the mine revenue or 50 percent of the operating margin) might allow the Colvilles to earn substantially more. The Indians take no risk in deciding which formula to use; they have retained the right to change from one to another each year, picking whichever will give them the most money.

* Hiring preference for the 600 new jobs at the mine will be given to Colvilles. Second preference will go to their relatives, whether Indian or not. Only if there are no qualified applicants will "outsiders" be hired.

* Hiring preference for the 600 new jobs at the mine will be given to colvilles. Second preference will go to their relatives, whether Indian or not. Only if there are no qualified applicants will "outsiders" be hired.

* The Colvilles are to get jobs across the entire spectrum, from janitorial to administrative. And AMAX has agreed to train tribal members in advance so that they will be qualified for the positions.

* Despite the "partnership" agreement, AMAX will supervise the day-to-day operation of the mine and assume all losses.

* When the molybdenum is exhausted in 40 to 50 years, the Indians are not to be left with an empty hole. The company is supposed to pay for the reclamation of the land and the Colvilles will get to keep all of the bulldozers, trucks, buildings, and other equipment.

The final environmental-impact statement on the project has been completed and the BIA is expected to approve the partnership sometime this month.

For AMAX, the agreement is one part of a major expansion in molybdenum mining. (The company also has lead, zinc, copper, and nickel operations and subsidiaries throughout the world.) Most of AMAX's supply of molybdenum has come from two mines in Colorado, and in the next few years the company wants to develop three new sites: one in Crested Butte, Colo. (which has encountered substantial resistance from residents), one in British Columbia, and the one at the Colville reservation. The Colville mine is expected to process 60,000 tons of ore a day, making it one of the largest moly mines in the world.

Although AMAX's expansion is coming at a time when a current oversuplly of steel has softened the market for moly, historically the demand for the mineral has risen steadily. Economists are predicting that by the mid-1980s, when the Colville mine would begin operating, the demand for steel will have outstripped the worldwide capacity for producing it.

For the Colvilles, the new mine will mark yet another step in their attempt to develop their reservation, which stretches from the empty plateaus of central Washington past Grand Coulee Dam to the timbered highlands of the northern part of the state.It is one of the two biggest reservations in the Pacific Northwest. Twelve years ago it was almost sold during a move to dissolve the 11 Indian bands that compose the Colville Confederated Tribes.

That attempt defeated, a new tribal government embarked upon a development program, relying on heavy sales of timber to fund new tribal jobs (from 65 in 1970 to 1,000 by 1980), to attract members back to a reservation that had become increasingly Angolo in character (Indian population rose 20 percent from 1970 to '78), and to set up new tribal businesses, including a log house construction company, a meat plant, a greenhouse, and tribal stores.

The Indian government expects the mine not only to provide new revenue to supplement that from the timber crop, but also to provide dividends for individual tribal mem! bers. One estimate published in the tribal newspaper put the expected income for the Colvilles at $100 million a year by 1990, which would fund many new tribal activities and increase family incomes by $10,000 a year or more -- not including the wages produced by the mine jobs.

Even so, not everyone in the tribe supports the new partnership and its goal. Opponents have formed a group called the Preservation of Mt. tolman Alliance.They protest that the traditional values of harmony with nature and with one another will be destroyed by a lust for money, by the coming of outsiders, and by the complete removal of a mountain.

So far, though, the opposition has not been able to mount any effective challenge.