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With nonferrous-metal demand rising, pressures for production from Minnesota’s Copper Range will be difficult to resist

Little noticed in our current news is the ongoing battle between the world’s largest iron-ore miner, Vale SA of Brazil, and the Jinchuan Group, China’s biggest nickel producer. They are bidding for control of South Africa’s Metorex Ltd, a medium-sized producer of high-demand nonferrous metals like copper, nickel and cobalt. One reason for this demand is their use in energy systems that provide transmission, rechargeable batteries, and wind turbine technology.

Commenting on the Metorex bids, Andrew Ross, partner at First New York Securities LLC, said, “The Chinese and the Brazilians have voracious appetites for mining assets. There’s a race for assets worldwide going on. China and Brazil are at the forefront of that race.”

Dwarfing the mineral assets of Metorex Ltd are world-class mineral deposits that lie in a band meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range. This resource has attracted several proposed mining ventures, including one by Polymet Mining Corporation of Canada and another from Duluth Metals of Canada and its partner, Chilean copper giant Antofagasta PLC.

The state of Minnesota owns more than 6,000 acres of land in the region, and it stands to collect $2.5 billion in royalties in the coming decades if these new mining projects proceed. This state property is known as “school trust lands.” Under the state Constitution, income from such lands is earmarked for the Permanent School Fund, which contributes about $60 per pupil to every school district. An analysis by the Minnesota Department of Natural Resources projected that the school fund, with assets of $720 million, could more than triple in size with the copper royalties over 25 to 30 years.

A 228-million-ton project
The PolyMet project calls for surface mining and mineral processing of approximately 228 million tons of copper-nickel-platinum ore over approximately a 20-25 year mine life. PolyMet expects to mine, on average, 91,200 tons per day of material, which would include about 32,000 tons of ore and 3,900 tons of overburden and 55,300 tons of waste rock. Annual metal production would total 39,000 tons of copper, 9,000 tons of nickel, 400 tons of cobalt, 22,000 ounces of platinum, 87,000 ounces of palladium, and 13,800 ounces of gold.

Environmentalists are lined up in opposition to PolyMet, viewing the project as a serious threat to water quality in the entire region, including the Boundary Waters Canoe Area Wilderness (BWCA). Project advocates include Rep. Chip Cravaack, Sens. Amy Klobuchar and Al Franken and most area mayors, who want those quality jobs on the depressed Iron Range.


There is a 714-page Draft Environmental Impact Statement (DEIS) for the PolyMet Project from the Minnesota DNR and the Corps of Engineers. It is clear from the statement that any effluent from the project ends up in the drainage areas of the Partridge and Embarrass Rivers. Those rivers flow south to the St Louis River and Lake Superior, not north to the BWCA.

The DEIS is generally positive about the project, and it suggests that if all of PolyMet’s commitments are met, there is no serious impact on the environment. The following quote from the DEIS on the Partridge River applies to its analysis of the three rivers involved:

“Even with these higher loadings and assuming no natural attenuation, the model results indicate that water quality standards for the Partridge River would be maintained for the eight constituents studied (i.e., antimony, arsenic, fluoride, cobalt, copper, nickel, vanadium, and sulfate) under all flow conditions and mine years modeled. Therefore, even using relatively conservative assumptions, the Proposed Action is not predicted to result in any exceedances of surface water quality standards for the Partridge River at the modeled locations.”


A relatively small corporation
One of the concerns with the PolyMet project is the financial status of PolyMet, a relatively small corporation for whom this is the major activity. PolyMet will have to meet the substantial environmental commitments of the project, which are described in the DEIS. There is also the final closure and remediation , which is estimated to cost $50 million, and then the long (more than 1,000 years per the DEIS) follow up of drainage from leftover tailings and newly created storage ponds.

The Duluth Metals/Antofagasta project is primarily underground, with fewer environmental concerns. And the presence of Antofagasta assures strong financial backing.

In 2010, world energy demand burned more than 2 tons of coal, oil, and natural gas for every person on the planet. This sent more than 30 billion tons of CO₂ into the atmosphere. World legislators are forcing renewable energy programs, causing increased demand for nonferrous metals, of which the world now produces a mere 35 annual pounds per capita. Their price is rising as shortages develop. The pressures for production from Minnesota’s Copper Range will be difficult to resist.

