business

Glencore, the privately held Swiss mining giant, will own nearly 15 percent of a company working to develop a copper-nickel mine in northern Minnesota after completing a $30 million private stock placement announced Friday.

PolyMet Mining Corp., a publicly traded exploration firm with its U.S. office in Hoyt Lakes, Minn., said it will sell Glencore 15 million shares of common stock at $2 per share in three $10 million transactions between January 2011 and October 2015. Glencore had held a 6.4 percent stake in PolyMet.

The stock deal, along with a related debt extension, offers PolyMet fresh capital to continue its development work on the proposed $600 million copper-nickel mine, whose most recent delay is related to environmental concerns raised by federal regulators. The mine, once expected to open in 2011, is now projected to begin operation in 2013.

Glencore, which already has financing and marketing deals with PolyMet, also agreed Friday to extend $25 million in existing debentures, plus accrued interest, for two years. Those debentures are convertible to stock at $4 per share, or roughly double the recent price. Glencore gained the right to purchase 3 million more common shares at $2 each until 2016.

PolyMet's earlier plan to raise another $25 million in debt financing from Glencore has been dropped.

'A much stronger deal'

"It is essentially a much stronger deal from that perspective -- in that equity as opposed to debt is a good thing," said PolyMet's chief financial officer, Douglas Newby.

PolyMet, based in Richmond, British Columbia, owns the former LTV Steel Mining Co.'s Erie plant in Hoyt Lakes. A proposed copper-nickel mine nearby would employ 400 Minnesota workers.

But the project's possible environmental effects have worried the U.S. Environmental Protection Agency and others who commented on a draft environmental study.

Those concerns, and issues relating to a land swap with the U.S. Forest Service, are being addressed in a supplemental study with greater EPA involvement.

Newby said the study should be finished next summer. After that, permits and approvals could take another six to nine months, with production now expected in 2013, he added.

David Shaffer • 612-673-7090