PolyMet launches next critical phase of controversial mine plan for NE Minnesota

PolyMet Mining Corp. has formally applied for a permit to mine copper and nickel in northeast Minnesota, the first of its kind in state history and a key turning point in the long fight to establish a new but environmentally risky kind of mining in the region.

The 15,000-page application launches another extensive state review and is likely to set off a fierce new round of debate — this time over design of the mine, the loss of thousands of acres of wetlands, and how PolyMet would treat contaminated water decades after the operation closes.

The application also addresses a critical question that has hung over the project for years: How much money PolyMet will offer as financial insurance against future pollution and reclamation costs. It's proposing $12 million for the first year of construction, $44 million for the second, and $197 million for the third. That reflects the progressively greater costs of the project's expanding footprint, plus long-term water treatment when it becomes necessary, company officials said.

Over the mine's proposed 20-year life, the company said, the total amount of "financial assurance'' would cover the cost of reclamation, including a sophisticated water treatment system that could operate for many decades to remove pollutants from runoff and groundwater even after the mine has closed.

Jon Cherry, PolyMet's chief executive, said the plan "demonstrates in detail the numerous steps we would take to ensure the mine operates in an environmentally responsible and safe manner, meets the high standards and expectations we and others have set for the project, and that there will be funds set aside to ensure that taxpayer dollars will not be needed for reclamation."

Kevin Lee, an attorney with the Minnesota Center for Environmental Advocacy, a nonprofit law firm, said the application provides insufficient information about the size and form of financial protections PolyMet will provide over the life of the mine. Nor does it provide enough detail on how the company plans to treat water once the mine closes, he said.

"We would absolutely want to see more," Lee said.

Barb Naramore, assistant commissioner at the Department of Natural Resources (DNR), said the state has the same concerns about the permit application. "From the state's perspective, it needs to include and address everything from the beginning of construction to final closure," she said. And that includes "unanticipated events."

PolyMet's proposal, for a $650 million open pit mine near Hoyt Lakes, triggered the most contentious environmental fight Minnesota has seen in years. Proponents predict a badly needed economic boost to the Iron Range, which has been devastated by a long-term downturn in the iron ore industry. PolyMet says that the project will create 350 long term jobs, plus hundreds of millions of dollars in economic benefits for the region.

Environmentalists and other critics say mining's boom-and-bust cycles damage local communities. In addition, copper-nickel mining presents a far greater environmental threat than the region's historic taconite and iron mines. The copper and other precious metals are contained in sulfide ore; when the resulting waste rock and tailings are exposed to air and water, it forms acid runoff which can seriously harm rivers and lakes.

Although the PolyMet operation would drain southeast, toward the St. Louis River and Lake Superior while in operation, the U.S. Environmental Protection Agency and nearby Indian tribes pointed out that, after the mine closes, the water could drain north, into a nearby taconite pit and toward the pristine Boundary Waters Canoe Area Wilderness and Voyageur's National Park.

DNR officials said the permit application triggers a review that is likely to take many months and will include a close evaluation of the environmental and financial questions that is likely to prompt changes to the proposed permit.

PolyMet announced last month that is has raised nearly $30 million from the private sale of stock, and that its primary shareholder, the Swiss commodities giant Glencore, also purchased additional shares for $10.5 million. Glencore, which now owns 28.4 percent of the company, could eventually own 37 percent under loan deals it made earlier.

But PolyMet, which has spent $250 million so far, still needs to raise hundreds of million more from investors or lenders to build the project if it receives a permit to mine.

If the DNR decides that, with likely changes, the permit meets state and federal requirements, it will open a public comment period expected to include public meetings.