 
Rolf Westgard is a professional member of the Geological Society of America

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Comments (11)

  1. Submitted by Greg Seitz on 07/11/2011 - 12:01 pm.

    A couple things:

    * There are serious concerns that we are currently experiencing a nickel glut, not a shortage, according to Merrill Lynch: http://www.bloomberg.com/news/2011-06-13/nickel-plunging-into-bear-market-as-expanding-glut-outstrips-record-demand.html

    * PolyMet is small, but is backed with significant financing by one of the largest companies in the world, the Swiss commodities broker Glencore. Glencore currently controls about 20%, and is poised to control even more. For more on Glencore’s record of manipulating prices, labor abuses, human rights violations, bribery, and other unsavory behavior, check out this video from an Australian news outfit: http://www.youtube.com/watch?v=u6rSBifsvwg

    * To state that “environmentalists” are afraid PolyMet will pollute the Boundary Waters is false. Nobody is under that misunderstanding. There are concerns that PolyMet will pollute the Lake Superior watershed, and that other projects, in the BWCAW watershed, will pollute the wilderness. Please provide a citation of an environmental group that has claimed PolyMet will pollute the Boundary Waters.

    * PolyMet’s draft EIS might have been “generally positive,” but the U.S. Environmental Protection Agency was not. As many recall, they gave the project a failing grade, literally the lowest possible ranking available. The EPA said the project would have unacceptable environmental impacts and the review itself was inadequate and lacked enough information to analyze the impacts. That is why PolyMet is currently back at the drawing board, doing more work, and will release a supplemental draft EIS, rather than proceed as usual to the final EIS.

    * The Duluth Metals/Antofagasta mine would be less than 3 miles from the Boundary Waters Canoe Area Wilderness, the most visited wilderness area in America and a Minnesota icon. As there has been no environmental review yet, it is premature to say there are “fewer environmental concerns.” Its proximity to the BWCAW, and the record of this form of mining to cause serious water pollution is a serious concern, no matter what mine design they eventually settle on.

    * The DNR study of how much money mining sulfide ores could contribute to the school fund is simply “the wildest fantasy,” according to Iron Range commentator and author Aaron Brown: http://www.minnesotabrown.com/2011/03/on-mining-and-future-in-northern.html

    Certainly, no mining company ever plans to pollute. I have no doubt the people of PolyMet, Duluth Metals and other companies have the best intentions, but we should be very careful about opening up a Pandora’s Box of potential water pollution and huge clean-up bills, likely to be left to taxpayers, in northeastern Minnesota.

    • Submitted by Brent Chezick on 05/21/2012 - 05:49 pm.

      “Please provide a citation of an environmental group that has claimed PolyMet will pollute the Boundary Waters.” Nathan John Ness with Move to Amend for example has said it in public and I witnessed it. I was at the protest of the Duluth Chamber of Commerce where Ness confronted David Ross asking Mr. Ross how he felt about Polymet contaminating the Boundary Waters and the subsequent tourism jobs that would be lost there. It is also a common theme in discussions with Occupy Duluth people. It is just one of the many lies being propagated by the anti-mining community to instill absolute fear in the general public.

      “The DNR study of how much money mining sulfide ores could contribute to the school fund is simply “the wildest fantasy,” according to Iron Range commentator and author Aaron Brown:” Well I guess that solves it. Aaron Brown must be the ultimate authority on the subject by being a commentator.

      “Certainly, no mining company ever plans to pollute. I have no doubt the people of PolyMet, Duluth Metals and other companies have the best intentions, but we should be very careful about opening up a Pandora’s Box of potential water pollution and huge clean-up bills, likely to be left to taxpayers, in northeastern Minnesota.” I agree, but isn’t that why these mining companies are going to have to put up assurance money to cover costs in the event of bankruptcy etc?

