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Cardero Receives Final Results from 2010 Titac Resource Definition Drilling Program

Cardero Resource Corp. ("Cardero" or the "Company") – (TSX: CDU, NYSE-A: CDY, Frankfurt: CR5) announces positive final drill results from its 2010 drill program at the Titac Ferro-Titanium project in northern Minnesota, USA. Results confirm the presence of semi-massive to massive iron and titanium oxide and associated copper mineralization over exceptionally broad intervals. Cardero has been aggressively drilling and evaluating potential resources at Titac and Longnose – both projects previously having been subject to historical exploration with Longnose, according to BHP Minerals (now BHP Billiton) being "the largest known ilmenite (FeTiO3) resource in North America."

The Company has completed a total of 36 diamond drill holes on the Minnesota projects for a total of 11,506 metres, with significant iron-titanium and copper mineralization being intersected in the majority of the holes at both projects.

Final results are presented for Titac North and South (Figure 1, Table 1). Additional resource definition drilling at Titac South and Longnose will commence in early February and will be completed in the coming months. SRK Consulting of Vancouver, Canada has been retained to prepare an independent NI 43-101 resource estimate for Titac South and Longnose.

The Company also provides an update on exploration at the Organullo gold exploration project, northwest Argentina. A total of 8 diamond holes were drilled during the 2010 program for a total of 2,053 metres. Drilling was hampered by technical difficulties and poor ground conditions. As a result, none of the drillholes tested the geophysical targets at depth. The grades intersected are not considered to be significant but since the priority targets remain untested, the property does warrant additional exploration. The Company has signed a number of confidentiality agreements and hopes to secure an option/joint venture agreement during 2011, which would allow exploration to progress and allow Cardero to focus on core projects. At this time, no further work is planned by Cardero at Organullo.


Titac and Longnose Resource Drilling Program

The Company initiated exploration and resource drilling in mid-February 2010, aiming to complete an initial NI 43-101 compliant resource estimate on Titac South and Longnose. A total of 36 drillholes (including two abandoned) have been completed of which six provided an initial test of the Longnose project. The remaining 30 holes focused on the Titac project. Significant intersections for the Longnose property and the first 14 holes for the Titac property were disclosed in a previous news release (NR-10-2010).

Current Work

Work has been ongoing in preparation for the 2011 winter drilling program, scheduled to commence in mid-February 2011. The program will focus on completion of resource definition drilling at Titac South and Longnose and is expected to total 1,600 metres, in addition to the 11,506 metres already completed. SRK Consulting of Vancouver, Canada has been retained to prepare an independent NI 43-101 resource estimate for Titac South and Longnose.


The Organullo Project is located in the Salta Province of north-western Argentina in the central South American Andes mountain ranges approximately 18 kilometres by road south of San Antonio de Los Cobres. The Company holds a 100% interest in the property, which covers approximately 6,100 hectares.

The positive results from surface exploration, conducted during 2009 and early 2010, indicated potential for a large, bulk-tonnage gold system. In mid-2010, the Company commenced a 2,000 metre, 5-hole diamond drill program. The drilling was designed to test an approximately 2.1-kilometre long by 800-metre wide north-south trending structural zone defined by the coincidence of significant historical drill intercepts, gold-in-rock surface geochemistry, and variably developed advanced argillic (alunite+/-dickite+/-pyrophyllite) and silica alteration in the vicinity of the former Julio Verne mine.

A total of 8 diamond drillholes were drilled during the program for a total of 2,053 metres, but drilling was hampered by technical difficulties and poor ground conditions. As a result, none of the drillholes tested the geophysical targets at depth. The best intersections from the drilling completed are outlined in Table 2.

The grades intersected are not considered to be significant but since the priority targets remain untested, the property does warrant additional exploration. The Company has signed a number of confidentiality agreements and hopes to secure an option/joint venture agreement during 2011, which would allow exploration to progress and allow Cardero to focus on core projects. No further work is planned by Cardero at Organullo.

Minnesota Ferro-Titanium Project Background

Cardero has acquired interests in and is exploring two iron-titanium projects on the edge of the Duluth Complex in north-eastern Minnesota.
The Longnose Project was first discovered in the 1950's through aeromagnetic and gravity geophysical surveys, and was first drilled by Bear Creek Mining Company in 1958. The Partridge River Intrusion (PRI) hosts the Longnose body, which dominantly consists of oxide-bearing peridotite, pyroxenite, and semi-massive and massive iron and titanium oxide. BHP Minerals previously produced a historic (pre-NI 43-101 standards), "probable reserve" at Longnose, estimating 27.57 million tonnes at 21.3% TiO2, stating at the time that Longnose is "… the largest known ilmenite resource in North America." However, the Company cautions that both the BHP report and the included resource estimate were prepared before the introduction of NI 43-101, and are therefore historical in nature and the Company is not treating such resources as a current resource under NI 43-101. Investors are further cautioned that a qualified person has not yet completed sufficient work to be able to verify the historical resources, and therefore they should not be relied upon.

The Titac Project was first drilled by U.S. Steel Corporation after it discovered several magnetic highs in the area. The Titac body is hosted by anorthositic and troctolitic rocks of the Anorthositic Series, the Boulder Lake intrusion, and the Western Margin intrusion. The Titac body dominantly consists of oxide-bearing pyroxenite and peridotite, and massive and semi-massive iron and titanium oxide.

Titanium dioxide (TiO2) is primarily used as a white powder pigment due to its brightness and very high refractive index. It provides excellent opacity to products such as paints, coatings, plastics, paper, inks, fibres, food and cosmetics. Titanium metal is also used as a light, high-strength and corrosion-resistant material in the fabrication of specialized components in the aeronautical and aerospace industries, and in high-end sporting goods and medical components.

Recent North America contract prices for titanium dioxide have been in the range of US$1.17-1.34/lb.

Organullo Project Background

The Organullo property is situated in the Province of Salta, northwest Argentina, in the central South American Andes mountain ranges. The property is located approximately 18 kilometres by road south of San Antonio de Los Cobres, the capital city of the Los Andes department, which has both power and rail infrastructure. Cardero holds a 100% interest in the property, which covers approximately 6,100 hectares. Elevations range from 3,990 to 4,580 metres above sea level in this arid region of the altiplano known in Argentina as the Puna.

