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State of Minnesota releases PolyMet's draft permit to mine

The state of Minnesota has given its preliminary blessing to the construction and operations plan for the state’s first-ever copper-nickel mine, releasing PolyMet Mining Co.’s draft permit to mine for public review Friday.

The draft permit from the Department of Natural Resources includes specific plans for how PolyMet would mine near Babbitt and process ore near Hoyt Lakes over the next 20 or more years.

The permit release signals the state is generally satisfied with how PolyMet plans to build, mine and then close the operations without harming the environment — especially without releasing potentially acidic mine waste into the St. Louis River ecosystem.

The mine permit also specifies how PolyMet will separate and store potentially acidic or reactive rock and then backfill the mine and rehabilitate the land. It also will determine how PolyMet treats wastewater that will come from processing ore at the former LTV Steel taconite processing center, possibly for decades even after mining ends.

It’s the biggest step yet for the proposed mine that’s been decades on the drawing board. But the company still must secure final permits, clear lawsuits and pass a possible contested case hearing process as well as find financing to actually pay for construction.

“This is a big step. It’s a big milestone,” said Tom Landwehr, DNR commissioner. “But we are nowhere near done… there are still so many steps that need to be required.”

Landwehr said regulators and the company have followed state laws governing mining to the letter, saying the issue isn’t discretionary. If PolyMet meets the requirements set in state statutes, the DNR must grant the permits.

“At this point… all the requirements have been met,” Landwehr said.

Supporters and critics of the copper mine now have 60 days to submit public comments, with public hearings set for Feb. 7 in Aurora and Feb. 8 in Duluth. After that the DNR will respond to comments, make any needed corrections to the permit and release a final permit, likely sometime later this year, the last major hurdle before PolyMet could start construction.

If all goes the company’s way, PolyMet officials hope to be mining later in 2020.

The DNR’s release of the draft permit “is really the last regulatory step before we get permission to start this mine,” said Brad Moore, PolyMet’s vice president of environmental and government affairs.

The hearings also will apply to the state air emissions, water discharge and water pollution permits. Although the Minnesota Pollution Control Agency will have a separate comment period for the permits it oversees, it will use the same public hearings as DNR to take verbal testimony.

It’s Minnesota’s first significant mining permit for anything other than iron ore, Moore noted, saying the release of the draft permit shows state regulators “share our belief that we can protect the environment and still have a job-creating entity to help diversify the Iron Range.”

Supporters say the estimated $650-plus million project — that will mine 32,000 tons of rock daily and employ about 300 people — will help diversify a regional economy that has been tied the cyclical iron mining industry for a century. The project will require an estimated 2 million construction hours.

The pro-mining group Jobs for Minnesotans called the permit release a “historic achievement” for PolyMet and all of Minnesota.

PolyMet will build “on our rich iron mining heritage and is a catalyst for a new era of responsible mining. Copper-nickel mining offers substantial private investment and long-term economic returns that will sustain families and communities and benefit our entire state. More broadly, the project will provide the crucial minerals we require as a part of our daily lives,” the group said in a statement.

U.S. Rep. Rick Nolan, D-Minn., called the permit release “a significant step forward for the PolyMet project and for bringing more good-paying jobs to the Iron Range after more than a decade of thorough environmental review and study.”

Critics say the high-sulfur rock that holds the copper poses too high a risk of acidic runoff that could spur heavy metals and other problems in downstream waterways, including the St. Louis River and Lake Superior. Some say copper simply shouldn't be mined in a water-rich environment such as northern Minnesota.

“The mining industry is unable to point to a single sulfide mine that has ever been developed, operated and closed without polluting water,” said Chris Knopf, executive director of Friends of the Boundary Waters Wilderness. “Given this near-perfect track record of creating pollution (we) will review and evaluate the draft permits closely to see how PolyMet and regulatory agencies plan to keep their lofty promises about protecting Minnesota taxpayers and water.”

Paula Maccabee, attorney for the group Water Legacy, said the DNR’s conditions added to PolyMet’s permit application are lacking, requiring more paperwork than actual pollution protection.

“Minnesotans will not be protected from dam failure, toxic pollution and financial risks as a result of DNR’s conditions,” she said. “The DNR’s proposed PolyMet permit to mine conditions represent a complete abdication of responsibility to protect Minnesota waters, ecosystems and taxpayers from adverse impacts of sulfide mining.”

In addition to copper and nickel, PolyMet also expects to recover gold, platinum, palladium and other valuable metals from mined rock. The company is considering building a secondary processing plant on the site to further refine the minerals.

