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Mine-waste release in B.C. raises question: Would better regulators oversee Minnesota mines?

It seems probable that Canada’s Mount Polley story will evolve as a tale of chronic regulatory underperformance.

Mount Polley: too little oversight, too much overlooking

Last week’s tailings-pond failure at the Mount Polley mine in British Columbia has surely heightened Minnesotans’ worries about the riskiness of projects being advanced by PolyMet, Twin Metals and other companies with stakes in the ground in our north woods.

No two precious-metals mines are exactly alike, of course, but they do share great similarities — including the need to retain crushed-rock tailings and water, in vast basins formed of bulldozed earth and rock, for centuries. And Mount Polley’s is far from the first to fail.

In his blog for the Strib, Aaron Brown asked PolyMet Mining Inc.’s LaTisha Gietzen for her thoughts on what would prevent a similar horror from unfolding here. As you might expect, she feels there are numerous differences between the Mount Polley mine and proposed PolyMet operations, sufficient to support her confidence — and yours — that a similar breach can’t happen here.

But already I think it’s probable that the Mount Polley story will evolve less as a tale of sudden and unforeseeable mishaps, or of cynical mine mismanagement, than as one of chronic regulatory underperformance — too little oversight, too much overlooking — by the agencies who protect the public’s interest, its resources and its safety.

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It has not taken Canadian journalists long to demonstrate that Imperial Metals, seeking to ride a wave of high copper prices, dramatically expanded both its production and its tailings storage problem at Mount Polley in the last several years — while warnings from its own engineers, employees and other knowledgeable observers couldn’t gain a sympathetic  hearing with the company or its overseers.

Whether Imperial Metals is a good, bad or average mining company, I’m not prepared to guess. But I don’t think that’s actually the most important question for Minnesotans to be asking right now, or in the months to come.

What matters most is whether we can know with confidence that the regulators PolyMet and others will answer to in St. Paul, and in Washington, are demonstrably and sufficiently superior to Mount Polley’s overseers in Vancouver and Ottawa, who actually have a lot more experience with precious-metals mines.

And who are not, by the way, situated in one of those environment-trashing political cultures we’re told we have a moral responsibility to quit relying upon as sources for copper we can dig ourselves.

Market drives mining pace

Here’s a rough outline of what happened in the years leading up to last week’s collapse, drawing on reports from a variety of Canadian journalists:

Mount Polley, a modern mining operation, began production in 1997 and stopped just four years later as the copper market weakened. Four years after that, in 2005, rising copper prices brought the mine back online and then moved Imperial Metals to propose, in 2009, an expansion beyond the mine’s original plans and permits.

As part of that expansion, Imperial Metals sought  to extend the capacity of its tailings pond in two ways: by making it deeper, and by steadily releasing water and other effluent into a nearby creek. An analysis conducted in 2011 determined that without some effluent release, expanded mining operations would fill the pond to overflowing.

British Columbia’s environment ministry approved most of the expansion program in 2011, and extended the mine’s overall operating permit to 2024. It then signed off in 2012 on the effluent discharges, subject to limits on contaminant content and overall volume; the company was allowed to increase the creek’s daily flow by 35 percent.

The unplanned effluent release in last week’s breach of a tailings dam is estimated at about 15 million cubic meters, two-thirds water and one-third solids. There is high concern about the content of the mine wastes, which include toxic metals, but so far government tests have not shown unsafe contamination levels downstream.

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On the other hand, tribes with rights to salmon downstream report that when they try to wipe their catch with newspaper, to remove natural slime, the skin is coming off, too.

The ministry says Imperial Metals didn’t break ground on the expansion until all the permits were in place. But a former provincial legislator, Bob Simpson, questions the entire process, telling the Vancouver Sun that

Mount Polley was originally permitted as a closed-containment mine, that “there was never supposed to be effluent released from the tailings,” and that the government was “fully aware” that the mine’s pond was “too small for its operations.”

The price of copper allowed the company to mine ore bodies that were originally dismissed as uncommercial, even though it couldn’t accommodate the additional tailings, Simpson said. “The government is directly implicated in this breach. … The Ministry of Mines approved the mine expansion … failing to account for the increased effluent into an already suspect tailings pond.”