Gold mineralization on the Organullo property is hosted in Tertiary age dacite to andesite pyroclastic rocks and underlying Paleozoic age Puncoviscana metasedimentary rocks in a tectonically fertile part of the Argentinean Puna. Textures, geochemistry, host rocks and alteration assemblages are consistent with both low- and high-sulphidation styles of epithermal mineralization that host prolific gold mineralization elsewhere in the central Andes, such as in the Pascua – El Indio belt, and do not preclude the potential for a large Bajo de la Alumbrera or El Salvador style porphyry deposit at depth.

The earliest recorded work in the area of the Organullo property comes from reports of small-scale production from the Julio Verne mine during the 1930's. Mining activity centered on 2 high-grade sub-parallel veins with concentrates reported to average 12.5% bismuth and 8.2% copper with gold ranging between 10-20 g/t. Early regional work was undertaken in the area by Fabricaciones Militares in 1962-72 in partnership with the United Nations, followed up by an IP survey and drilling by Cities Service Corporation. In 1994-1995 Triton Mining Corp. and Northern Orion Explorations, Ltd. jointly conducted a detailed surface sampling, mapping and prospecting campaign and completed a 17-hole, 3,295-metre RC drill program. This was followed with a 6 hole diamond drill program in 1997 and an additional 12-hole RC drill program in 1999 by Northern Orion. Cardero purchased the project in 2004.

2011 Annual Report Filed

On January 31 2011, Cardero filed its Annual Information Form for the year ended October 31, 2010 with certain securities commissions in Canada and its Form 40F for the year ended October 31, 2010 with the US Securities and Exchange Commission. Shareholders can obtain copies of these documents, as well as the Company's audited financials for the year ended October 31, 2010 and related management discussion and analysis, on Cardero's website at http://www.cardero.com/. Cardero will also provide hard copies of these documents, free of charge, to shareholders who request a copy directly from the Company.

Qualified Person

EurGeol Keith J. Henderson, P.Geo., Cardero's Vice-President Exploration and a qualified person as defined by National Instrument 43-101, has supervised the preparation of the scientific and technical information that forms the basis for this news release (other than historical data) and has approved the disclosure herein. Mr. Henderson is not independent of the Company as he is a senior officer and employee and holds incentive stock options.

The analytical results were reviewed by Tansy O'Connor-Parsons, Cardero's Senior Geochemist. Cardero's on-site personnel at the projects rigorously collect and track samples which are then security sealed and shipped to ALS Laboratory Group. ALS Laboratory Group's quality system complies with the requirements for the international standards ISO 9001:2000 and ISO 17025:1999. Analytical accuracy and precision are monitored by the analysis of reagent blanks, reference material and replicate samples. Quality control is further assured by the use of international and in-house standards. Certified reference material, blank material, and quarter-core duplicates are inserted at regular intervals into the sample sequence by field personnel prior to shipping in order to independently assess analytical accuracy and precision. In addition, representative blind duplicate samples are routinely forwarded an ISO-compliant third party laboratory for additional quality control.

About Cardero Resource Corp.

Through 2011 Cardero will continue its migration from high-risk, early-stage grassroots exploration projects and will continue to add value through identification and acquisition of advanced projects.

In recent years, Cardero's focus has increasingly been on iron ore and iron-making technologies. The sale of Cardero's wholly-owned Pampa de Pongo iron deposit in late 2009 for US$100 million cash represented an early success in the iron market. Cardero continues to hold significant iron ore resources at the Iron Sands Project in Peru and iron-titanium interests in Minnesota, USA. More recently, in keeping with bulk-commodity focus, Cardero acquired a 45% interest in Coalhunter Mining Corp., with a right to increase its interest to 51% in certain circumstances. Coalhunter holds a 75% interest in the Carbon Creek Metallurgical Coal deposit in north-eastern British Columbia.
The common shares of the Company are currently listed on the Toronto Stock Exchange (symbol CDU), the NYSE-Amex (symbol CDY) and the Frankfurt Stock Exchange (symbol CR5). For further details on the Company readers are referred to the Company's web site (http://www.cardero.com/), Canadian regulatory filings on SEDAR at http://www.sedar.com/ and United States regulatory filings on EDGAR at http://www.sec.gov/.

On Behalf of the Board of Directors of

"Hendrik van Alphen" (signed)
Hendrik van Alphen, President

U.S. control of ‘rare earth’ minerals slipping

Pittsburgh Tribune-Review
Lou Kilzer
January 30, 2011

When China slashed export quotas of fundamental minerals in 2010, it awakened America to a danger that has been building for more than a decade, experts say.

Those minerals, called "rare earths," shape a modern nation's defense and economy.

Your iPhone and hybrid car won't work without them, nor will your laptop computer. The Pentagon needs them for its precision-guided "smart" bombs.

China has locked up the supply – stripping the United States of its dominance.

U.S. lawmakers in both parties blame China's "mercantilist" policies – state interference in international trade. Yet, the United States and other nations also were caught napping, according to members of Congress, lobbyists and industry experts.


• China produces 97 percent of the rare earths used in high-tech items such as fiber optics, flat-panel monitors and televisions, and electricity-generating wind turbines.

• Through export policies and tariffs, China forces foreign companies to manufacture there in order to remain competitive. And where manufacturing goes, research and development often follow.

• China dominates more than rare earths. It leads the United States (or even the rest of the world combined) in key elements such as germanium, indium, antimony, zinc, manganese, tungsten, magnesium, cadmium, pig iron, graphite and fluorspar.

Those materials, used to make alloys, feed China's surging steel industry. A decade ago, China and the United States produced roughly equal amounts of steel; in 2010, the United States produced about 90 million metric tons – to China's 630 million.

• China is acquiring even more foreign resources. While most of the world fell into recession in 2008, China went on a spending spree: It bought all or part of 184 foreign mining assets for $37.2 billion, according to the U.S. accounting firm Ernst & Young.

Recently, Shanghai Securities News reported that China may create a strategic stockpile of rare earths, tungsten, antimony, molybdenum, tin, indium, germanium, gallium, tantalum and zirconium.

In contrast, the United States began selling its reserves in the 1990s.

