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EDITORIAL

Copper-nickel mining

Our local economy has already taken a hit from the proposed mine

Posted 6/24/20

Antofagasta, the massive international copper-mining giant behind the proposed Twin Metals project, needs to start playing straight with Minnesotans, particularly residents here in the North Country. …

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EDITORIAL

Copper-nickel mining

Our local economy has already taken a hit from the proposed mine

Posted

Antofagasta, the massive international copper-mining giant behind the proposed Twin Metals project, needs to start playing straight with Minnesotans, particularly residents here in the North Country. Their proposal for an underground copper-nickel mine just upstream of the 1.1 million-acre Boundary Waters Canoe Area Wilderness has sparked division in our region that is, undoubtedly, creating a drag on the local economy.
Nearly a quarter of residents in the townships surrounding Ely told University of Minnesota pollsters back in 2014 that the new mining in the local area would likely prompt them to leave the area. That’s concerning enough, considering that Ely’s surrounding townships generate more than half of the community’s income, thereby fueling the Ely economy.
That’s a reality that can be quantified. What’s tougher to recognize is the degree to which uncertainty over Ely’s future direction has been harming the local economy in recent years.
If nearly a quarter of existing residents would consider leaving the area in the event that a mine is opened, how many prospective new residents have simply chosen to look and invest elsewhere rather than consider Ely? If the amenities that attract new residents to the community are threatened, it’s only rational for people to be cautious.
If there were the potential for a huge economic payoff from a mine, one might at least be able to accept the sort of limbo in which Antofagasta has placed the community. Every year that the Twin Metals project casts a giant question mark over Ely’s future, is another year during which the community is likely underperforming its potential.
We’ve previously reported on the study conducted by two Harvard economists, who found that the area would be better off, in terms of community income, without a mine. Yet, Ely currently is experiencing the worst of both worlds: fear of a mine is almost certainly limiting new investment and in-migration from those attracted by the region’s natural amenities. At the same time, the prospects for the Twin Metals mine remain far more remote than many mine boosters in the community care to admit.
The widespread opposition to the Twin Metals proposal in Minnesota certainly doesn’t bode well. While the Trump administration appears intent on ignoring the law in its mad dash to complete an environmental review, it is the state of Minnesota that will issue any permits for the mine. And a broad majority of Minnesotans do not support a dangerous sulfide-based mine on the edge of the Boundary Waters.
But that’s mere politics. In the end, mines are about money, and on that score, the prospects for the Twin Metals project look even bleaker. It’s noteworthy that Twin Metals issued a mine plan late last year that failed to include any financial projections. The trouble is, any independent financial projection would expose the truth about Twin Metals, and that is, that it cannot operate profitably under anything close to current or even historical prices for copper or nickel.
Let’s be blunt— at current metal prices, even PolyMet, a proposed open pit mining operation that obtained its processing facility for pennies on the dollar— can’t make a buck. PolyMet’s 2018 financials showed a marginal ten-percent return on investment with copper at $3.29 per pound (it’s currently at $2.68 per pound) and nickel at $7.95 (currently at $5.68). If an open pit mine can’t make it, the prospects for an underground operation, with a substantially higher upfront investment requirement than is the case with PolyMet, is nothing more than pie-in-the-sky.
The Twin Metals project is banking solely on the theory that copper prices are going to increase sharply over the next two decades, eventually making extremely low-grade deposits like those found in Minnesota economical. Anything is possible, of course, but the odds are against it. A recent World Bank estimate projected that copper demand will increase by just seven percent between 2017 and 2050. That’s not seven percent annually. That’s seven percent, period. Besides, metal recycling is largely built into all green technologies, which means the economy will make more efficient use of metals in the future.
All of which makes the current talk of a Twin Metals mine so self-defeating for Ely’s economy. Supporters of the mine spin a tale of economic woe in the absence of a mine, which discourages new investment, while the future risk posed by talk of the mine keeps the alternative economy, based on outdoor amenities, stuck in first gear. It’s a lose-lose.
That’s why Twin Metals needs to put up or shut up. If they can’t produce an independent financial projection that shows the mine will be able to operate profitably at anything close to current metal prices, they should pack up and go back to Chile. As it stands today, they’re only hurting Ely’s economy.

Comments

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Bill Hansen

Is it possible that both PolyMet and Twin Metals are actually money laundering schemes for foreign oligarchs who make their real money in drug trafficking and illegal arms sales? Glencore, PolyMet’s owner, is widely cited as the most corrupt company on the planet, currently the target of multiple investigations.

It’s impossible to trace the real investors in these projects because they are protected by numerous shell companies and sham accounts in foreign tax havens. The Panama Papers revealed just how prevalent this practice is among the ultra-rich.

If these mines are money laundering operations, the investors may not care about profitability. Their ruthless persistence in pursuing these projects, in the face of terrible market projections, lends credence to this idea. Is it also possible that they are the source of the flood of untraceable campaign money in Minnesota’s last few elections? Again, no way to know for sure.

The question for Minnesota is: Do we want to place our economic future in the hands of the world’s most corrupt companies? Food for thought.

Thursday, June 25
Steve Jacobson

I guess to answer your question - yes, we do want our economic future in their hands and as you are well aware Bill the polls (elections) have proven we do.

Thursday, June 25
Reid Carron

Are you referring to the election Trump lost by about 3 million votes? The election that put Trump in office through the perversity of the electoral college, which exists because the slave states would otherwise not have ratified the Constitution? That election? Or do you refer to the elections of Tom Bakk and Rob Ecklund, who are now lying about their effort to stiff the Fond du Lac communities? Just curious.

