Minnesota estimates PolyMet would need $1 billion in financial assurance for copper-nickel mine

December 21, 2017

State regulators in Minnesota have estimated that PolyMet Mining Corp. would have to put up about $1 billion halfway through the life of its proposed copper-nickel mine in northern Minnesota to protect state taxpayers from environmental risks.

The estimate, that was obtained by the Star Tribune, found that more than half the funds would have to be dedicated to a trust fund for water treatment that would be required long after the mine has closed.

PolyMet had already proposed to put of $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 state estimate approximates what outside engineering experts have recommended because of the scale and severity of potential water contamination from hard-rock mining.

The projections are contained in documents produced by state regulators as they develop financial protections that, by state law, must accompany the permit to mine that PolyMet is seeking. The permit will be open to public comment early next year, but officials say they haven’t decided yet whether those long-term costs will be included.

The Star Tribune reported the mining permit represents a critical turning point for one of the longest, most contentious environmental debates in state history.

Unlike taconite mining, copper-nickel mines can produce runoff that can generate acid that leaches hard metals and other contaminants from underlying rock, a problem that can linger for decades.

The mining industry and PolyMet officials say modern technologies and engineering can protect Minnesota’s surface- and ground water.
Still, some mining states, including Minnesota, require companies to post “financial assurance” in the form of bankruptcy-proof financial instruments that would pay for mine closure and environmental cleanup if PolyMet or its successors should fail or walk away — as many mining companies have in other places.

The states’ role in negotiating such protections became even more critical last week when Scott Pruitt, administrator of the U.S. Environmental Protection Agency, dropped a new federal rule that would have required mining companies to provide funds for cleanup.
Pruitt said it would impose an “undue burden on this important sector of the American economy.”

Using PolyMet’s financial and mining projections submitted as part of its permit applications, combined with additional data from outside consultants, the state determined that after peaking in year 11, the potential cleanup costs would gradually decline to $580 million in the 20th year. And that’s where they would stay as the basis of a trust fund to pay for water treatment perhaps “in perpetuity.”


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