China has positioned itself to surpass the United States in purchasing-power parity – a closely watched measure of an economy's real size – next year, according to the Conference Board, a nonprofit international business association.

'Free market isn't working'

The situation leads some analysts to stark conclusions.

"The free market isn't working right now," says Rep. Mike Coffman, R-Colo., who intends to sponsor legislation to re-stockpile strategic materials.

China, he says, "had the foresight to say, 'We want to be a manufacturing country. There are critical components to that in terms of raw materials, and we're going to make sure that we have unfettered access to those supplies.'

"And now it's (their) goal as a country not to export those raw materials. It is to export finished products."

John Pike, a defense expert and director of GlobalSecurity.org, a Virginia-based website analyzing military and intelligence matters, says "we cannot pretend there's a free market when there's not."

Ronald Ashburn, executive director of the Association for Iron & Steel Technology, a Warrendale-based nonprofit promoting industrial research, says China controls "huge aspects of the world capacity for many materials."

Congressional staffers, speaking on background, agree.

"China is going to produce, whether they are making a profit or not," says a Democratic staffer who has studied the issue for years. Its mining companies "are willing to get hammered" financially in order to gain control over markets.

A Senate Republican staffer says the federal government has backed American firms, but "people didn't like it. But they do like jobs – and mining jobs are good jobs."

Three bills countering China's rare-earths policies were introduced in the last Congress by Coffman, Sen. Lisa Murkowski, R-Alaska, and Rep. Kathleen Dahlkemper, D-Erie, who lost re-election in November.

Each bill involved some degree of government intervention. None won approval.

Dahlkemper's bill emerged at a sensitive moment – during China's brief rare-earths embargo on Japan in September. A spooked House passed it, 325-98, but the bill lost momentum as the midterm election neared and China relented.

Like Coffman, Murkowski plans to try again.

Many Republicans, however, caution against going too far, too fast.

In a statement, 10 GOP congressmen on the committee that sent Dahlkemper's bill to a House vote said federal loans "should be restricted to those areas not undertaken by the private sector," to avoid "favoring certain companies … and potentially crowding out further private-sector investment."

Congressional Republicans generally favor trimming regulations to spur rare-earth mining.

China's long-term strategy

Meanwhile, America's numbers across the board continue to decline.

The U.S. share of world spending on mining has dropped to 7 percent, from 21 percent in 1991, according to Carol Raulston, spokeswoman for the National Mining Association.

"When mining moves offshore, you are going to lose the fabrication that goes with it," she says.

"What happened to the manufacturing base? It followed the natural resources."

That was China's long-term plan, according to a congressional report and a Chinese official.

In December, China cited environmental concerns in cutting rare-earth exports by 35 percent.

Yet, in 2009, Zhao Shuanglian, vice chairman of the Mongolian Autonomous Region, told a different story.

According to Xinhua, the official Chinese news agency, Zhao said exports would be cut "to attract more Chinese and foreign investors into the region … . We are aiming to make Baotou in Inner Mongolia into a world-class rare-earth industrial base."

Baotou, Inner Mongolia's largest city, holds China's largest rare-earth reserves.

Dr. Peter Leitner, a former Defense Department trade expert, bluntly assesses China's dominance in rare earths and other elements and materials.

He calls it a national-security concern as well as an economic issue. Those who disagree "don't realize that the prime cause of wars throughout history has been access to raw materials. There are people who have no sense of history, and I find that deeply troubling."

Eroding U.S. position

China leads in the production of many minerals, yet rare earths best illustrate the consequences.

They reflect how China used a long-term plan to develop a critical industry while the United States lost its footing.

Nearly 20 years ago, China's then-leader, Deng Xiaoping, reportedly proclaimed: "There is oil in the Middle East. There are rare earths in China. We must take full advantage of this resource."

The full weight of his remark was widely overlooked.

First, the 17 elements called rare earths are not really so rare – just difficult and costly to mine.

Second, many of their special magnetic or electrical properties were less essential two decades ago.

Finally, the United States then led in production of rare earths, principally from a mine in eastern California called Mountain Pass, owned by a company called Molycorp.

The nation was a major producer of rare-earth products, including neodymium iron boron magnets (neo-magnets) required for militarily sensitive items such as "smart" bombs.

Yet, America's position began to erode. By the mid-1980s, China accelerated production of rare earths and flooded world markets with cheap materials.

Molycorp, meanwhile, faced investigations and a lawsuit for allegedly degrading the environment. Then owned by the oil company Unocal, it closed its Mountain Pass mine in 2002 – leaving America with no production of rare earths, according to securities filings.

The mine's closure largely went unnoticed.

China, however, busily secured commercially minable rare earths at home and abroad. In 2005, the Chinese National Offshore Oil Corp. tried to buy Unocal, but U.S. backlash against selling an American oil company to a Chinese government firm blocked the deal.

According to an article on http://www.skilledwelding.com.au/, in 2009 China Nonferrous Metals Mining Co. Ltd., another government enterprise, bid to acquire Lynas Corp., an Australian firm with plans to develop what its website calls the world's richest deposit of rare earths. Australia's government barred the Chinese firm from taking a controlling interest.

Yet, China did not simply buy raw materials.

A decade earlier, in 1995, two Chinese government-backed companies – together with Sextant Group, a private-equity firm headed by Archibald Cox Jr., son of the former Watergate prosecutor – bought Indiana-based Magnequench, one of the last U.S. makers of neo-magnets.

Magnequench's unique manufacturing process was developed by General Motors – and the Chinese wanted it, according to Stanley Trout, a former Magnequench scientist.

Cox pledged to keep Magnequench plants in America for five years. After that time passed, the plants were moved to China.

Japan's Hitachi Metals closed the last U.S. neo-magnet plant – in Edmore, Mich. – in 2005.

With that, the United States not only stopped mining rare earths but stopped manufacturing neodymium products altogether.

Awakened to China's power

The world began to notice China's dominance of rare earths when it tightened exports about seven years ago, says Jim Sims, Molycorp's public affairs director.

China also began slapping taxes of 15 percent to 25 percent on rare-earth exports, according to the Government Accountability Office.

Yet, nothing awakened the world so much as three recent actions.

