⇦ BACK

On Mining Precious Metals: Northlanders Know It’s About the Jobs

Duluth News Tribune
Opinion: Kent Kaiser 

This month, Minnesota’s State Executive Council — which includes the governor, lieutenant governor, secretary of state, attorney general and state auditor — voted to delay 77 leases to explore for copper and nickel on private lands in northern Minnesota.

This short-sighted action was initiated by Gov. Mark Dayton and Secretary of State Mark Ritchie. It was unfortunate for the job situation in the Northland, and I know many Minnesotans are terribly disappointed.

After all, the people of Minnesota own the rights to minerals in the state, including those under private land. Anyone from Northeastern Minnesota knows this; I remember learning this fact in elementary school.

Dayton and Ritchie said they were responding to the complaints of a handful of Isabella-area landowners who supposedly didn’t know about the state’s century-old mineral laws. Yet most of the people testifying against the leases actually live in the Twin Cities area or are only transplants to the Northland. I think most Northlanders would agree: It’s inconceivable that someone from the Twin Cities or elsewhere would buy property in Northeastern Minnesota without being astute enough to learn the laws relevant to that land. If they didn’t: well, tough.

Minnesota’s mining laws — established as they are — work for landowners and businesses alike. They have allowed landowners to maintain their properties while enabling businesses to explore the vast untapped resources buried deep beneath the surface. Those resources represent the future of Minnesota’s mining industry, including the potential for hundreds or even thousands of jobs and millions of tons of precious metals vital to the 21st-century economy.

Minnesota’s mining industry always has worked closely with landowners to assuage their fears and to ensure they are fully compensated for deposits found underneath their land.

Personally, I own properties near Babbitt and Embarrass. I would be thrilled to learn there were minerals under my land, knowing that my land would be contributing to our economy, to our state’s jobs outlook and, additionally, to the global environment. (In Minnesota, we mine far more safely and cleanly than foreign operations do. Thus, if we are truly to think globally, we should be acting locally by encouraging mining to be conducted here rather than in countries with lax environmental standards.) Moreover, I know it would likely be financially rewarding if any explorations went all the way to development on my property.

As Dayton said at this month’s meeting, the minerals aren’t going anywhere. And that’s exactly the problem. It’s a shame, because jobs could be created soon, if only approval were given to prospect. And, what happens after this six-month delay? More politically manufactured delays?

It should be noted that Lt. Gov. Yvonne Prettner Solon — a Duluthian — advocated for approving the leases, saying it was about jobs. Like most Northland residents, she understands. It is noteworthy, too, that State Auditor Rebecca Otto, from rural Marine on

St. Croix, outside the metro beltway, also advocated aggressively for the leases.

In an act of utter inconsistency (some might say hypocrisy) Gov. Dayton attended a “jobs summit” in Duluth just two days after quashing well-paying jobs in the Arrowhead region. (The average annual salary of a Minnesota miner is about $70,000, with benefits fully loaded on — far more than could be made in tourism or other industries in the region.)

Indeed, Dayton’s actions this month were more consistent with his actions two decades ago. At that time, when he was on the State Executive Council as state auditor, he called for the postponement of mining lease votes so he could consult first with the Sierra Club.

This is a new day. It’s time to set aside allegiances to outside special interests and make the Arrowhead economy the first priority. The lieutenant governor is right: It’s about jobs.

 

Twin Metals Welcomes Thoughtful Mining Discussion

Timberjay
Opinion: Bob McFarlin

In his Oct. 15 opinion article, Marshall Helmberger calls for a serious public discussion about plans for a new copper and nickel mining industry in northeast Minnesota. Twin Metals Minnesota couldn’t agree more.

Twin Metals is pursuing the development of an underground copper, nickel and platinum group metals – strategic metals – mining project approximately 15 miles southeast of Ely. One of several mining projects being proposed in the region, the Twin Metals project has the potential to be operational for 60 years or more, providing long-term jobs and economic benefits to generations of Minnesotans, while also protecting our precious environment.

Twin Metals recently launched our project’s “prefeasibility study,” meaning that we are in the early stages of assessing a variety of mining options, environmental protection strategies and overall economic impacts. Like Twin Metals, Minnesota’s emerging strategic metals mining industry is in its early development. However, much is already known about the industry that can serve as the foundation for thoughtful and thorough public discussion.

We know that strategic metals mining holds great promise for creating more than ten thousand construction jobs and thousands of well-paying, long-term mining jobs for generations of Minnesotans. In a 2009 study, the University of Minnesota-Duluth found that more than 12,000 construction jobs and more than 5,000 long-term mining jobs would be created in Minnesota if all the strategic metals mining projects currently proposed came to fruition. The UMD study also found that nearly 2.6 additional indirect jobs would be created for every new mining job.

 

We also know that Twin Metals alone is already having a positive impact on the local economy. Twin Metals and its partners have invested more than $150 million in Minnesota since 2006, supporting more than 100 direct and indirect jobs in such areas as drilling, geology, construction trades and metallurgy. The new Twin Metals Operational Headquarters in Ely, opened just two months ago, is the hub of project development activities. Over the next several years, Twin Metals capital investment in Minnesota could exceed $2 billion.

