A decade after PolyMet Mining Corporation’s symbol first appeared on the American Stock Exchange, Minnesota has at last signed off on the bitterly fought environmental review of its proposed copper nickel mine.

For PolyMet, it couldn’t come at a worse time.

The copper industry is on its knees, brought low by a slowdown in the Chinese economy and global excess mining capacity. And the market may not have hit bottom yet.

In short, say industry analysts and economists, it’s highly unlikely that PolyMet’s $650 million open pit mine, which has sparked one of the most contentious state environmental fights in decades, will be built any time soon. Even if PolyMet passes the next regulatory steps — nailing down a financial agreement that protects Minnesota taxpayers against future environmental problems, and obtaining permits to mine — it faces the enormous hurdle of finding the money it needs to start construction.

“Projects like this end up being mothballed,” said John Kaiser, an industry analyst who specializes in “junior” mining companies like PolyMet. “This is happening all across the world.”

PolyMet officials say they see it differently.

The global economic slowdown also means that steel, oil and equipment are cheaper, meaning the mine could be built at low cost, and then be up and ready to go when commodity prices rise again, said Brad Moore, PolyMet’s vice president of environmental and regulatory affairs.

“In many different ways, the fact that we are in a downturn is favorable,” he said.

Regardless of the tectonic shifts in the global copper market, Moore said the company’s permit applications will likely be complete by late spring.

And they will include its plan to address one of the most critical unresolved issues: How much will PolyMet have to pay up front to ensure against mining pollution in the future?

Minnesota law requires the company to put up enough money to cover the cost of closing a mine, and this one will require indefinite water treatment long after the copper and nickel is gone. And PolyMet would be the state’s first copper-nickel mine, which carries far greater pollution risks than the taconite industry.

When exposed to air and water, the ore containing copper and nickel generates acid that leaches heavy metals and other contaminants into nearby streams and wetlands. While PolyMet says the technologies it plans to use will prevent such problems, a legacy of hard-rock mining elsewhere has left tens of thousands of miles of contaminated streams across the country, costing taxpayers billions of dollars in cleanup expenses.

The environmental review that Minnesota approved last week predicts that closing the mine will cost $200 million, plus $3.5 million to $6 million annually to treat the water that flows from the site — perhaps for hundreds of years.

Those are the risks that weigh on Gov. Mark Dayton, who has said the decision whether to approve the mine is one of the most difficult he’ll make in his tenure. Even if economics take the decision out of his hands, he said in a recent interview, the state will fulfill its obligation to taxpayers now.

“You want to make sure that regardless of fluctuations in prices and regardless of what happens to companies’ financial fortunes, that we are protected,” he said.

Lean times

PolyMet was formed in 2006 to extract copper-nickel deposits in the Duluth Complex, a geologic formation running east of the Iron Range and holding one of the world’s largest untapped ore bodies. It’s only one of several companies with interests there, but the first to get this far in the process.

On the day PolyMet went public, global copper prices had been rising for four years, reaching $3.08 cents per pound. They were riding a commodities “supercycle” driven by rapid growth in developing countries — primarily China, whose economy consumes 45 percent of all the copper produced in the world.

But today the supercycle is over. China’s economy has slowed dramatically, copper prices have dropped by more than half from their 2011 peak of $4.50 per pound, and mines are closing all over the world.

Glencore, the Swiss giant that has provided $175 million in loans and investments to keep PolyMet afloat and contracted to buy its copper, last week reported losses of $5 billion for the year, and is shedding assets. The world’s third-biggest copper producer, Glencore has closed one of its mines and has said it expects to cut annual production by one billion pounds by 2017. That’s 14 times the amount that PolyMet would produce at peak production.

Industry analysts, however, say that for most “junior” mining companies like PolyMet, the mission is not mining. It’s to win the permits.

“Typically, the only way they can stay alive is to keep advancing a project,” said Graham Davis, an economist at the Colorado School of Mines. “The juniors tend to be more aggressive in a project, no matter what the environment.”

The permits themselves then become an asset that PolyMet could sell to another company. The betting has long been on Glencore, which already owns about a third of the company.

“This is the hope with PolyMet — that someone will buy them out, especially if the environmental objections have been de-risked,” said Kaiser.

Moore said he could not speculate about the future, but that the company’s intention is to build and operate a mine.

Analysts said that in the current market, that could take years. In the meantime, Kaiser said, the prospects are bleak. A company holding permits to mine could be acquired by its creditors or by a “mineral bank,” a private equity firm, which would likely hang onto it until the market improved.

“The entrepreneurs who backed this had their clock run out by the environmental process,” Kaiser said. “The winners will be banks and creditors and the vultures who come in and pick up the pieces.”

Davis says that that’s not necessarily true. If PolyMet’s NorthMet mine could produce copper at a low price, then a big miner like Glencore might find it attractive, he said. “Glencore has to stay in the mining business,” he said.

While that might be true in flusher times, others said, most of the giant miners like Glencore are struggling to reduce costs, not grow.

“Most miners need to consolidate the balance sheet and look to drive out costs rather than embark on new growth,” said Paul Gait, an industry analyst with AllianceBernstein, the global investment firm. “Only the very highest quality projects will attract financing at this stage in the cycle.”

That’s where PolyMet officials are staking their claim. The company’s financial projections could change somewhat as it updates its planning in coming months, Moore said. But PolyMet’s most recent documents say that the old LTV taconite processing facilities near Hoyt Lakes — tailings basin, railroad line and crushing plant — that it acquired from Cliffs Natural Resources will allow it to produce copper at $1.05 per pound. That means the company could be profitable even at today’s low prices, Moore said.

PolyMet still needs to find money to build the mine, estimated at about $650 million, plus another $72 million to fix old pollution problems at the tailings basin and the as-yet unknown burden of financial assurance. Moore said the company is talking to potential investors and “interest in our project is strong.”

The decision on financial assurance is likely months away, and the state is approaching it cautiously. The Department of Natural Resources has formed a committee of outside experts to advise it on hiring a firm with expertise in the complex equation of predicting future risk.

Whatever amount they come up with, PolyMet will have to decide whether it’s worth the investment, Dayton said.

“If not, they can walk away,” he said. “If the state says it’s not satisfied — then that’s the end of it as well.”