In mid-2010, China announced export reductions of 72 percent, Sims says. Then in September, it embargoed rare-earth exports to Japan, following a territorial dispute over small uninhabited islands in the East China Sea.

In December, it set further export cuts of 35 percent.

And on Dec. 30, the People's Daily, the Chinese Communist Party's newspaper, hinted at more tightening. It quoted "experts" as saying recent cuts "did not seem deep enough."

Like much of the world, Japan depends on China's rare earths. It uses the elements to build neo-magnets 10 times smaller and 100 times more powerful than standard ferrous magnets, Sims says. Each Toyota Prius hybrid car uses 2.2 pounds of neodymium for its electric motor and 22 to 33 pounds of lanthanum for its battery.

China's actions stunned Japan. Some rare-earth prices leaped 700 percent while others doubled, according to Bloomberg News. Toyota has said it will work to reduce its use of rare earths.

Prices rose because demand outstrips supply, according to Jeff Green, whose J.A. Green & Co. in Washington represents the U.S. Magnet Materials Association.

World demand is 134,000 metric tons while production is at 124,000 metric tons, according to the Congressional Research Service. It predicts demand will be 180,000 metric tons in 2012.

The difference is made up by stockpiles.

Japan and South Korea have those.

The United States does not.

A scramble to compete

Setting quotas is one thing. Getting China's far-flung enterprises to abide by them is another.

The Wall Street Journal reported Jan. 20 that 2010's actual cuts were less than officially set.

Still, the recent nationalization of 11 rare-earth mines in southern China and the announcement of more quota reductions leave little doubt among experts that China is determined to reduce rare-earth sales abroad.

Investors have taken notice.

In July, a reconstituted and independent Molycorp Inc. completed an initial public offering of 29 million shares, netting $378.6 million, according to securities filings. In mid-December, it raised $130 million from Japan's Sumitomo Corp.

Molycorp also applied for $280 million in government-backed loans and said last week it will sell $172.5 million in convertible preferred shares.

It aims to mine about 40,000 metric tons of rare-earth oxides by 2013.

Australia's Lynas Corp. raised $450 million in 2009 to develop its mine, producing about 20,000 metric tons annually.

Across the world, other companies are searching for rare-earth deposits.

Minable quantities are believed to exist in Colorado, Idaho, Missouri, Montana, Utah and Wyoming, according to Congress' Government Accountability Office, and the U.S. Interior Department has identified sources in Alaska.

The U.S. Geological Survey pinpoints other potential sites.

Problems solved, right?


That same GAO report said that, once companies find minable resources and the money to develop them, actual production can take seven to 15 years, principally due to state and federal regulations.

Mining is step one – and the easiest – in a five-step process to bring products such as military-strength magnets to market, according to Green.

The GAO lists those steps as mining; separating rare-earth elements; refining rare-earth oxides into metals; forming the metals into alloys; and, finally, manufacturing the alloys into commercial components.

U.S. lacks expertise

Other hurdles must be crossed, too.

For instance, until 2014, Hitachi Metals holds the patent on neo-magnets. In December, Molycorp and Hitachi said they will form joint ventures this year, removing one obstacle for the American firm.

Yet Ed Richardson, president of the U.S. Magnet Materials Association, says much uncertainty remains about the deal, including where a plant will be built. He does not believe Hitachi will transfer technology to Molycorp, which "doesn't have the knowledge to do this" alone.

America also lacks skilled rare-earth experts. In the 1980s, the U.S. magnet industry employed 6,000 workers, according to Richardson's association. Today's figure: 400.

An even greater gap exists at the scientific level's top echelon. The United States has about 60 scientists and engineers with specialized knowledge of magnet production, to China's 6,000, Green says.

"U.S. leadership in (rare-earth element) technology is eroding," according to a Carnegie Mellon University report. It found that the end of U.S.-based manufacturing "led to the removal of over 90 percent of domestic R&D activities on rare-earth permanent magnet materials."

Conclusion: The "knowledge for producing (neo-magnets) within the U.S. has been lost."

"The knowledge drain is a long-term strategic problem" for America, Molycorp's Sims acknowledges.

Molycorp has hired 20 scientists and is seeking more "as fast as we can," according to CEO Mark Smith. He says the company has contacted retired Japanese experts interested in helping the American firm.

Peter Dent, vice president of business development at Electron Energy Corp. in Landisville, Lancaster County, outlines the challenge: "Japan, China and Germany are extremely good. … Molycorp is going to have to be competitive against people who are doing very well. It's a big hill to climb."

Thomas Sanderson, deputy director and senior fellow on transnational threats for the Center for Strategic and International Studies (CSIS), a Washington think tank, is equally pessimistic.

"In some ways, it's too late," he says, because China "bought up the market. It will be difficult for us to regain our position. Some skills and industries are perishable."

Coffman, the Colorado Republican, disagrees, "mostly because we don't have a choice. The fact is, the national security and the economic security of the United States are dependent upon the United States not allowing itself to be in a position where it can be dominated."

Leitner, the former Defense Department official, believes everything can be turned around by a "catalytic event" that galvanizes the nation.

"All it takes is a threat, a sudden change," he says. "Politicians swing like cafe doors."

Eye on technology

China may have provoked such a threat by raising exports, hiking taxes and briefly embargoing Japan.

One who thinks so is GlobalSecurity.org's John Pike.

"The Chinese policy is potentially devastating to China since it's awakened the world," he says. "It depends on whether people have long … or short memories.

"We don't see as much China-bashing as is warranted by the facts of the matter."

On a recent trip to China, CSIS's Sanderson heard leaders there express concern that "maybe (they've) been a little too aggressive."

So why did they do it?

China's long-term strategy is to use raw-material advantages to lure Western companies, just as Vice Chairman Zhao told the Chinese news agency in 2009.

The near-unanimous consensus of those interviewed is that China's domestic demand for rare earths is in industries dominated by multinationals producing high-tech items such as wind turbines, batteries, cars, fiber optics and electronics.

China wants to replace those foreign manufacturers with its own companies.

The Harvard Business Review reported last month that China is weary of attracting companies that hire cheap Chinese labor. It wants that technology for itself, which foreign companies often give away to gain access to China's markets.

Since 2006, the magazine reported, new Chinese rules "seek to appropriate technology from foreign multinationals."