It is also known that the development of the strategic metals mining industry will provide a significant boost to local and state tax collections, and will provide significant revenues to state school districts through royalties paid to the Minnesota Permanent School Fund. Case in point – mining in Minnesota today is a $3 billion annual industry, supporting 10,000 jobs and providing hundreds of millions in revenues to state and local governments, public school districts and Minnesota public universities. 

It is also fact that the strategic metals deposits in Minnesota are among the most significant, untapped resources in the world. These metals are critical to our nation’s modern economy, supporting the manufacture of electronics, cell phones, aircraft, computers, pollution control devices and “green energy” technologies such as solar panels, wind turbines and electric vehicles. These metals have also been deemed critical to our nation’s security due to their importance in a variety of defense systems.

Despite the clear economic benefits and needs, we also know that northern Minnesota’s unique and precious environment must be protected. Strategic metals mining must meet this important test in order to move forward. Twin Metals is strongly committed to protecting Minnesota’s environment through the use of modern, environmentally sensitive mining practices.

Our underground mine plan will significantly reduce surface impacts and provide underground storage options for mine waste. Modern technology in such areas as water treatment, water use minimization, land reclamation, brownfield redevelopment, noise reduction and air quality will ensure the highest possible environmental protections.

Moreover, in the coming years, the Twin Metals project will be closely scrutinized by multiple state and federal agencies to ensure that strict state and national environmental regulations are met. Throughout this rigorous and lengthy environmental regulatory process, all citizens will have multiple opportunities to review plans and offer their comments, suggestions and concerns.

Twin Metals is committed to extensive public dialogue during the coming several years of project development and environmental review, and will maintain that commitment throughout the life of our mine. We look forward to sharing our vision of environmental stewardship and long-term economic growth, job creation and prosperity. The Twin Metals project will only get better through thorough and thoughtful public dialogue.

 

Readers Write: Marriage Amendment, Mineral Rights, Breast Cancer, Political Action, Political Rhetoric

Star Tribune

Opinion: Anne Swenson (Ely, Minn.)

 

MINERAL RIGHTS

 

Land owners need to put state before wallets

 

Thank you for your balanced editorial on mining ("Blame fear for delay in mineral leases," Oct. 16). In Ely, Minn., mining was more than a lifestyle and a way to make a living — the ore became the backbone of this country.

 

What we have seen of late are the selfish interests of a very few, very vocal anti-mining people being reported and taken as the opinion of many. It is a naive view to claim homeowners did not know they may only own surface rights to their property.

 

I don't own mineral rights under my home because I am not interested in recovering the minerals owned by the people of Minnesota. Mineral exploration at or near my home could affect my life, and I accept that fact. Although I "own" my property now, ownership is temporal.

  

Some Surprises on State Mineral Lease Issue, Education Needed

Ely Echo
Editorial

For a newspaper to take a stance on mining, immediately there is a perception of favoritism or environmental opposition.

So when the Star-Tribune took up the issue of mineral leases in its Sunday editorial on Oct. 16, many would expect there to be a degree of opposition based on perceived environmental issues.

Not so fast.

"The six-month delay imposed by Gov. Mark Dayton and the state Executive Council earlier this month set a troubling precedent and appeared to be driven mostly by landowners' unfounded fears about mineral prospecting," the editorial stated.

That doesn't sound like the words of an editorial board that has often aligned itself with the Sierra Club. So what gives?

There is more to this story than a handful of landowners who don't like the state approving mineral leases. Yes, they are a vocal group but the root of their argument lies in quicksand.

When someone buys surface property in Minnesota, they do not get the mineral rights with it. The rights are separate, or severed. And the surface rights do not trump the mineral rights.

What's become obvious is those who are opposed didn't read the fine print. They assumed they owned the land and everything underneath it. Not so, two separate things.

And if Dayton assumes this issue will go away by repeatedly delaying making a decision, he is foolish. The legislature could solve this problem by eliminating the Executive Council's blessing from the process.

While some may sympathize with the NIMBY (Not In My Backyard) crowd, our advice is to be careful here. This may well be one of two things: one, somebody making a mountain out of a molehill, or two, the anti-mining crowd using people.

There is plenty of information available to those who wish to get the facts on mineral rights in Minnesota. We suggest looking up the publication available online called, "Public Land and Mineral Ownership in Minnesota – A Guide for Teachers."

Here's something you won't find online. Or in any courthouse or law library. You won't find any case law in Minnesota dealing with mineral rights and angry surface rights owners.

How can this be? Surely in over 100 years of mining in Minnesota, there must have been someone who took the mining exploration company or the DNR to court. Does that mean that every time this issue has come up the matter has been resolved peacefully? Yup.

As Aaron VandeLinde, the state's transactions manager for DNR Lands and Minerals said, "The times there's been a severed estate and the mining company wanted to access the minerals, they've paid handsomely for that access."

We believe the DNR needs to do more to educate the public on mining and mineral leases. And we advise those who may have a company looking at a mineral lease to do more than listen to the misinformation from those who crusade against mining. Call the DNR, ask questions. Become informed on what is and isn't true.