Thursday, June 25
Steve Jacobson

No Reid, I'm talking about the local election that clearly pitted mining vs. non-mining. If you remember, the liberal polls showed that the candidate had the support of most of the area. But in the end except for one township he got smoked!

Friday, June 26
Reid Carron

Mr. Hansen quite clearly was referring to all Minnesotans when he used "we"--not just people who voted in a local election in Northeastern Minnesota. It's impossible to tell from the comment what local election it was that the "liberal" polls supposedly misread so badly. One local election that was significant however was the 2018 Congressional election, when Trump acolyte and mining industry mouthpiece Pete Stauber won the 8th District U.S. House election over Joe Radinovich of the DFL. The 8th is a big district, and in addition to the Arrowhead it includes a vast area south of Duluth all the way to the edge of the Twin Cities. In that southern portion of the district typical Republican issues, not mining, were in the forefront. In that 2018 race, significant smoking was done by the people of St. Louis County, who know Pete best--in St. Louis County, the vote was Radinovich 57,108--Stauber 38,496. Stauber lost Lake and Cook Counties by big margins also--it was nearly 2-to-1 in Cook County. Want to get more local? Here are the official votes in Ely and surrounding townships: Ely (Radinovich 828, Stauber 820); Morse (Radinovich 404, Stauber 382); Fall Lake (Radinovich 236, Stauber 194); Eagle's Nest (Radinovich 86, Stauber 80). Since that election, the world has changed dramatically, and who knows for sure what will drive votes this year? But I am confident in saying that in November 2018 the local "we" in Northeastern Minnesota were saying emphatically that they did not want to place the public's lands and waters, and the economic future of the area, in the hands of corrupt foreign companies. "We" do not support sulfide-ore copper mining in Northeastern Minnesota.

Friday, June 26
Steve Jacobson

No, the one I was talking about, the one that pitted mining vs. non-mining the term "smoked" was used to describe the election results. Remember?

Monday, June 29
Scott Atwater

Note to Reid Carron: Abraham Lincoln was elected by the "perversity of the electoral college". You remember Abe, the guy who put an end to slavery?

Monday, June 29
snowshoe2

During the Iraq war and again during the Iran embargo, Glencore would not stop trading after being asked repeatly, they still sold material and goods to those countries. Some was for their Nuclear reactors.

Glencore in Africa would not stop using arsenic for their copper mining and dumped it into a major river used for the countries drinking water, Thus a source of drinking water was done. Glencores answer. Well we would have to lay of people. The government was furious

Monday, June 29
Reid Carron

Note to Scott Atwater: Even a blind hog finds an acorn now and then.

Monday, June 29
Reid Carron

But the more obvious answer is "Of course he was. Every president is." But the very definition of perversity is putting in office someone who received fewer popular votes than another candidate.

Monday, June 29
Scott Atwater

Had the Democrat party in 1860 had just one candidate rather than two they would have won the popular vote, but Lincoln still had the Electoral College votes to win. Why not just admit that the Electoral College system is sound. How many more years do you suppose slavery would have continued had the Democrats won the 1860 election? The southern states most certainly had the popular vote to do exactly that.

Monday, June 29
snowshoe2

That was a weird election Lincoln's name wasn't even on the ballot in 10 Southern States - Lincoln won a plurality of the popular vote (40%) and a majority of the electoral vote.

Tuesday, June 30
DJB

Electoral College: If you voted for trump in Minnesota, your vote counted for exactly nothing, you may as well have thrown your ballot in the garbage. Hillary Clinton won Minnesota's popular vote so she got all of its electoral college votes. trump lost the popular vote so he got zero electoral votes.

That is how the electoral college works.

Tuesday, June 30
Scott Atwater

A small number of heavily populated states can't choose the president for the remainder of the states........that is how the Electoral College works.

5 days ago
Reid Carron

One either believes in democracy or one doesn't. People matter, not states, with respect to the election of a president. The founders got it wrong.

5 days ago
Scott Atwater

Rule by simple majority is not a sound principle, thankfully the founders of our Constitutional Republic realized this. As I've already pointed out, slavery would have existed much longer in the US had the Democrats won the 1860 election. There is no rational argument to be made for mob rule.

5 days ago
jtormoen

What an interesting argument ... in favor of fascism

4 days ago
bonfire

"Mining vs non-mining" is a disingenuous construct. Most people who are concerned about effects of copper-nickel mining with good reasons are not against mining as we grew up with and many of our families worked in the mines. The view that only copper-nickel mining, putting all the eggs in one basket, can "save" the Range economy and/or bring back the boom times is like wishing to find that pot of gold at the end of a rainbow. It's just not that cut and dried as Marshall has pointed out. Nothing ever is.

It's interesting that what isn't mentioned here about the economy is the gigantic elephant in the room, the pandemic. The economy here on the Range nor in entire US won't recover until the pandemic is under control and even then, economy will take a long time to get up to speed.

3 days ago
Steve Jacobson

True, but minimum wage jobs for four months of the year certainly will not help the recovery!

2 days ago
bonfire

I suppose the pandemic bringing US economy to a standstill is just too "removed" from the Iron Range for many Rangers to pay attention.

Even Goldman Sachs economists wrote in recent report that a national mandate requiring face masks would save 5% of GDP losses, salvage roughly $1 trillion of economic activity.

2 days ago