⇦ BACK

Precious metals exploration stung by economic slump

Business North
April 29, 2009

On April 20, Kennecott Rio Tinto Exploration geologist Robert Peter was supervising the setup of the first borehole the company will drill in its 2009 summer program in an ongoing search for nickel and copper in southeastern Aitkin and western Carlton counties.

The company plans to deploy two drill rigs in Automba Township in western Carlton County with each drilling up to three holes, Peter said.

That program is dramatically scaled back from 2008 when the company commissioned four rigs that drilled around the clock last summer and fall in Aitkin County, with most of that exploration activity near Tamarack in Clark Township.

It's a reflection of the severe world recession and decline in demand and prices for both ferrous (iron) and non-ferrous minerals, including copper and nickel. "Exploration is (the industry's) R&D," Peter said. "We create wealth down the line, but we don't produce cash flow."

Peter is principal geologist with nine employees at the company's field office in Tamarack, (pop. 97), about 50 miles west of Duluth on state Highway 210. Kennecott Exploration is based in Salt Lake City, UT, and part of Rio Tinto Exploration. Parent Rio Tinto Group, based in London and Melbourne, Australia, is one of the world's largest metals and minerals developers. In fiscal 2008, it generated $3.7 billion in net earnings on $58 billion in consolidated revenues.

Kennecott Exploration holds mineral leases on 16,000 acres in Aitkin and Carlton counties and has been exploring there since 2001. In the first seven years it drilled 47 bore holes, capped by its first discovery of high-grade nickel-copper mineralization during the winter of 2007-08. The high-grade rock strata was discovered about 1,000 feet down at Hole 42 in Aitkin County's Clark Township.

Last year the company drilled more than 50 holes in Aitkin County, concentrated in a 120-acre area in Clark Township near Tamarack.

"Those were encouraging results," Peter said. "It was the rock type we're looking for. But one drill hole doesn't make a mine."

With the economic downturn, the company's 2009 exploration strategy has shifted, as well as slowed. "We're stepping back for a broader view of our 16,000-acre footprint," Peter said.

Mid-continent Rift

Kennecott/Rio Tinto was drawn to Aitkin and Carlton counties after the U.S. Geologic Survey published a 1997 paper outlining copper-nickel mineralization in the Northeastern Minnesota portion of the "Mid-continent Rift."

USGS mapped the region using aerial magnetic measurements and identified geologic formations in the 16,000-acre area Kennecott has leased that holds promise for nickel-rich deposits.

These deposits of both ferrous and non-ferrous minerals are the result of geological events more than 1.1 billion years ago when a deep crack appeared in the Earth's crust as two tectonic plates overrode each other. That created the conditions for iron, nickel and copper-rich magma to erupt to the surface from deep within the earth.

Other players

Presently, three other companies want to develop non-ferrous minerals ore bodies in another part of the Rift stretching from Virginia to Babbitt-Ely called the Duluth Complex. Furthest along is Vancouver, BC-based Polymet Mining, ((NYSE:PLM), which has proposed a copper-nickel mining and processing operation at the NorthMet ore body it controls near Hoyt Lakes. Polymet would process the ore at the nearby Erie Plant it already owns.

The company has stated it will release its long-delayed draft Environmental Impact Statement by June 30. The Minnesota Department of Natural Resources and U.S. Army Corps of Engineers are co-leading that environmental review process. With their approval and needed permits, Polymet could begin actual mining later this year. The mine and processing operations would employ 400 workers for up to 25 years, according to the company.

Meanwhile, Toronto-based Duluth Metals, Ltd. (TSX:DM) and Franconia Minerals Corp. (TSX:FRA) are exploring the Nokomis and Birch Lake ore formations in the Duluth Complex, respectively.

Reflecting industry conditions, the stocks of all three firms are trading near their 52-week lows (stocks table, page 18). For instance, Duluth Metals common stock that traded at $2.95 on April 30, 2008, plummeted to a low of $0.14 on March 4.

Those dismal stock prices provided the only gallows humor in a generally upbeat session devoted to non-ferrous mining at the 70th annual University of Minnesota Mining Symposium in Duluth on April 14. Industry and academic scientists said copper, nickel and platinum group precious metals deposits in the Duluth Complex represent the largest untapped non-ferrous metals resource in the world. Those USGS estimates indicate the Duluth Complex also stacks up nearly as well against the world's premiere non-ferrous ore bodies already under development.

