Chris Cline, the New King Coal, Likes to Swing His Big Iron Fist
Mary Annette Pember
At first glance, Chris Cline, owner of The Cline Group, the parent company of Gogebic Taconite (GTAC) would have been a perfect subject for the old TV show, āLifestyles of the Rich and Famous.ā
The popular 1990s the series featured the lavish, over the top lifestyles of wealthy entertainers and business moguls. Robin Leach, the shows host, offered no background on the source of his guestsā wealth, ill gotten or otherwise. Lifestyles celebrated the excess offered by wealth. Leach, in his distinctive working class cockney voice took us on a tour of the owners spoils, oooing and awing after each scene, vulgar and sublime alike. Like a butler gone awry, however, there was the tiniest tinge of disgust in his voice for the masterās holdings and the hint that not all was what it appeared to be. Even as Leach signed off with his signature phrase bidding his guests, āchampagne wishes and caviar dreams,ā we sensed that there might be an unsavory story behind those gilded mansion doors.
Although Clineās lifestyle appears to be all about champagne and caviar, the basis of his wealth presents a far darker story than the golden-hued online tour of his 33,413 square foot mansion in North Palm Beach, Florida.
According to an extensive 2010 profile of Cline in Bloomberg Markets Magazine, he became āa billionaire by betting on a dirty fuel the world canāt get enough of.ā
The magazine crowns Cline āNew King Coal,ā as authors describe his decision to pursue mining lower quality higher sulfur coal after he realized that new environmental laws were forcing coal burning power plants to add scrubbers to reduce pollutants. Shrewdly he noted the decrease in Appalachian coal and decided to pursue mining high sulfur coal found in areas like the Illinois Basin that could be used by plants with scrubbers. The decision has helped make him the one of richest men in America according to Forbes Magazine which ranked him as #377 on a recent list of American billionaires, estimating his net worth at $1.2 billion.
According to a story in the Chicago Tribune, the cost of mining Illinois coal is 40-50 percent lower than Appalachian coal.
Perhaps emboldened by his success in gauging the coal industry, Cline now has his sights on a new commodity, taconite. His subsidiary GTAC is planning to dig the largest open pit iron ore mine in the country in the pristine Penokee Hills of N. Wisconsin. Although Cline does not appear to have any experience mining taconite, his business model and philosophy would seem to make him well suited to the risky industry. āI never had a problem going āall inā in a card game,ā he said in the Bloomberg article.
Cline is also the majority owner of Foresight Reserves, which is part of the Carlyle Group, a global assent management firm. The Carlyle Group is a controversial, corporate giant with connections to defense, aerospace, automotive, energy, health care, real estate, technology, telecommunications and transportation industries. The Group was the subject of a book āThe Iron Triangle,ā by journalist Dan Briody. In the Economistās review of the book, the Carlyle Group is described as a secretive group that gives capitalism a bad name. The reviewer wonders, āCan a firm so deeply embedded in the iron triangle where industry, government and the military converge be good for democracy?ā
Members of the Carlyle Group are known for influencing politicians through financial donations. According to the Wisconsin Democracy Campaign, a lobbyist for the management firm, Bob Kjellander, is under scrutiny by federal investigators for helping a Washington based investment firm land a $500 million contract with the Teacherās Retirement System. Kjellender has contributed to Gov. Scott Walkers campaign. In a similar strategy, Cline began contributing to Wisconsin Republican politicians a year before the new mining bill was introduced. Roughly a quarter of corporate contributions to the stateās Republicans came from Cline.
No stranger to risk or incurring the rancor of environmentalists or citizens concerned about the impact of his industries on the health of their communities, Cline describes coal as a moral imperative for the worlds poor. He also told Bloomberg reporters that Massey Energyās CEO Don Blankenship, who headed the company during the Upper Branch Mine disaster, was one of the coal industryās most talented leaders.
