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Minnesota’s mining boom: New riches or new threat?

Star Tribune
Josephine Marcotty

ISABELLA, MINN. — For 30 years, Ron Brodigan has cherished the winters that blanket his two-room log cabin near this tiny town in the North Woods. But soon that cold, white silence could be broken by the relentless grinding of a drill rig.

Beneath his land, on the doorstep of the Boundary Waters Canoe Area Wilderness, lies one of the largest untapped deposits of copper and nickel in the world. And now, for the third time in its history, Minnesota is on the verge of a mining boom.

This one, triggered by seismic shifts in the world economy, will present the state with its biggest environmental decision in a generation: Whether to open its arms to hard-rock mining, an industry that could bring thousands of jobs — and a record of environmental calamities — to the wildest and most beautiful corner of the state.

As two multinational mining companies set up shop here, a fierce debate is erupting over what kind of place Minnesota should be.

Opponents say this new kind of mining cannot co-exist with wilderness and clean water — that it brings risks that dwarf those that came with taconite mining.

"This is beautiful country," said Brodigan, who, along with some other local property owners, is fighting the state's decision to lease their land for exploratory drilling. "And they are bound to wreck it."

Proponents, including many of the state's leading politicians, say the state can have both. New technologies, sharp regulatory oversight and legally binding financial protections will preserve the state's lakes and forests for future generations, they say.

Just this month, at the request of the mining industry, Gov. Mark Dayton created a new mining coordinator and a subcabinet of top state officials assigned to expedite and coordinate environmental review and permitting for mine projects.

"You have to balance the recreational needs with the fact that you are creating tremendous long-term employment," said Ernie Lehmann, a mine executive and longtime mining advocate.

State and federal regulators are nearing the end of the environmental review of the first proposed project, near Hoyt Lakes. But engineers who specialize in mining say even the best designs and highest scrutiny are not fail-safe.

Some modern hard-rock mines have fulfilled their environmental promises, and some have failed spectacularly, said Stuart Jennings, a geologist and mining consultant in Bozeman, Mont. "These are massive disturbances on the landscape, and there will be impacts," he said. "Sometimes they are negligible, and that is the best-case scenario."

Copper-nickel deposits

A century after finding vast iron deposits in northern Minnesota, mining interests discovered copper nearby in the 1960s.

It's contained within the "Duluth complex,'' a geological formation that forms an arc across the Arrowhead region and extends below ground one-third of the way to the earth's core. Though the deposit is low in concentration — about 5 pounds of copper per ton of rock, at best — the volume is enormous.

For years, the deposits were considered too expensive to mine because of their depth and low concentration. But the economic boom in China and India has helped push copper to nearly $10,000 per ton, making Minnesota's deposit much more alluring. The ore also contains smaller amounts of nickel, palladium, gold, cobalt and platinum — all metals in huge demand for computers, smart phones, solar panels and medical devices.

"Minnesota is sitting on something special in terms of the world economy," said Bob McFarlin, vice president of public and government affairs for Twin Metals, the Canadian company that is developing an underground mine near Ely.

Not to mention the green economy, he added. A single wind turbine can contain nearly 5 tons of copper.

The industry is predicting a rebirth of northern Minnesota's once-vibrant mining industry, one that many residents would like to see rise again.

McFarlin said copper mining will create the kinds jobs that provide a good life — the kind "that let you send your kids to college."

As a down payment on that promise, Twin Metals has built a beautiful, $1.5 million glass, steel and copper office building in Ely.

Taxpayers also stand to benefit. The state could collect up to $2.5 billion in royalties from mining on state-owned property in coming decades, according to one state study.

PolyMet, a Canadian company that is proposing a vast open-pit mine and processing facility near Hoyt Lakes, says it will create 360 "high-quality" jobs and an annual payroll of $36 million.

Others, however, doubt those numbers.

"Job predictions are often inflated," said Betsy Daub, policy director for Friends of the BWCA, who points out that mining has had boom-and-bust cycles.

But above all, they say, jobs must be balanced against serious environmntal risks.

To use the valuable ore, mining companies must extract it from tons of sulfur-bearing rock, a process that creates sulfuric acid that can leach heavy metals, including mercury and arsenic, into groundwater, rivers and lakes. In high concentrations, that acid drainage can make water lethal to wildlife and undrinkable for humans. And it can persist for decades, long after a mine has closed.

All the potential mine sites near Ely drain into the Boundary Waters Canoe Area. PolyMet's would drain to the St. Louis River and its estuary, a primary wildlife incubator for Lake Superior.