Dean Peterson, senior vice president-exploration at Duluth Metals, and a former UMD Natural Resources Research Institute geologist, places Duluth Complex copper sulphide deposits at No. 2 in the world, behind Russia; nickel as No. 3, behind Russia and the Sudbury District in Ontario, respectively; and No. 4 in platinum group element reserves.

He said Duluth Metals also has cut its 2009 exploration schedule and will concentrate on environmental studies as it waits for mineral prices to recover. "We've already identified enough to mine for 100 years," he said.

Donald Fosnacht, director of the Research Institute's Center for Applied Research and Technology, predicts non-ferrous mining in Northeastern Minnesota will grow to rival its established iron ore industry. In an interview that aired April 21 on Minnesota Public Radio, Fosnacht said ". . .this deposit is so massive, you have many, many potential years of mining."

Minnesota State Building and Construction Trades Council United in Opposition to Anti-Mining Bill

Wall Street Journal MarketWatch
April 22, 2009

SAINT PAUL, Minn., April 22, 2009 /PRNewswire via COMTEX/ — Agree with Range legislators, Governor Pawlenty, the Minnesota AFL-CIO, and the Minnesota Chamber of Commerce that no additional regulations are needed to ensure environmental safety of proposed non-ferrous mining projects.

The Minnesota Building and Construction Trades Council, one of the state's most prominent labor groups, is in agreement with high profile elected officials from both sides of the political isle that there is no need for the non-ferrous mining legislation being pushed by the Friends of the Boundary Waters.

Minnesota is facing the largest budget challenge in history and companies across the state are cutting jobs. Non-ferrous mining will bring thousands of great-paying, enduring jobs and tens of millions of dollars to cities, schools, and the State. The Council strongly opposes SF845 and HF916 authored by Senator Carlson and Representative Hausman.

"At a time when all Minnesotans are eager for job growth, non-ferrous mining offers us a new opportunity to do just this and at the same time help reduce the global carbon footprint associated with the mining of base metals like copper and nickel," Council President Dick Anfang said. "We need to be inviting this type of smart investment into Minnesota."

Most of the world's copper is currently mined in countries with poor environmental records and in fact 80% of global copper production is still done with a smelter. The proposed non-ferrous mining projects in Minnesota use the latest technology and will have to adhere to all of Minnesota's existing environmental laws – some of the strictest in the country.

"Those of us who live and work in northeastern Minnesota respect the environment as much as anyone. The current laws and rules allow us to make sure that remains the case while bringing the great jobs to our region that come with this exciting new industry," said John Grahek, Council Vice President.

Minnesota Regulatory Agencies already have all the authority necessary in statute and rules to assure air and water quality and financial responsibility. The current rules are good, strong standards that were promulgated with input and participation from all groups, including environmental groups. No additional restrictions are necessary.

"Just like the Minnesota AFL-CIO Board's unanimous vote opposing this legislation, the Building Trades is voicing its opposition to the legislation, and our support for the industry and the environmentally responsible jobs that come with it," stated Harry Melander, Saint Paul Building Trades Executive Secretary.

The Minnesota DNR estimates that the proposed projects will also bring more than $1 billion into the School Trust Fund, helping school districts all across Minnesota.

SOURCE Minnesota Building and Construction Trades Council

Duluth Metals acquires new mineral rights in St. Louis, Lake counties

Duluth News Tribune
April 22, 2009

Duluth Metals Ltd. announced Tuesday that it has acquired mineral rights that will enable it to explore an additional 5,142 acres of property in St. Louis and Lake counties.

The company already has documented the presence of what Duluth Metals Chairman and Director Chris Dundas called "one of the larger polymetalic deposit discoveries in recent history." The company hopes to exploit copper, nickel and other precious metals in the formation.

"We had a major exploration program that was one of the largest in North America under way until recently, when this world financial crisis hit everyone," he said. Like other companies, Duluth Metals has responded by slowing down its drilling program.

The new leases bring Duluth Metals' mineral holdings to 15,283 acres, including 10,890 acres of surface rights. The company also has applied for additional state and federal leases that could more than double its current holdings, if approved.