He further told the magazine that humankind would benefit more from cheap and abundant energy than overreacting to what he calls minimal increases in atmospheric CO2 levels. As an example Bloombergreporters described an incident in which Cline became annoyed over a showing of the film āAn Inconvenient Truthā at his childrenās school and insisted that teachers also provide literature to students showing that sunspots rather than simply carbon may cause climate change. When teachers refused, Cline complained to school fundraisers.
According to the National Library of Science, coal-burning power plants are among the countryās greatest sources of pollution. They are the biggest industrial emitters of mercury and arsenic into the air. They emit 84 of the 187 hazardous air pollutants identified by the Environmental Protection Agency (EPA) as posing a threat to human health and the environment.
Cline, however, is nonplussed by this information.
āAs far as the social acceptability of coal, I like to think Iām part of supplying the cheapest energy in America,ā he says.
Cline portrays himself as a āself madeā man who grew up in a coal mining family in Beckley, West Virginia where he still keeps a home. His father owned a small coal mining operation there. Cline described the good lives that mining coal helps people live and lamented the bad reputation that coal mining has in the media. The Bloomberg interview was the first time he has spoken with reporters. Cline noted that he is abandoning his policy of not speaking with reporters in an effort to improve coals public image.
His policy, however, did not extend to reporters from Indian Country Today Media Network. Calls to Clineās company Foresight Energy asking for an interview were greeted with a young womanās terse response, āWe donāt comment,ā before she abruptly hung up the phone.
A bit of online research however reveals that not everyone seems to agree with Clineās description of the good life provided by coal mining.
Environmentalists, farmers and citizens are complaining about the dangerous and polluting ālong wallācoal mining processes being used in the Illinois Basin by companies such as those owned by Cline.
They claim that the use of coal slurry impoundments used to store waste from coal washing is polluting water supplies. Slurry contains selenium, magnesium and other toxic metals. According to the Sierra Club, a single such mine can use up to 500,000 gallons of water a day.
The new coal mining companies of Illinois, such as Clineās Foresight Energy Partners, a subsidiary of his Foresight Reserves company, are exploiting the stateās antiquated permitting process, forcing farmers to sell to the owners of mineral rights under their lands.
Sierra Club Illinois Conservation Chapter Chair Joyce Blumenshine said the Sierra Club thinks that āany Chris Cline-related mine in Illinois should not be given new permits, permit revision approvals, or permit renewals until they do something about the ongoing water pollution at the Shay 1 Mine.ā
āIt is outrageous in this day and age that a coal company can come in with claims based on deeds from generations ago, and force homeowners to sell their land and homes,ā Blumenshine said. āThe type of highly damaging long wall mining done now was never envisioned in the early 1900s when many coal rights and these strange leases were done. This just is not right.ā
Citizen groups such as Citizens Against Long Wall Mining note that the long wall mining process can cause land over the mines to drop by 4-6 feet, effectively destroying the productivity of some of the richest farmland in the world.
After coal, comes iron.
Cline is moving into unknown territory for his next long shot, taconite mining.
According to an article in the Duluth News Tribune, 2011 the world demand, especially in China for steel is making taconite, previously seen as an inferior, expensive source of iron more attractive to mining companies. Minnesota produced taconite is now competing with raw steel produced in Brazil and Australia.
The Duluth News Tribune quotes a JPMorgan Chase forecast regarding iron ore prices.
āWe believe that high-cost Chinese production will keep its place in the market and support prices at above normal levels for some time,ā JPMorgan Chase forecast in a research report. āHowever, we have lowered our demand projections in line with our global economistsā estimates of world growth, and this results in lower price forecasts.ā
The analysts predict an average price of $167 per ton this year, $147.50 per ton for 2012 and $150 for 2013. Matt Lehtinen, vice president of the Magnetation plant in Minnesota said the cost to produce traditional taconite is $60-$80 per ton in Minnesota, with transportation to China about the same cost.
āSo the price is still in that neighborhood of being profitableā to sell overseas, he said.