Mining vs. tourism

Skeptics also say Minnesota shouldn't forget the region's other valuable asset — the $700 million tourism industry, which depends on pristine woods and lakes.

The threat to tourism is "the albatross around our neck," said Jane Koschak, who along with her husband, Steve, built the River Point Resort just outside Ely into a thriving business.

Their resort and outfitting business, which began life as a simple family fishing camp, sits on the north edge of Birch Lake, a northern Minnesota classic, with high rock walls, loons and bays of wild rice.

But Birch Lake is now ground zero for future copper mining. The surrounding national forest is dotted with drill rigs that operate day and night, mapping ore deposits. Five companies have purchased exploratory drilling leases within the 1.7-million-acre Superior National Forest, and more are pending.

The Minnesota Department of Natural Resources is selling exploratory drilling leases on state property and on certain private property where the state controls the mineral rights — a total of 621 parcels, including Brodigan's 200 acres outside of Ely. DNR officials point out that they have twin roles — managing natural resources as a source of revenue to the state as well as protecting them for future generations.

Twin Metals, which hopes to drill beneath Birch Lake, says that, mindful of environmental risks, it is creating models that would predict the impact of mining on groundwater and surface water.

But engineers say such models are not always accurate. And just the presence of the mine could forever alter the nature of the lake and send their customers away, the Koschaks said.

"This is where we live," said Jane Koschak as she looked out over the wind-scudded lake on a cool day in July. "Our entire lives will have been wasted."

Superfund sites

Her fears are grounded in the often disastrous history of hard rock mining.

In 1991 acid runoff from the Summitville Mine in Colorado killed all life in a 17-mile stretch of the Alamosa River. The gold mine, owned by a Canadian company that eventually filed for bankruptcy, is now a federal Superfund site.

In the 1990s the Gilt Edge Mine in South Dakota leached cyanide into groundwater and nearby creeks, and in 1995 acid drainage from mining waste piles flowed into Ruby Gulch Creek, killing off the fish population. It was declared a Superfund site in 2000 after its owner filed for bankruptcy.

In 2004 the federal government estimated that it would cost taxpayers $7.8 billion to clean up 63 of the mining operations designated as Superfund sites by the Environmental Protection Agency; cleaning up all abandoned hard-rock mines would cost between $20 billion and $54 billion.

Mining executives in Minnesota don't dispute that legacy. But, they say, mining techniques have improved markedly in the past decade. Today, for example, they can use reverse-osmosis water treatment plants to reduce the risk of hazardous runoff. New technologies can process ore without the air pollution produced by traditional smelting. They also argue that the risks from acid drainage are less in Minnesota because the rock has much lower concentrations of sulfide than in the West.

They hope to convince the public and regulators that they can protect the fragile ecosystem in northern Minnesota. "We will bear the burden to answer those questions," said Twin Metals' McFarlin.

A pivotal question is how much "financial assurance'' the mining companies will provide to cover the cost of future cleanups, even long after the ore is played out.

"We cannot tolerate a situation where big mining companies take the profits'' and leave pollution behind, said Scott Strand, executive director of the Minnesota Center for Environmental Advocacy, a nonprofit law firm in St. Paul.

Mining proponents say such sums, now required by state and federal laws, will be adequate to cover any significant failures. The environmental review of PolyMet's project is expected to wrap up in January, with the permitting and financial assurance calculation to follow sometime next year.

Brad Moore, a PolyMet vice president, said that quite apart from financial assurance, the company plans to use the most up-to-date antipollution techniques. The waste rock and tailings, for example, will be stored in water-filled pits that are dammed and lined with impermeable materials. Jennings, the mining consultant, says such systems have been used successfully elsewhere.

But for how long? Moore said PolyMet is still trying to figure that out. The answer, however, is crucial because even the best protections don't last forever, Jennings said.

"All dams fail. And all liners leak," he said. "Sometimes the leakage is inconsequential. Sometimes very consequential."

Josephine Marcotty • 612-673-7394

MN Mining Cluster Gets Million Dollar Grant

FOX 21 News 


DULUTH- The Minnesota mining industry is getting a boost in funding. Friday Senators Amy Klobuchar and Al Franken announced three grants totaling over $1.9 million to strengthen the northeastern Minnesota mining cluster.

 

The money will help promote mineral research, accelerate educational programs, and increase technical assistance to area entrepreneurs and businesses.