In its latest round of leases, Duluth Metals acquired mineral rights to 2,528 acres from the state of Minnesota and an additional 2,614 acres from private landowners.

A map of the newly acquired mineral rights is available online at www.duluthmetals.com.

Duluth Metals aims to eventually develop an underground mine in the area but has not yet begun to apply for needed permits. Dundas said it would be premature to speculate as to a project timeline at this juncture.

 

 

 

Minnesota State Building and Construction Trades Council United in Opposition to Anti-Mining Bill

News Release
April 21, 2009

Agree with Range legislators, Governor Pawlenty, the Minnesota AFL-CIO, and the Minnesota Chamber of Commerce that no additional regulations are needed to ensure environmental safety of proposed non-ferrous mining projects

Saint Paul, Minn. (April 21, 2009) – The Minnesota Building and Construction Trades Council, one of the state's most prominent labor groups, is in agreement with high profile elected officials from both sides of the political isle that there is no need for the non-ferrous mining legislation being pushed by the Friends of the Boundary Waters.  

Minnesota is facing the largest budget challenge in history and companies across the state are cutting jobs. Non-ferrous mining will bring thousands of great-paying, enduring jobs and tens of millions of dollars to cities, schools, and the State.  The Council strongly opposes SF845 and HF916 authored by Senator Carlson and Representative Hausman.   

"At a time when all Minnesotans are eager for job growth, non-ferrous mining offers us a new opportunity to do just this and at the same time help reduce the global carbon footprint associated with the mining of base metals like copper and nickel," Council President Dick Anfang said.  "We need to be inviting this type of smart investment into Minnesota."

Most of the world's copper is currently mined in countries with poor environmental records and in fact 80% of global copper production is still done with a smelter.  The proposed non-ferrous mining projects in Minnesota use the latest technology and will have to adhere to all of Minnesota's existing environmental laws – some of the strictest in the country.

"Those of us who live and work in northeastern Minnesota respect the environment as much as anyone.  The current laws and rules allow us to make sure that remains the case while bringing the great jobs to our region that come with this exciting new industry," said John Grahek, Council Vice President.

Minnesota Regulatory Agencies already have all the authority necessary in statute and rules to assure air and water quality and financial responsibility. The current rules are good, strong standards that were promulgated with input and participation from all groups, including environmental groups. No additional restrictions are necessary.

"Just like the Minnesota AFL-CIO Board's unanimous vote opposing this legislation, the Building Trades is voicing its opposition to the legislation, and our support for the industry and the environmentally responsible jobs that come with it," stated Harry Melander, St. Paul Building Trades Executive Secretary.

The Minnesota DNR estimates that the proposed projects will also bring more than $1 Billion into the School Trust Fund, helping school districts all across Minnesota.

Minnesota rich in valuable minerals – and potential pollution

April 21, 2009
Minnesota Public Radio

St. Paul, Minn. – Spring is just arriving in the Superior National Forest as a small band of modern explorers gathers in the sun-warmed woods near Ely.

A red steel pole juts 5 feet out of the ground in a small clearing among green balsam fir and bare white birch trees. The pole is coming out of one of more than 100 drill holes where Duluth Metals company has pulled rock samples from as far as 4,000 feet below the surface.

Larger view Drill site

Company President Rick Sandri picks up a fist-sized stone from the ground. It's dull and dark with tell-tale shiny specks.

"This is Duluth complex rock," Sandri said. "This is the rock that we're looking at, and in fact, that … silvery gold color … is part of the mineralization that we're looking at."

The colors indicate copper. And there's a lot more than copper hiding in the hard rock below, according to Project Director David Oliver.

"We have turned up a tremendous amount of minerals — an unexpectedly high amount of mineralization," he said.

Something can go wrong, and if something goes wrong it's going to release enormous amounts of toxic waste. – Brad Sagen, Northeast Minnesotans for Wilderness

The metals were first identified by an iron mining company a couple of decades ago, but the deposit was considered too thinly spread to make recovery profitable. That's changed with new mine technology and an ever tightening world supply of these elements known as base metals.

Project Director Oliver said the local formation, known as the Duluth Complex, is turning out to be world class for the size of its metal deposits – second only to South Africa's.

Duluth Metals says it has identified more than 10 billion pounds of copper, more than 3 billion pounds of nickel and 15 million ounces of precious metals. The company pegs the total value at more than $45 billion.

