As Minnesota precedes in evaluating PolyMet’s proposed copper-nickel mining project, a number of pressing issues still need to be resolved with respect to how much – and what kind – of financial assurance would be necessary to mitigate long-term environmental impacts. This became clear at a recent House Environment, Natural Resources and Agriculture Finance Committee hearing.
Under Minnesota law, PolyMet must offer some form of “financial assurance” during the permitting stage to ensure it can cover the costs of mine closure and any ongoing treatment or environmental remediation required as a result of mining operations. The process is designed to protect taxpayers from having to shoulder those costs, and is crucial given the possible duration of associated impacts – up to 500 years, according to the project’s environmental impact statement.
During the hearing, Committee members heard testimony from the DNR, PolyMet, and members of the public, many of whom were representing organizations. Attitudes toward financial assurance seemed to fall into one of three camps: those who supported the financial assurance process, those who rejected it outright, and those who didn’t feel they had enough information about the project to decide either way.
Mining and construction industries representatives argued that Minnesota’s financial assurance process is sound, that the DNR should be trusted to determine an acceptable level and type of financial assurance, and that technology can prevent and mitigate environmental damage from mining activities, which would ultimately be financially beneficial for the state.
On the other end of the spectrum, some representatives from environmental organizations and a few private citizens noted that no amount of money (either in the form of financial assurance or profit from the mine) could render acceptable the long-term environmental devastation that would be wrought by hard-rock mining. One testifier stated it was “patently absurd” to assume any mechanism put in place today could address costs incurred 500 years from now. Another argued that the fact the mine could generate impacts in perpetuity should result in an automatic rejection of the project.
The majority of those in attendance fell somewhere in between. Members of the Committee clearly felt that PolyMet needed to answer a number of questions about the project before any determinations could be made about financial assurance. Chief among the concerns were the longevity of potential environmental impacts (particularly with respect to water quality and wetlands), the potential for unforeseen environmental consequences in the event of treatment equipment failure, and PolyMet’s ability to provide an acceptable level of financial assurance.
Regarding this latter concern, PolyMet’s relationship to Glencore, a multinational commodity trading and mining company, was repeatedly questioned. Glencore owns a substantial amount of PolyMet’s shares, and it isn’t quite clear how much control Glencore has over PolyMet, or which of the two companies should be on the hook for financial assurance. Rep. Andrew Falk, who represents west-central Minnesota, and other participants questioned whether PolyMet is simply a shell company that Glencore will quickly dismantle once mining commences, and wondered if PolyMet itself has the financial resources to take responsibility for ongoing costs.
One of the best pieces of advice offered at the hearing came from Ron Sternal of St. Louis Park. Sternal, a recently retired Wall Street executive, emphasized the likelihood of unanticipated liabilities in a project like this one, and urged lawmakers and the DNR to “drive a hard bargain” with PolyMet should it proceed. He argued that at this stage, we should all be asking PolyMet to provide every bit of information we need to make decisions with respect to the project that are in the best interests of the state, because we hold the power to make or break the project. After permitting goes through, all of the power will be in PolyMet’s hands.
The need to take a firm stance when it comes to dealing with PolyMet was illustrated when Brad Moore, Polymet’s representative at the hearing, declined to provide worksheets showing how the company calculated the costs of mine closure and ongoing remediation in the environmental impact statement. His reticence came despite Chairwoman Rep. Jean Wagenius’ repeated requests that he offer that information to the Committee. Moore noted that the details would be hammered out in the permit application – yet another point of contention during the hearing. Several participants argued financial assurance can and should be determined sooner than the permit phase, lengthening the opportunity for public comment and deliberation.
The hearing showed that Minnesota lawmakers are rightfully approaching PolyMet’s proposed mine with caution – especially since financial assurance has never been used before in Minnesota. Few participants rejected the mine outright, and most were willing to explore the idea that a smartly negotiated financial assurance package could help address the long-term costs associated with the project.
The only area of consensus during the hearing seemed to be that a trust fund would be the best mechanism for securing financial assurance. The longevity of the environmental impacts financial assurance must be able to address – and therefore the amount required – remains unclear. This information is crucial if Minnesotans are to make an informed decision about the future of the PolyMet project.
Related story: Big turnout for Polymet mining hearing in St. Paul – video (The Uptake, January 2014)