The institutions. Retirement funds. 700 to 1 leverage. {expletive deleted}.
Turmoil in the insurance industry is catching hardrock mining companies between a rock and a hard place.
For years, mining companies have depended on insurers for financial guarantees to government agencies assuring that lands affected by mining would be properly cleaned up. But following the massive hit to the insurance industry after Sept. 11, as well as the Kmart Corp. and Enron Corp. bankruptcy filings, numerous insurers are refusing to issue the so-called reclamation bonds, saying they are too risky.
At the same time, state and federal agencies have been sharply increasing mining companies' bonding requirements, forcing some companies to ante up more than 100 times as much money as before to ensure taxpayers won't have to bear the cost of reclaiming former mining lands. All this while prices for gold, copper and many of the other metals the companies extract remain well below historic highs, crimping corporate profits. |