Duluth Metals has only sampled half its site, and it's only one of at least six companies actively exploring the Duluth Complex.

The Duluth Complex stretches roughly from Ely southwest to Aitkin.

Oliver said the metals they're finding are in high demand for modern technology.

Larger view Duluth Metals crew

"Every new wind turbine you put up is going to have a couple tons of copper in it and a ton of nickel in it. All of the hybrid cars contain copper and nickel in the components there. Every stainless steel thing contains nickel. And these in no way can be seen as frivolous or ancillary elements in our society," he said.

Duluth Metals is not necessarily overstating the potential of the Duluth Complex, according to Don Fosnacht, a metals expert who helps direct the University of Minnesota Duluth's Natural Resources Research Institute. He said the Duluth complex metals will rival the value of Minnesota's iron mining industry.

"I think there's no doubt about it because this deposit is so massive, you have many, many potential years of mining, similar to the iron district that we have. You will have comparable … total metal value associated with this Duluth Complex," Fosnacht said.

But it's not an easy road to get from promising exploration results to a working mine. In the ground, these metals are bound to sulfur. Expose sulfide minerals to air and water and they create sulfuric acid — a potentially deadly pollutant.

Larger view Drill core warehouse

The mine companies have plans to remove and neutralize sulfuric acids, and to cover exposed tailings.

But they've yet to convince people like Brad Sagen, a nearby homeowner and board member of the group Northeast Minnesotans for Wilderness. "Something can go wrong," Sagen said, "and if something goes wrong it's going to release enormous amounts of toxic waste into the Kawishiwi River or Rainy River watersheds."

Duluth Metals hopes to be mining underground in five years or more. Another company, PolyMet, hopes to start a surface mine later this year. PolyMet's Environmental Impact Statement will be published this spring.

How well PolyMet fares in the coming months could spell the future for the local industry. As Duluth Metal's President Rick Sandri puts it, PolyMet is the snowplow, and Duluth Metals is the car behind the plow.

Mining presence has and will be here

Ely Echo
April 18, 2009

The Ely area's history over the last 120 years can be traced back to mining, tourism and timber.  While each has its importance, a new study shows there is no doubt which is number one.

"The Economic Impact of Ferrous and Non-Ferrous Mining Study on the State of Minnesota" was conducted by the University of Minnesota-Duluth and released last week.

Here are some of the highlights:

  • Iron mining helped contribute $3.1 billion to the state's economy in 2007 and helped support more than 10,000 jobs.
  • Iron mining paid $148 million is state and local taxes in 2008, based on 2007 production levels.  Of that, $46 million supported local schools, $11 million supported the University of Minnesota and much of the remainder was funneled to local communities where mining takes place.
  • Mining is the single largest contributor to the region's economy and its relative importance is growing.  Mining was responsible for 23% of the gross regional product in 2001; in 2007, mining was responsible for 34% of the gross regional product.  Its contributions jumped from $2.3 billion in 2001 to $4.7 billion in 2007.
  • Every existing iron ore mining job generates an additional 1.8 jobs in other industries.
  • Expansion of existing iron ore operations and development of new projects have the potential to generate an additional $2.87 billion in economic impact and create 3,442 new jobs – not including construction.  
  • The economic impact of new construction could amount to more than $5.2 billion from 2008 to 2013.  Construction employment would range from a high of 6,599 per year to about 1,229 per year in the same time frame.
  • If all projects move forward as planned, iron mining's combined economic contributions could amount to $6 billion and provide 13,615 jobs.

Those highlights do not include the proposed non-ferrous mining projects, which could generate another $2.29 billion for the state's economy and create 5,600 jobs.  For every non-ferrous mining job, an estimated 1.6 additional jobs will be created.

The impact of mining is felt here in Ely.  From Northshore Mining in Babbitt to the mines in the Eveleth-Virginia area, families here put food on the table thanks to mining jobs.

We believe what was started in the late 1800s will continue for decades to come. We may not see iron mining here again, but there have been major finds of copper and nickel, including Duluth Metal's $45 billion deposit southeast of Ely.

Mining has been and always will be part of our community's economic fiber.  This study shows the impact of mining on the economy of northeast Minnesota.  Ely will not survive on tourism alone.  Ely will not survive on logging alone.  