  2. Submitted by rolf westgard on 07/11/2011 - 01:23 pm.

    Greg:
    First you said “nobody” among environmentalists is concerned about the Boundary waters. Then you went on to express great concern for closeness of the Duluth Metals mine to the Boundary Waters. Actually almost all the protests feature emotional appeals about the Boundary Waters and how terrible sulfide mining is.
    The EPA has taken a stand in opposition to the DNR and Corps of Engineers. We will see how this plays out.
    The actual revenues to Minnesota will depend on the market price of the metals at the time, and how successful these mines are. Tpugh to predict. I just supplied DNR numbers. It will be a lot.
    My main point is that there will be growing pressure to open mining. And everyone agrees it should be done with care.

  3. Submitted by Greg Seitz on 07/11/2011 - 02:05 pm.

    Rolf,
    I said, “To state that ‘environmentalists’ are afraid PolyMet will pollute the Boundary Waters is false.” PolyMet is at least 15 miles from the BWCAW and outside the wilderness watershed.

    And then, yes, I expressed concerns about mining proposals that are much closer to the BWCAW, and well within its watershed.

    I am not sure how you construed that as saying “nobody is concerned about the Boundary Waters.” Many people are concerned about PolyMet’s impact outside the wilderness, and many are concerned about *other* mines’ potential impacts on the wilderness.

    The EPA has more experience reviewing and permitting hardrock mines than the DNR, as we’ve never had such a mine in Minnesota before. They also delegate authority on Clean Water Act permits and can step in. They have a lot of authority and a lot of scientific resources. The grade they gave PolyMet has been given to less than 1 percent of the 11,000 EISes the EPA has reviewed since 1987 (for all kinds of projects, not just mines). We will indeed see how it plays out. In the meantime, the DNR, the Corps and PolyMet are back at the drawing board, per the EPA’s request.

    – Greg

  4. Submitted by rolf westgard on 07/11/2011 - 02:58 pm.

    Thanks for bringing up Glencore, which to my knowledge owns about 10% of Polymet with options and warrants for another 10%. But I see them as having limited liability to the extent of their substantial investment. I contrast that with BP in the Gulf. When things went wrong there was BP with its billions to fix things and pay damages. BP’s minority partners in the project like Anadarko are declining any participation.
    I do suggest that Glencore’s involvement is all PA has the more reason the dirt will soon be flying on the Copper Range. The EPA has bigger fish to fry in our coal fires.
    One of the active environment groups on the Range is Citizen’s Against the Mesaba Project(CAMP). I wrote an editorial in the Duluth News Tribune on the project. If you go to their website you will an article describing me in less than flattering terms. For me it’s like the advertising principle – it’s better to be noticed even if unfavorably, than ignored. The truth sometimes hurts.
    REW

  5. Submitted by rolf westgard on 07/13/2011 - 04:53 am.

    I want to offer a belated thanks to Greg for his perceptive comments on the issues raised in my article. MinnPost has many readers with something to say. It’s unfortunate that so few actually come forward on these articles. I’m not sure why.

  6. Submitted by C.A. Arneson on 07/13/2011 - 12:33 pm.

    Mr. Westgard,

    I wrote the following before I saw your comment about so few people responding to Community Voices; thank you for making the point.

    You fail to mention with your statistics – “PolyMet expects to mine, on average,”91,200 tons per day of material, which would include about 32,000 tons of ore and 3,900 tons of overburden and 55,300 tons of waste rock“ – that there will also be astronomical waste.

    Because your figures for ore, overburden, and waste rock are daily and your figures for metal production are annual – “Annual metal production would total 39,000 tons of copper, 9,000 tons of nickel, 400 tons of cobalt, 22,000 ounces of platinum, 87,000 ounces of palladium, and 13,800 ounces of gold” – it is difficult for readers to understand the impact of total waste after production.

    However, if you multiply the 32,000 tons of ore per day by 365 days for an annual figure, you show readers that for 11,680,000 tons of ore per year, according to your figures, PolyMet would produce approximately 48,404 tons of metals, including approximately 4 tons (3.5 tons, 3.2 if metric tons) of platinum, palladium, and gold (122,800 ounces converted to tons). Leaving 11,631,596 tons of waste (11,680,000 tons minus 48,404 tons).