"The (Chinese) government's hope is that the country will soon become a global innovation center," enabling "Chinese companies to overtake their foreign partners," the magazine concludes.

And foreign companies keep coming.

Following China President Hu Jintao's U.S. visit earlier this month, General Electric agreed to help Aviation Industry Corp. of China to develop advanced avionics for China's new C919 aircraft.

The C919 will compete with the Airbus A320 and Boeing's 737 Next Generation jetliners. The new deal involves technology transfer.

As Coffman sees it, America's China problem is partly self-inflicted.

"Part of it," the congressman says, "is that we've been asleep at the switch when we think China will operate along the lines of free-market principles and not use its leverage … like (it has done) with rare earths."

The Non-Debate Spins On

Mesabi Misadventures Blog
January 29, 2011

Yesterday, a Minnesota Senate Joint Committee hearing  was held at Hibbing Community College.  It was a much-appreciated opportunity to experience a hearing without having to travel down to St. Paul.  The Jobs and Economic Growth Committee and the Environment and Natural Resources Committee toured one of the taconite mines before the hearing to gain some perspective and hopefully, appreciation for the economic impact of the industry.

The majority of the hearing inspired no more than a shrug of my shoulders and a "yeah, yeah, same ol', same ol'."  The PolyMet debate has been going on for several years now and we've been hearing the same voices, pro and con, for most of that time.  Few of the characters or their approaches change and the wheels of progress spin like my tires before the 4WD kicks in. 

Could the 4WD please kick in on the PolyMet project already?

A decision must be made by Minnesotans regarding our management of the minerals contained within the Duluth Complex.  It's a simple question without a simple answer.

Should Minnesotans allow non-ferrous mining within their state? 

The following terms should be banned from this discussion – Boundary Waters, Lake Superior, Northeastern Minnesota and Superior National Forest.  If water and air quality are important to us, then there should not be a greater value assigned to those factors based on their location.  There is zero reason that projects within this area should have to be subject to higher scrutiny than if this deposit was located south of Hinckley.  Our developments have just as much right to proceed with proper permits as any of the development projects that have occurred within the Metro area or throughout the agricultural areas of the State.  Air is air, water is water, people are people.  There is an intrinsic value to those three factors separate from their geographic location.  The Arrowhead region has a higher perceived environmental value; however, the fertile soils and prairie lands throughout the rest of the State are on par with it and regulations need to apply equally.

I spoke with a Senator after the hearing and because I didn't ask him if he could be quoted, I'll keep his name out of this posting.  I wish he would have told everyone what he told me, "we can do this and we can do it right."  His attitude was akin to the front tires of my truck gripping the road and pulling us forward. 

We CAN do this and we CAN do it right.  However, we CAN'T do either if we can't have honest discussions based on facts, not fears.  Unfortunately, those honest and solution-developing discussions are relegated to meetings between industry and the regulators because too many people cannot see in shades of gray or admit it publicly if they can.  Instead, we get public hearings with the same soundbites spinning away.

We don't encourage honesty in our public forums and we all lose because of it.  To advance towards the middle is too often seen as being weak and capitulating.  If the environmental activists were to admit that people need solid employment for survival and that these metals could be mined in a significantly more sustainable way, both environmentally and socially than most places throughout the world, they would risk appearing as if they are caving into corporations.  If the pro-development crowd admitted that they have concerns for the environment also and that they also want to be assured this project will be done properly, there is a risk that environmental groups would use that admittance as a sign that there are doubts that it can be done safely.

It's moments like yesterday that make me disappointed in adulthood.  It should be okay to admit that no one on either side of the discussion knows all of the answers and that both sides have valid concerns.  We won't get anywhere as a region unless we're able to have open discussions and look past the dreadlocks and the loafers and hear the underlying messages of both sides.  We all want sustainability – environmentally, socially and economically – whether we call it that or not. 

Both sides have ideas and energy that could push our Range economy forward in a powerful, creative, competitive way.

By viewing each other as enemies, we're just spinning our wheels.

Environmental Permit Process Hearing Draws Crowd on the Range

Duluth News Tribune
Janna Goerdt
January 29, 2011

A mine tour, a snowstorm and a trip to Sammy's Pizza in Hibbing – it was about as Iron Range a day as Minnesota senators could get.

About 18 state senators, most from the southern half of the state, spent the day in Hibbing on Friday to hold a rare legislative committee hearing on the Iron Range. The Senate Committee on Environment and Natural Resources and the Senate Committee on Jobs and Economic Growth held a joint hearing at Hibbing Community College to get local input on the environmental permitting process that governs – and in many cases, delays – proposed mining and wood industry projects.

Many people spoke in favor of expediting a process that can take years, while others cautioned against moving too quickly to approve projects that could leave lasting environmental damage.

After a tour of Hibbing Taconite and a quick lunch, the senators took their seats in front of nearly 200 locals, most of them connected to the mining industry.

As the hearing began, former state Rep. Tony Sertich, now commissioner of Iron Range Resources, asked those in the room to raise their hands if they, their spouses, parents or grandparents worked in the mines. Nearly everyone in the audience had an arm raised.

"This is our life up here," Sertich said, as he thanked the legislators for moving the hearing north for the day. "We're a resource-based economy."

One after another, city officials, mining industry lobbyists and forest industry advocates spoke in favor of speeding up the various permitting processes. Many spoke about the proposed Polymet precious metals mine and the proposed Twin Metals mining project near Babbitt.

Frank Ongaro, executive director of Mining Minnesota, noted that Polymet officials began scoping their project in 2005.

"It's taken the better part of five years and $25 million on environmental testing alone," he said. "That's too long."

"Is permit streamlining the magic bullet? No," Ongaro said. "But it will give companies more options."

Sen. Bill Ingebrigtsen, chairman of the Environment and Natural Resources Budget and Policy Committee, said his committee already was pushing forward on the process, having recently talked about permitting with policy makers at the Minnesota Pollution Control Agency and the Department of Natural Resources.

"With the promise of the DNR's and the PCA's cooperation, we want to move forward with the things we are hearing about today," Ingebrigtsen said.

Gov. Mark Dayton recently proposed streamlining the state's environmental permitting process to eliminate some of these delays for more routine projects like building a new gas station. For large, complicated projects, seeking the correct permits can take so long it eventually can kill the project, said Wayne Brandt, executive vice president of Minnesota Forest Industries.

