Mine a test of mettle

Condos sprouting beneath Silver Mountain’s gondola are a sign of renewed economic vitality in Idaho’s Silver Valley. In the past two years, the real estate market has boomed here, as investors and vacationers bought up affordable mountain getaways.

But the economy is still fragile in this historic mining district. Nothing underscores the point more than reaction to Tuesday’s announcement that Galena Mine may be up for sale. About 185 people collect paychecks from the mine near Silverton.

“My hope is that if they do sell, there’s a ready, willing and able buyer,” said Vince Rinaldi, executive director of the Silver Valley Economic Development Corp. “Our economy is moving along really well, but we certainly need to keep all of our primary industries.”

The Galena lost more than $1 million during the first nine months of 2005, despite rising silver prices. Owner Coeur d’Alene Mines Corp. is evaluating options for the mine, including selling it and investing the money in more profitable Latin American ventures.

The news comes amid an otherwise brightening outlook for the Silver Valley.

About 360 new jobs were created in Shoshone County last year. Unemployment rates, though still among the highest in the state, fell to 7.8 percent. Poverty levels are also declining.

The job growth occurred in a wide array of industries. Silver Mountain employs 225 people during the peak ski season, pumping paychecks worth $130,000 into the local economy every two weeks. Dave Smith Motors employs about 350 people. Construction and health care jobs are also on the upswing.

“The economy is less dependent on silver,” said Kathryn Tacke, a state regional economist. “They don’t have all of their eggs in one basket, which is a good thing.”

But the growth, though impressive, is still a recovery. Shoshone County had about the same number of jobs in 1995, when three large mines were operating, Tacke said.

In addition, the average wage for a mining job in the Silver Valley was $49,134 last year, which makes those positions hard to replace. In other sectors, the average wage was $24,154.

Along with the rest of the community, Galena workers are waiting to see what will happen. A decision is expected before the end of March.

“I go along with the company line on this – that it’s a good thing it’s up for sale,” said John Shea, a 58-year-old electrician at the Galena. “Anyone who buys it will probably try to operate it.”

Coeur d’Alene Mines spokesman Scott Lamb declined to comment on why the mine was losing money during a period of rising silver prices. Silver was trading at $9.80 per ounce Wednesday, up from less than $7 per ounce a year ago. According to the company’s financial statements, however, costs at the mine shot up in conjunction with significant drop-offs in silver production. Ore grades were lower than expected in several key areas, the statements said.

During his five years at the mine, Shea said the company worked hard at extracting silver, but spent less on developing future areas to mine. That looking ahead is critical to keeping an underground mine afloat, he said.

“I think it was shortsighted,” Shea said. “Maybe the corporation needed the cash flow, but they should have expected this.”

James Moore, who works as a nipper, or miner’s assistant, dropped by the Lucky Friday on Tuesday afternoon to check out prospective openings at the Silver Valley’s only other operating mine. Not much was available.

Moore, 37, was hired at the Galena six months ago. He left a landscaping job in search of a more stable paycheck.

“It’s a good job, and good people,” he said.

The Silver Valley is in the midst of an uncomfortable economic transition, said one Kellogg businessman. The real estate boom is bringing a new water park, Wal-Mart, and condo development to Shoshone County, along with an influx of affluent part-time residents.

“The closeness and Valley pride will go away,” said the man, who declined to give his name. “It’s good for investors. The everyday person who has lived here all their life has less to gain.”

After the day shift ended Wednesday at the Galena, Shea drove home to Osburn through a narrow, forested valley. The mine’s entrance lies at the end of Lake Gulch Road.

“I’d hate to see this covered with time-share condos,” he said.