Mining in Minnesota — regulation needed – by Rolf Westgard (Minneapolis Star Tribune – June 21, 2013)

Rolf Westgard is a professional member of the Geological Society of America and is adjunct faculty on energy subjects for the University of Minnesota’s Lifelong Learning program.

This is a potentially significant industry for the northeastern part of the state. Regulation is needed, and can succeed.

Josephine Marcotty’s June 16 article “Minnesota’s next mining boom” focused on the environment-vs.-economics dispute that hangs over Minnesota’s world-class deposits of copper, nickel, cobalt, gold and platinum group elements.

They lie in a band, meandering from southwest to northeast, adjacent to the Archean granite of Minnesota’s Iron Range. They arrived more than a billion years ago in the magma that featured northern Minnesota’s active volcanic history. They are concentrated out of the magma by liquid sulfur, which acts as a “collector,” because these elements prefer the sulphide liquid to the magma by a factor of 1,000 times more. This process is responsible for forming the world’s economically mineable magmatic nickel-copper sulphide deposits, like those found in Canada, Russia and the United States.

Demand for these elements is soaring. One reason is their use in renewable energy systems that provide transmission, rechargeable batteries and wind turbine technology. An example is the battle between the world’s largest iron ore miner, Vale SA of Brazil, and China’s biggest nickel producer, the Jinchuan Group. They were bidding for control of South Africa’s Metorex Ltd., a medium-sized producer of high-demand nonferrous metals like copper, nickel and cobalt, a contest finally won by Jinchuan. The Metorex resource is dwarfed by Minnesota’s.

This resource has attracted two major mining ventures, including one by Polymet Corp. of Canada that includes Swiss commodity and mining giant Glencore, which now owns 18 percent of Polymet’s shares. Glencore also has Polymet convertible debentures and warrants that would increase its ownership to 25 percent.

The other is Twin Metals, a joint venture that includes Duluth Metals and Antofagasta PLC of Chile, one of the world’s largest copper miners.

A team of geologists at Twin Metals facility in Ely, Minn., estimates that there are 13.7 billion pounds of copper, 4.4 billion pounds of nickel and 21.2 million ounces of palladium, platinum and gold in that venture.

The Polymet project expects annual metal production of 39,000 tons of copper, 9,000 tons of nickel, 400 tons of cobalt, 22,000 ounces of platinum, 87,000 ounces of palladium and 13,800 ounces of gold from its lease.

The state of Minnesota owns more than 6,000 acres in the region, and Minnesota’s schools could collect at least $2 billion in royalties in the coming decades if these new mining projects proceed. This state property is known as “school trust lands.”

Under the Minnesota Constitution, income from such lands is earmarked for the Permanent School Fund, which contributes about $60 per pupil to every school district. An analysis by the Minnesota Department of Natural Resources projected that the school fund, with assets of $720 million, could more than triple in size with these new royalties over 25 to 30 years.

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