Support the Timberjay by making a donation.

Serving Northern St. Louis County, Minnesota

Groups appeal DNR decision on new EIS for PolyMet

Marshall Helmberger
Posted 10/10/18

REGIONAL— A coalition of environmental groups is appealing a decision by the state’s Department of Natural Resources to reject calls for a supplemental environmental impact statement on PolyMet …

This item is available in full to subscribers.

Please log in to continue

Log in

Groups appeal DNR decision on new EIS for PolyMet


REGIONAL— A coalition of environmental groups is appealing a decision by the state’s Department of Natural Resources to reject calls for a supplemental environmental impact statement on PolyMet Mining’s proposed copper-nickel mine near Hoyt Lakes.

The Friends of the Boundary Waters has now joined Water Legacy and the Minnesota Center for Environmental Advocacy in asking the state Court of Appeals to take a second look at the DNR’s decision. Environmental groups have argued since the spring that a supplemental EIS is needed after the company’s updated 43-101 technical report said the company is looking at a significantly larger mining operation than the DNR and other agencies examined during the mine’s original environmental review process.

All sides agree that any proposal for a larger mining operation would require additional environmental review, but environmentalists say that review should be done before the DNR issues PolyMet a permit for the original mine plan of 32,000 tons-per-day. They believe if the DNR approves the current mine plan, and PolyMet begins operations and hires mine workers, the agency would have little choice but to approve any expansion proposal—regardless of the environmental impacts— or face blame and potential political fallout for mining layoffs.

Environmentalists contend that PolyMet has no intention of operating a 32,000 tpd operation, at least not for long. “The NorthMet mine project as proposed in the permit to mine application is clearly uneconomic, and will never be built in its current form,” wrote MCEA attorney Kevin Lee earlier this year in comments to the DNR.

PolyMet suggested a massive increase in the scale of its mining after its updated technical report pointed to much lower financial returns than the company had originally projected under the 32,000 tpd mine plan. The report, issued last March, showed an internal rate of return of just 9.6 percent under the current mine plan, well below the 30-percent return projected in the company’s initial technical report published in 2006 and updated in 2008.

The report also indicated that the company was exploring increasing the rate of mining, from the 32,000 tpd that was the subject of environmental review, to a 59,000 tpd option and a 118,000 tpd alternative. A higher rate of mining could enhance profitability of the operation, boosting the internal rate of return to 18 percent in the case of the 59,000 tpd scenario, and to 24 percent for the 118,000 tpd option.

Such an increase would lead to significantly greater environmental impacts, and environmental groups say those effects should be studied before PolyMet receives any permit to mine. “The updated technical report is a staggering concession,” states Lee. “What it makes clear is that if Minnesota ever sees a NorthMet project, it will be as a mega-mine processing four times as much rock as proposed today, and generating four times the waste, creating a tailings basin four times the size.”

In rejecting the environmentalists’ position, however, DNR officials argue that the change in PolyMet’s financial picture does not constitute the kind of “new information” that would require the completion of a supplemental EIS. Finally, the DNR argues that it has not yet received an expansion proposal that it could actually study.

Project status

The latest appeal comes as the DNR continues to wait for a financial review and update by its project consultants, who are expected to weigh in on PolyMet’s economic viability prior to a final permitting decision. At issue is whether adequate funding will be available to cover the costs for clean-up and a long-term closure monitoring and maintenance plan that will need to be viable for centuries. DNR consultants have previously expressed doubts about whether PolyMet will be able to obtain the surety bonds or irrevocable letters of credit that they’ll need to begin mine construction, at least without backing by a much larger company, such as Glencore, its current financial backer. Glencore, however, remains under a federal investigation for violations of the Foreign Corrupt Practices Act and U.S. laws prohibiting money laundering stemming from its acquisitions of mining properties in Nigeria, the Democratic Republic of the Congo (DRC), and Venezuela.

DNR Assistant Commissioner Barb Naramore said the financial review is “ongoing.”

Meanwhile, Naramore said the DNR has yet to decide whether to hold a pre-decisional contested case hearing before an administrative law judge, as environmental groups have also requested, and the DNR has no current timeline for when that decision might be made.

The debate over the project comes as the price of both copper and nickel remain well below the levels that PolyMet projected in its latest financial report. That report pegged copper prices at $3.22 per pound, or well above the current price of $2.80 per pound. Copper prices have averaged under $3 per pound over the past year. PolyMet’s financial projections also assume an average nickel price of $7.95 per pound, more than two dollars per pound higher than current nickel price of $5.68 per pound. Copper and nickel would provide more than three-quarters of the revenue from the proposed mine. PolyMet stock continues to trade within a relatively narrow range around 90 cents per share.


1 comment on this story | Please log in to comment by clicking here
Please log in or register to add your comment
Steve Jacobson

I hope you know that 96.5% of the Ely area are against sulfide leaching mining!

Thursday, October 11, 2018