Arizona Department of Mines & Mineral Resources
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· ,tfit . :J.. ARIZONA DEPARTMENT OF MINES & MINERAL RESOURCES Annual Report 1999-2000 DEPARTMENT OF MINES AND MINERAL RESOURCES 61stANNUAL REPORT FY1999/2000 W. 'Doug' Sawyer Director STATE OF ARIZONA Arizona Department of Mines and Mineral Resources 1502 West Washington Phoenix, Arizona 85007 Arizona Department of Mines and Mineral Resources 1502 West Washington, Phoenix, AZ 85007 Phone (602) 255-3795 Toll Free in Arizona 1-800-446-4259 FAX (602) 255-3777 Honorable Jane Dee Hull, Governor August 15, 2000 State of Arizona 1700 West Washington Phoenix, Arizona 85007 Dear Governor Hull: The Annual Report for the Arizona Department of Mines and Mineral Resources for the fiscal year 1999/2000 is herein submitted in compliance with A.R.S. Section 27-106. This fiscal year has been one of change for our department as Marianne Charnauskas retired after almost 12 years of service. We also added a new member to the Board of Governors-James Miller, Vice President of CTI. Omya Corporation has completed construction of a plant in Superior that will process limestone into chemical and food-grade calcium carbonate. The limestone is mined north of the town on forest service land. Our department published an industrial minerals study that lead to the exploration and investment in the mine and new $3,000,000 plant. Cambior completed its arduous task of obtaining the necessary federal approvals to begin mining copper at the Carlotta Mine located near Miami. Unfortunately, low copper prices has precluded Cambior from beginning development of the mine and appurtenant facilities. In the late 1980's Cambior's exploration team approached our department and asked about favorable copper exploration areas. We pointed them to the Carlotta mine area and our involvement lead directly to the $60,000,000 investment in design, permitting, equipment, personnel, and land acquisition that has been spent in the Miami area. Late last year, a major consolidation of copper mining companies began with the merger of Cyprus and Phelps Dodge Corporation and the acquisition of Asarco by Grupo Mexico. Arizona is now home to the second largest copper mining company in the world-Phelps Dodge. Grupo recently ·announced relocation of corporate headquarters from New York to the Phoenix metropolitan area. These mergers will likely change the landscape of the copper mining industry in Arizona for years to come. The rock products industry has also experienced a number of acquisitions and mergers under the banner of several large multi-national companies. The present staff consists of eight FTE's funded by the general fund, five part-time employees (funded by profits from the Museum Gift Shop), and a dedicated group of volunteers provide quality service to the Department's customers and visitors. During the 1999-2000 school year approximately 25,000 children visited and toured our museum. We also assisted the Arizona Mining Association as they educate teachers about the importance minerals in our society. Governor Hull August 15,2000 Page 2 As we look to and prepare for the future, members of the department and several key stakeholders have identified the following key tasks. The first is making our mineral and mining information more accessible to the public. Our belief is that the mines and mineral resources of the next fifty years are contained in these files and must be made available to exploration geologists and others. With the advent and explosion of internet information, we are planning to tum our much of our hard copy "information" into electronic files that are accessible from our website. Another area that has been identified is the need to expand our museum and make it more educational about the mineral resources of the state and how modem-day miners are harvesting these resources. We are working with key stakeholders to develop plans and a funding source. Should you have any questions or need additional information, please do not hesitate to contact me. I wish you the best in all your endeavors. Sincerely, ~IVV) Doug Sawyer Director ADMMR File : h\UniniItntiVC\I999·10001lDJ~ovcrlc:tLa'. doc Table of Contents Letter of Transmittal 1999/2000 Fiscal Year Financial Statement 2 Personnel 3 Arizona Mineral Industry - 1999-2000 4 Copper 4 Coal 8 Gold and Silver 9 Industrial Minerals 9 Gemstones 10 GovemmentNews 11 Recreational Mining 11 1st Quarter Report 12 2nd Quarter Report 15 3rd Quarter Report 17 4th Quarter Report 20 Statistics 24 Museum Visitation Chart 27 DEPARTMENT OF MINES AND MINERAL RESOURCES Expenditure Report Fund 1000 Appropriated Funds Fiscal Year 1999/2000 Index 44921 Claims Appropriation Paid Thru % END OF YEAR Balance SPENT Personal Services 299,300.00 262,943.08 36,356.92 87.85% Employee Related Expenses 63,700.00 58,224.72 5,475.28 91.40% Travel (In State) 