The DNR requires the exploration company to submit a plan on how it will look for minerals on a lease. They may not even drill a hole. They can take readings from the air. They can look at surface outcrops. They can test the water and the roots of trees for traces of minerals.

Joining up with the anti-mining crowd because you didn't read up on property rights discredits your argument.

There was a story from the Associated Press this week that was interesting as well.

The story was about drilling being done in the Ely area by companies looking for copper, nickel and other platinum group minerals. 

The story talked about jobs, about environmental concerns and the impact all of this could have on tourism.

Ely Mayor Roger Skraba was quoted in the story and issued a strong statement on the need for more economic development.

"If it's not this generation, then it'll be another generation, or another generation getting the minerals out of the ground. It's gonna happen," Skraba said. "My community needs something 'cause it's dying."

Does this mean our community should sell out? Should we turn a blind eye toward environmental risks? No. But we can be open to the idea that new technology could solve the extraction problems that have haunted minerals that are often found near sulfur and can cause sulfuric acid.

Pessimism says innovation and technology will always fail. If that was the case, we'd still be listening to Walkmans and Steve Jobs would've died penniless selling cassette tapes on the corner.

Optimism says tourism and mining can exist in the same area. And our community can be a better place with fewer vacant storefronts and empty school desks to show for it. 

Iron Range board may reconsider taconite subsidy

Duluth News Tribune
Peter Passi 
 

At a time when steelmakers and mine operators are notching hefty profits, members of the Iron Range Resources and Rehabilitation Board will discuss whether to continue subsidizing the Northland’s taconite industry.

Today, the board will reconsider its practice of returning a portion of the taconite production taxes it collects. This money has been reimbursed to the mines for reinvestment in Minnesota operations through the Taconite Economic Development Fund.

At least one board member contends the aid is no longer needed. Rep.

Tom Anzelc, DFL-Balsam Township, said he will propose that the IRRRB do away with the fund and instead redirect the proceeds to public works projects on the Range.

“I will move that we not continue to cut taxes for the mines at a time when everyone else’s taxes are going up,” Anzelc said.

This year, about $9.7 million is at stake, and more will probably be on the line next year, as production climbs. Disbursements through the Taconite Economic Development Fund are based on the prior year’s production.

In lieu of property taxes, the Minnesota Department of Revenue collects $2.31 for every ton of pellets produced on the Range. Of that sum, 30.1 cents on every ton — or 13 percent of total proceeds — flow back through the Taconite Economic Development Fund to support capital investments in the region’s mining facilities.

“The idea was to spur continued capital investment to ensure Minnesota mines are modern and updated and can compete in a global market,” said Craig Pagel, president of the Iron Mining Association of Minnesota.

He said the Taconite Economic Development Fund has been an effective means of encouraging international companies to make additional investments in their Minnesota facilities.

An IRRRB vote today could authorize distribution of money from the development fund, but Anzelc said he will ask fellow board members to reconsider, given the mining industry’s recent resurgence. Iron Range mines produced 37.5 million tons of pellets in 2010, and many expect 2011 production will top 40 million tons.

Peter Kakela, a Michigan State University professor who tracks the global steel industry, said the merchant price for Minnesota and Michigan pellets has eased a bit, but at around $150 to $155 per ton, they’re still well above production costs that are generally about $65 to $75 per ton.

“Huge profits are being made right now, and while prices have been dropping somewhat, I think they will stay high for some time to come,” Kakela said.

He pointed to China’s growth and its appetite for steel as a price driver on the global market.

Kakela also noted that relatively few steelmakers these days control substantial mine operations — U.S. Steel Corp. and ArcelorMittal being two notable exceptions. Instead, most steelmakers now purchase from suppliers, making the market for pellets more competitive.

Pagel observed that markets go up and down.

He expressed his hopes that the IRRRB will not do away with the Taconite Economic Development Fund program without first engaging in a discussion with mining industry representatives. He described being shocked by Wednesday’s news of Anzelc’s pending proposal.

“What’s hard is when state policy changes and adds more uncertainty and risk to the equation,” Pagel said. “Our industry needs consistency in state statutes and rules, so it can make better business decisions.” 

Transportation Poised to Grow

BusinessNorth
Ron Brochu 

High-paying jobs with benefits. That’s always the battle cry in Northeastern Minnesota and Northwestern Wisconsin. Despite the recession, more of those coveted positions are likely to emerge, but not in headline-grabbing technology positions.

The growth of mining activity is expected to generate additional jobs in the transportation sector, primarily maritime and rail. New sources of taconite pellets, the addition of iron nuggets, slab steel, new uses for tailings and nonferrous metals will add to the number of train and ship loads needed to haul material to mills.

“There’s no question that the jobs element of these new projects is not limited to the mining silo,” said Bob McFarlin, vice president of public and government affairs at Twin Metals Minnesota.

Although much of the shipping infrastructure already exists, more may be needed. A flurry of inquiries have been received this year by interests seeking to acquire property along Superior’s working waterfront, according to David Hozza, CEO of Wisconsin Woodchuck, which is sandwiched between the Midwest Energy Resources Co. coal dock and the Cenex Harvest States grain facility.