We believe Ely will survive with mining, tourism and logging.  Each has a role in our economic survival.  To think otherwise is to ignore reality.

Board approves mineral exploration in Automba, Kalevala townships

Pine Journal
April 16, 2009

Kennecott Exploration Company was back before the Carlton County Board on Tuesday morning, this time seeking conditional use permits to test for precious metals in Automba and Kalevala townships. The board unanimously approved both requests, which will allow the mining company to construct exploratory bore holes on property they lease from landowners in both those townships.

Kennecott, headquartered in Salt Lake City, Utah, has been conducting mineral exploration in Carlton and Aitkin counties since 2001, primarily in search of areas deemed optimal for significant deposits of nickel and copper.

"One of these times we're liable to get what we ask for," commented Commissioner Ted Pihlman, "and end up with an open-pit mine."

On hand for Tuesday's meeting was Robert Peter, principal geoscientist for Kennecott's Canada Exploration based in Vancouver, B.C. Peter explained that when, and if, any significant findings result from the exploratory process, the style of mining operation "open pit or underground" will depend on various technical, environmental and economic factors distinctive to each location.

Peter explained that Automba and Kalevala townships were selected for exploration after airborne magnetic surveys identified an area of unusually magnetic bedrock there.

"This is interesting to us since it may represent the occurrence of the rock type peridotite and the potential for nickel and copper," said Peter.

He said work in the two Carlton County townships will commence this week, and the company anticipates drilling one or two holes in each of the two townships.

"Each borehole takes, on average, five to six days to complete with two 12-hour shifts drilling 24 hours a day," he explained, "so we expect to be finished by the end of the month."

Bore hole drilling uses a drill rig to extract a continuous core of bedrock from holes generally ranging from 1,000-2,000 feet deep. He added that the company makes every effort to conduct drilling in ways that don"t disturb local residents, such as through the use of materials and barriers that physically absorb the sound.

"Residents will certainly see a few vehicles driving in and out of our project sites, and at night may see the lights of the drill rig," he detailed. "If our work causes concerns or raises questions, we actively encourage any local residents to contact us immediately."

UMD study: Mining top sector in economy

Mesabi Daily News
April 15, 2009

DULUTH – A study on the mining industry's impact on Northeastern Minnesota and Douglas County released Wednesday tells the strength of the sector.

"Mining is the single largest contributor to the economy" of the region, Minnesota Iron Mining Association President Craig Pagel told a news conference at the Duluth Entertainment Convention Center.

The sector also is more important, growing from $2.3 billion or 23 percent of the Gross Regional Product in 2001 to $4.7 billion or 34 percent of the GRP in 2007, the study's summary said.The study, handled by the University of Minnesota Duluth's Labovitz School of Business and Economics' research bureau, covered impacts of the six iron ore mines in the region, as well as potential future iron and non-ferrous mining projects. Figures of 2007 iron pellet production were used as a baseline, with possible production models projected out five years to 2013, with 75 percent and 50 percent levels of mines that may start up by then.

Minnesota mining added $3.1 billion to the state and supported more than 10,000 jobs through direct and indirect employment (suppliers). If all iron mine expansions and all new projects go forward, the total impact on Minnesota could triple to $8.7 billion by 2013, and could support 20,000 jobs, the study said.

While iron mining has had its ups and downs, compared to other major regional sectors such as timber and tourism, "We've increased while they've decreased," Pagel told the audience.

The study's figures for 2001 and 2007 showed timber having dropped from 18 percent to 12 percent of the economy; and tourism dropping from 12 percent in 2001 to 11 percent of the GRP in 2007.

The 10,000 jobs figure in the study was far more comprehensive than has been previously seen in other reports, with 3,621 workers directly employed in the mines, and the remainder in 322 supplier or other categories.

Frank Ongaro of MiningMinnesota, a trade association promoting non-ferrous mining, said the U of M Duluth study was "confirming the fact that mining is the driving force to the region's economy."

Non-ferrous mines, included in the study's projections, could add 7,000 new jobs and $2.7 billion to the regional economy by 2013, he added.

Besides 1.8 supplier/vendor jobs created for every one direct mining job, the study listed construction work adding significantly to the economy through 2012. Of $148 million in tax revenues for 2008, about $46 million went to local schools, $11 million went to the University of Minnesota, and much of the rest went to local communities where mining occurs.

