Serving Northern St. Louis County, Minnesota

DNR issues draft permit to mine

One of numerous permits needed for state’s first copper-nickel operation

Marshall Helmberger
Posted 1/10/18

REGIONAL— Nearly two years after approving an environmental impact statement on the proposed PolyMet copper-nickel mine near Hoyt Lakes, the Department of Natural Resources has issued the company a …

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DNR issues draft permit to mine

One of numerous permits needed for state’s first copper-nickel operation

Posted

REGIONAL— Nearly two years after approving an environmental impact statement on the proposed PolyMet copper-nickel mine near Hoyt Lakes, the Department of Natural Resources has issued the company a draft permit to mine.

The permit is one of nearly two dozen state and federal permits that the company will need before opening Minnesota’s first copper-nickel mine, but it’s considered the most important since it covers the totality of the planned mining operation. The issuance of the draft document signals that state regulators are prepared to go forward with allowing the operation, as long as the company agrees to a long list of conditions and financial assurance requirements spelled out in the document.

That’s considered likely, since the document was prepared in close consultation with PolyMet representatives.

“This really does involve a lot of sitting around the table,” said DNR Commissioner Tom Landwehr. “There’s been a lot of back and forth and some tough negotiating on both sides,” he added.

The public will have its chance to weigh in on the proposed permit during a 60-day public comment period that ends March 6. The DNR is also planning public hearings on the document, set for Feb. 7 at Mesabi East High School in Aurora, and Feb. 8 at the Duluth Entertainment and Convention Center. The DNR will host open houses at both events beginning at 1 p.m. in Duluth and 4 p.m. in Aurora, followed by public comments from 6-9 p.m.

The draft document spells out how PolyMet plans to construct and operate its proposed open pit mine, processing plant and tailings basin, as will as how it plans to close and restore the site and to replace nearly 1,000 acres of wetlands the mine will destroy. It also outlines the company’s plan for long-term water treatment at both the mine site and the tailings basin. The project’s environmental impact statement predicts that water treatment will be necessary at both locations for centuries following closure of the mine and the permit to mine outlines how that treatment will be done and how the company plans to cover the long-term costs of that treatment. That’s part of the permit’s financial assurance component.

The draft permit would require PolyMet to put up $544 million in financial assurance in the first year of mining, which is similar to the number that PolyMet proposed in its recently revised permit application. Most of that would be pledged in the form of letters of credit or surety bonds, rather than actual cash.

The numbers would rise to more than $1 billion at the midpoint of the mine’s 20-year projected lifespan.

The $1 billion figure is how much the state estimates it would cost to close and reclaim the mine at its peak liability, and operate a water treatment plant indefinitely, if the company were to walk away and the state would have to manage the work.

Still much to do

While the issuance of the draft permit marks progress, DNR officials declined to offer any timeline for when construction on the mine might actually get underway.

“It’s a big milestone to be at this point, but we are nowhere near done, sad to say,” said Landwehr. It’s likely to be several months before the DNR has a chance to respond to what is likely to be a large number of public comments on the proposal. It’s also possible that a contested case hearing could be ordered, although legislative action this past session sharply limited who has standing to seek such a hearing. A contested case hearing, which involves a lengthy process overseen by an administrative law judge, could add several more months to the permitting process.

Meanwhile, state regulators are still processing other permits needed by PolyMet, and a significant federal permit, known as a Section 404 wetlands permit, which will need to be issued by the Army Corps of Engineers, has been sitting in limbo for years. The Army Corps has also yet to issue a record of decision on the Final Environmental Impact Statement, which was completed in early 2016.

Polling shows project remains controversial

Environmental groups greeted last Friday’s announcement with new polling from Public Policy Polling showing that Minnesotans remain broadly split on their support or opposition to the project. The latest survey, based on data gathered in December, finds that 44 percent of Minnesotans say they’re opposed to the project, while 40 percent expressed support and 16 percent weren’t sure.

The survey also found a sharp political divide over the question, with 62 percent of DFLers expressing opposition to the project, while only 19 percent of Republicans oppose the plan. Independents opposed the project by a margin of 45-39 percent.

“PolyMet’s sulfide mine proposal is unpopular with Minnesotans already,” said Kathleen Hoffman, executive director of the Minnesota Center for Environmental Advocacy. “PolyMet has made lofty promises to treat polluted water for hundreds of years, prevent taxpayers from being stuck with a $1 billion cleanup bill, and to meet or exceed industry best practices. Will PolyMet meet their promises to Minnesotans or will they break them?” Hoffman asked.

MCEA refrained from making a quick judgment on the draft permit, but promised that its own experts will be examining the document and will have more to say in the near future.

Meanwhile, others lauded the latest announcement.

“This decision…is a significant step forward for the PolyMet project and for bringing more good paying jobs to the Iron Range after more than a decade of thorough environmental review and study,” said Eighth District Congressman Rick Nolan. “As someone who has helped coordinate agency discussions and actions to move this process forward, I applaud the DNR’s work to ensure that the NorthMet project will be done in a safe and environmentally responsible way.”

Jobs for Minnesotans called the draft permit “a historic achievement” for both PolyMet and the state. “It builds on our rich iron mining heritage and is a catalyst for a new era of responsible mining,” read a statement from the group.

Financial

questions remain

While the company is making slow but steady progress on the permitting process, less is known publicly about PolyMet’s progress in obtaining financial commitments to build the enormous project, or how much it might cost in today’s dollars. The last financial projections released by the company put the construction cost at $650 million, but that was ten years ago. Adjusting for standard inflation would put that tab at nearly $760 million, according to the Bureau of Labor Statistics. And that doesn’t include the upfront financial assurance cost of the project.

That could put the upfront financial price tag at well over $1 billion. Company officials indicate they’ve already spent over $300 million to reach this point of the process.

The public should get a clearer picture of the company’s financial prospects when it issues an updated Definitive Feasibility Study later this year. DNR officials indicated that the company has told them to expect the document sometime in March.

The updated financial study will also show the effects of the fallout in the metals market, which began in 2015. While the prices of both copper and nickel have recovered somewhat from earlier lows, they still remain well below peak levels and, in the case of nickel, at less than half the price that PolyMet used in its most recent financial projections.

State officials say they’ll be reviewing the updated financial report in detail before issuing a final permit to mine.

Meanwhile, investors appeared buoyed by the release of the draft permit, sending PolyMet’s stock price to a peak of $1.08 in trading this week, the stock’s highest price in more than two years.

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