Copper: Puerto Rico's New Found Health

September 25, 2007

It has been generally held by both scholars and politicians that Puerto Rico is a land with scarce natural resources, especially minerals. This has been held up as a disadvantage for the islands development. As early as January 1965 this myth was undermined by Kal Wagenheim in Copper: The Billion Dollar Secret. At that time he revealed that copper deposits were being explored by two mining companies (American Metals Climax Inc. and Kennecott Copper). It was estimated that the deposits contain about 200 million tons of 1% ore or 4 billion pounds of copper. In Wagenheim's interview with a geologist in the U.S. Geological Survey Office, which has been operating in Puerto Rico for over nine year; it was revealed that besides copper deposits, which are probably the largest mineral deposit, there are probably deposits of oil, iron, gold, cobalt, nickel and bauxite.

The question that is now uppermost in the developing controversy over copper is just how the island's mineral resources will be utilized. Under the mining regulations enacted in 1933, prospecting permits of one year are extendable up to nine years. This nine year period permitted for exploration has expired for both Ponce lining Co., a subsidiary of American Metals Climax and Bear Creek Mining Co., a subsidiary of Kennecott Copper. According to the law, for the extraction of the mineral, a contract must be negotiated by which the government receives a royalty of from 2 to 12 percent, depending on the grade of the mineral in the ore. It is an undeniable fact that the highest degree of secrecy has surrounded the whole issue of the exploration of the copper and the present negotiations as well. It is only the vociferous opposition of various groups which has brought the question into the open. The Commonwealth government would like to sign a contract with both companies assuring them the right to exploit copper for a 32 year period with a 3 royalty to be paid the government for all copper deposits extracted in addition to 8% of their profits during the 17 year tax-exemption period. Since the most profitable part of the exploitation is in extracting the copper, Fomento (the government development agency) is pleased that the companies would be willing to process the copper in Puerto Rico. The reaction by the "independentistas" to these pronouncements has been that the government seems willing to give away the copper resources for a small sum, indeed. They clearly do not believe that leasing the rights to exploit the copper by North American giants will be to the benefit of most Puerto Ricans.

Let us look more closely at some of the arguments. On the issue of land ownership, the opposition contends that the government has done nothing to forestall farmers (the copper reserves are in the Central highlands where sugar is grown) from selling out at low prices. Neither have the landowners been informed that they would be entitled to 20% of the government's royalty. One other proposal in relation to land ownership has been made by Vanguardia suggesting that maximum ownership of 500 acres should be applied to exploitation of the sub-soil. As of now Ponce Mining Co. owns almost 500 acres and their plans for exploitation would include almost 2000 acres.

The factor of prospective new jobs is another issue. Some estimates go as high as 3,000 jobs directly created by the mining operations. While the unskilled and semi-skilled jobs would be designated for Puerto Ricans, it is unclear if the companies would provide training for skilled jobs. And management positions would be filled by North Americans.

One criticism of the project has stemmed from the Water Pollution Control Advisory Board charging that problems of water and air pollution have received little consideration in the plans for exploiting copper. A technical study explored the serious effects of the release of sulfur dioxide into the air, which would be spread to all parts of the island. This could be avoided by use of the Cottrell process to utilize the sulfur dioxide, the Mining Commission has pointed out. The Mining Commission has also indicated protective measures would of course be stipulated in any contract, There are other issues such as erosion of agricultural soil around the mining operations and the eventual affect of the "waste lands" around the copper deposits, a problem the Mining Commission refuses to discuss.

The position of the Mining Commission is most intractably that they have the full rights to conduct negotiations in private and they are trying hard not to lake the copper question into a political issue. They feel it is their moral obligation to give these private companies the go-ahead as these firms have already invested several million dollars and nine years in exploratory operations. They also look at all new employment opportunities and possibly secondary industry as an immediate boost in their industrial development program. What the critics raise are arguments for the use of these mineral resources for the social benefit of all Puerto Ricans. They invoke the U.N. resolution which endorses permanent sovereignty of nations in the development of their own natural resources. One need only view the record of the exploitation of natural resources in other Latin American countries by private companies from the capitalist countries to see the validity in their argument. They also point out that the relative scarcity of copper in the world market right now is partly due to its wide use for military purposes in the war in Vietnam. At the end of last year the U.S. government was forced to release some of its copper stockpile to American copper companies because of that shortage.

The question has not been settled. It remains to be seen if enough pressure will be created to force the Commonwealth government to take into account some of the criticisms of their manner of exploiting the island's resources. The exploitation of copper is a crucial precedent for further exploration and uses of the island's other mineral resources. It is most indicative of the Commonwealth's whole "operation Bootstrap" program that they have looked to please the monopolies of the North often with disregard to criticism from hone. It can be said, at the very least, that the "so--called" benefits to the Puerto Rican people such as job creation is a side effect of this most profitable courting effort.

Tags: Puerto Rico, copper

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