“A number of local, national and international potential (land) buyers are making inquiries about the property. There’s serious interest,” Hozza said.

Superior Mayor Bruce Hagen acknowledged local officials have met with one possible waterfront land buyer to provide information about the city.

There’s also space available on Duluth’s waterfront. Garfield slips C&D have more storage capacity than the Globe site and could accommodate development. Currently, however, nobody has publicly said they want to develop the parcel.

The Superior harbor visitors have not revealed whom they represent. So far, there have been no specific offers, negotiations or deals. But some mining executives say it’s not too early for them to begin investigating their options.

For instance, Gogebic Taconite LLC, which hopes to mine iron ore in northwestern Wisconsin, has identified four possible shipping scenarios, according to Bill Williams, president. The company currently isn’t pursuing any of them, he stressed, because its proposal remains in such an early stage. But Gogebic also must ensure it has viable transportation options should its plans advance, he noted.

Without doubt, Essar Steel, which is developing a mine near Keewatin, also is exploring its options, according to those familiar with transportation and mining issues. Essar is expected to begin pellet production in mid- to late-2012 at an initial annual rate of 7 million tons, with slab production to begin in 2015.

The most likely destination for Essar’s pellets is the company’s Algoma steel mill in Sault Ste. Marie, Ont., which is located west of the Soo Locks and could receive maritime deliveries via Lake Superior year-round. But there’s one obstacle.

“Self-unloaders won’t work for slab steel,” said Richard Stewart, PhD., director of the Transportation and Logistics program at the University of Wisconsin-Superior. There’s also a rail option via Canadian National, he said, although the train would have to follow a round-about route through Rhinelander and Stevens Point.

There’s also new production that will begin at Keetac. U.S. Steel is reopening a pellet line that has been closed since 1980, adding 3.6 million tons of production annually that will move via rail and, most likely, ship.

Magnetation, meanwhile, also will contribute to the growth. Next year, it will transport 650,000 tons of high-grade iron ore concentrate by rail to Mexico, and 150,000 tons by rail for transshipment to Great Lakes vessel (approximately two ship loads). Similar rail transport is expected in 2013, but Magnetation plans to add 800,000 tons via rail to cargo vessel, about 10 shiploads, depending on ship capacity.

Copper-nickel-precious metals developments will further stimulate the transportation sector further down the time line, providing that regulators approve their developments.

PolyMet intends to process some copper concentrates locally but, in a 2011 change of plans, also announced it will process some of that concentrate in outside plants. Shipping will be via train, said spokeswoman LaTisha Gietzen. Although PolyMet has access to a Cliffs Natural Resources private rail line to the Taconite Harbor docks, the firm likely will transport all rail, she said.

Twin Metals has not yet defined its options, but they likely will involve existing carriers, McFarlin said.

Gathering far less media attention are taconite aggregate byproducts (also called “course tailings”), for which 400 uses have been found from 1960 to 2006, according to a UMD Natural Resources and Research Institute report for the U.S. Economic Development Administration. The study concluded:

Taconite aggregate construction materials and valueadded aggregate by-products could create longer lasting pavement if used in concrete or asphalt based highway mixtures. Widespread use of the materials in the Midwest will lead to economic development and immediate job creation in Northeastern Minnesota, the report said.  

Delivery is feasible using unit trains and Great Lakes shipping, with the maritime option being least expensive. Possible backhaul cargoes include limestone, which will be needed as a neutralization agent in non-ferrous mining project; western coal, which already shipped to mining areas for power generation; grain from northwestern Minnesota, the upper plains and Canadian provinces.

Area rail service is dominated by two carriers – Burlington Northern Santa Fe and Canadian National. Representatives of both firms in the highly-competitive industry were guarded in their comments about what negotiations, if any, they’ve had with specific firms.

“We are aware of the new iron ore projects and would be interested in new transportation opportunities,” said CN area spokesman Patrick Waldron.

In Minnesota, CN has main lines on the east Range from the Hibbing area to Hoyt Lakes, then south to its waterfront docks in Duluth and Two Harbors. Its current customers include United Taconite and Minntac.

In Wisconsin, CN has lines running from Mellen and the Penoke Range, where Gogebic hopes to operate, north to Ashland, east to Escanaba and, in a round-about way, south, then west, then north to Superior. CN also has an all-rail route to the Chicago area.

CN also owns the waterfront loading dock in Ashland, which is among the waterfront loading sites that possibly could be used by Gogebic Taconite. That dock is strong enough to support four loaded trains, said Gogebic’s Williams. Rail lines to the dock, however, have been removed, according to Stewart.

“We wouldn’t need a structure of that strength. If we were to use it, we’d replace the overhead train unloading system with a conveyor system,” he said.

BNSF’s presence is strongest on the west Range, where it has lines between Hibbing and Grand Rapids, then south from each city to its waterfront loading facility in Superior’s Allouez neighborhood. It currently transports taconite for the Keetac mine and Hibbing Taconite.

“BNSF Railway has been actively expanding our business on the Iron Range,” said BNSF spokeswoman Amy McBeth, who also declined to be more specific.

