PolyMet Mining Corp. has proposed to put up $544 million in financial protections for the first three years of construction and mining at its proposed copper-nickel facility in northern Minnesota to insulate taxpayers from any environmental damage that could result.
The Minneapolis Star Tribune reported that the so-called “financial assurance” is the last piece required in PolyMet’s application for a permit to construct a $650 million mine and processing plant near Hoyt Lakes, the company said.
The assurance estimate in PolyMet’s financial proposal, which is considerably higher than the company predicted a year ago, now goes under state review.
Along with other permit requests covering air quality, water quality and a tailings dam, it is expected to be open for public comment early next year.
“If we do our job right, there will be no reason for government intervention and no reason for the financial assurance instruments to ever be called,” said Jon Cherry, PolyMet’s president and CEO. “Whether we execute the plan or the state executes it, the work will get done and the environment and taxpayers will be protected.”
State law requires regulators to set the amount annually based on the potential costs of closing the mine in each year of operation. That means the initial costs are low, but will peak midway through the mine’s life, in about 11 years. They include the costs of treating water that drains from the mine site long after it’s closed.
PolyMet’s submission did not include long-term predictions of what closing costs would be years down the road — when the mine will be significantly larger and the volume of water requiring treatment much greater. Bruce Richardson, a company spokesman, said the proposal goes beyond what state law requires with a three-year projection.
Mining experts used by Minnesota environmental groups have urged the state to set a high bar to cover what could be considerable future costs: $934 million for mine closing costs and at least 500 years of water treatment. Other states have often underestimated the overall costs and been forced to turn to taxpayers to deal with long-term pollution and cleanups.
As a result, the total amount of financial assurance and the types of instruments to create it are under intense scrutiny from advocates on both sides of the mining debate — one of the most divisive environmental issues that state regulators have tackled in years. Though Gov. Mark Dayton said recently he supports the PolyMet project, he also said it would be one of the most difficult decisions he would make as governor.
PolyMet’s proposal includes $75 million in financial assurance for the first two years of construction, about $60 million of which is associated with the former LTV Steel Mining Company site, which PolyMet has taken over to process its ore.
In the third year, the first year of mining, it would bring the total to $544 million. That would cover the costs for the state to close the mine and perform environmental reclamation, including long-term water treatment, if PolyMet is unable to perform the work.