"We're not seeking Third World standards. That's not what we're about," Brandt said. "But we have to have decisions in a time frame that allows us to compete" with countries like Germany and Sweden, which have more predictable timelines. He noted that the "Thunderhawk" project at UPM/Blandin Paper, which involved installing a new paper production line at the Grand Rapids plant, was long delayed while permits were sought. While it now has all the necessary permits, the project has been on hold for several years.

"In Germany, it took six months to get the permits for the same project," Brandt said, noting that the country also has strict environmental quality standards. "I'm not going to sit here and tell you that [local] projects were not built because of permitting issues, but it was a major factor."

A handful of citizens warned against zipping through any permitting process too quickly.

Bob Tammen of Soudan said it hasn't been the burden of excessive permitting that has held up the Polymet project, "it's that they have a crappy mining plan."

"They want to dump copper mining tailings on top of iron mining tailings in a pond that's already leaking," Tammen said. "The problem is not the permitting process, the problem is their defective mine plan."

Brad Sagen, chairman of the Northeastern Minnesotans for Wilderness, wondered why, if the hearing was truly about learning the impacts of proposed development projects, no one from a community that had actually developed a precious metals mine had been invited.

Perhaps, Sagen said, "it's because the news is not good. There's a brief span of economic activity, followed by a boom and bust cycle."

He referenced precious metals mining projects in South Dakota and Montana that have left behind little economic activity, but plenty of pollution. One project is the Gilt Edge gold mine in South Dakota, which operated for about eight years before being shut down. Acid runoff from the mine continues to pose environmental hazards in the area, and the mining land is now a Superfund site, according to the Environmental Protection Agency.

Sen. Tom Bakk, DFL-Cook, said he believes that mining "jobs and the environment can co-exist."

"My dream is that we not only mine copper and platinum group metals," Bakk said, "but that we build the factories here in Minnesota to make the pipe, make the wire, make the solar panels and add all the value" to those extracted metals.


Mining Mattered

Mesabi Daily News
Anna Kurth
January 28, 2011

Legislative committees on jobs and the environment came north to hold a joint hearing on the Iron Range Friday afternoon.

Members of the state Senate's Environment and Natural Resources Budget and Policy and Jobs and Economic Growth Budget and Policy committees held a joint session to hear from industry and business representatives in Northeastern Minnesota on the mining and forestry industries. The committees also heard from area residents with concerns about or support for proposed mining ventures.

State Sen. Geoff Michel, R-Edina, and Sen. Bill Ingebrigtsen, R-Alexandria, presided over the joint hearing.

On Monday, Gov. Mark Dayton issued an executive order requiring the Minnesota Pollution Control Agency and the Department of Natural Resources to make a decision on permit applications within 150 days " in comparison to a process that averages 180 days, but has taken up to 600 days.

The order will hasten and streamline environmental review and the permitting process.

Senators in Hibbing Friday were collecting information for a bill to be introduced Tuesday, Feb. 1, that would make Dayton's order state statute, Ingebrigtsen said.

The governor's order was a good first step, he said.

Those who spoke before the joint committee listed the time it takes to complete the permitting and environmental review process as a major obstacle for businesses looking to invest in mining and forestry projects in Minnesota.

Senators heard from local elected officials, tradespeople and business people. They also heard from industry representatives in forestry and mining and from a small business that supports mining operations.

Hoyt Lakes City Administrator Michael Skrbich told legislators how the region was hit by the recent economic downturn.

Strategic metal mining could be the third leg of sustainability " along with iron mining and forestry " that the Iron Range needs to solidify the economy in this region, he said.

"Once operational, mining projects like PolyMet and Twin Metals will provide a significant and much needed boost to local and regional economies," he said. "The mines will provide skilled, long-term, good paying jobs to the economy and in addition will provide hundreds of (additional) jobs and economic growth for our region."

Members of the Iron Range Building and Construction Trades are working on the Essar Steel project and the Mesabi Nugget project, said John Grahek, president of the Iron Range Building and Construction Trades.

These men and women also started working with PolyMet in 2007 to acquire an agreement to go along with their project, but to this date nothing's happened, he said.

PolyMet is still undergoing permitting. That project alone is estimated to create 1.5 million hours of construction work along with 400 permanent jobs and 500 more spin-off jobs.

The unemployment rate is 8 percent, but unemployment in the trades is 20 percent to 25 percent, said Grahek.

"Our members are hurting. We need the projects," he said.

Lory Fedo, president of the Hibbing Area Chamber of Commerce, asked senators to think of main street as well as mining.

"When new mining projects were announced originally, we had several business startups and new housing projects that have since either faltered or closed," she said. "Long-time businesses have said to me that they are trying to hold on until the new mines open but many have not made it."

A burdensome permitting process puts locally owned businesses as well as large companies at a disadvantage, said Fedo.

These regulatory processes become a basis for legal actions, which prompt delay and can lead to denial of the projects, she said.

Bud Stone, president of the Grand Rapids Area Chamber of Commerce, and Wayne Brandt, vice president of Minnesota Forest Industries, spoke of forestry related projects that have suffered because of the length of the permitting process.

The forestry products industry employs 40,000 people in Minnesota.

This industry is a global one and Northern Minnesota needs to compete within its forestry companies for industrial resources. Companies are choosing to build new pulp mills and paper machines in other countries rather than go through Minnesota's permitting process, Brandt said.

The environmental review process in Minnesota is expensive, unpredictable and designed for the age of mail, not the age of the computer, he said.

Mining supporters also stressed the need to expedite permitting and environmental review for proposed projects.

Several mines are developing new technology for mining on the Iron Range, including an iron to steel mine, an expanded taconite mine, a nugget plant and a tailings waste mining company.

The mining industry is $3.1 billion in gross regional product in Northeastern Minnesota and Northwestern Wisconsin, and is 34 percent of the region's economy, said Craig Pagel of the Iron Mining Association (IMA).

"We're shovel-ready. We have the people. We've got the technology. We're ready to go, but we're waiting for permits," he said.

Executive Director of Mining Minnesota Frank Ongaro agreed.