A few other options are available, but some former ones have disappeared. As mentioned earlier, Cliffs owns a rail line from Hoyt Lakes to the Taconite Harbor dock.

“There’s been talk about having the ability to ship from there,” said Craig Pagel, president of the Iron Mining Association of Minnesota.

With heavy industry nearly written off in the 1980s, several rail lines stopped being used, including the former Northern Pacific rail line that directly connected Ashland with Superior. Its right-of-way was converted to the Tri-County Corridor. Another line that would provide a better route through middle Wisconsin, the CN line between Ladysmith and Prentice, is available for use but is out of service, Steward said.

“It’s nice to have recreation trails, but I think we’ve shortchanged our future,” said Superior’s Mayor Hagen. “If this country ever had a major disaster, we’d regret eliminating these lines. Rail and sail still provide the cheapest transportation.”  

Senator Says Environmentalists Are Behind Mining Delays

Capitol Chatter
Don Davis 

Sen. Bill Ingebrigtsen, R-Alexandria, blames environmentalists for a delay in the state allowing mining companies to explore under some northeastern Minnesota lands.

“The environmentalists, I think, are behind this because they want to slow down any type of mining up there,” said Ingebrigtsen, Senate Environment and Natural Resources Committee chairman.

Gov. Mark Dayton led the all-Democratic Executive Council recently voting to delay for six months considering a proposal to allow mining companies to explore land with state mineral rights in northeastern Minnesota, including under private property.

It was the second delay by the Dayton-led council this year.

Dayton and Secretary of State Mark Ritchie led the effort to delay the vote earlier this month, saying too many people are unaware of state laws and regulations that allowed the state to own the mineral rights under people’s homes and cabins. Dayton said the state’s entire mining lease procedures may need updating.

Ingebrigtsen said he thinks that protesting landowners knew they do not own mineral rights under their land. “Here you have property owners who want this changed … knowing very well when they purchased that land that the state of Minnesota holds the mineral rights.”

 

Property owners told the Executive Council they will ask legislators to pass laws next year to give them more rights to refuse mining company access to their land, as well as laws that could allow them to purchase mineral rights.

The proposal the council delayed only would give mining companies the right to see if nonferrous minerals are present. It would not be a mining permit.

The dispute comes at a time when mining companies want to see if copper and other valuable minerals are in plentiful supply in the Ely and Isabella areas.

Ingebrigtsen said he was surprised that Lt. Gov. Yvonne Prettner Solon, from Duluth, did not fight the rest of the council to support mining as economic development for her northeastern Minnesota neighbors. “I would think Prettner Solon would be a little more aggressive.”

The so-called nonferrous mining could be a boon for the area, the senator added, comparing it to the current North Dakota oil boom.

Ingebrigtsen complained that the “governor’s office didn’t contact me,” even though he is a key legislative player on the subject.

“I don’t know that I can do anything about it,” he said about the delay, but promised to look into the issue. “I really have to take some time to evaluate it.”

Next big thing looms in Minnesota’s Iron Range

Crookston Daily Times
Steve Karnowski 

Ely, Minn. — On a warm fall day, in a clearing cut into the evergreen and birch forest, a drill rig roars as it bores deep into northeastern Minnesota bedrock. Nearby, three men in hardhats keep close watch as the machinery slowly extracts samples more than 3,800 feet down from an ancient deposit that holds copper, nickel, platinum and other valuable metals.

 

Two executives looking on from Twin Metals Minnesota LLC say the project heralds a new era in mining for Minnesota. It promises "hundreds of jobs, if not thousands of jobs" in a struggling region, said Bob McFarlin, vice president of public and governmental affairs. He described the mineral reserves as "vast, world class, possibly among the largest untapped nickel and copper resources in the world."

 

But the site is near a jewel of the North Country, the Boundary Waters Canoe Area, some 1 million acres of pristine wilderness that draws 250,000 visitors a year from around the world. And that worries environmentalists, residents and people in tourism who fear northern Minnesota's mining rebirth will send noxious chemicals into lakes and streams that flow into the BWCA or Lake Superior.

 

Sipping iced tea on the balcony of a coffee shop overlooking Ely's main drag, Mayor Roger Skraba shows off a coaster made of nearly pure copper extracted from another nearby test area. In a shrinking community dotted with empty storefronts, and with some residents working two and three jobs to get by, there's no doubt where Skraba stands.

 

"If it's not this generation, then it'll be another generation, or another generation getting the minerals out of the ground. It's gonna happen," Skraba said. "My community needs something 'cause it's dying."

 

Ely sits on the Vermilion Iron Range, where the last iron mine closed in 1967. Good-paying mining jobs were once the backbone of the local economy, but the town now depends on tourism, logging and call centers.

 

Minnesota's iron mining history dates to the late 1800s when the first mines opened on the Vermilion Range and on the nearby and bigger Mesabi Range. People from 43 ethnic groups settled the region to work the mines. Pam Brunfelt, an Iron Range historian at Vermilion Community College, said it's no exaggeration to say Minnesota iron helped make the U.S. the world power that it is today. Minnesota ore became the steel that became the skyscrapers of New York, Chicago and other great cities, she said, and gave America the steel it needed to win World War II.