Government changes hands

By some measures, British Columbia’s oversight of Mount Polley and other mines in the province seems to have declined sharply after control of the provincial government shifted from the New Democratic Party to the more centrist Liberals in 2001.

Drawing on official reports from the provincial Ministry of Energy and Mines, the Tyee news magazine showed that inspection visits to British Columbia’s mines during 2012, the most recent year for which data could be had, totaled 1,163, of which only 875 were actual inspections; the number of investigations and enforcement actions plunged as well.

Whichever number is used for inspection activity, it’s still about half the 2,021 recorded 11 years earlier — and way higher than the 399 recorded in 2004. (However, the Tyee — a respected, progressive voice in independent journalism — does not address the slowdown in activity at Mount Polley, and presumably other copper mines, in the initial three years after the Liberals’ victory.)

Soon after news of the tailings dam’s breach hit the headlines, the activist site, which opposes the copper/nickel mining projects proposed for Minnesota’s north woods, pointed out that this “Latest Mining Catastrophe Has Direct Minnesota Ties.”

The link? Imperial Metals’ engineering company Knight Piésold, which “designed, engineered, and oversaw the construction of the Mount Polley tailings dam,” also advised the Minnesota Department of Natural Resources in its review of the proposed PolyMet mining project.

(Knight Piésold  was also hired to design tailings storage for the proposed Pebble Mine  at Alaska’s Bristol Bay, according to the Cordova Times.)

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Mine’s engineering firm resigns

That looked like an intriguing angle to me, too, until I found the articles about Knight Piésold’s having bailed out of Imperial Metals in 2010, warning the company that it might be overplaying its hand with heavier use of the tailings pond than originally envisioned.

Knight Piésold was quick to call attention to this disassociation from disaster on Friday, even sharing the letter in which it resigned as the mine’s “engineer of record” and notified Imperial Metals that

Knight Piésold will not have any responsibility for any aspects of the on-going operations, or of any modifications to the facilites that are undertaken from now onwards. … It must be understood that Knight Piésold will no longer have any responsibility for the performance of the tailings storage facility.

The engineering company’s position now is that changes made to tailings storage at the Mount Polley site were such that “it can no longer be considered a Knight Piésold design.” And the big question of the moment for Canadian journalists, as yet unanswered, show the mining and environment ministries responded to CC copies of the letter, including its admonition that

The embankments and the overall tailings impoundment are getting large and it is extremely important that they be monitored, constructed and operated properly to prevent problems in the future.

Imperial Metals’ positions

In fairness, I’ll note the company’s position as shared with the Bloomberg Vancouver bureau that both the tailings pond and dam were “operating within the parameters of the original design at the time of the accident.” Also, its assertion that the problems at Mount Polley need not delay the start of operations at the new Red Chris mine later this year. That mine, the Seattle Post-Intelligencer notes, is on the Iskut River, “a principal tributary of the Stikine River, which crosses into the United States near the Alaska cities of Wrangell and St. Petersburg.”

Meanwhile, the Vancouver Sun reports that Imperial Metals’ $15 million insurance coverage for property loss and business interruption, and $10 million in third-party liability coverage, isn’t going be nearly enough to take care of the Mount Polley cleanup.

While Imperial Metals says it is too early to provide a cleanup cost, the collapse of the mine waste dam in 1998 of the Los Frailes lead-zinc mine near Seville, Spain, cost hundreds of millions of dollars.

Imperial Metals vice-president of corporate affairs Steve Robertson said Saturday he would be guessing at a cleanup at cost at Mount Polley. The company has, however, vowed to do all it could to “make right” the effects of the dam collapse.

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A BMO Nesbitt Burns Inc. analysis pegged the cost to the company at $200 million. That does not include legal damages that could double that amount. Notice of a class-action lawsuit was filed against Imperial Metals Thursday on behalf of investors who bought shares in the corporation after Aug. 15, 2011.

The significance of that precise date isn’t clear, but the plaintiffs’ lawyer referenced “a report that raised some questions about that tailings pond and there were some government reports that raised questions as well.”