Hecla Mining: 125 years old and not slowing down a bit

For 125 years, Hecla Mining Company has been in business.

It’s seen good times. It’s seen bad times.

Hecla has been hit flush in the face with plunging commodity prices. Rock bottom has been firmly and tragically established with the loss of miners’ lives, including the death of Pete Marek at Lucky Friday in April 2011. Marek’s death was the company’s first in 25 years, yet it was followed just seven months later when Brandon Lloyd Gray of Kellogg was killed in another accident.

But through it all, Hecla has persisted. For many of those years, it’s flourished. And that’s part of the reason why CEO Phillips S. Baker, Jr. believes the latest commodity price strife won’t last, and that great days await. Hecla, headquartered in Coeur d’Alene, has been there too many times to start blushing now.

Baker, Hecla’s CEO for 13 years this May, understands the past and has seen the future. Last Christmas the Baker family traveled to India, where he caught an optimistic glimpse.

“What struck me more than anything was, I’m not worried about the future of our business and who’s going to consume our product,” he said. “I saw it, and they’re the biggest consumers or the second biggest. They’re going to consume lots and lots more as they get wealthier, and they’re going to consume it in all sorts of different ways.”

Baker explained further, pointing to China and the world’s burgeoning population. The current drop in commodities prices follows a peak perpetrated, in big part, by China’s surging growth. Metals that were essential to Chinese infrastructure — buildings and power systems, for example — are now finding homes elsewhere.

“What they’re moving to now is a consumer-driven economy,” Baker said during a recent interview with The Press. “What is it you use in a consumer-driven economy? The first thing are cars, and electronics. It goes even further. As people’s wealth increases, more and more white goods — white goods would be like a refrigerator and an air conditioner — all this stuff takes a fair amount of silver, zinc and lead [all metals that Hecla produces]. The outlook as the consumer demand increases, we’re going to have the next wave of demand for metals.”

But that’s tomorrow. Today — this entire year, in fact — Hecla is celebrating a century and a quarter in business.

Back in 1891, Hecla was born into a different world.

“It was a remarkably inventive and productive year, with a lot of ‘firsts’ that in some ways immensely changed our lives,” Baker said during his American Exploration & Mining Association keynote speech in December.

In 1891, while the Dalton Gang was committing its first great train robbery and Spam was being introduced by a new company called Hormel, the first gasoline-power car debuted in Springfield, Mass. — shortly before the first basketball game was played in the same city. Thomas Edison patented radio signals, and the Army-Navy football teams cracked heads for the very first time.

Baker’s glee in knowing something most of those around him don’t is on display when he tells folks that 125th birthdays are called quasquicentennials. Because it was incorporated in 1891, the birthday boy known as Hecla is the oldest precious metals company in North America.

One thing he doesn’t know is where the company name comes from. In 1885, he said, a claim in Burke was called the Hecla. He said the name could be derived from towns and mining companies in Michigan and Montana, or from an Icelandic volcano.

“Or was it the foresight of James Toner, the man who staked the claim that it would go so deep that it would fulfill the medieval folklore definition of the word ‘Hecla,’ and be at the gates of hell?” he said. “I kinda like that one.”

The Silver Valley’s slice of heaven was actually carved by the needs of Washington Water Power — now known as Avista Corp. — which started in 1890. In 1903, steam gave way to electrical power, which revolutionized the mining industry.

“The Silver Valley mines ... were the backbone for developing hydropower [for the region],” Baker said.

Innovation and improvements were seen in explosives — black powder and nitroglycerin were replaced by dynamite — and other miners’ tools of the trade like the two-man double jack and hand steel were replaced by the stoper drill.

“But the stoper drill was also known as ‘the widowmaker,’ its pounding force creating clouds of rock that caused emphysema,” Baker said. The evolution of safer, more productive mining continued with hollow steel drilling, where water flushed the cuttings and dramatically reduced the fine and potentially lethal dust.

Those were just a few of many key transitions. From its beginnings with the power of water and unleashed explosive potential, Hecla evolved through the 20th century. Now from the mountaintop known as 2016, Baker sees innovation helping the industry substantially in the near future.

Battery powered equipment — no emissions, reduced refrigeration and ventilation requirements, and a relatively quiet workplace — “will allow us to go deeper than we ever imagined,” Baker predicted.

Automation much like driverless cars above ground could lead to operators on the surface running several machines simultaneously because many of the functions are done autonomously.

Adopting mechanical mining to hard rock mines is another advancement Hecla is considering. Used for decades on coal but only a few years on hard rocks, mechanical mining eliminates drilling and blasting — “turning the underground into more of a rock producing factory,” Baker said.

“We will probably try to test some equipment in the next 3 to 4 years,” he added.

Baker’s vantage point doesn’t allow him to see much further into the future than that, but he said the company’s long history has helped define keys to success in longevity.

He said the first key to building longevity is continuity in management, board and employees, “and a strong culture of being part of the community.”

