It’s been a topsy-turvy week for Twin Metals, one of two nonferrous mining projects near the Iron Range. Last week, the company triumphantly touted a “pre-feasibility” study showing that their proposed mine would be extremely profitable — costing $2.77 billion (possibly more expensive than any single private project in state history), but bringing in more than $12 billion in revenue.
Early this week, however, Twin Metals announced it would be halving its workforce at its Ely office, as reported in this story in the Mesabi Daily News. We’re not talking about huge numbers: more like nine people.
So let’s look at these items. Duluth Metals, one of Twin Metals two partner owners, was responsible for the study. And really, if the study had shown anything except robust feasibility it would have been corporate suicide. Even with the positive news, the company’s stock dropped upon the study’s release.
The second item, the job cuts, is one of those “theory meets practice” stories. IF Twin Metals gets permits to mine near the BWCA AND almost THREE BILLION DOLLARS, they could be raking in huge profits, hiring left and right. Those are big “ifs” and “ands,” and, as such, produce an even bigger “but.” (Pun not initially intended, but accepted for temporary comic relief).
Twin Metals is dangling what it believes to be a winning business proposal so that investors infuse new cash to take the project to the next rung of a tall ladder. When companies lay off half their workforce (while failing to replace them with machines) something is wrong. They need money.
I’ve said many times, you can scream and yell about jobs vs. the environment when it comes to these projects, but what really determines whether they happen or not is money. Big, big money.
Earlier this summer, Essar Steel said it was pumping half a billion dollars into their iron ore project near Nashwauk. Then they bombed out on their bond holders and had to get an extension. Then, one of their key North American corporate holdings — the Algoma Steel Mill in Canada — goes bankrupt. So, the money tells us that Essar is stuck, and facing serious corporation financial problems.
Meantime, Cliffs Natural Resources gets a new management team. They buy back $200 million in common stock, adding value to the company and suggesting investment in company properties. The money suggests stability and growth.
PolyMet is a holding corporation. It hasn’t mined anything, anywhere yet. Initial investors have pumped millions into the ongoing permitting process and plans for the new mine. All of this has been targeted at permits. But if PolyMet gets its permits, it will immediately need huge investments for plant construction and legal defense against likely challenges. Those are the real barriers to PolyMet.
Same for Twin Metals, but more so. When we talk about the nonferrous mining debate in Minnesota we often picture a grizzled old miner with a mesh ball cap in a screaming match with a granola-crunching “enviro” wearing sandals on the streets of Ely. Who will “win?” But that little scuffle is just two dust molecules on a giant chess piece moved across a global board by forces beyond the comprehension of local letter-to-the-editor writers.
That’s another reason why I keep writing about economic diversification and self-determination. Nobody cares about the cities of Northern Minnesota more than the people who live here, or who might live here if conditions allowed. We might see nonferrous mining this generation or we might see it next generation. If it comes, it comes. Certain recent headlines might be exploited by either side of the mining debate for public relations purposes. Taken together, one only sees the urgency of local economic development and community improvement. Desperation is not a plan. Opposition is not an alternative. And sometimes, despite the best of intentions, the dam breaks on the tailings pond. This isn’t an impossible challenge; merely an extremely difficult one. Anyone offering an easy fix, however, is lying to us.
Background: When we talk about copper, nickel and precious metals mining in Northeastern Minnesota, we’re actually talking about two separate projects. There could be more in the future. There could be one and not the other. There could be none of them. Those are the possible outcomes of this debate.
PolyMet’s North Met project is the smaller of the two, but the one that is further along in the permitting process. PolyMet would use the former LTV Steel processing plant in Hoyt Lakes and would be would be partially located on pre-existing mining lands in the Lake Superior Watershed. PolyMet is the least risky of the two, though as the exhaustive EIS process has shown it would by definition pose some risk. PolyMet says it will employ about 300 permanent workers at its plant.
Twin Metals is proposing a mine near Ely that would be located in the same watershed as the Boundary Waters Canoe Area Wilderness. Their processing plant would be in the Lake Superior watershed. The only way to describe their project is “vast.” Twin Metals says it will employ 850 workers, maybe more. But as big as this project is, the more difficult it will be to permit, finance and keep open. PolyMet revised job totals downward as it moved through the process; it’s possible Twin Metals would do the same.
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