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50 Years Ago: Tribe explores new directions in mining leases

It turns out one of the problems the new chairman will have to look into is the tribe’s mineral leases with outside companies.

The Navajo Times never reported any real news about the tribe’s mineral reserves during Raymond Nakai’s eight years in office with the exception of reports put out by the BIA about new contracts bringing in millions of dollars to the tribe. But there were no new contracts signed during the last three years and neither the tribe nor the BIA ever made public information about how the tribe was faring in selling rights to its natural resources.

But now that has changed probably because one of the promises that Peter MacDonald made during his campaign was to make the government more transparent. He provided the Times with an opportunity to bring readers up to date on this issue.

In an article written by P.K. Hurlbut, a tribal minerals supervisor, he brought up oil sales. While this was bringing in the most money of all the mineral resources, he had some disturbing news: Unless the tribe could find some new oil fields, the government should prepare for dwindling revenue in the future.

“Most powerful of the current oil fields are getting too old,” he said, comparing the situation the tribe finds itself in with a farmer who has an old horse. As the horse gets older, it produces less but the upkeep costs the farmer more.

“Oil reserves put out less oil but the cost to maintain them keep getting higher and higher,” he wrote. “What the tribe needs now are some new discoveries.”

He said the tribe was now working on that. Hurlbut then brought up the subject of uranium. In 1971, uranium was looked as a source of revenue. It would be a few more years before tribal officials and the Navajo people would fully realize how dangerous uranium mining was to the health and welfare of not only Navajo miners but the general population as a whole.

Hurlbut pointed out that the entire United States was in a frenzy looking for uranium sites. This resulted in only a few years of production on the reservation.

The Navajo government, knowing that uranium could be found in many sections of the reservation, adopted a royalty rate that was so high it scared a lot of companies off.

“So now we have come to the threshold of a new era,” he said, adding that the tribe was making preparation for the auction of new uranium leases. The tribe has a new schedule meant to be competitive, he said, and he was “very optimistic” about the future of uranium sales on the reservation.

He was so optimistic, he said, that he bet some friends a steak dinner if the tribe receives less than $5 million when it holds its auction in the spring.

He didn’t mention coal in his report very much, probably because the tribe was receiving such a small royalty that it didn’t bring in a lot of revenue. The reason for this was that many people working in the U.S. Interior Department – which was responsible for negotiating the coal leases – formerly worked for top companies or had some kind of relation with the coal industry so they had a tendency to decide with the coal companies in these kinds of circumstances.

From the day he came into office, MacDonald sharply criticized the Interior Department for the existing contract between the tribe and Peabody Coal Co., saying the amount the tribe received in royalties was far less than the company paid other landowners.

The tribe was getting at the time about 20 cents a ton as royalty, or, as MacDonald said, about the price of a can of Coke. The tribe filed a lawsuit and several years later the royalty rate was increased to the norm at the time – 12 and a half percent of the value of the coal at the site.

And then there were diamonds. The tribe has been told by geologists that certain sections of the reservation may have diamonds and they have been searching these areas with no success. Hurlbut said the searches will continue.

Tribal geologists are also searching for the presence of rare earth metals, which generally bring in high royalties. They are on the tribe’s most wanted list, he said.

He said the mineral department recently discovered a deposit of iron ore and was working to see if anyone was interested. “This might develop into a new mineral industry for the tribe,” he said.

Gold and silver? “We haven’t found too much of this lately, although some occurrences are known,” he said. Copper is another mineral that the tribe is looking at exploiting. Hurlbut said there were at least four places on the reservation that show signs of having enough copper for mining. The tribe plans to hold its first copper auction in June to see just how much interest there is in the mineral.

And then there is bentonite, which the reservation is apparently has a lot of. “Unfortunately there is so much of this stuff around that a lot will probably just stay here,” Hurlbut said. “However, there continues to be a small steady demand for it.

“Probably our best course of action is to continue looking,” he said. “Look everywhere, not just on anthills and in lizard gizzards. And also read the Wall Street Journal for idea on new technology.”


About The Author

Bill Donovan

Bill Donovan has been writing about the Navajo Nation government since 1971 and for the Navajo Times since 1976. He is currently semi-retired and is living in Torrance, California, and continues to report for the Navajo Times.

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