 

The northeastern Minnesota mining cluster is composed of mining and steel companies, suppliers, vendors and organizations that support mining's strategic value to America.

PolyMet anticipates January completion for SDEIS

Business North 

A Supplemental Draft Environmental Impact Statement being prepared for PolyMet Mining Corp. (NYSE:PLM) will be completed by January, the company said Monday.

The environmental document is being prepared for its NorthMet copper-nickel-precious metals project and for the nearby Erie Plant, located near Hoyt Lakes.  

The SDEIS will clarify the proposed project and address concerns expressed by the U.S. Environmental Protection Agency (EPA) and others. It will address the proposed exchange of forests, wetlands and lakes with high recreational value, most of which are now owned by PolyMet, for surface rights held by the U.S. Forest Service at the NorthMet mine site.

The supplement document is being prepared by an environmental consulting firm on behalf of several lead agencies, including the Minnesota Department of Natural Resources, U.S. Army Corps. of Engineers and the U.S. Forest Service. The EPA is a cooperating agency and actively involved in review of the SDEIS.

“Completion is taking longer than was anticipated due to the time the lead agencies have spent receiving and considering input from cooperating and regulating agencies during the planning process,” PolyMet said in a news release. “In addition, some time was lost because of the state government shutdown in July.”

Once the SDEIS is complete, the lead agencies will review it with the cooperating agencies, regulating agencies and PolyMet. The lead agencies expect the SDEIS to be finalized in April with formal publication taking place later in the second quarter of 2012.

 

 

 

Dayton to hire Minnesota mining coordinator

Duluth News Tribune
John Myers 

Minnesota Gov. Mark Dayton is looking to fill a new position of state mining coordinator to oversee all aspects of mining expansion in the state.

Dayton was asked last week by mining industry officials to appoint the new position, and the governor appears poised to do so in coming days.

The position will offer a single and first point of contact for industry officials and others seeking answers to questions on state regulations and state involvement in both taconite and copper-nickel mining projects.

The person in the new position will act as a facilitator for mining projects.

“We’re hoping to fill it as quickly as possible,” Tony Sertich, commissioner of the Iron Range Resources and Rehabilitation Board, told the News Tribune Monday. “I think it’s important that it be someone very familiar with the federal agencies involved, in addition to the state processes, because it’s at the federal level where these things are more likely to get held up.”

Sertich said the new mining coordinator won’t be able to bypass or change any state regulation but will help companies “navigate through the process.”

The position will coordinate efforts by the Department of Natural Resources, Pollution Control Agency, Department of Employment and Economic Development and Iron Range Resources and Rehabilitation — which all have involvement in state mining regulation and support — but also keep track of the Environmental Protection Agency, U.S. Army Corps of Engineers and U.S. Forest Service.

Dayton, who held one of his several economic development meetings on the Iron Range last week, was told by several local officials that mining development and new jobs are being stalled by the state and federal regulatory process.

Brian Hiti, former IRRRB deputy commissioner, will fill the role temporarily, Sertich said. A so-called mining “subcabinet” of state agency heads will make a recommendation to Dayton on a person to fill the mining coordinator job. It’s not clear under what agency the new position will serve.

The mining subcabinet — the commissioners of IRRRB, DNR, PCA and DEED — has been meeting since January, Sertich said, but until now hasn’t had an official name.

“We meet regularly. This is not some ceremonial committee. We deal with both immediate issues and looking at the long-range picture,” Sertich said.

 


MINING SUBCABINET SET UP

Mesabi Daily News
Bill Hanna 

ST. PAUL – A subcabinet on mining has been created as directed by Gov. Mark Dayton.

“It will not be a ceremonial group. It will be hands-on with mining development projects and will report directly to the governor,” Iron Range Resources & Rehabilitation Board Commissioner Tony Sertich said in a telephone interview on Thursday.

Dayton heard from several people at an economic development forum in Virginia on Tuesday that delays on mining projects are frustrating developers and investors and keeping payroll checks from being earned in a more timely fashion for workers.

 

Sertich said Dayton, whose campaign mantra was “jobs, jobs, jobs,” turned to him during the forum and said he wanted to work immediately on the issue. He wasted no time. A conference call was set up on Wednesday and continued Thursday with Sertich and Commissioners Paul Aasen of the Pollution Control Agency, Tom Landwehr of the Department of Natural Resources and Mark Phillips of the Department of Employment and Economic Development. They form the mining subcabinet.

