DNR consultants doubt PolyMet Mining can protect taxpayers
Posted May 14
MINNEAPOLIS — State-hired financial consultants have raised doubts about whether PolyMet Mining Corp. can come up with enough money to protect taxpayers against the long-term environmental cleanup costs of its proposed copper-nickel mine in northeastern Minnesota.
And the consultants say there's no certainty that PolyMet will find the deep pockets it needs to provide the financial assurances, the Star Tribune reported Sunday (http://strib.mn/2rfTl7D ).
As the project moves through the permitting process, regulators are trying to come up with a financial arrangement to protect taxpayers from risks such as catastrophic accidents, mine closure and water treatment needs that could last hundreds of years.
PolyMet officials said the final number has yet to be negotiated, but the company has proposed setting aside $332 million.
Barbara Naramore, an assistant commissioner at the Department of Natural Resources, says the state's consultants, Oakdale-based Emmons and Olivier Resources Inc., haven't furnished a number of their own yet. She said agency officials understand that the decision could have significant financial implications for PolyMet.
"But we need to look at it through the lens of making sure the state's interests are protected," she said.
Another consultant, hired by the Minnesota Center for Environmental Advocacy, concluded that PolyMet's long-term cost estimates, especially for water treatment, are unrealistically low. Jim Kuipers, a Montana mining consultant, said PolyMet's financial projections are contrary to standards recommended by the federal government and overly optimistic. He said Minnesota should ask for $934 million up front to cover at least 500 years of water treatment and costs for closing the mine two decades from now.
PolyMet is a small Canadian mining company whose main assets are the mine site and the old iron ore processing plant it plans to convert. They are of value only if the company succeeds in getting a state mining permit, the consultants said, so the financial protections would have to come from a company or partner with much deeper resources. That may mean Glencore, the Swiss mining conglomerate that holds about a third of PolyMet's stock and has been its primary lender.
Brad Moore, PolyMet's vice president for governmental affairs, said small and large mining companies can and do find ways to fund financial assurance packages. PolyMet is in the process of doing that now, he said. He also said PolyMet has proved its ability to raise capital through the $300 million it has invested in the project to date.
"And we are confident we will have a package to meet regulatory review and the needs of our investors," he said.
Naramore said the state is on track for now to present proposed permit terms and a financial assurance package in September.