Settlement could lead to Bunker Hill reopening, new mining jobs in the Silver Valley

In a move that could allow the storied Bunker Hill Mine in Kellogg to reopen, the federal government has settled a longstanding Superfund lawsuit against its owner.

The agreement, filed Monday in U.S. District Court in Boise, resolves past environmental liabilities against the Bunker Hill Mine’s owner and ends a counter-lawsuit against the U.S. Environmental Protection Agency.

Bunker Hill Mining Co., which is headquartered in Toronto, could reopen the mine on a limited basis by the end of the year, and large-scale production could be possible in about two years, said CEO Bruce Reid.

“We don’t have the money yet. … I’ll have to go out and raise about $100 million,” Reid said in an interview. However, settling the environmental claims is a big step forward, he said.

Bunker Hill Mining Co. is leasing the lead-zinc-silver property and has an option to buy it from the owner, Placer Mining Co.

Under the agreement negotiated with the EPA and the U.S. Department of Justice, the company will pay $20 million to the federal government on Placer Mining’s behalf over seven years.

The payments will help the EPA recover part of the $24 million the agency has spent on water treatment at the mine. In addition, Bunker Hill Mining will pay about $1 million annually to treat future discharges from the mine, which releases about 1,300 gallons of water polluted with heavy metals per minute.

After about three decades of litigation, the settlement allows the Bunker Hill Mine to make a fresh start, according to the EPA.

“EPA is clearing the way for a new operator to resume mining, bringing jobs back to the community, while also securing the ongoing cleanup of contaminated water and recovery of EPA’s past cleanup costs,” said EPA Administrator Scott Pruitt in a news release.

The agreement is subject to a 30-day public comment period.

In 1885, Noah Kellogg discovered the lead outcropping that became the Bunker Hill Mine, one of the Silver Valley’s richest mineral strikes.

After nearly a century of operations, the Bunker Hill Mine and Smelter closed in 1981 when the owner, Gulf Resources Corp., went bankrupt. About 2,200 workers lost their jobs.

New owners restarted the mine in 1989, but it was a short-lived effort. Placer Mining has owned the Bunker Hill Mine since 1991.

Pollution from Bunker Hill’s smelter stacks spread over the Kellogg area, leading to some of the highest blood-lead levels in local children ever documented in North America during the 1970s and 1980s. The EPA began Superfund cleanup of mine waste in the Silver Valley in the early 1980s.

“EPA has done an incredible job at reviving the Silver Valley,” said Reid, the Bunker Hill Mining chief executive. “Going forward, we’ll have to be as environmentally conscious as possible. … While you wouldn’t call it pristine, it’s a beautiful part of the country.”

The company would operate the underground mine but has no plans to build a smelter, he said.

Reid and others on Bunker Hill Mining’s management team raised $75 million to buy and restart another Silver Valley mine, the Galena. They sold their interest in the Galena Mine in 2008.

Reid read about the Bunker Hill Mine when he was studying geology at the University of Toronto. He said he tried to buy the mine in 1997, but the price was too high.

Now, “there’s a furious shortage of lead-zinc concentrate,” Reid said. “It’s created a decent opportunity that Bunker Hill could fill.”

If the company can contract with a local mill to process the ore, the Bunker Hill Mine could re-start production on a limited basis by year’s end, he said.

When the Bunker Hill Mine has its own mill and is fully operational, it will employ about 300 people, said Nicholas Konkin, the company’s marketing and communication manager.

The Bunker Hill Mine’s lower levels are flooded, but the mine could support eight to 10 years of operations from the dry upper levels, he said.