Proposed mining projects will create thousands of jobs and help reduce the state's deficit. These companies are committed to upholding the state's air and water quality standards, but the environmental review and permitting process takes too long, he said.

PolyMet could benefit from a streamlined permitting process now, while other proposed projects will benefit in the future, he said.

Ongaro asked the senators to work with federal agencies to speed the environmental reviews as well.

"Please pass this needed reform, and let's get this going," he said.

Some area residents addressed their concerns about pollution and the impact of mining on local communities.

Others expressed support for proposed mining operations and a quicker permitting process.

Senators thanked those present for participating in the hearing as they headed back to the Capitol to work on putting the governor's order into state statute.

The committees are moving forward, said Ingebrigtsen, whose Environment and Natural Resources committee met Thursday with the MPCA and DNR to review their permitting processes.

"We're not sitting around. … It's really a fast moving ball, and we're going to continue," he said.


Former Minnesota Pollution Control Agency head now at PolyMet

Duluth News Tribune
John Myers
January 26, 2011

A former head of the Minnesota Pollution Control Agency has been hired by Polymet Mining Co. as the firm's executive vice president of environmental and governmental affairs.

Duluth native Brad Moore will assume "overall responsibility for the company's effort to complete environmental review and obtain permits necessary for construction and operation of the" proposed PolyMet copper mining operation between Babbitt and Hoyt Lakes, the company announced.

Moore served as PCA commissioner from 2006 to 2008 and as assistant commissioner for operations of the Department of Natural Resources from 1999 to 2006. He also worked in several policy positions at DNR and the Minnesota Department of Public Service (now the Department of Commerce).

Moore's "existing knowledge of the project and the process mean that he can step in immediately to effectively help the environmental review and permitting process move forward to completion," LaTisha

Gietzen, PolyMet's vice president of public, governmental and environmental affairs, said in a statement on the hiring.

Moore has most recently worked for Twin Cities-based Barr Engineering as senior adviser, public and governmental affairs, where he advised several companies, including PolyMet, on environmental strategy. Moore has extensive experience in dealing with the Minnesota Legislature and other state agencies.

"I am excited to join the PolyMet team," Moore said in the company statement. "PolyMet offers an important opportunity to Minnesota and the United States. We can provide essential minerals each of us uses every day and we can demonstrate that nonferrous mining can be done in a way that meets Minnesota's high environmental standards."

PolyMet would be Minnesota's first copper mine. It is in the midst of a joint federal/state environmental review process that could end later this year. The company also must obtain permits to operate the mine and for emissions and also must complete a land swap with the U.S. Forest Service for the land where the proposed mine would be located.

Permitting process changes

Friday hearing in Hibbing vital to area

Mesabi Daily News
January 24, 2011 

St. Paul is coming to the Iron Range Friday to hear thoughts on whether the state's environmental permitting process needs to be streamlined to improve Minnesota's business climate.

Boy, is that ever needed.

Whether it be the copper/nickel/precious metals PolyMet project on the East Range or taconite mine expansions across the Range, the permitting timeline has been far too long; the effort needed to get it moving far too laborious. 

We are pleased to see leadership of the two Senate committees on both sides of the political aisle put a focus on this issue and travel to the Iron Range to hear concerns. This is very much a jobs issue, and jobs are being delayed, in part, because of a stifling permitting process.

The Environment & Natural Resources Budget and Policy and the Jobs and Economic Growth Budget & Policy committees will meet and gather testimony beginning at 2 p.m. Friday at the Hibbing Community College.

We strongly urge a large turnout of people from the Iron Range to demonstrate just how important is a streamlined and quicker permitting process to all businesses, most especially mining, to produce more jobs that in turn generate paychecks and dollars spread throughout communities.

Oh, and let's not forget the tax revenues that flow to St. Paul and Washington. For that reason alone, elected leaders at the State Capitol and at a federal level should not just be on the bandwagon of fair and fast regulation and permitting, they should be driving that wagon.

However, in the past, that has far too often not been the case. The jury most definitely is still out on whether that will change.

But the decision by the new GOP Senate majority to bring these two committees north to the Range to hear how a faster permitting process can be a big boost for the area's economy is a good step in that direction.

And it should be a bipartisan step.

Executive order on permitting issued

'Well overdue,' says Sen. Tomassoni of Gov. Dayton's decision

Mesabi Daily News
Katy Meeks
January 24, 2011

ST. PAUL — Gov. Mark Dayton's executive order on permitting for agencies is "well-overdue," according to Sen. David Tomassoni-DFL, Chisholm.

"This sends a good message to businesses and will be great for jobs," he said. "This is partly because when people are thinking of investing and so look further into the permitting process, they realize that things take too long … change their minds, and invest elsewhere."

Dayton's executive order issued Monday requires the Minnesota Pollution Control Agency and the Department of Natural Resources to make a decision on permit applications within 150 days in comparison to a process that averages 180 days, but has taken up to 600 days.

The order will hasten and streamline environmental review and the permitting process.

"This is a wonderful thing. executive order pre-empting a bill through legislation is exciting," said Sen. Tom Saxhaug, DFL-Grand Rapids. He said that in the past, permits that aren't even controversial have taken entirely too long to be processed, and that these "uncontroversial" permits will no longer be stopped by simple processes.

The order will directly affect northeastern Minnesota, as things like water permitting will begin to see a change something that hasn't happened in about 40 years, Saxhaug said.

Iron Range lawmakers also believe that this will have a positive impact on jobs because the ease and speed of attaining permits directly affect how smoothly businesses run.

Saxhaug also said the order directly takes care of four of the six goals of a bill that he said will still be passed, but now there is no wait in getting started.

Gov. Dayton's order is similar to legislation being pushed by the Republicans, with only two exceptions, those being that the GOP bill also would change who conducts certain reviews and alter the appeals process, which would take the strain off of local governments.


Legislative committees to discuss permitting on Range

Mesabi Daily News
Charles Ramsay
January 23, 2011

Range officials are urging a big turnout Friday when two key legislative committees conduct a hearing on the economy and environmental permits in Northeastern Minnesota.

The hearing will start at 2 p.m. at the Hibbing Community College.

