photo of lake in northern mn
Given the incalculable value of the wilderness resource that a copper-nickel mine in the Rainy River watershed puts at risk, it can credibly be argued that this is the worst place on the planet for such a mine. Credit: Creative Commons/Flickr/Greg Gjerdingen

Marshall Helmberger

The ongoing debate about the pros and cons of copper-nickel mining near Ely has been cast by many as the stereotypical clash between jobs and the environment. It’s a familiar means of framing the issue, but I believe it overlooks a critical component — namely that the fundamental argument against copper-nickel mining near Ely is economic, not environmental.

By saying so, I don’t mean to give short shrift to the environmental concerns, which are significant. Anyone who believes that the environmental impacts of a copper-nickel mine will bear any relationship to the effects of Ely’s Pioneer Mine, or even modern-day taconite mining, is badly misinformed. Due to the geological differences, sulfide-based ore mining is inherently far riskier, and those risks are heightened dramatically in a water-rich environment. Given the incalculable value of the wilderness resource that a copper-nickel mine in the Rainy River watershed puts at risk, it can credibly be argued that this is the worst place on the planet for such a mine.

Supporters argue that the risks are worth it for the economic boost they believe such a mine would bring.

Yet there is a remarkable amount of economic data and research, as we reported on our front page Sept. 6, that suggests that a new mine will not bring the economic benefits that its supporters believe. Ely, over the past few decades, has made considerable progress pursuing amenity-based economic development, which is a well-established and widely pursued model for economic growth in the U.S. Far from boosting the economy, there is considerable economic research, including the study recently produced by a pair of Harvard economists, that predicts a new mine will simply disrupt the progress Ely has made and leave the local economy weaker overall within just a few years.

The evidence for Ely’s recent success is overwhelming, and it isn’t just limited to Ely. In communities along the edge of the Boundary Waters and the Superior National Forest, we have seen significantly higher rates of in-migration of residents from other areas than most other non-metro counties in Minnesota. High percentages of those migrants are professional and well-educated, and bring relatively high incomes, either through ongoing earnings or investments, that are spent in the regional economy. Because many of these new residents, whom we can call “lifestyle residents,” are not tied to a location for their employment, they are highly mobile. If the qualities that draw lifestyle residents to Ely are threatened, some will choose to relocate. Many more will simply look elsewhere without ever considering our area.

Keep in mind, we’re not talking about relatively low-paying tourism jobs versus mining employment. Tourism jobs are a nice bonus, but I’ve never viewed them as the basis for a vibrant, year-round economy. The jobs lost from short-circuiting Ely’s amenity-based economic activity include the often high-paying professions that these new residents bring with them, along with jobs that provide support services for these new residents, including sectors like construction, real estate, finance, insurance, building supplies, home furnishings, and some kinds of light manufacturing.

These are solidly middle-class jobs we’re talking about here. This isn’t a question of mining jobs versus tourism jobs. That’s a false argument made by people who should know better.

The recent Harvard study used a standard economic model to examine 72 different economic scenarios with mining, and without. In all but three, the Ely area economy did better without mining than with it.

And the Harvard study overlooked one very important factor. In its analysis, the economists looked at a 20-year time horizon assuming that a mine is opened this year. And it found that in the first few years the added income from mine construction and initial mining would lead to more jobs and local income in the area economy. But it also found that over five-to-ten years, the disappearance of some existing lifestyle residents, who would choose to relocate, along with a modest reduction in the in-migration of new lifestyle residents, was significant enough to leave the Ely area economy worse off in terms of jobs and local income.

I believe the negative economic impacts of mining would actually be much worse, because we all know a new Twin Metals mine won’t be built this year. The earliest such a mine could open is a decade from now, and that’s wildly optimistic.

That means that the negative effects from a slowing of in-migration of new lifestyle residents and the gradual departure of some who already live here, will begin now, while the temporary (and still highly speculative) economic benefits of a possible new mine won’t be achieved for 10-20 years.

That means the economic costs to Ely’s economy will have 10-20 years to accumulate before the short-term boost a mine might bring even occurs. Under this more realistic scenario, Ely’s economy begins to see the downsides of mining whether or not a mine is ever built. And that means that Ely, in the end, never sees an economic upside (not even a temporary one) from a new mine.