Minnesota Public Radio describes iron ore mining as a classic boom and bust industry. When times are good, they can be really good, but when the economy slows, the resulting slump can be devastating to communities dependent upon coal mining jobs.
As an example, MPR cites Cliffs Natural Products, the nationās largest taconite producer that recently laid off more than 100 people in its Minnesota facilities and another 500 at its Michigan plant.
Spokesperson for Cliffās Natural Products Sandy Karnowski told Minnesota Public Radio, āCliffsā decision is based on what we see in the U.S. economy, because we provide taconite pellets to blast furnaces in the U.S.,ā she said. āHowever there has been a softening in the overall world market for iron ore pellets, and that has affected pellet prices, and that in turn has had some impact on Cliffs.ā
According to steel industry analyst Michelle Appelbaum, there is an oversupply of iron ore on the global market, especially from China.
Although taconite sold for nearly four times its production cost in 2011, current profit margins are razor thin and may not bode well for the long-term economic health of mining communities.
Typical of the boom and bust cycle of extractive industries, mining, despite its initially high wages, actually serves to impoverish communities. The highest levels of long-term poverty tend to be found in regions relying on mining. Appalachia, home to much of the countryās earlier coal mining, is a prime example according to an extensive 2002 study, āMining the Data: Analyzing the Economic Implications of Mining for Nonmetropolitan Regions,ā by William Freudenburg, University of Wisconsin-Madison and University of California-Santa Barbara and Lisa Wilson, Watershed Research and Training Center.
Freudenburg and Wilson found in their analysis of more than 300 examples that unemployment is significantly higher in mining counties than in those counties that depend on agriculture. They contend that since mining is tied to the volatility of commodity prices, the industry is subject to frequent periods of āflickeringā or shutdowns.
In 31 of their findings in the Great Lakes region, for instance, they found that counties with mining dependent economies had 44.1 percent more people living in poverty than those counties that were not mining dependent. Further, 63 percent of mining counties were in a ādeep economic bustā with no new boom on the horizon. Freudenburg and Wilson speculate that although mining may initially bring higher income for some, increased mechanization of the mining industry provides fewer traditional blue-collar jobs. Further adding to the poverty cycle is what they describe as āextraction of concessionsā by mining companies that seek to reduce the number of workers and/or pressure them to agree to wage cuts as well as pressuring communities to agree to reduced taxes and regulations, all in the interest of keeping the mines open.
Industry analysisās maintain, however, that those mines sending their ore to be processed in the U.S. stand to maintain higher profits for longer periods.
For some, mining might offer a short-term piece of the good life. But the long term looks more uncertain. For instance, there is increasing data that taconite workers experience an increased rate of mesothelioma, a form of cancer usually associated with exposure to asbestos.
The University of Minnesota Workers Health Study research team released a study in April 2013 that found definitive connection between the lengths of time workers labor in the taconite industry with an increased risk of developing mesothelioma. The study found that in the case of taconite mining, the small particles produced during the refinement process might be the cause.
Mining, however, continues to provide Cline with a substantial piece of his self-described good life. He has been featured recently in celebrity gossip news for his relationship with Tiger Woods ex-wife and former nanny Elin Nordegren. Cline, 54 and the 33-year-old former model have made the news cruising in Clineās huge yacht named āMine Gamesā that is several feet longer that the yacht owned by Woods. He and Nordegren are also reported to be buying up beachfront real estate in swanky North Palm Beach. According to Gossip Extra, Cline owns $31 million of property on Seminole Beach Road. Clineās new 17,000-foot mansion has a bunker and putting green.
āWeāre sending Tiger Woodsā ex-wife a 9-iron,ā Frank Koehn, an anti-mining activist in Wisconsin told Gossipextra.com.
āMaybe she can do a number on Chris Cline.
āWith the mercenaries he hired, Chris Cline shows that heās just another rich guy whoāll try to take our resources and pollute our water.
āItās not the first time this happened, and theyāve all failed. He will, too.ā
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