Polymet’s projection of its mine by Year 11 of operation. IMAGE: Polymet
This is certainly one of those stories that will be read very differently by various audiences, but it’s worth a read regardless. A group of undergraduate economics students at the University of Minnesota won scholarships in a juried competition for an ethical economic analysis of the PolyMet project in northern Minnesota. Their finding: PolyMet is not worth the long term costs — at least, not at this time.
(PS: For those who prefer their news unfiltered, the actual paper may be found here)
PolyMet is the first of a series of proposed nonferrous mineral mining operations in the area which have sparked tremendous statewide controversy and conflict between those who want the jobs and minerals and those concerned about the environmental impact and lack of economic diversification. Locally, Iron Rangers accustomed to the impact of the iron mining industry have mostly supported the new projects for the possibility of jobs and mineral revenue they represent. Meantime, others concerned about the environmental impact, particularly the cost of mitigating the long term cleanup, have sought to stop the projects, or at minimum force the companies into stringent long term financial assurances.
From the Neal St. Anthony story in the Star Tribune:
The paper will have little or no bearing on the emotional, political, economic and other considerations that go into a final decision by state regulators and Gov. Mark Dayton.
But give credit to these bright students who turned the issue into a business-ethics case study, and to Securian Financial, which sponsored the competition and provided volunteer judges.
About 600 freshmen in the Carlson School of Management participated in the competition. Slightly more than half of the student teams came down against the mining project, largely because of environmental risks that could be quantified. Those risks were balanced against benefits that include an estimated 20 years of mining by the Canadian company and related jobs on the Mesabi Iron Range.
Prof. Jeffrey Kaufmann, who taught the class, said what’s impressive is that 18- and 19-year olds stripped out the emotions and applied a relatively sophisticated process for analyzing an ethically difficult situation.
“One of our problems in business and politics is that we focus too much on where we stand on an issue and too little time on understanding the issue,” Kaufmann said. “As [student] Kevin Hyde was saying … the [winning] group’s collective gut started with the idea that the PolyMet proposal was ethical. It changed as they focused on understanding the issues and the claims.”
The students behind the winning essay put themselves in the role of the outside directors of the company. And they analyzed the situation not just in terms of profits to shareholders, but for overall impact on a variety of stakeholders, including environmental liability.
Securian General Counsel Gary Christensen and his team of judges evaluated the papers of the 11 finalists. And Securian gave each of the six members on the winning team a $1,000 scholarship.
“The debate and teamwork involved in analyzing a real business problem help prepare students to be better leaders and contributors in the workplace and society,” said Lori Koutsky, Securian manager of community relations.
MiriamHadidi, a 19-year-old business student from Shoreview, at the outset was the only member of the winning team to doubt the PolyMet plan.
But her teammate Hyde said after analysis: “We concluded it was wrong at this time. It would have to involve a new form of mining [to negate the impact on area streams and lakes].”
A PolyMet official said the students deserve credit for exploring the issue, but that they were “in over their heads.”
“There is a process established in law to identify and determine whether we can obtain these mineral resources responsibly,’’ [PolyMet executive Bruce Richardson] said. “The question is should they be mined in Minnesota, a place of strong environmental responsibility and accountability to stakeholders, or leave the mining to somewhere else in the world where regulations are lax?”
The story is interesting to me because I’m always curious what people who are divorced from the local politics and emotions of the situation conclude after considering both sides of the issue. One undergraduate economics essay does not make critical mass, but it’d be nice if we could consider the contents of the paper on their own merits.
You can read the full paper right here.
My initial read of the essay is this: the paper relies on assumptions about the methods of mining being proposed by PolyMet being similar to those used in other parts of the world. PolyMet says their technology is different. That being said, the paper fixates on the difference between the short term cost and the long term cost. That’s an important distinction. The rosy economic forecasts for nonferrous mining often downplay the long term cost of post-mining mitigation and the gaping hole in the region’s economy once mining stops. So, in this regard, the paper raises an important point that should be debated.
Good for them. These young people are our future, and they are starting out very well, indeed.
Well, actually not my future, but my grandchildren’s .