With ambitious new infrastructure projects coming down the pipeline, business should be booming for local mining operations that supply the construction industry with the raw materials used in building roads and bridges. However, a looming supply shortage and local opposition to new exploration spells trouble down the road.
“There’s absolutely no denying that in the short term, things are looking good,” said Arnold Brink, vice president and general manager with United Rock Products Corp. in Irwindale. “Last year was the best year we’ve had since 1989, but in the long term things are going to be a lot tougher.”
As demand for aggregate (the gravel and sand used in concrete and asphalt) continues to boom, miners are scratching their heads about where to find new reserves. Perhaps not surprisingly, gravel mines are typically among the last things, together with prisons and nuclear waste sites, that communities want to see in their backyards.
“Since they’re not beautiful, the general public associates mining operations with environmental pollution, even though we’re required to meet and do meet all environmental standards,” said Jock Scott, vice president for engineering with CalMat/Vulcan Materials Co.
As a result of this negative public image of the industry, it has become increasingly difficult, if not impossible, for companies to obtain new mining permits in L.A. County.
“The process can take three to five years and cost as much as $10 million,” said Scott. “And then there is still no guarantee that you end up with a permit.”
Not in my back yard
In Irwindale, ground zero of the aggregate mining industry in Los Angeles County, there is growing opposition to new mines, as well as to existing ones, and getting permits for new exploration has become pretty much impossible.
“They don’t really want mining anymore,” said Brink. “Which is kind of ironic if you consider that the city of Irwindale is essentially a byproduct of the gravel industry.”
Incorporated in 1957, Irwindale has a resident population of around 1,200 people, and approximately 93.5 percent of the city is zoned for industrial use. The dominance of the mining industry is evident from the huge pits and towering processing plants that dot the landscape.
“It’s not that we want the mines to go away,” said Rueben Arceo, director of planning and development services with the city of Irwindale. “But our citizens have become more aware of the effect the mines have on the quality of life here, and we have become much more careful when we get new proposals from the mines to dig even deeper.”
A particular area of concern for the city is the low tax revenues that mines generate. According to Arceo, the sales taxes the city derives from the 4,000 or so acres of land used by the mines is equal to what one good-sized car dealership in neighboring cities produce.
And with increasing demand for state-of-the-art industrial space in the San Gabriel Valley, Irwindale could attract more-lucrative new projects like the 1.2 million-square-foot industrial park that Trammell Crow Co. is planning at a former gravel pit in Irwindale that it acquired from CalMat.
However, the mining industry is not likely to leave Irwindale anytime soon. Unlike most other building materials, aggregate has to be mined close to where it is used because, given its weight and relatively low value, it is prohibitively expensive to transport. A ton of aggregate sells for between $6 and $9, depending on its size and quality. To transport it by truck adds another 35 cents per ton per mile.
Moreover, the aggregate from the San Gabriel Valley is considered among the best in the world and is even exported overseas. Further, building codes in L.A. County often specify that aggregate from the San Gabriel Valley must be used in local construction.
Because of the high demand for local aggregate and the lack of surface facilities, mining companies in Irwindale are now dredging up gravel from pits that are below the water table level, which is about twice as expensive as surface mining.
The looming shortage of permitted land for aggregate mining is expected to cause drastic changes in the industry. Already, large national companies, such as Vulcan, are snatching up smaller local operators in order to get their hands on additional reserves. This is similar to what is happening in the homebuilding industry, where a shortage of available land for new development has brought about a wave of consolidation in recent years.
“The difference is that people accept homebuilding as part of the American dream, but not mining,” said Scott. “What will happen is that a lot of producers will go out of business in the next five to 10 years as their resources run out.”
Although Vulcan has enough supply in the San Gabriel Valley to last for the next 30 years, according to Scott, that won’t suffice to meet demand, and additional supply will have to be transported from mines in the high desert.
That means prices for aggregate will start going up in the near future.