Pagel defended the study's findings, in answer to several questions asking about the impact of the current economic downturn affecting mining. Models projecting figures at 100, 75 or 50 percent out to 2013 could just be shifted over a year or two to 2014 or 2015, when recovery starts up, he suggested.

These were tough economic times, Pagel said. "People are being laid off."

But there are positive prospects ongoing, including construction at Mesabi Nugget and planned expansion by U.S. Steel at its Keewatin Taconite plant. Despite conflicting accounts about Essar Steel's planned project in Nashwauk, "they're still moving ahead," Pagel added.

Ongaro said that non-ferrous projects were poised to move ahead in a shorter time, and there would be lots of opportunities for public input and comment, including with the PolyMet operation's draft Environmental Impact Statement coming up.

Demand for non-ferrous metals such as copper, nickel, palladium and platinum will be there for newer-technology products such as cellular phones and hybrid cars. "These are the metals that can do that," he said.

The report comes amid a series of slowdowns, layoffs or planned shutdowns at all of the taconite mines on the Iron Range. While some halts will be shorter than others, some may be longer, such as Hibbing Taconite closing for the summer.

Aside from PolyMet, possible non-ferrous projects cited in the study included Duluth Metals, Kennecott, Franconia, Teck-Cominco and Encampment Minerals, none of which are beyond drilling studies, and all of which are years away from operations.

The study was backed by a number of Minnesota state agencies, industry associations and Minnesota Power.

Study: Iron mining 34 percent of northeast Minn. economy

Minnesota Public Radio
April 15, 2009

Duluth, Minn. – A new study finds that 34 percent of northeast Minnesota's economic activity comes from iron mining. The study, by the University of Minnesota-Duluth's Bureau of Business and Economic Research, looked at mining's influence in seven Minnesota counties and one in Wisconsin.

Frank Ongaro, spokesman for the trade group, Mining Minnesota, said new copper nickel mines will add to the industry's regional importance.

"The non-ferrous projects currently being planned have the potential to help create $2.29 billion to the state's economy, and 5,600 jobs," Ongaro said. "That's significant."

The study, based on 2007 data, puts iron mining well ahead of other leading industries in the area such as tourism and forestry. The mining industry has contracted since then because of the global economic downturn.

"We are as dependent in this region on mining as we were 20, 40, 60 years ago," Ongaro said. "And that's not a bad thing."

The study was commissioned by organizations including Mining Minnesota and the Minnesota Department of Employment and Economic Development.

Mining still supports region’s economy, UMD study says

Duluth News Tribune
April 15, 2009

Mining remains a mainstay of northern Minnesota's economy, according to a new report from the University of Minnesota Duluth. It found that in 2007 – the most recent year for which data was available – Minnesota iron ore mining generated more than $1.5 billion in wages, rents and profits.

The total economic output of iron ore mining was estimated to be more than $3 billion.

In all, 34 percent of the gross regional product comes from mining activities.

"We are as dependent on mining as we were 40 to 60 years ago, and that's not a bad thing," said Frank Ongaro, president of Mining Minnesota, an organization working to expand mining activities in the state.

A study on the economic impact of mining in Minnesota, and more particularly the Northland, was released today during day two of the annual meeting in Duluth of the Society for Mining Metallurgy and Exploration.

It showed that as of 2007, 3,621 people were directly employed in iron ore mining, and another 531 were employed by the would-be developers of new nonferrous mines. But the study found that for every mining position, another 1.8 jobs are created as an indirect and induced result, leading the research to suggest that mining sustains the employment of more than 11,600 people.

Despite recent downturns in mining due to the ongoing economic recession, Craig Pagel, president of the Iron Mining Association of Minnesota, remains optimistic about the long-term outlook for the industry.

He defended the study's projections that the expansion of existing iron ore operations and the development of new mining projects – including proposed copper-nickel-precious metal operations and a new slab steel mill – could lead to the direct future employment of nearly 7,500 people in mining, and could support 20,600 total jobs by 2013.

"One thing we know is that the economy is not where we would like it right now," he said, noting that no one knows for sure how long a recovery will take. But he suggested the growth in mining will occur eventually.

"Whatever happens would not change the numbers, but it could shift them into another year," he said.