They will decide soon on a point person hired in that new position. That person will:

• Make sure the agencies that deal with mining issues are hitting their deadlines.

• Keep lines of communication open with federal agencies involved and ensure there is state and federal coordination on projects.

• Make sure the mining subcabinet is hitting its marks for the governor.

“There will now be a single point of contact for mining companies and developers to go to,” Sertich said.

IRRRB official Brian Hiti, who currently deals with community development and mining issues at the agency, will start right away as the point person until a permanent hire is in place, Sertich said.

“The IRRRB will be taking the lead,” Sertich said.

The Iron Range taconite mining industry currently has upgrades underway at plants, and new projects ranging from an Essar Minnesota mine-to-steelmaking venture on the West Range to several copper/nickel/precious metals initiatives on the East Range.

What has triggered the most debate and controversy has been the PolyMet nonferrous project slated for the former LTV Mining Co. plant near Hoyt Lakes.

That venture, which is being fought by preservationist groups, has now had more than six years of environmental review. Yet it remains in the supplemental draft Environmental Impact Statement phase. The project would create 360 permanent jobs, hundreds more spin-off positions and 1.5 million hours of construction work.

“Job number one will be to look at where all the projects are currently at. A key piece will be our relationships with federal regulations,” Sertich said.

The IRRRB commissioner said “everybody’s fully on board and supportive of our recommendations to the governor,” referring to all members of the subcabinet.

“The expectation is that the government needs to work well. We’re not predisposing the outcomes. But we are saying that if we say we’re going to do something, then we’ll do it,” Sertich said. “With big developments there are so many layers of government involved. We need somebody committed to see the whole picture.”

Sertich had high praise for the governor’s decision to move quickly on the mining issue.

“I think this is a positive step forward. It shows commitment to making sure these projects meet deadlines and timelines. It shows Gov. Dayton’s leadership to solve problems. He is solutions-oriented to get jobs done.

“He said get me a plan. That’s the sign of a good leader,” the commissioner said.

Mineral leases have long history in Minnesota

Duluth News Tribune 

Department of Natural Resources mineral exploration auctions are held annually and have been drawing increased interest from mining companies as new discoveries of valuable metals have been found.

Those discoveries happened at the same time as prices for those metals jumped to new highs.

The state has held similar auctions in various forms for 150 years, and Minnesota tax coffers have realized millions of dollars from iron ore and taconite mining operations on land where the state owns the mineral rights.

Now, the official state policy is that Minnesota wants to see the same kind of royalties from copper, nickel and gold mining. Estimates skyrocket into the billions of dollars for the state if all known mineral deposits on land with state mineral rights are eventually mined.

So far, no such mining has been done here. But the rush toward a new era of mining has some landowners and environmental groups concerned.

Last year, six mining companies bid on 123

mineral-rights parcels when the state offered 458,040 acres of state mineral interests across parts of St. Louis, Carlton, Itasca, Aitkin, Pine, Benton and Morrison counties, including large tracts just outside Duluth. No bids came for parcels in Pine, Benton or Morrison counties.

High bidders pay the state an annual fee during exploration, between $1.50 and $35 per acre. But their bids will be selected mostly based on the highest royalty per ton the company offers the state when any actual mining occurs. The companies get exclusive rights to prospect on each parcel for 50 years — if they keep paying their lease fees, which ramp up after five years. In most cases, the leases are turned back to the state, either because not enough minerals were found or because the company never bothers to look.

Some companies, such as Duluth Metals, part of the Twin Metals corporate family, already are buying parcels of private land in Lake County, where there is a strong likelihood of profitable mining, avoiding the issue of leases.

DNR delays mine exploration leases again

Duluth News Tribune 

Dennis Koepp of Denny's Drilling in Hermantown monitors a drill site at PolyMet's NorthMet precious minerals project near Babbitt in 1999. The Minnesota Department of Natural Resources has delayed possible mineral-rights leases in Northeastern Minnesota, which could bring more drilling and other exploration activity to the area. (File / News Tribune)

The Minnesota Department of Natural Resources has pulled a proposal for mineral exploration leases off the agenda of the Minnesota Executive Council set to meet next week at the Capitol.

The council, comprising the state’s top elected officials, considered the mining leases in June but kicked them back to the DNR for more work.

DNR leases, some of them for private property where landowners don’t own the mineral rights, are located where state geologists and mining companies think there may be valuable deposits of copper, nickel, gold and other minerals that might be mined in the future. The high bidder gets exclusive rights to explore and drill at those sites for 50 years, with the state recovering royalties for any minerals mined.