Chairs for the two state Senate committees to be in Hibbing are: Environment & Natural Resources Budget & Policy, Sen. Bill Ingebrigtsen, R-Alexandria; and Jobs and Economic Growth Budget & Policy, Sen. Geoff Michel, R-Edina.  Area lawmakers on the two panels include Sen. Tom Saxhaug, DFL-Grand Rapids, with Environment & Natural Resources; and Sen. Dave Tomassoni, DFL-Chisholm, with Jobs & Economic Growth.

Some of the major reasons why the committees are heading north from St. Paul are to learn firsthand about the economy in the region, including mining; and to see what can be done to move environmental permitting for projects ahead more expeditiously.

While it was not immediately clear who might be called by the committees to testify, three veteran advocates of mining on the Range plan to be there.

Craig Pagel, president of the Iron Mining Association of Minnesota, said the region's leading economic sector "is back and running at near full capacity," and should reach that by spring.

New employees who are trained and ready to work are being hired at the six iron mines on the Range now, he said. A number of miners are retiring, opening up new positions; new projects are starting up, which will open up more jobs, he added.

Citing a 2007 University of Minnesota Duluth business study that placed the iron ore industry's impact at 34 percent, or $3.1 billion, of the region's economy, Pagel added that when new expansions and new projects are online in the near future, that amount will double. Mesabi Nugget and Magnetation, as well as Essar Steel Minnesota, will help the industry grow "and expand in new technology," he said.

Frank Ongaro, executive director of MiningMinnesota, the trade group for nonferrous mining, said it was important for everyone to attend the hearing and tell the committees "what people have to say about jobs and the economy."

Area residents can help inform committee members about the huge economic benefit the projects will bring to the region and the entire state, Ongaro said. "We plan to emphasize to the committees what we have seen from existing projects and the time they've taken in the review process."

Hoyt Lakes Mayor Marlene Pospeck has seen the closing of the former LTV Mining Co. near the city in 2001 and the resulting loss of 1,400 mining jobs, and the efforts to start up new projects. She has been a former president of the Iron Trail Tourism Bureau, a former president of the Virginia Area Historical Society and currently is president of the Range Association of Municipalities and Schools.

Mining has been going on in the Iron Range for more than 100 years, and its impact "has not precluded tourism," she said. "People come to enjoy it. It is a destination for tourism."

The region has been able to maintain its reputation as a beautiful and environmentally sound area for a century, Pospeck said, adding she was confident that enough questions had been asked and enough studies done. Now, "let's get on with it," she said of copper/nickel/precious metals projects.

Pospeck said that a "very vociferous minority" has been opposed to nonferrous mining, and has "absolutely" delayed projects such as PolyMet, which has been having a review done since 2004. It is prudent to do the studies for the environment, she added.

Jobs in mining, both in iron ore and the developing nonferrous projects looking at copper, nickel and precious metals (palladium and platinum, foremost) "are absolutely necessary" that would be good for the state, add to the public schools fund, help local schools, bring in families and help towns to grow, Pospeck said.


Opinion: Skraba meeting with DNR Commissioner: A sign the Range is not forgotten in St. Paul

Ely Echo Editorial
January 22, 2011

The concerns of the Range have often fallen on deaf ears at the governor's office since Rudy Perpich left town. But maybe, just maybe, Gov. Mark Dayton will keep the Range closer to the front burner over the next four years.

We saw a sign of this last week when newly appointed Department of Natural Resources Commissioner Tom Landwehr met with Ely Mayor Roger Skraba.

Making several stops on the Range, Landwehr and Skraba sat down for lunch at the Rustic Rock in Eveleth. Up for discussion: mining, hunting, logging, fishing and management of wild animals.

A letter from Skraba and five other Range mayors was the impetus for the meeting. The gist of the letter was simple: appoint heads of the DNR and MPCA that believe in projects such as Polymet and Twin Metals and will work to see the state conducts efficient permitting.

Landwehr brought a message from the governor, according to Skraba. "He said the governor feels this is an opportunity to bring jobs to northeast Minnesota and we want to work to get that done."

He also said that the DNR will not delay projects and that "nobody wins when you delay projects" like Polymet.

Skraba breathed a sign of relief and pressed further. Would Landwehr push for making permitting harder or easier?

"He said it's not my job to do that. He said his job is to make sure the agency follows the process set right now. If the process changes the legislature changes it, not the DNR commissioner."

As further proof that the to do list at DNR headquarters will include seeing through a process that has taken five years, Landwehr's next stop was at the Polymet plant in Hoyt Lakes.

Skraba reported Landwehr is no stranger to Ely. "He's been to Ely a lot, twice a summer he goes into the Boundary Waters."

There were issues Landwehr may need to be brought up to speed on, including snowmobile/ATV trails and funding.

The commissioner doesn't own a snowmobile or ATV, but told Skraba he was supportive of multiple use. "We talked about snowmobiling and the gas tax that pays for trails and how important that is to the support and our community."

A proposed ATV trail between Ely and a trail junction south of Spruce Road known as Mattila's Shelter was also discussed. Currently one of the longest ATV trails in the area runs from Babbitt to the shelter and Skraba explained how an Ely connection would be beneficial to residents and visitors.

Wild animals were also on the agenda, including the delisting of wolves by the federal government.

"He said at some point (the state) is going to be managing the wolves," said Skraba.

The mayor said he would like to see the same rules for wolves in place statewide. Currently Ely is north of an imaginary line where wolf management is different than south of the line.

"I said I had a problem where south of the line the rules on killing wolves are different where up here the rules are more strict. Are the kids better on the other side of the line than our kids?"

Skraba also talked to the commissioner about the city's ideas for a biomass plant and increasing logging in the area.

So did Dayton listen to the mayors and appoint a DNR commissioner who will work with Range mayors and legislators on expediting projects such as Polymet?

"He's approachable, he understands the environment and his regulatory authority. It was a who are you and who are you kind of meeting.

"He said we have a lot more to talk about. We met for over an hour and he said he wants to come up trout fishing. I said give me a call and we'll go."

That may not be the exact answer the Range was looking for, but we'll give Landwehr credit for listening. The proof if the governor's choice for head of the DNR was a good one still lies in how he and his agency handle the permitting process.

Working to balance environmental concerns, jobs and wise use of natural resources, Landwehr has his hands full. He might need that fishing trip in Ely sooner than later.