Baker credits Luke Russell, Hecla’s VP of External Affairs, with properly describing a critical relationship:

“A mine’s relationship with a community over a long period of time goes from often opposition, to acceptance, to ownership.”

Baker said Hecla enjoys that unofficial ownership relationship with the people in its mining communities, with benefit to all.

“We’ve seen the payback in the loyalty of our communities, their willingness to support us when budgets are tight, regulations change or the media casts the company in a bad light,” he said. “That’s how you achieve longevity. You don’t do it on your own.”

The second key to longevity, he said, is planning to stick around for a very long time.

“This requires tough decisions, risk taking, good judgment, some failure and lots of criticism,” he said, “but it can pay off.”

Paying tribute to another company’s mine, Baker used Bunker Hill as an example. He said Bunker Hill began work on the 12,000-foot Kellogg tunnel in the 1890s.

“It took nine years for them to complete it, and in the meantime, prices went up, went down, there was a financial crisis, there was criticism, but they kept going,” he said. “And it paid! The Bunker ended up as one of the largest producers of lead and zinc for almost 50 years because of that tunnel.”

Baker also said longevity in the mining industry is predicated upon the need for strong assets. “And we have them,” he said.

Hecla’s assets include:

• Greens Creek in Alaska, which has produced 200 million ounces of silver and 1.5 million ounces of gold since its startup in 1989;

• Lucky Friday in Mullan, which has produced 155 million ounces of silver and, thanks to its $225 million No. 4 shaft, is expected to open up more than 20 years’ worth of additional resources;

• Casa Berardi in Quebec, which has produced 1.9 million ounces of gold with another 10 years of mine life remaining;

• San Sebastian in Mexico, that has a short mine life — two years — but 400 percent returns (Baker believes eventually it will become a long-term asset);

• And recently acquired Rock Creek in Montana, which Baker says has potential to become a long-life silver and copper mine.

All told, Hecla has just over 1,400 employees worldwide. About 380 of them are in North Idaho, with 50 or so of those in the Coeur d’Alene corporate office.

According to Russell, Hecla’s VP of external affairs, total Idaho wages in 2015 were about $37.5 million. Including benefits, the number rose to $54 million.

A century and a quarter in business, and Hecla’s still spreading a lot of silver around.

Key dates in Hecla history

1891: Hecla Mining Company incorporated in Idaho Oct. 14

1903: Washington Water Power completes 100-mile power line, electrifying Silver Valley mines and helping Hecla operate year-round.

1923: Compressed air is used in Jacklege drilling. Work that took 17 miners to complete now requires three.

1929-39: Great Depression eliminates almost all demand for silver.

1944: After 40 years of production, last tonnage hoisted from original Hecla shaft. Over that time, mine yielded more than 9 million tons of ore.

War increased demand for lead, zinc, copper; premium prices stimulated mining and the war effort.

1958: Hecla became largest shareholder in Lucky Friday. Mine still operating today.

1964: Hecla listed on prestigious New York Stock Exchange after 49 years on American Stock Exchange.

1977: Apple II personal computer marketed, making micro-computers available to consumers. Good news for silver, key product in computers and electronic components.

1979: Work begins on Lucky Friday Silver Shaft, first concrete, circular shaft in Silver Valley. It’s 6,200 feet deep. Shaft completed in 1983.

Hecla stock best performer on NYSE.

Hunt Brothers corner silver market, drive price from $6 to over $50 per ounce.

1981: Hecla owns 100 percent of Republic gold mine in Washington.

1982: The Star mine, deepest in North America (8,100 feet), shut down.

“The Computer” named Machine of the Year by Time Magazine.

1984: Solar Energy Generating System began operating in California Mojave Desert. Projections: 70 million ounces of silver will be used in solar energy by 2016.

1987: Hecla purchased 28 percent interest in Greens Creek silver-gold-zinc-lead mine near Juneau, Alaska.

1991: Hecla celebrated centennial.

1994: Hecla began operations at La Choya, largest open-pit, heap-leach gold mine in Mexico. Lucky Friday mined its 100 millionth ounce of silver.

2000: Ericsson Mobile Communications marketed first “smartphone.” Underground mining communications forever changed; wireless phones, Wi-Fi, Voice-Over IP communications eventually replaced whistles and bells.

2003: Arthur Brown stepped down as Hecla CEO after 36 years and remains chairman of the board. Philips S. Baker Jr. became CEO.

2008: Hecla secured 100 percent of Greens Creek silver mine.

2011: Hecla began $225 million #4 Shaft project at Lucky Friday.

Company resolved all claims for historic environmental liability in Coeur d’Alene Basin Superfund Site.

2012: Bright-white LED lamps used on miner helmets for improved safety.

2013: Hecla completed acquisition of Aurizon Mines Ltd., 100 percent ownership of Casa Berardi gold mine in Quebec, Canada.

2015: Hecla acquired Revett Mining Company and 100 percent ownership of Rock Creek project in Montana — considered one of largest undeveloped silver and copper deposits in North America.

Company decides to bring San Sebastian silver-gold mine near Durango, Mexico, back in production.