Texas Silver Mine, Border County’s Largest Taxpayer, Shuts Down
Thursday, November 14, 2013
A mine at Shafter, Texas has shut down leaving only non-essential employees working to maintain the mine until a hoped-for reopening. This is hampering budget planning in one of the border's poorest counties.
SHAFTER, Texas — After two years of hopes for an economic injection to a poverty-plagued part of the border, a Texas silver mine is shutting down at least until next year. Eighty-five people are jobless, the mine is under a safety investigation and the company is ruffling feathers by taking one of the country’s poorest counties to court to cut its tax bill.
The mine's owner, Vancouver-based Aurcana, says the problem is failing equipment. A ball mill, a huge clone of a cement mixer that sifts silver from dirt, is under repair. New parts are in China and are six weeks away at best.
But the matter isn't simply one of equipment. The mine is facing a declining silver market, federal inspectors have arrived after smoke was released underground and politicians in one of the border's poorest counties are fending off a lawsuit the company has filed to cut its tax bill.
This is the latest setback in a story marked by poor management and bad science that was supposed to translate into jobs and tax revenue on a slice of the border starving for both.
The company officially closed the mine in Presidio County, Texas, on Nov. 4 laying off half the mine’s workforce of 170. It says in addition to failing equipment, it had explored the wrong parts of the underground property and would shut down for a minimum of three months.
Lou Rogers is part of a crew maintaining the mine.
“It was a very tense situation,” he says referring to an incident that followed the layoff announcement.
A hose ignited underground just days after the layoffs. Rogers says it was over in 15 minutes and no one in a group of four came close to getting hurt. But he was told to stay home afterward, with pay as the law mandates during an investigation.
He said the federal Mine Safety and Health Administration — MSHA — was tipped off.
“MSHA is there now ‘cause some of the guys that left called them. They called them and they come, laid off or fired or something like that just carrying some anger with them," Rogers said.
This isn’t the first time workers have been let go. Last year, electrician Alfredo Uriste worked for one of the mine’s subcontractors.
He says he left work at about 4 p.m. on a Friday. He explains what happened next.
“They called us about 6 o’clock that evening and told us to come in and pick up our toolboxes because we didn’t have no more job," he said.
Up until that time, the mine was in expansion mode. Silver flirted near $50 an ounce and politicians were buoyed by the prospect of long term tax revenue in a county with an unemployment rate of 18 percent.
Uriste’s boss told him to scout for people to work in this hardscrabble landscape. He says it was an easy pitch. His friends could come home to the Big Bend region of borderland Texas where work is historically scarce.
“They left their work in Odessa, Midland and all that to work, you know, here at home. When they came, they never did come into work," he said.
Although the mine has sputtered since groundbreaking two years ago, it’s still the largest taxpayer in Presidio County, putting $2 million a year into county coffers. But now the company is fighting its bill in court, mirroring an increasingly used tactic across Texas — companies litigating taxes.
The Austin-American Statesman and KUVE-TV released a study last month documenting how Texas businesses increasingly are turning to the courts to lower their property taxes.
Even if the business loses its case, counties are legally bound to pay a part of the court costs, so there’s little incentive for businesses in Texas not to sue.
County Judge Paul Hunt is Presidio County’s highest elected official.
He believes Aurcana launched the suit because bad decisions and a sagging silver market put the mine in a precarious position. He says informal talks could solve the tax impasse before the case proceeds.
“When they’re confronted to these surprises from their lack of planning they’ve tended to get very defensive. And I’d hope that we can get to a place where we’re more cooperative in working out these sort of details," Hunt said.
Hunt cites a legal concept called minerals-in-place, meaning you’re taxed on the value of the ore whether or not the mine is producing. He says next year’s budget is in the balance because it’s pegged to that tax revenue.
To mend fences and reboot, the company has brought in a new COO, Andrew Kazcmarek.
“We didn’t have a very good management style here. People were intimidated. People were threatened with jobs. And the technical skills were in short supply," Kazcmarek said.
Despite setbacks, some investors still believe in the company. American, Canadian and Mexican financiers loaned it $50 million this summer. And it has a profitable Mexican mine propping up losses here.
That’s scant comfort in a job-starved region where hopes have been raised and dashed for two years.
Dennis McIntyre is the school superintendent in the city of Presidio.
“We never really considered it as something permanent. We thought it would be a six, seven, eight year issue. Then they took it out 15, 20 years when they started finding more ore. And now with the constant volatility of this going on with them we just kind of taking it back zero," McIntyre said.
The company is asking taxpayers to give it a second chance. That plea is falling on increasingly deaf ears.
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