Waupaca Foundry’s need for locally produced sand and its economic relationship to the county were among the topics raised at Thursday’s hearing on the proposed sand mine in Union.
An instructor from the University of Wisconsin-Fox Valley asked the Waupaca County Board of Adjustment to consider the costs as well as the benefits of the proposed sand mine in Union.
The board closed the appeals hearing on the mine Thursday, May 15. It is currently discussing the issue in closed session.
Among those giving testimony against the sand mine were Angela Williamson Emmert, an instructor at the University of Wisconsin-Fox Valley.
Emmert took issue with a report presented to the Zoning Committee by Mike Koles, a Waupaca County UW-Extension educator, and Dave Thiel, director of the Waupaca County Economic Development Corporation.
In his report, Koles stressed the economic relationship between the sand mine and its primary customer, Waupaca Foundry.
At the Zoning Committee’s Nov. 1, 2012, public hearing, Koles said the foundry employs 1,410 county residents and is responsible for “one out of every $10 and one out of every 10 jobs in Waupaca County.”
“He did not talk about the costs,” Emmert said. “Any decision of this magnitude needs to consider the costs.”
Emmert said the Board of Adjustment needs to re-examine some of the claims of benefits “that may have been overstated.”
Pointing to a UW-Extension study on the economic impact of frac sand mining, Emmert said there is a clear negative relationship between the proximity of homes to a mine and their property values.
Research encompassing 1,400 homes in a Michigan township found that a gravel mine could reduce total property values by $31.5 million, Emmert said.
The UW-Extension report concluded that land prices tend to be depressed close to mines and haul routes.
Emmert said property values on and near the roads where there is a steady stream of truck traffic would drop. Trucks from the proposed mine will pass through downtown Manawa and the homes and campground on Bear Lake.
She also directed board members’ attention to a study on the economic benefits and costs of frac sand mining. Prepared for the Wisconsin Towns Association and the Wisconsin Farmers Union, the report concluded that the significant environmental degradation makes “mining districts unattractive locations for both homes and non-mining businesses.”
“The promise that mining can lay the basis for prosperous, vital economies has not usually been fulfilled,” Emmert said, reading from the report. “Mining has been synonymous with economic depression, high rates of unemployment and poverty, or simply ghost towns.”
She said the board should also consider that the foundry is currently owned by KPS Capital Partners, a private equity firm based in New York.
“Companies like KPS have one goal,” Emmert said. “Create stockholder wealth.”
She said private equity firms buy and sell companies, increasing stockholder wealth by cutting costs, cutting jobs and selling assets.
Emmert provided the board with copies of press releases that were posted on the KPS website.
In February and June 2013, KPS completed two recapitalizations to fund a total of $325 million in cash distributions to shareholders.
She said Koles repeatedly equated failure to open the Union sand mine with the threat that the foundry might close.
A sand mine in Union, Emmert said, will not guarantee that KPS will keep the foundry open.
Clyde Tellock, who lives across the road from the proposed sand mine and serves as the county’s treasurer, also questioned the validity of the report presented by Koles and Thiel.
He described the report “as nothing more than a veiled threat that if the mine was not approved the Waupaca Foundry would cease operations.”
Tellock believes the report biased members of the Zoning Committee.
“The value of farmland was downplayed in that presentation,” Tellock said.
Brad Milliken, who owns 277 acres in Union, questioned whether the foundry needs the sand from Union.
He said Waupaca Foundry installed a system to recycle sand in the production process.
Milliken noted that Gary Gigante, Waupaca Foundry’s president and CEO, had testified at a Zoning Committee hearing that the new technology “wouldn’t be able to reclaim 100 percent, but possibly 40 to 50 percent tops.”
Milliken said he talked to a 20-year foundry maintenance man who said the foundry was recycling 45 percent of its sand. He did not give the employee’s name during his testimony.
“At the very least, their needs have been substantially reduced and therefore brings in the question whether they need this additional pit. Since Badger Mining has a contract to sell their product, as well as AJ Gelhar, there should be plenty of sand unless it is going somewhere else,” Milliken said.
“I would suggest that Gelhar is just removing the overburden to expose the much more profitable frac sand which is also present at this site,” he said.
Steve Sorenson, the attorney for AF Gelhar, asked two Waupaca Foundry employees to respond to statements made by opponents of the sand mine.
Bryant Esch, the foundry’s environmental coordinator, described the sand reclamation system as a pilot program to help reduce the solid waste coming out of the foundry.
Esch said the technology was experimental and Waupaca was the first foundry in the United States to install it.
“Once fully implemented, it could recover 75,000 tons per year,” Esch said. “The total amount of sand we need is 300,000 tons annually.”
Esch said reclamation of as much as 40 percent to 50 percent of the sand would be extremely unlikely.
The foundry will continue to need 225,000 tons of sand for production annually, Esch said.
“The need for this sand mine is to protect raw material resources that we need to make our castings,” according to Tony Lewis, Waupaca Foundry’s director of procurement.
Lewis said the foundry’s access to sand had been compromised by the fracking industry, which has increased demand for sand production and driven up the costs for sand.
The foundry obtains most of its sand for the Waupaca plants from suppliers in Markesan, which is 60 miles away. The proposed mine in Union would be 22 miles from the foundry, Lewis said.
He said the foundry would benefit from lower transportation costs and from having a reliable source of sand.
“The raw material sand used by the foundry and used by fracking comes from the same ground,” Lewis said. “But we can’t take frac sand and use it in our foundry.”
He said the grain size of frac sand is different from the grain size of foundry sand. Different processes are used to screen sand for its different uses, Lewis said.
Lewis estimated that the foundry could use about 75 percent of the sand coming out of the Union sand mine.
Lewis also talked about the owners of Waupaca Foundry.
After 36 years with the foundry, Lewis has seen it change owners several times.
In 1968, the local owner sold Waupaca Foundry to The Budd Co., headquartered in Troy, Mich.
Ten years later, Thyssen, based in Dusseldorf, Germany, acquired The Budd Company. In 1999, Thyssen merged with Krupp and three years later the foundry’s name was changed to ThyssenKrupp Waupaca.
In 2012, KPS Capital Partners acquired the foundry and restored its original name, Waupaca Foundry.
“We continue to put more capital dollars into these plants in Waupaca, as well as into the other plants,” Lewis said.