If the draft permit becomes final, PolyMet could be the first of several copper-nickel mines in northern Minnesota, with the Twin Metals project near Ely, the Teck project near Babbitt and the Kennecott project near Tamarack in Aitkin County all in early stages.

Wetlands change

The draft permit to mine includes a change in how PolyMet plans to replace wetlands that will be destroyed at the mine site. The company had planned on buying land and restoring wetlands in four other locations. Instead, the company has agreed to terms with EIP, a company that reconstructs and creates wetlands, to buy wetland restoration credits.

The EIP-restored wetlands are in the St. Louis River watershed near Meadowlands, in restored bogs that had been ditched a century ago to attempt farming in the area.

“We consider this (change) a project enhancement because the benefits are derived in the (St. Louis River) watershed and these restoration efforts have already been approved,” Moore said.

Contested case hearings possible

Some possible hurdles remain for PolyMet, however, including whether the DNR bows to demands from copper mining critics who are calling for contested case hearings on the mine permit. The DNR is obligated to call so-called evidentiary hearings if any new issues arise during public comments and objections that haven't been fully addressed in the draft permit — new evidence that might help the DNR commissioner make a final decision on the permit.

Only parties that have direct standing in the case can apply for the hearings overseen by an administrative law judge. Those hearings, and waiting for the judge’s decision, could stretch the permitting process out through much of 2018.

Financial assurance and insurance

The draft permit to mine includes the first few years of so-called financial assurance requirements, with the state ready to accept $75 million in cash, bonds and letters of credit up-front before construction starts — enough to cover any costs of closing the mine even if PolyMet somehow ceases to exist.

“The package is designed to be bankruptcy-proof,” Moore noted.

PolyMet must then come up with $544 million that would be available to the state during the first years of mining, money that would be used to close the mine and run water treatment for years, potentially decades, into the future.

That financial assurance dollar amount would ramp up as mining increases, peaking at $1.1 billion required by the 11th year of mining, so-called peak exposure.

Moore said the company will accept and can meet the DNR’s financial requirements.

Financial assurance is meant to directly cover only expected costs to close the mine and reclaim the land. But the financial package also will include enough up-front money in future years to pay for liability insurance premiums to cover the cost of catastrophes, such as a major leak of pollution from the site. PolyMet figures it will need $100,000 in the first year of operations to pay for a $10 million policy but that, like the entire financial assurance package, that liability coverage will increase as mining increases.

Critics have said that $10 million in coverage is woefully small to pay for any major disasters, such as the 2014 Mount Polley tailings basin dam collapse in British Columbia.

The PolyMet project has been on the drawing board since 1999, then as a Colorado-based company. The company now is based in Toronto and owns no other assets other than the so-called NorthMet project in Minnesota. PolyMet is about one-third owned by the Swiss commodities giant Glencore, with Glencore also granted first access to buy all of the minerals produced by PolyMet.

PolyMet first applied for environmental review in 2005 and already has spent more than $300 million moving toward the mine’s opening. Its first environmental review was kicked back as unacceptable in 2010. The company went back to work and recrafted the 3,500-page document that was eventually deemed acceptable in March 2016. The company then applied for 23 state and federal permits last year, the most important of which is the permit to mine.

Land swap lawsuit still unsettled

Another still-hanging issue is a federal lawsuit, filed by environmental groups, challenging a land swap between PolyMet and the U.S. Forest Service. The Forest Service approved the land swap, giving PolyMet ownership of 6,500 acres at the proposed mine site and giving the Superior National Forest an equal value of previously privately-owned forest to add for public use.

That lawsuit is pending. But legislation has passed the U.S. House that would force the Forest Service to move ahead with the land swap, in essence nullifying the suit. The bill has not yet passed the Senate.

Polymet already has acquired mineral rights under the surface land. Those mineral rights are owned by dozens of private individual, trusts and corporate entities.

Public hearings on PolyMet’s draft permit to mine

  • Feb. 7 — Mesabi East High School in Aurora. Open house 4-9 p.m. with verbal comments accepted 6-9 p.m.
  • Feb. 8 — Duluth Entertainment Convention Center. Open house 1-9 p.m. with verbal comments accepted 6-9 p.m.

The draft permit can be found at polymet.mn.gov, while written comments and objections can be submitted online through March 6, also at polymet.mn.gov, or by mail to: MN Department of Natural Resources, Division of Lands and Minerals, 500 Lafayette Road N, Box 45, St. Paul, MN 55155-4045.

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