Minnesota's next mining boom has picturesque Ely divided

ELY, MINN. - Every year Randy Stender and his family spend Memorial Day weekend at Birch Lake Campground, a tradition that ties him to the wild, unspoiled lands here on the edge of the Iron Range where he grew up. There was a time, he says, when he and his wife would have moved back — if there had been a job like the one his father once had at Reserve Mining.

So when he heard that Birch Lake's shoreline could become the site of one of the largest copper mines in the country, he immediately grasped the conflict gripping this charming tourist town and spreading across Minnesota.

"That's the catch," he said, opening his arms wide to the lake that shimmered in the morning light. "Because I kind of like it like this."

The prospect of a massive new mining industry here is igniting long-simmering tensions — between those who long for the surge in prosperity it could bring and those who say it threatens the splendor of the North Woods and the tourism that relies on it.

At least a dozen companies are exploring for copper, nickel, gold and other precious metals in a vast geological formation called the Duluth complex, which stretches from Tamarack, Minn., to the nearby Kawishiwi River that feeds the Boundary Waters Canoe Area Wilderness.

Company officials say hard-rock mining can — and will — be done safely, while creating thousands of jobs and spawning a new industry that could someday dwarf the state's taconite and frac sand mining operations.

"A viable community has to depend on more than tourism," said Brian Krunkkala, who works at an Ely bait shop.

Opponents say hard-rock mining is not like taconite, and point to western states where similar mines have polluted thousands of miles of streams and rivers with acidic runoff. Even at its best, they say, mining that produces acid along with precious metals is too risky for the water-rich environment of northern Minnesota and the outdoor recreation that draws hundreds of thousands of visitors each year.

"Do you want the Superior National Forest … to be home to a mining-industrial complex?" asked Rebecca Rom, a retired attorney who lives in Ely.

This summer the first of the new mining companies, PolyMet Mining Corp., will disclose how it plans to mine some 530 acres of national forest near Hoyt Lakes without polluting water that drains to Lake Superior.

And nowhere are people more intensely interested in the outcome than in Ely.

"This has the potential to be huge," said Marshall Helmberger, publisher of the local newspaper, the Timberjay. "There is a significant dividing line."

A town divided
Dean DeBeltz was one of nearly 1,000 people who turned out recently for PolyMet's open house in nearby Hoyt Lakes. He stood inside a cavernous and now-silent taconite crushing facility, the first place he ever worked — before its owner declared bankruptcy. Soon, it might come to life again as part of a $475 million PolyMet mining project that promises to create 350 jobs.

DeBeltz grew up in Ely. His father and grandfather worked in taconite. Now he works for Twin Metals, the company exploring for copper-nickel along the edge of Birch Lake with the hopes of digging a vast underground mine, the first of its kind in the state.

"I think mining and tourism could really complement each other,'' DeBeltz said.

Others around Ely feel differently. A few days later, dozens of people braved a frigid rain to paddle down the Kawishiwi in celebration of the grand opening of Sustainable Ely, a converted house on Ely's main street run by volunteers trying to call attention to the economic and environmental risks from mining. The group launched their canoes from the Voyageur Outward Bound School, which for 50 years has taught visitors to navigate the wilderness with confidence. This past winter they had to reroute their dog sleds around exploratory drill rigs in the national forest, and now the board of directors might consider moving the school.

"That's not an easy question," said Jack Lee, the school's executive director.

The bitter divide is a clear, bright line that runs through the center of the community.

Earlier this month, a group of cabin owners along the Kawishiwi sent a letter to county officials about their property values — already diminished by the nearby drill rigs that grind away 24 hours a day. Realtors say "anyone on the Kawishiwi River might as well kiss his property valuation good by, as well as expectations of being able to sell," they wrote.

But the local Mesabi Daily News also carries letters that are sharply critical of Sustainable Ely.
"It would be easy to conclude that this effort is really the 1 percent trying to prevent the 99 percent from having a fair shot at a fair share," former Ely Mayor Chuck Novak wrote recently.

No one wants to sacrifice clean water or the environment, Novak said. But the mining companies deserve a chance to make their case, and many in the community want to hear them out, he said.
Bartenders, meanwhile, have learned to squash any talk about mining and the wilderness among their patrons.

"I don't need to be breaking up fights," said a barkeep at the Bowling Alley bar. He wouldn't give his name because, he said, the issue is just too hot.

'A big scar'
Ely is no stranger to such controversies. When the million-acre BWCA became the nation's first protected wilderness in the early 1960s, many locals who lived and played inside its borders lost their land — and some their livelihoods.

"That was the first wound," said Novak, who grew up in Ely and returned there to live in retirement.
A few years later, a generation of iron mining ended when Ely's last mine closed, laying off 450 men and beginning what many here see as the long, slow economic decline of a once-vibrant town and region.