 

When the high-grade ore ran out after the war, the University of Minnesota helped develop a process for separating iron from a low-grade ore called taconite that saved the state's mining industry. The mighty Mesabi remains the country's largest domestic source of iron ore, accounting for about 70 percent of the nation's supply with at least two centuries' worth still in the ground, Brunfelt said.

 

But iron has meant a boom-and-bust regional economy that mirrors world steel markets. In the 1980s, the region lost 10,000 mining jobs that have never returned, Brunfelt said.

 

"So people up here are torn about this supposed boom in mining nonferrous metals, because the population has declined here and we want people to know about this special place. On the other hand our water is very, very precious. We don't know what to do about this," Brunfelt said.

 

Geologists have known since the 1960s about the copper, nickel and platinum group metals underneath parts of northeastern Minnesota in what's known as the Duluth Complex. But it's only in the last few years that new extraction technologies and high world market prices have made it practical to go after it.

 

The reason copper-nickel mining has become such a flashpoint is that, unlike comparatively inert iron ore, these metals are locked up in sulfur-bearing minerals that can leach sulfuric acid and other pollutants when exposed to air and rain. Sulfide mining elsewhere has led to one environmental disaster after another, opponents say.

 

"Based on the track record of this type of mining, it just seems incredibly risky to put it next door to the Boundary Waters, the nation's most popular wilderness area, and a very ecologically sensitive area filled with rivers, lakes and wetlands," said Greg Seitz, a spokesman for the Friends of the Boundary Waters Wilderness.

 

McFarlin said the Twin Metals project will be different because it will use modern mining practices and technologies, including cleaner ways of separating the metals from the ore. The state will also require mining companies to set money aside to cover future cleanup costs.

 

"They're very legitimate concerns," McFarlin said. "We don't dismiss them and we know we can address them."

 

Such claims have won over some key political leaders and many residents who see revival in the Twin Metals project and in one planned by PolyMet Corp. for about 25 miles to the southwest in Hoyt Lakes.

 

Yet not only are some residents in the greater Ely region alarmed by the long-term environmental risks, they're becoming increasingly vocal about the more immediate loss of peace and quiet from exploratory drilling.

 

The Stony River Township Board, which governs over 500 sparsely populated square miles of forest southeast of Ely, voted last month to ask the state and federal governments for a moratorium on copper-nickel mining and prospecting in their area. And area landowners this month won a six-month delay from the state in the issuance of new mineral exploration leases in the area. Last week, the Eagles Nest Township Board, which represents an area west of Ely, officially welcomed the postponement and issued its own call for a moratorium on mining and prospecting.

 

That reprieve came as a relief to Andy Fisher, who has heard drill rigs coming closer to the two small resorts he co-owns southeast of Ely. Sitting at a picnic table under the pines at his National Forest Lodge on Lake Gegoka, Fisher said he fears the noise from prospecting and the impact of mining could kill tourism in the area. He said his customers want to experience the beauty and solitude of nature and see moose and wolves.

 

"You can't really replace a lake. You can't really replace a forest. You can't replace the fish that are going to die," Fisher said.

 

Mining supporters point out that the U.S. has no operating mines for nickel, which is used to make stainless steel and alloys that go into jet engines. They also say the U.S. is heavily dependent on foreign sources of platinum and related metals like palladium, which make catalytic converters work.

 

The world's demand for those metals is what's drawn the interest of the investors behind Twin Metals, PolyMet and several other companies prospecting in northeastern Minnesota. PolyMet's proposed NorthMet mine would be an open pit near Hoyt Lakes on the eastern end of the Mesabi Range. It's farther along in the planning stages than Twin Metals. But the federal Environmental Protection Agency sent PolyMet back to the drawing board last year when it deemed the project's environmental impact statement inadequate; Polymet says it plans to submit its revised version in January.

 

Any mining is at least several years off for either project. A key difference between them is that Twin Metals envisions an underground mine. It would sit near the Kawishiwi River, which flows out of the Boundary Waters into Birch Lake and back into the BWCA. Twin Metals is operating six drill rigs in the area to create a three-dimensional map of the deposits.

 

Jane and Steve Koschak, whose River Point Resort sits where the Kawishiswi enters Birch Lake, consider it an imminent threat. Standing on the shoreline, they pointed across the crystalline river toward where the mine would go, somewhere on the other side of the treeline, where the birch and aspen were turning orange and yellow against a backdrop of pines. They said they've endured the roar of drill rigs since 2006, including a couple years ago when one prospecting company set up a rig on a barge out on the lake.

 

They argue that the tourism industry deserves consideration, too, for its economic contributions to the state and region. River Point has been in his family since 1944. They said regular guests from as far away as Thailand come to enjoy the views across the water, the peace and quiet, the walleye fishing and the easy canoe access to the wilderness. On this day, at least, any drilling was out of earshot.

 

"The stillness is deafening, and to put something like that in the heart of this stillness and quiet is definitely disturbing — very disturbing," Jane Koschak said.