The issue has attracted broad attention in recent weeks, part of the building debate over mining expansion in the state, as opponents geared up to testify against the DNR’s plans. But the DNR pulled the mining issue Thursday after a high-level meeting between Gov. Mark Dayton, top DNR officials and other staff.

Larry Kramka, DNR Lands and Minerals Division director, said the DNR was unable to notify all private landowners affected by the leases in time for the council’s September meeting. Instead, the DNR will send landowners notification in coming weeks and ask the Executive Council to hold a special meeting in October to approve the leases.

Kramka said the DNR doesn’t plan to remove any of the proposed leases from the package.

“We were asked by the council in June to indentify the landowners involved, and we’ve done that, and to notify them in advance of the (council’s vote) and we’re going to do that,” Kramka said. “Our plan is to bring the entire package back to the council in October.”

Frank Ongaro, executive director of Mining Minnesota, a mining industry group, called the delay “unfortunate.”

“There are companies that, if they had their lease in hand, as they should by now, would be out there prospecting, or getting ready to,” he said. “There’s a lot of competition globally right now for mining investment and any hiccup like this isn’t good for Minnesota’s mining future.”

Landowners affected by the DNR leases also are concerned.

“I don’t consider this any kind of reprieve. I think they (DNR) are going to come back in October with bigger guns and ram this through,” said Ron Brodigan, who owns land in Lake County near Isabella where he operates the Great Lakes School of Log Building. Some of Brodigan’s land is over mineral rights owned by the DNR and included in this round of leases.

Opponents to the leases say most Minnesotans don’t realize that mineral exploration and mining interest is expanding into new areas of the state’s north woods, far beyond the traditional Iron Range, surprising cabin owners and homeowners who never expected to own land where mining might occur. The state, until now, hasn’t informed landowners when the mineral rights under their land were up for auction to mining companies.

Brodigan says he isn’t opposed to mining but that the state’s system of auctioning mineral exploration leases is broken and needs fixing.

“I don’t think we can stop this. But we are hoping we can at least get the state to pull the leases that are under private land,” he said. “They’re already drilling just a few miles away, though, so I don’t think there’s any way to win in this … other than selling my place and moving away.”

How we got here

In April, four mining companies bid on 77 mining units on about 22,000 acres under which the state owns the mineral rights, much of it in western Lake County, near Isabella, an area thought to be promising for copper-nickel deposits. The DNR had offered 652 mining units across 226,000 acres in Lake, St. Louis and Koochiching counties in April, but many areas did not receive bids. About 20 percent of the total units offered were under private land.

Minnesota’s Executive Council — composed of Gov. Mark Dayton, Lt. Gov. Yvonne Prettner Solon, Attorney General Lori Swanson, Secretary of State Mark Ritchie and Auditor Rebecca Otto, all DFLers — meets quarterly to make decisions on state real estate and investment actions, including mining leases.

The June action by the council was the first time since 1982 that a DNR lease package wasn’t approved, DNR officials said. Mining supporters — and official state policy — say the leases are a critical first step to tapping the state’s vast mineral wealth, leading to new types of mining, hundreds of jobs, increased tax revenue and huge royalties for the state to pay for schools, roads and more.

The leases are a critical element of mining exploration as mining companies try to home in on where the best deposits are. Some exploration can be done by aerial surveys, other through seismic testing on the ground. But the final stage usually involves drilling deep underground to verify what’s there.

“It’s the big first step in the process of prospecting. These leases are part of the company’s programs to determine where there are deposits of these metals,” Ongaro said.

But opponents say the system is stacked against landowners, some of whom didn’t realize they don’t own what’s under their own land. And others say the state is allowing too much prospecting too fast. Still others oppose any new venture into copper mining, saying potential environmental impacts, such as sulfuric acid runoff, aren’t worth the risk.

Across northern Minnesota, especially on land that was once controlled by the government, even 100 or more years ago, many private parcels are on top of mineral rights retained by the state or federal government.

If you don’t know whether you own the mineral rights under your property, check your property abstract. Any severance between surface and mineral rights must be recorded in the abstract. More information is available at http://files.dnr.state.mn.us/lands_minerals/mineralownership.pdf.

Several companies are prospecting for copper, nickel, titanium, platinum, gold and other metals across northern Minnesota – from Aitkin County to Lake County — including PolyMet, Franconia, Twin Metals, Cardero, Kennecott, Teck and Encampment Minerals.