Glencore loans $11 million to PolyMet

(IMAGE: PolyMet Mining Company)

(IMAGE: PolyMet Mining Company)

The global mining giant Glencore has loaned $11 million to Canadian development company PolyMet, owner and developer of a proposed copper-nickel-paladium mine in Hoyt Lakes, Minnesota. This according to a John Myers story in today’s Duluth News Tribune:

With no source of income until its mine permits are approved and production can begin, the company has relied on investors and creditors to keep operating during the engineering and environmental review phases. The company expects to receive final word on the adequacy of the project’s environmental review in February, with the final word on federal land exchange for the mine site expected soon thereafter.

Glencore is widely believed to be the likely owner of the PolyMet mine should the project receive its permits. The environmental review process that leads to those permits has created the most controversial clash between environmentalists and developers in the state for almost 10 years. Most seem to predict that PolyMet will clear the environmental review hurdle later this winter, but the permit process could be held up in courts by Minnesota Ojibwa tribes for years to come depending on how that review is completed.

Meanwhile, PolyMet — which has never mined anything before — is reliant on outside money to keep the process going. The hazard for them is that they continue to lose stake in the proposal long before any mining takes place:

PolyMet announced in December that it will get an extra year, until March 2017, to pay back an earlier loan of more than $66 million to Glencore, which owns 28.4 percent of PolyMet stock. Glencore could eventually hold 37.4 percent of PolyMet under new terms of that loan. The loan had been due this March.

Of course, not that anyone wants to hear this, but the biggest barrier to PolyMet isn’t the legal process, its the state of global commodities prices and cost of production. Glencore itself is in danger of bankruptcy, according to a major analyst, the effects of which could be very bad for everything touching it.

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