Editorial: Blame fear for delay in mineral leases

Star Tribune Editorial
 

That, more than facts, drove decision by governor, council.

The second postponement of state mineral-rights leases may have mollified landowners opposed to copper-mining exploration on their northeast Minnesota property. But the six-month delay imposed by Gov. Mark Dayton and the state Executive Council earlier this month set a troubling precedent and appeared to be driven mostly by landowners' unfounded fears about mineral prospecting.

The council's decision displayed startling disregard for existing law and a long-established class of property rights — the rights to below-the-surface resources — that have long given primacy over surface rights.

It put a small but vocal group of landowners who hadn't read the fine print on their property records ahead of the state's broader economic interest. And it may well make the problem worse for those the council, composed of the governor and the state's four highest constitutional officers, seek to help.

The council offered up the Minnesota Legislature, where there's widespread support for new Iron Range mining jobs, as a solution to landowners' concerns. Landowners planning to seek reforms — many unrealistically want the state to give up mineral rights to their property or ban exploration from it — will run into a Capitol buzzsaw.

There's already talk swirling among legislators angered by the delay that perhaps the council doesn't need to sign off on leases. State law requires the council to approve leases arranged by the Department of Natural Resources (DNR). But lawmakers can change this. Landowners could easily lose the sympathetic oversight that the council now provides, or find their cause set back in myriad other ways by a Republican majority and an unabashedly promining Iron Range DFL delegation. Education-minded legislators will also be pushing to maximize revenue from state mineral rights and holdings because it helps fund schools and the university.

Dayton said this week that the latest postponement is really about improving the lease process. He's right that it's time to scrutinize the process, improve notification of affected landowners and ensure that the state is maximizing lease revenue as global prices soar for the copper and other precious metals found in northeast Minnesota. The state owns about 12 million acres of mineral rights. That's about 24 percent of the mineral rights in the state. Private interests also hold these rights.

But the process could have been improved without essentially shutting down much of the state's mineral exploration. Mining industry fears about local job losses from the prospecting delay are overblown. But the uncertainty will make it more difficult to attract the investment dollars for a new industry that could bring thousands of jobs to Minnesota.

Crusading landowners won't be satisfied with anything less than being able to ban mining companies from their property. If they don't get that, will Dayton and the Executive Council delay the leases when they meet again? The governor didn't provide much clarity on that during an interview this week. He needs to say more, especially if a longer-term postponement is a possibility.

As a former educator, Dayton should seize the opportunity to clear up the motherlode of misinformation about mining. Many of those attending the Executive Council meeting did not know that there is no copper mining yet in Minnesota. Polymet, the first project, has been in the permitting stage for years.

Some at the meeting thought prospecting automatically led to a mine opening — not true; there's only a slim chance of finding valuable resources. Others didn't realize that prospecting typically involves short-term hole drilling, with reclamation afterward. Or that they could relay complaints about mining company staff to the Department of Natural Resources or local law enforcement. Fears of mining companies condemning property also appear overblown; it hasn't happened in the state.

Good information won't change the fact that many people are opposed to this new industry and its environmental risks. But factual communication will help smooth relations between northeast Minnesota landowners and the mining industry, two important groups who need to find a way to coexist.

Despite Six-Month Hiatus, Property Owners Are Likely to Lose Their Battle

Politics in Minnesota

Jake Grovum

On its face, the vote taken recently by the state’s top constitutional officers to delay the granting of mineral rights leases on the Iron Range for six months was democracy in action: government bending to a public outcry and pledging to explore the issues raised.

 

Dozens of irate landowners packed a Capitol hearing of the state’s Executive Council on Oct. 5 to vent their displeasure over arrangements that they said would unjustly — if legally — force them off their land to the benefit of mining companies.

“You’re looking at the tip of the iceberg here,” one testifier told the panel. “This is going to keep coming up.”

 

Since the Executive Council, at the urging of Gov. Mark Dayton, voted unanimously to defer a decision on the 77 mining leases and light industrial space for lease by six months , the local opponents of those leases have been turning their attention to the 2012 legislative session, where they hope to join environmentalists at the Capitol to push changes that might prevent the mining exploration ventures from going forward.

 

But this citizen uprising may yet fall short of the Jimmy Stewart ending it’s after. Both long-standing state law and pro-business, pro-mining majorities at the Legislature augur for the triumph of the mining companies in this dispute.

“Waiting six months does not guarantee positive solutions,” warned State Auditor Rebecca Otto, a council member. At several points during the hearing, she expressed skepticism about Dayton’s motion to defer a vote on the leases. “The laws could become worse,” she noted. “They could become better, or nothing could change.”

 

Mineral rights law not widely understood

 

The issue at hand is not new. It involves the letting of state leases to mining companies for mineral exploration, including exploration on many parcels of privately owned land. A number of Capitol and Iron Range observers cite decades of precedents for the practice, and none seem to recall similar controversies in years past.

