REGIONAL— A host of environmental and conservation groups are alleging that the state’s Pollution Control Agency fell for a “bait and switch,” when the agency issued both air and water discharge permits to PolyMet Mining late last month for their planned copper-nickel mine near Hoyt Lakes.

The four groups, including the Minnesota Center for Environmental Advocacy, the Friends of the Boundary Waters Wilderness, the Center for Biological Diversity, and the Sierra Club, made the claim in a joint lawsuit over both air and water permits filed on Tuesday. Simultaneously, the group Water Legacy filed a separate appeal of the water discharge permit issued by the MPCA, arguing that the permit fails to set limits on toxic seepage into groundwater and serves primarily as a liability shield designed to protect the company from citizen lawsuits should its planned mine pollute the environment.

MPCA spokesperson Dave Verhasselt indicated that the agency could not comment on ongoing litigation.

Several of the environmental groups involved in this week’s filings had earlier requested a contested case hearing to address concerns before an administrative law judge, a request that officials with both the MPCA and the Department of Natural Resources rejected. The groups have since asked that the agencies place a stay on the issuance of their permits to PolyMet pending the outcome of court appeals.

The groups, citing the company’s own technical report and financial update issued last March, contend that PolyMet is unlikely to actually build the 32,000-ton-per-day mining operation that they spent years studying, and for which state regulators have now issued permits.

“PolyMet has told Canadian financial regulators they intend to build a much larger mine than the version they submitted to Minnesota environmental agencies,” stated Kathryn Hoffman, CEO of the MCEA. “By turning a blind eye to PolyMet’s plans for faster and more intense mining, the MPCA permits for PolyMet allow them to skirt the law and avoid stronger environmental protections.” 

PolyMet’s updated technical report did propose a significantly faster rate of mining as a means of boosting the project’s financial viability. PolyMet’s latest financial report suggested a sharply lower return on investment than previous estimates, which the company had issued more than a decade ago. Those initial estimates had pegged an internal rate of return at more than 30 percent, but that had dropped to less than ten percent in the most recent analysis— far less than would typically attract investor interest in a mining venture.

In response, the company had analyzed profit margins from two different mining scenarios, including a plan for a 59,000-tons-per-day operation and one for 118,000-tons-per-day. Both of those scenarios boosted the company’s financial outlook, while still falling well below the projections of a decade ago.

This week’s lawsuits are just the latest in a series of cases filed against agencies that have advanced PolyMet’s proposed mine, which would be the state’s first copper-nickel and precious metals mine if ultimately approved. The company has made significant progress in the permitting process, having received all of its state-issued permits as of December. PolyMet is still waiting on a federal wetland permit from the Army Corps of Engineers as well as a handful of minor local permits.

But both the MPCA and the DNR face lawsuits over permit decisions, including over the DNR’s issuance of a permit to mine. The U.S. Forest Service is also embroiled in a lawsuit over the 6,600-acre federal land exchange that provided PolyMet with surface rights at its planned mine site. Efforts to end that lawsuit through federal legislation have so far proven unsuccessful.

Any of those lawsuits could potentially delay or derail the project. At the same time, low metal prices appear to be limiting investor interest in the project, despite the company’s progress on permitting. The stock was trading at just 77 cents a share earlier this week, well below its $1.13 spike on Nov. 1, 2018, when the DNR announced it would issue the company’s permit to mine. PolyMet’s lackluster financial projections, issued last March, assumed copper prices at $3.29 a pound, well above the latest posted price of $2.74 per pound. Nickel, meanwhile, was trading at $5.29 per pound this week, far below the $7.95 per pound that PolyMet assumed in its latest financial analysis. A slowdown in global economic activity, particularly in China, appears to be affecting prices of metals, oil, and other basic commodities, and that could pose challenges for PolyMet as it seeks to raise the $1 billion-plus it will need to begin mining operations.