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Mine reopening lifts battered Butte

Montana town rejoices, but future uncertain

Published: Sunday, July 11 2004 12:00 a.m. MDT

A shovel operator loads a haul truck in the Continental Pit at Montana Resources in Butte, Mont. Closed in 2000, the mine reopened last fall.

Derek Pruitt, Associated Press

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BUTTE, Mont. — The steel-toed boot index at Miller's Shoe Store is looking strong, an encouraging uptick in a city where economic setbacks have become a way of life.

Miller's is selling more work boots now that Montana Resources is mining again, extracting copper and molybdenum from a pit dug in 1980.

"As soon as they started hiring, the guys needed steel-toed, industrial boots," said Dan McElroy, Miller's owner.

Citing exorbitant electricity prices, Montana Resources halted mining at its Continental Pit in July 2000, laying off all but five of 327 employees.

The closure was yet another disappointment for a town that has seen its share of hardship.

In the late 19th and early 20th centuries, the demand for copper wire to electrify the nation caused Butte to boom. In 1920 Butte was a thriving city of 100,000, many of them immigrants from Europe who came to work the copper mines. The boom didn't last, however, and after years of decline the population has dropped to just 34,000 or so, as mining companies went elsewhere for riches.

But Montana Resources decided last August to reopen the mine. The company said it had secured a new contract for its power supply and wanted to capitalize on strong copper prices.

Workers were hired and trained, and on Nov. 17 they processed the first ore. The company now employs 351 people receiving pay and benefits that average $42,800 a year, plus profit sharing.

The reopening is a rare bit of economic prosperity for Butte these days and has brought some renewed optimism.

"When you have 350 good paychecks added to the economy, some of the best paychecks in town, it makes a difference to every retailer, to car dealers, restaurants," said Evan Barrett of the Butte Local Development Corp. "People are more optimistic, and with reason. There's an economic reality to it."

But the mine is the only one operating in Butte, and its future depends on a lot of factors, including what happens to copper prices. The Continental Pit was mined by the Anaconda Co. from 1980-83, then closed until Montana Resources arrived on the scene in 1986, mining until the shutdown four years ago.

The reopening of the mine largely offset job losses in other segments of Butte's economy last year, according to the Montana Department of Labor and Industry.

Blows included the loss of several hundred jobs in 2002-03 with the demise of Touch America, spinoff of the old Butte-based Montana Power Co. The company that bought some assets of crippled Touch America, 360networks Corp., has 38 employees in Butte.

Then there is the uncertainty surrounding NorthWestern Corp., the power company that is trying to emerge from bankruptcy and employs about 500 people here.

In the last half of the 1990s, Rhone-Poulenc Basic Chemicals imposed about 200 layoffs in phases while preparing to close its phosphorus plant near Butte.

"We've been taking shot after shot in the economic chops," said McElroy, whose shoe store near old underground mines opened in 1917. "Butte's always had a reputation for coming back, but Touch America, and then NorthWestern declaring bankruptcy last summer, it was a one-two punch that everyone was staggering from."

While there is optimism with the mine's reopening, officials are quick to note that a long-standing push to recruit other business and diversify the economy continues.

"Mining has been and can continue to be the economic foundation for the city," said Steve Walsh, Montana Resources vice president and a longtime resident. "But we need to diversify. We need to attract other businesses."

The city did that in the mid-1990s, when Advanced Silicon Materials decided to build a manufacturing plant west of town. The company produces polysilicon for high-tech industries and has 280 employees.

There is no shortage of economic development initiatives, among them Team Butte, Advantage Butte and until recently, Destination Montana, a proposed gambling and entertainment development. The proposal did not get the necessary approval of the 2003 Legislature.

Montana Resources received government financial incentives when it agreed to reopen. One of the stipulations is that it continue mining for 10 years. Based on ore reserves, Montana Resources can operate for 23 years if costs are controlled and metal markets do not collapse, Walsh said.

McElroy said the impact on his shoe store goes beyond demand for industrial boots. Miners who signed on with Montana Resources left jobs that then went to other people, and some of those have been in for boots and shoes, he said.

"It was a psychological lift when it was announced the mine would reopen," said Walsh, a 50-year-old mining engineer who has lived here most of his life. "We're hoping Butte can build on it."

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