State is trying to set size of PolyMet’s financial guarantee.
Beneath the controversy over Minnesota’s first proposed copper mine lurks a hundred-million-dollar question: How much would it cost to protect the state from water pollution, environmental calamities and mining company bankruptcies that could occur decades, even centuries, after the mine opens?
The answer could make or break the project proposed by PolyMet Mining Corp. for Minnesota’s Iron Range, and it will be front and center at the State Capitol on Tuesday, as the state’s top mining regulators testify at a hearing on how much “financial assurance” might be necessary to protect future generations of taxpayers from a new and risky type of mining. The short answer for now is: They don’t know.
If the mine goes forward, they will have to walk a perilous line.
If they ask PolyMet to post too large a financial guarantee, the project may not attract the next $450 million in investment PolyMet is seeking — jeopardizing a plan that could bring hundreds of mining and construction jobs to northern Minnesota. If they ask for too little, then taxpayers someday may have to pay the price of polluting one of the most beautiful corners of the state.
“Our concern is not so much whether PolyMet is profitable or not,” said Jess Richards, director of lands and minerals for the Minnesota Department of Natural Resources, the agency that is leading the environmental review. “Our focus is to make sure that the state is protected if PolyMet were to walk away.”
It doesn’t make their job easier that the proposal has sparked passionate debate across the state and has drawn thousands of citizens to recent public hearings about the project and its environmental impact.
Company and state officials won’t predict how much financial assurance could be required, and they say it will be determined if and when state officials grant a permit for the project to proceed — late this year at the earliest.
Bruce Richardson, spokesman for PolyMet, said the company’s financial plans include those costs. “We are fully aware of our obligations there,” Richardson said. “And we are confident we can meet the state’s requirements.”
But one watchdog environmental group already has hired experts to crunch the numbers. It predicts that, because the mine might require indefinite water treatment to protect the region’s lakes and rivers, it could require guarantees of about $400 million by the time the operation closes in 20 years.
“It’s a critical question for the viability of the project,” said Kathryn Hoffman, an attorney with the nonprofit Minnesota Center for Environmental Advocacy. “It should not be what the company can afford. It should be what will protect the taxpayer and the environment.”
Because environmental problems can persist long after a mine closes, operators elsewhere in the country now are routinely providing hundreds of millions of dollars in such guarantees. Sometimes it’s enough — and sometimes it’s not.
The DNR’s Richards said he’s well aware that he’ll be in the spotlight on Tuesday, when he explains exactly how Minnesota’s financial assurance law, which has never been tested, is supposed to protect the state. The decision is all the more important because PolyMet is the first of many companies hoping to tap into one of the largest untouched copper deposits in the world, which lies beneath northeast Minnesota.
Minnesota is one of many mining states that require companies to put up financial assurance before they start digging. And regulators at the U.S. Environmental Protection Agency have begun writing national rules to protect taxpayers from the risks of hard-rock mining. They learned their lesson the hard way: The EPA is facing billions of dollars in cleanup costs from mines across the country.
In 2004, the EPA’s Office of Inspector General estimated that cleanup costs at 156 hard-rock mines would cost the EPA up to $15 billion. Some of the mines have contaminated tens of thousands of miles of streams by exposing sulfide-bearing waste rock and tailings, which produce acid when exposed to air and which leach heavy metals and other contaminants into ground and surface water.
“That’s been a big problem,” said Tom Bloomfield, a California environmental attorney who has negotiated such agreements for the EPA, other regulators and mining companies. “Now there is a better understanding that a mine that generates acid drainage will require a long-term approach.”
At the Iron Range site near Hoyt Lakes, there’s sulfide in the ore that PolyMet expects to mine and process — 32,000 tons a day, with ample room for expansion.
Company and state officials both say that only a third of the ore is expected to be high in acid-generating sulfides and that modern mining techniques and reverse-osmosis water treatment technology will prevent water contamination during and after mining.