Underground mine would gross $12 billion in first ten years and cost $2.77 billion to construct
ELY— The proposed Twin Metals underground copper-nickel mine would cost $2.77 billion to build, would operate for 30 years and employ approximately 850 workers during mining operations, according to a pre-feasibility study released by the company on Wednesday.
Over a thirty-year mine plan, the massive underground operation would produce an estimated 5.8 billion pounds of copper, 1.2 billion pounds of nickel, four million ounces of palladium, 1.5 million ounces of platinum, and one million ounces of gold. It could also turn a solid profit, according to the company, thanks to relatively low production costs, the company said, generating about $12 billion in gross revenues over the first ten years of operation, with projected earnings before interest, taxes, depreciation and amortization of $6.19 billion.
The company’s stock dropped 22 percent on the news, finishing the trading day at 33 cents per share. Investors have questioned where the junior mining company will raise the money needed to build the planned mine. The company’s major partner, Chilean mining giant Antofagasta, announced earlier this summer that it would not exercise its option to take a controlling interest in the company, nor would it invest additional dollars in the project.
The Twin Metals project, a joint effort of Duluth Metals and Antofagasta, would be one of the largest underground mines in the United States, targeting a rich deposit of copper, nickel and precious metals on either side of Birch Lake, near the southern edge of the Boundary Waters Canoe Area Wilderness.
The technical report provided with the study predicts the mine would produce on average 50,000 tons of ore per day during its planned three decades of operation. Twin Metals officials have said the proposed mine would resemble an “undergound city,” with features like roads, lights, plumbing, electricity, and air circulation supporting a 24-7 operation more than 1,500 feet below ground.
The project is “one of the most compelling greenfield copper-nickel development projects in the world,” Duluth Metals President and CEO Kelly Osborne said in a statement announcing the new technical analysis.
But it’s also a controversial project. Opponents say a mining operation on the edge of the Boundary Waters would devastate more than two dozen resorts and businesses that cater to tourists who come for the solitude and clear lakes in and around the Superior National Forest. The BWCA is the most- visited federally-designated wilderness area in the country.
They also say potential water pollution, generated when sulfide- bearing ore comes into contact with air and water, could flow into the pristine lakes and rivers of the BWCA.
In contrast, the proposed PolyMet copper-nickel mine near Hoyt Lakes, which lies in the Lake Superior Watershed, is a smaller project. The PolyMet mine has a proposed 20-year lifespan, would employ about 300 people, and produce about 32,000 tons per day. It also is much further along in the regulatory process, with state and federal regulators evaluating public comments to the project’s environmental impact statement.
Twin Metals is still nearly two years away from submitting a specific mine plan to begin the environmental review process.
According to a project configuration Twin Metals unveiled earlier this year, employees would enter the mine through two long, sloping declines near the Ely airport, about six miles south of town.
Ore would be crushed underground, and a finished concentrate would be piped about 15 miles south to a new facility outside Babbitt, near the existing North Shore taconite mine.
The company also would ship about 45 percent of its tailings, the waste material left behind after the ore is concentrated, to the site located just across the Laurentian Divide, in the watershed that flows into the St. Louis River and eventually to Lake Superior. The remainder of the tailings would be mixed with cement and fly ash and backfilled into the mine.
Osborne said in a conference call with investors that Minnesota is an optimal place to build a new mine because of strong support for the existing iron ore mining industry, an able work force, and access to rail and shipping on the Great Lakes.
“We believe Minnesota is a great place to build what I believe is one of the world’s best 21st century mines,” he said.
Minnesota Public Radio’s Dan Kraker contributed significantly to this report. You can hear MPR news at 89.3 FM in Ely.