5,300.00 2,796.02 2,503.98 52.76% Travel (Out of State) 0.00 0.00 Operating 341,800.00 353,977.35 (12,177.35) 103.56% Capital Equipment & Furni 0.00 11,549.50 (11,549.50) 0.00% Non Capital Equip. & Fum 0.00 19,842.42 (19,842.42) 0.00% Non Capital Software 385.12 (385.12) 0.00% TOTALS $710,100.00 $709,718.21 381.79 99.95% 2 PERSONNEL Board of Governors Staff Willis D. (Doug) Sawyer Sydney Hoff-Hay Director Chairperson - Phoenix Mineral Resources Information Center James. Miller Ken A. Phillips -Chief Engineer Vice Chairman - Tucson Nyal J. Niemuth - Mining Engineer Leroy Kissinger Ann Tumey - Administrative Assistant Secretary- Tucson Diane Bain - Public Information Officer Ken C. Bennett Member - Phoenix Arizona Mining & Mineral Museum Susan Celestian - Education Curator Eric Nordhausen Member- Tucson Part-time Employees * Janice Adams - Tour Guide Liz Anderson- Tour Guide Ann Baker- Tour Guide Shirley Cote- Tour Guide Joanne Hesterman- Tour Guide Alice Rosenfeld - Tour Guide * Non-appropriated funds 3 ARIZONA'S MINERAL INDUSTRY -1999 and 2000 .For th~ firs~ time in ~ 0 years, Arizo~~ did not rank first in the Nation in non-fuel mineral production in 1998, falling ~o thIrd. Arlz~na s pro~uc~lOn was $3.0 billion, down $800 million from 1997. Contributing to this drop was an II-year low In copper prices. Prellmmary figures released from the USGS indicate that Arizona was also third in 1999 with total production valued at $2.7 billion. During 1999, copper prices fell 3 cents more to 72 cents per pound, the lowest annual average price (in constant dol/ars) in the century. Arizona did continue to lead the Nation in copper production, accounting for 65 percent of the total u.s. mine production. In addition, Arizona is among the leaders in the production of gemstones, molybdenum, silver, perlite, and sand and gravel. There are 72 mining companies operating 126 mines in the state, with an additional 70 sand and gravel producers. More than 15,000 people are directly employed by the mining industry. quickly issued clearance for the acquisition of Asarco COPPER and Cyprus without any divestitures. Later in August. Low copper prices and increased foreign production Grupo Mexico made an offer to acquire Asarco. In resulted in a difficult period for copper producers last October, Asarco's board of directors accepted Phelps year. Arizona's copper production declined 4.8 percent Dodge's offer of $29.50 cash per share and the merger in 1998 and fell 7.5 percent in 1999 to 2.42 billion was signed, contingent upon 80 percent of the shares pounds. The value of copper produced had an even more being tendered by October 22 and approval by Phelps dramatic decline, dropping 29.9 percent in 1998 and Dodge's shareholders. Grupo Mexico increased their 12.1 percent in 1999. Producers changed the goal of offer the next day to $29.75 per share and that offer was their operations, returning to the mantra of the late eventually accepted. When the companies merged, all 1980s, achieving low-cost production, rather than Asarco shares were acquired for $29.75 cash for a total maximizing production as they had been doing for most transaction value including assumed debt of $2.25 of the 90s. In addition to cutting costs and reducing billion. Asarco paid a $30 million termination fee to production, the major Arizona copper companies Phelps Dodge. A passing note: 1999 marked the looth attempted to improve their competitive position in a anniversary of Asarco who commemorated it by changing world market through mergers and releasing Asarco 1899 - 1999, Celebrating a Century of acquisitions. Accomplishment. In December 1999, following five months of offers, Before the merger activity began attention had been Phelps Dodge acquired Cyprus Amax and is now the focused on BHP whose North American copper world's second largest producer of copper. Phelps Dodge operations were for sale. Not receiving any acceptable acquired the following operating mines in Arizona: offers, BHP made the decision in June 1999 to close Sierrita, an open-pit copper-molybdenum mine, Miami, their copper properties, excluding leach production. The an open-pit leach copper mine, smelter, and refinery, San Manuel mine, smelter, and refinery complex, along and Bagdad, a copper-molybdenum mine. Phelps Dodge with the Pinto Valley mine, remain closed and await a also acquired Cyprus' position as the world's largest buyer. molybdenum producer. The total equity value was $1.8 As copper prices remain low and inventOIY levels billion based on approximately 90.7 million Cyprus high it is difficult to predict which properties will Amax shares outstanding. remain in production, but change is certain. For In November, Grupo Mexico, S.A. de C.Y. example at Morenci, North America's largest copper purchased Asarco Inc. to become the third largest mine; Phelps Dodge plans to phase out sulfide copper producer in the world.