PolyMet forms joint venture with firm planning another Minnesota copper-nickel mine

Firms planning two large copper-nickel mines for northeastern Minnesota — including the PolyMet project — will be combined into one company.

PolyMet, the Minnesota hard rock mine closest to becoming reality, said Wednesday it will create a 50-50 joint venture with Teck American, the owner of a nearby project that is still in early stages of development.

Swiss mining giant Glencore will retain its majority ownership of PolyMet. Teck American is a subsidiary of Canadian mining heavyweight Teck Resources.

"This extraordinary venture links the expertise, experience and financial resources of PolyMet, Teck and Glencore," Jon Cherry, PolyMet's CEO, said in a press statement. The combined PolyMet and Teck operations will be named NewRange Copper Nickel.

PolyMet's proposed project near Hoyt Lakes sits on at least 795 million tons of potentially minable copper, nickel, cobalt and platinum group metals; Teck's resources for its Mesaba project cover at least 1.74 billion tons.

"The NewRange Copper Nickel joint venture brings together two large, well defined mineral resources in the established Iron Range mining region of Minnesota," Don Lindsay, Teck's CEO, said in a press statement.

PolyMet, registered in Canada but headquartered in St. Paul, has gotten myriad state and federal permits to begin mining. But three of them are still being challenged on environmental grounds, stalling the $1 billion project.

Environmental groups contend hard rock mines like PolyMet's and Teck's threaten to pollute water with toxic acids and metals.

Teck has not begun its environmental review and permitting process. "They are still in early stages," said Bruce Richardson, a PolyMet spokesman. "They are still doing exploration drilling, but they have a well-known and well-established [mineral] resource."

The environmental review for Teck's property is separate from PolyMet's, though Teck can rely on PolyMet's experience in the permitting process, Richardson said. "It gives them a gateway — perhaps a clearer pathway to the development of Mesaba down the road."

Richardson said the partnership will allow for other "synergies" between the two projects.

For instance, Teck has a proprietary mineral processing technology that could be employed at PolyMet's project, he said. And the proximity of the two mines — Teck is roughly 1 mile northeast of PolyMet — could boost overall operational efficiency.

That proximity raises red flags for environmental groups that oppose PolyMet.

"This raises the specter of a mega-operation where the impact of PolyMet would be much greater," said Chris Knopf, executive director of Friends of the Boundary Water Wilderness.

Paula Maccabee, advocacy director for the environmental nonprofit WaterLegacy, said the combination will lead to "the predictable expansion of the mining industry. … Minnesota has been stuck with a humongous bait-and-switch."

PolyMet and Teck are each putting $85 million into NewRange. Glencore is providing PolyMet's share and is also sinking an additional $30 million directly into PolyMet to cover debt obligations. Glencore owns 72% of PolyMet's stock.

The joint venture will be run by a six-member management committee, with three appointees from each company. PolyMet's Cherry will be the committee's chairman.

Shares in PolyMet, whose only project is the NorthMet mine, closed 8.4% higher on Wednesday's news. "The successful completion of this transaction is expected to more than double the resources attributable to PolyMet shareholders," Cherry said.

Teck's stock fell 2.2% Wednesday, but the company's Minnesota operation is a blip at this point.

Teck began drilling for precious metals in Minnesota in 2007 and has intermittently done so since, the company told the Department of Natural Resources in 2019. It has said little publicly about its Minnesota venture but told the DNR in 2019 it planned more drilling.

Vancouver-based Teck mines copper, zinc and several other minerals, as well as coal for steelmaking, mostly in Canada. The company also owns a portion of a large petroleum extraction operation in Alberta's oil sands, also known as tar sands.

Glencore is one of the world's largest mining companies, with interests in copper, cobalt, nickel, zinc and coal for power plants and steelmaking. It has long backed PolyMet and gradually assumed majority ownership in recent years.

Glencore recently admitted guilt in bribery and corruption charges and agreed to pay nearly $1.2 billion in a settlement between the company and prosecutors in the United States, Britain and Brazil over Glencore's operations in the U.S., the Democratic Republic of Congo, Venezuela and Nigeria dating back to 2018.

PolyMet's operation would include an open-pit mine in wetlands south of Babbitt and a processing site at the former LTV taconite mining operation near Hoyt Lakes, all within the headwaters of the St. Louis River.

With the joint venture, the two companies could end up sharing the processing plant.

The Fond du Lac Band of Lake Superior Chippewa, whose reservation is downstream from PolyMet, successfully challenged a wetland permit issued by the U.S. Army Corps of Engineers. The U.S. Environmental Protection Agency sided with the tribe earlier this year, recommending that the Corps not reinstate the permit.

In another action, the Minnesota Supreme Court in 2021 paused PolyMet's permit to mine, ruling that the state Department of Natural Resources must hold a hearing on the company's plans for its tailings dam.

And in a third case, the state Court of Appeals earlier this year turned back PolyMet's wastewater permit to the Minnesota Pollution Control Agency, saying regulators erred in its handling of issues related to the tailings dam.

"PolyMet still has huge permitting hurdles to overcome," Knopf said.