Those who doubt the impact of lifestyle residents on the Ely economy should take a look at the report we issued last August, “Ely’s golden goose: how the townships drive Ely’s economy,” which clearly demonstrated that the townships (where most lifestyle residents reside) provide the lion’s share of local spending that maintains the Ely area economy.

The divide within the community over this issue further hampers Ely’s economic progress. While some people don’t mind conflict, many do, and the conflict within the community over this issue, which will now carry on for decades, is guaranteed to cost the area economy. Under the amenity-based model of economic development, economic progress is made through the individual decisions of thousands of people who choose to relocate to a community that offers them the lifestyle they desire. If Ely is seen as a community that’s hostile to new residents, or as a place where the amenities these potential new residents seek are under threat from industrial development and pollution, most will simply choose to go elsewhere.

There are dozens of economic studies to back up these arguments. I’m including a bibliography below in case readers want to check out some of the research themselves.

I recognize those who support the Twin Metals project may have a different view. But where are the economic studies to show that copper-nickel mining will actually benefit Ely’s economy? The Skurla study, produced by UMD’s Labovitz School in 2012, which is touted all the time by copper-nickel mining boosters, is highly outdated. Besides, 90-percent of the economic impact it projected came from anticipated development in the taconite industry. It attributed barely 600 direct jobs to non-ferrous forms of mining, and none of those new jobs have arrived. Nor have the 5,000 new taconite jobs that the study predicted. There are no more workers in the taconite industry today than there were when the study was produced. If anything, the Skurla study was just another example of how frequently hopes are dashed on the Mesabi Iron Range because its mining dependent economy relies on hugely expensive and risky investments in production capacity for commodities that fluctuate wildly in price.

The bottom line is this. If there were economic data to suggest that a new copper-nickel mine near Ely would create long-term economic prosperity above and beyond the current economic model, one could at least argue about whether the environmental and related economic risks associated with the project were justifiable. But when the economic data points to just the opposite, there is no longer an argument, just stubborn refusal to face the facts. For Ely political leaders to continue to push for a mine in the face of such evidence is questionable. While the community spends the next decades fighting over it, potential economic progress will be lost. And a new mine risks killing Ely’s sustainable golden goose for short-term benefit at most, while leaving the community worse off economically than it is today. Smart political leaders would recognize there’s little to gain, and far too much to lose in the pursuit of copper-nickel mining at the end of the road.

But don’t take my word for it. Read some of the studies for yourself.

Cited studies:

Marshall Helmberger is the publisher of The Timberjay newspapers (including the Ely Timberjay, Tower-Soudan Timberjay and Cook-Orr Timberjay), where this commentary originally appeared. It is republished with permission.

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16 Comments

  1. This is a cogent and well written version of the point that I’ve been making for years. Sulfide ore mining is bad for Minnesota, even if it wasn’t an environmental disaster (which it always is).
    Helmberger doesn’t mention that the big multinational mining companies behind these mining proposals are the worst companies on the planet, controlled by billionaire oligarchs who care not one whit for the future of our communities.
    Minnesotans are too smart to fall for the sulfide mining scam.

  2. Thank you for this well-sourced article, I may have to come back to it for the bibliography – I had no idea there was so much data already out about this proposal.

    I’m eager to hear what people running for office in the area and the state have to say about this. It seems like the sooner this nonsensical idea gets quashed, the better off the community will be. It would be more practical to initiate fracking along the North Shore than to do this kind of mining in the boundary waters. In other words, it’s ridiculous and we need to put a stop to it immediately. No years-long studies, just shut it down.

    There was another article today interviewing Arne Carlson, who is “petrified” by the idea this mining will take place. Interesting reading about how we used to have a state commission for assessing our water resources until Pawlenty shut it down. I think it would be worth asking officials running for election whether they’d consider reinstating that commission.

    We don’t know how lucky we are in this state to have plentiful clean water – which makes us look like easy marks.

  3. Do you have any studies done on a sulfide mine with 2018 regulations? You can read a counter to the studies sited here just by reading the regulations imposed on the permitting process for sulfide mining in 2018. You can have both a clean environment and mining. Those who say no to this are living in the past.