 

The issue of mineral rights is complicated and not widely understood. The majority of property owners in the state never have cause to consider whether they hold the rights to potentially valuable raw materials beneath the surface. And many do not own those rights. Throughout the state’s history, it was a common practice for timber, railroad and mining interests to reserve mineral ownership when transferring surface lands to other parties. In addition, beginning in 1889, the state started reserving mineral rights when selling public lands in Cook, Lake and St. Louis counties. That practice quickly spread throughout the state. As of 2000, according to a DNR report, roughly a quarter of the mineral rights in Minnesota were believed to be controlled by the state.

 

Although the leases involve only exploration for minerals and not full-blown mining operations, their potential impact on the environment and the surrounding scenery is considerable. Here is an excerpt from the state’s statutorily recommended boilerplate mineral exploration lease:

 

“The lessee has the right to construct or make buildings, excavations, openings, ditches, drains, railroads, roads and other improvements on the mining unit as necessary or suitable for those purposes. All buildings and ditches must be constructed according to applicable local ordinances. The locations of railroads, roads and other improvements are subject to review by the commissioner. The lessee has the right to mill and concentrate the ore so mined, either upon the mining unit or elsewhere, but the right to mill and concentrate does not include the right to reduce or smelt ore upon the mining unit without an agreement between the lessee and the commissioner, authorizing that use of the surface of the land and providing for the necessary protection of life and property.”

 

An expanding backlash?

 

The push by the mining industry and by government officials to open the Iron Range to a wide array of nonferrous mining ventures has attracted little attention outside the region except from environmental activists. But the protests of landowners are changing that equation: In addition to causing delays, their actions threaten to publicize the issue more broadly and to add property rights advocates to the industry’s list of political adversaries.

 

Back in April, the Executive Council delayed action on the leases so landowners could be notified of the coming auctions. Some say their protests, coupled with the latest delay, are fanning a broader resistance.

 

“This has further solidified the opposition to PolyMet in particular,” DFL Iron Range Rep. Tom Anzelc said, referring to the controversial nonferrous project working its way through the regulatory process. “That’s unfortunate.”

 

Gov. Mark Dayton himself pointed out at the Executive Council hearing that the kind of mining being proposed for the region — nonferrous nickel and copper mining — looms large over the leasing debate.

 

“We’re in a different era in terms of the kind of mining that could occur in Minnesota,” he said. “These issues are understandably intertwined with that, and that’s the specter of that kind of mining.”

 

Some local governments balking

 

Nonferrous mining seems to be stirring heightened opposition from local governments as well. Last month, a Stony River Township resolution opposed “changing the area from a lake district to a mining district” and called for a moratorium on sulfide mining and mineral leases. On Wednesday, Eagle’s Nest followed suit with a similar resolution.

 

To be sure, some local officials have not come out so strongly against the leases or mining. The Lake County board, for instance, isn’t expected to push for any changes at the Legislature, instead preferring to allow exploration and then deal with actual mining projects as they come up.

 

“We’ve said our piece, put our position out there, and we’re going to take a step back and let the citizenry take over,” Commissioner Rich Sve said.

 

Still, the brewing alignment of opposition forces has mining advocates and those in the industry concerned. Even a six-month delay, they say, could have a negative effect on the future of mining and the economic development it might bring.

 

“It sends a terrible message,” Mining Minnesota’s Frank Ongaro said. “Those mineral leases should have been approved without any delay.”

 

But now that they are on ice, it creates a breach into which the Legislature may choose to leap — and the result could be lasting changes in the way the state grants mineral leases and handles mining regulations.

 

To this point, there seems to be no sign of concrete proposals being created, but the issue is sure to be brought up when the Legislature convenes next year. Whether environmental groups will partner closely with local governments and landowners remains unclear — partly because the six-month delay came as a surprise to almost everyone involved in the issue.

 

But some potential changes floated at the hearing involve letting landowners hold the mineral rights themselves or even blocking exploration on private land altogether. Such changes, if approved by the Legislature, would mark a significant change to a corner of state law that dates back more than a century and could cost the state millions of dollars in mining proceeds. Landowners, though, are expected to push ahead nonetheless.

 

“This is an opening for somebody to introduce a bill,” said Denny McNamara, chairman of the House Environment and Natural Resources Committee. “And I would expect somebody would put in a bill.”

 

But McNamara and his Senate counterpart, Bill Ingebrigtsen, both said they oppose any changes that would block mineral exploration. Mining, they say, is critical to the state’s economic future.

 

Given the interests arrayed behind the leases, the Republican majorities at the Legislature and the political charge of “job creation” in the current economy, any changes to state law that would step on the toes of mining companies seem nearly inconceivable for 2012.

 

With that in mind, GOP lawmakers are likely to be content in blocking any changes that would halt mining or exploration and instead keep the lease process moving forward. Indeed, many observers think if the six-month delay passes without any changes to the leases or the policies surrounding them, the Executive Council is likely to give them final approval. Dayton, for his part, called the delay simply a “pause” last week.

 

To Ingebrigtsen, that means officials, interested parties and his committee can review the process if need be and listen to concerns from landowners on the Iron Range. But ultimately, he says, the projects are too important to pass up and will need to move forward as the law provides.

 

“If it’s going to be done in a proper fashion, I can’t imagine why people would stand in front of that,” Ingebrigtsen said. “They’re stepping in front of business.”