PolyMet clears a hurdle with Minnesota regulators, though battle isn't over

A long-awaited environmental review of Minnesota's first — and highly controversial — copper nickel mine is done, and it concludes that if the project goes forward as proposed, the state's air, water, wildlife and people will be protected from harm.

State Natural Resources Commissioner Tom Landwehr released the 3,000-page document Friday, calling it "thoughtful, independent and thorough."

But it doesn't mean that final approval is a sure thing, he added. PolyMet Mining Corp. still faces a series of permitting and financial reviews before it can proceed with the $650 million mine it has proposed for a site near Hoyt Lakes on Minnesota's Iron Range.

Within minutes of the report's release on Friday, reaction on both sides was in full swing.

Sen. David Tomassoni, DFL-Chisholm, who chairs a key environment committee and whose district includes the site, was ebullient. "I think it's an exciting day," he said. "I'm excited about the possibility of new jobs on the Iron Range."

Officials from Mining Truth, a grass-roots campaign organized by Minnesota environmental groups, said in a news release that state regulators and PolyMet are "still ducking the tough questions, while trying to reassure a skeptical public that all their worries will be addressed at some later time."

PolyMet is the first of several mining companies eager to tap into a major copper-nickel deposit that reaches from the Iron Range up into the Boundary Waters Canoe Area Wilderness.

Its NorthMet mine would create an estimated 350 jobs and has brought hopes of an economic rebirth to the Range. But the mine also presents different and greater environmental risks than the taconite industry that has dominated the region for decades. The copper-nickel deposits are contained in sulfide ore, which, when exposed to air and water, produces acid that leaches heavy metals and other contaminants out of the rock and, potentially, into nearby lakes, streams and groundwater.

Completing the exhaustive federally required environmental impact statement (EIS) marks an important milestone for PolyMet. It's been the longest-running and most expensive environmental analysis the state has ever conducted — an indication of the public's interest and the ecological risks involved.

The impact was immediately apparent. PolyMet's stock price, which sank as low as 55 cents per share in October, was up 10 percent Friday to $1.10.

"Completion of the Final EIS is a huge milestone for PolyMet, for the Iron Range communities, and for the state of Minnesota," said Jon Cherry, president and CEO.

The state's review drew thousands of people to public meetings earlier this year, and generated 58,000 comments.

Among other risks, citizens and environmental groups were alarmed by the possibility that water from the open-pit mine and metal processing sites may have to be treated for decades after the mine closes, at a cost of millions of dollars.

Landwehr said Friday that the state still cannot predict how long water from the site would have to be treated, other than it will be "indefinitely."

Another critical question that came up just months ago is whether water from a tailings basin that holds mine waste could flow north toward the pristine Boundary Waters instead of south to the St. Louis River, which has long been contaminated by taconite mining and other industries.

The final document says that's unlikely, and that PolyMet plans to capture most of the groundwater and run it through a treatment plant. But it also calls on the company to monitor groundwater around the mine, and, if it does move north, to address it by filling cracks in the bedrock or taking other steps.

Environmental groups remained critical of the state's effort. Kathryn Hoffman, an attorney with the Minnesota Center for Environmental Advocacy, said taxpayers have a right to know what the long-term risks to water are. And the entire review, including predictions about how much polluted water could escape the site, relies on data and analysis provided by PolyMet, she said.

"The agencies have an opportunity to fix these problems," she said. "They have an opportunity to figure out if there is any … scenario from this mine under which it can close, and end water treatment and the taxpayers of Minnesota are no longer on the hook."

Hoffman also said there are now much safer ways to store mine tailings, but the state rejected those in the final document, saying they are not feasible for the old iron ore pit that PolyMet plans to use.

Landwehr said the project, as now planned, would actually improve the quality of water coming from the site, which has been polluted from decades of taconite tailings.

Now it's up to Gov. Mark Dayton to decide if the mine goes forward and, if so, what protections the state will require to protect future taxpayers from any environmental consequences.

A 30-day public comment period begins next week. In addition, state law requires Landwehr to determine whether the EIS has addressed the environmental risks adequately. He is expected to make the decision in February, and indicated he is likely to declare it adequate.

Two federal agencies must complete their reviews as well, and then PolyMet can begin applying for about 20 permits for air, water, waste and mine operations — reviews that could still torpedo the project, Landwehr said.

The most critical question may be how much "financial assurance" PolyMet must provide upfront to protect taxpayers against the cost of long-term water treatment and other environmental problems that might occur later. Hoffman said, based on experience at other mines, it should be about $450 million to $500 million.

PolyMet officials said they will present a formal plan for financial assurance shortly after Landwehr's adequacy decision in February.

In addition, Dayton insisted on hiring outside finance experts to conduct a thorough review of PolyMet to make sure it has the wherewithal to manage the project in an environmentally safe way and provide adequate financial assurance.

Josephine Marcotty • 612-673-7394