Then, in 1978, protests erupted over a federal proposal to restrict logging, motors and snowmobiles inside the BWCA, where they were still allowed. Many saw the move as a broken promise — a decision made on behalf of wilderness lovers and conservationists from the Twin Cities and elsewhere. Revered conservationist Sigurd Olson, who advocated the new protections, was hanged in effigy outside the Ely high school. Loggers parked their trucks to block access to the BWCA.

But after years of court battles, the wilderness became what it is today — a million silent acres of woods and water where the human presence is feather light. No one wants to see the BWCA harmed, Novak said. But "it was a taking," he added. "It left a big scar and it goes from generation to generation."

The vanguard of the region's new economic hope is a clean, modern $3 million headquarters, storage and processing facility built by Twin Metals, a joint venture between Canadian and Chilean minerals companies, overlooking what is now a popular park and Miners Lake — the site of the old Pioneer Mine ore pit on the west side of town.

Twin Metals isn't ready to talk publicly about its plans to mine along the east side of Birch Lake and the Kawishiwi River. But even now it runs ads in the local papers predicting high-paying jobs, sponsors a weekly show on WELY, the End of the Road Radio station, has donated thousands of dollars to the local food shelf and other charities, and has bought uniforms for a local Little League team.

Skeptics see a blatant public relations campaign. But Bob McFarlin, Twin Metals' vice president of government and public affairs, insists the company is committed to environmental protection and coexisting with tourism. Twin Metals' civic efforts, he said, are sincere: "We are working to be a good corporate citizen."

Twin Metals is also generating hope for younger residents who want to stay in Ely but can't make a living working summers at a restaurant or an outfitter. Twin Metals is already hiring graduates from the University of Minnesota Duluth, who are now shopping at local stores and buying homes.

Jason Richards, one of 63 kids in Ely Memorial High School's class of 2006, now works for Twin Metals in finance. "I'm fortunate," he said. For most of his fellow graduates, "the jobs just aren't here now," he said.

Sulfide rock
But today a new generation of wilderness entrepreneurs has gained a foothold in Ely — replacing motorboats with canoes and snowmobiles with dog sleds — and feeding a regional tourism industry that generates $700 million to $1 billion in annual revenues.

They include Steve and Nancy Piragis, who built a successful outfitting business that dominates downtown Ely, and Paul and Susan Schurke, who run Wintergreen Dogsled Lodge outside of town. Famed wildlife photographer Jim Brandenburg has a gallery on Ely's main street.

Jane and Steve Koschak built the River Point Lodge on Birch Lake outside Ely into a destination resort; scores of retirees are finally living their dream life on the lake.

"There are times when I can sit out there and hear absolutely nothing," said Dan Humay, a retired schoolteacher who lives on Eagles Nest Lake south of Ely.

Wilderness is "our livelihood, and our jobs are just as important," Steve Piragis said, explaining his support for Sustainable Ely.

Inside the old house, maps and exhibits warn of grave risks to the BWCA, the local lakes and a treasured way of life. A laptop lies open, ready for visitors to e-mail their elected representatives. In the back, a life-size photo of Sigurd Olson overlooks a big yellow canoe "petition," destined for Washington, D.C.

The displays explain that the ore containing copper is not the same kind of rock that came out of the Pioneer Mine a generation ago. It is sulfide rock, and it contains less than 1 percent of precious ore — meaning that 99 percent of the millions of tons of rock unearthed would be waste. And not just any waste. When sulfide rock is exposed to air and water, it generates sulfuric acid. That leaches heavy metals out of the rock, and the acidity can destroy aquatic systems.

The U.S. Environmental Protection Agency has reported that hard-rock mining, which includes more than copper-nickel, has polluted 10,000 miles of rivers and streams, mostly in the western United States. Between 1998 and 2007, the federal government spent at least $2.6 billion to clean up polluted hard-rock mines, some of which are now Superfund sites.

Mining officials say mining is different today and that new technologies can handle the runoff. Moreover, they say, Minnesota law requires them to provide financial insurance to pay for any cleanup.

PolyMet, which will be based in an old taconite processing site, plans to install a state-of-the-art reverse osmosis water treatment system to take contaminants out of water from its pits. It also plans to recycle the water it uses in it processing facility. Twin Metals is planning an underground mining complex, where it would store waste rock in mined tunnels, returning it to the ground it came from and greatly reducing its exposure to air and water.

Both companies say they will meet all state and federal water quality standards. They say a thorough and public regulatory review process — which is expected to begin this summer for PolyMet — will ensure it.

In Ely, where so much hangs on the question whether mining can coexist with one of Minnesota's most treasured places, that's what many are banking on.

"Because that's what it comes down to," said Roger Skaba, a former mayor and fishing guide who supports the new mining ventures. "Can you trust them?"

Josephine Marcotty • 612-673-7394