    That remaining 11,631,596 tons of waste – along with 1,423,500 tons of overburden (3,900×365) and 20,184,500 tons of waste rock (55,300 x 365 days) – equals a grand total of 33,239,596 tons of potentially leaching waste each year in return for PolyMet garnering 48,404 tons of metals.

    Our waters – the priceless resource of Minnesota – are worth infinitely more.

    It also seems you do not understand the connection between permitting PolyMet and subsequent sulfide mining proposals on the edge of the Boundary Waters Canoe Area Wilderness. Once the precedent is set and standards in place with PolyMet’s permit, it would be highly unlikely that any subsequent mining proposal would be refused – regardless of location – as long as the company claims they can meet the standards.

    As we have seen repeatedly with sulfide mining worldwide – and in fact here in Minnesota with PolyMet’s NorthMet DEIS compared to the abysmal EPA rating of the NorthMet Project – prior claims do not match resultant reality.

    Similarly, while I understand you made the drainage distinction as a geographical point, making such a distinction also suggests that it makes a difference, in terms of value, which watershed PolyMet’s NorthMet mine would contaminate. Both Lake Superior and the Boundary Waters are precious to most Minnesotans – and I would venture to say those whose property is within the Duluth Complex, regardless of watershed, also care about their homes, their water, and their health.

    Respectfully,
    C.A. Arneson

  7. Submitted by rolf westgard on 07/13/2011 - 04:54 pm.

    Actually the waste rock and lean ore(mined later) would total about 400 million tons over the life of the mine. Once mining of the East Pit is completed, some of the waste rock would be used to fill in the East Pit and thereby stored subaqueously; however, the
    majority of the waste rock stockpiles would be permanent surface features(piles) with liner and cover systems to prevent metals from
    leaching to the surrounding landscape.
    The mine pit surface overburden would be sorted into organic soils (peat), unsaturated overburden, and saturated overburden. The
    peat and unsaturated overburden would be stockpiled in the Overburden Storage and Laydown Area and the remaining material would be placed in the waste rock stockpile.
    A series of dikes and ditches would capture and convey most of the surface runoff and process water to a waste water treatment facility by the central pumping station. This treated water would then be pumped to the Plant Site Tailings Basin for use as processing makeup water or used to backfill the East Pit once mining is completed.
    This the procedure that satisfied the Corps of Engineers and the DNR, but not the EPA. Take your pick.
    The common protest theory which you also mentioned is the domino theory. Once this is approved, many more projects, some unsafe, will be approved. I can’t answer that one.
    Regards, Rolf

  8. Submitted by rolf westgard on 07/13/2011 - 08:33 pm.

    My major point is that economic pressures are going to cause dirt to fly on what I now consider to be Minnesota’s Copper Range. Whether the mining can be done safely is an open question.
    REW

  9. Submitted by Ross Williams on 07/14/2011 - 10:15 am.

    “My major point is that economic pressures are going to cause dirt to fly on what I now consider to be Minnesota’s Copper Range. Whether the mining can be done safely is an open question.”

    Actually the question is whether it can be done “safely” and profitably. The current controversy is over the level of regulation that should be imposed. The opposition to additional regulation is largely driven by the belief, or fear, that it will make the operations unprofitable.

    The author’s basic point seems to be that eventually prices will reach a level where it will be profitable to mine the ore regardless of how strict the environmental controls. That is probably correct. But it is clear that is not the case right now. Leaving the ore in the ground will provide jobs for future generations, until the technology develops that will allow it to be mined without environmental damage.

    Anyone who has followed the regulation of water quality with regard to wild rice production knows that the current debate is over what level of environmental damage is acceptable, not whether you can eliminate it. While that will always be the case to some extent, the longer we wait, the less environmental damage will need to be accepted.

  10. Submitted by rolf westgard on 07/14/2011 - 12:21 pm.

    Good point, Ross, about waiting. Reminds me of a comment by Saudia Arabia’s king Abdullah when his oil people wanted to drill more wells in the Saudi desert. He said, “I keep no secret from you that when there were some new oil finds, I told them: ‘No, leave it in the ground, with grace from God, our children need it’.”

    The same could be said of Alaska north slope oil. Most of it is too gas rich, anyway. We need to wait for pipelines.

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