    1. The focus of the article is the economics of the mining, not the environmental effects of the mining.

    3. I’m going to agree with William and Tory on the cogency and sourcing of this article, well done. Even without the factor of “lifestyle residents” and their contributions to local economy/culture, the long term economic risk vs. reward appears a balance sheet deep in the red for Minnesotans. Not a good color for the land of sky blue waters.

      1. Agreed as above. I’ve noticed a trend with the pro-mining crowd. If there is an article (here or elsewhere) pointing out the obvious environmental danger of sulfide mining, all the comments are about the economic benefits. Now that there’s article pointing out the economic benefits are a chimera, the comments have turned to being about how sulifde mining can be done with environmental responsibility.

        Trial lawyers have an old saw- if the facts aren’t on your side, pound on the law. If the law isn’t on your side, pound on the facts. If neither is on your side, pound on the table. I’m expecting to see pro-mining enthusiasts resorting to pounding on the table soon. That’s all they’ve got left.

        1. Well that, and a bunch of politicians who are lap dogs for a foreign corporation that will leave us high and dry as soon as the profits dry up and before the you know what hits the fan.

          I’d have a very low level of grudging respect if they were selling out to US corporate interests. But they’re behaving like politicians in some third world country that can’t even keep the lights on all day.

  4. I was just in Ely on Monday to take my dog to the vet. The ‘growth’ that is written about in the article certainly cannot be seen from the street. Many closed businesses, and little pedestrian traffic for a Monday afternoon.

    1. two points. 1) Anecdotes are not data. one visit, on one afternoon proves nothing 2) To go back to the question raised by the article- what “growth” can be expected from the mine? The studies and data that currently exist indicated that the Ely area will LOSE population and income from people who don’t find it agreeable to live near a mine. If the mine brings in $100, but people leaving take out $150- the overall economy of the area loses. How is the mine a win in that scenario?

  5. Thanks Mr Helmberger for keeping the truth of sulfide mining destructiveness in the forefront. The entire Iron Range needs to refit. Mining is a way backwards for jobs anyway. Things are clearly on hold as the debate comes to conclusion. It is difficult to reap investment in the face of what could become the death of the resource for investment-the land and the water. The thing is I do not see any suggestions for other forms of investment and jobs coming from th pro plymet crowd. They are the one horse town crowd still Iiving in that reality and trying to put everybody’s eggs in the same basket. Dare diversity and diversification or soon other parents like mine will push their children away from staying there. Or things will become so inhospitable that it will be dangerous to stay ala hog farm and coal ash overflows in North Carolina with it’s climate denier laws.

  6. As an economist it is good that they ran scenarios because impact models are better at doing comparative rather than absolute economics. And I am pleased that the references were supplied.

    Reading the Harvard letter is most enlightening. What they have done is confirm while not entirely intuitive is that resource extractive activities which are almost always boom bust cycles are not good economic growth strategies. What they are is good quick short infusions of cash with boom bust limp along periods of moderate employment and unemployment. We have seen it on the iron range in Minnesota and the Oil fields in the Dakotas, not to mention lumbering in the 19th and early 20th century. Welcome to market economics and resource exploitation.

    The migration to amenities studies however are based on scenic resources that are a lot rarer and more spectacular than our mosquito/ black fly infested swampy (or wetland rich) north woods, and have more available infrastructure. And I say that as an almost lifelong Minnesotan.
    It can indeed produce lots of low paying low benefit jobs in quantity. Although given the current unemployment rates do we need more of those jobs, can we even fill jobs like that.

    The paper makes a case for the least worse case scenario. And given the alternatives and the past history of significant public cash investments it that may be the best than can be done.

  7. Well, here we have a region with an economy based on mining… that’s been in crises for what? 60 years? My whole life (50+ years) I’ve been hearing about the “next” big revival of the mining economy on the Iron Range. Obviously mining economies aren’t a good bet for local economies. Boom and bust industries always end in bust, a fact ghost towns all over the world attest to. Mining companies have been “promising” to protect the environment for decades… then they lobby to change the laws to that they don’t have to protect the environment. It’s simply foolish to buy into this gambit at this point.

  8. I love a good debate and argument. Please counter the assertions with real data and facts, or don’t waste everyone’s time.

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