Paying for copper-nickel clean up


If a proposed mine has the potential to produce environmental impacts that will last for decades – maybe even centuries – how can we be sure taxpayers won’t get stuck footing the bill for costly treatment and cleanup? This question is at the heart of debates over PolyMet Mining Corporation’s plans to develop an open-pit copper-nickel mine and processing facility in northeast Minnesota, and will be addressed at a House environmental committee today. It will be streamed live on the House website at 12:30 pm.

Copper-nickel mining does have the potential to induce long-term environmental impacts, because the metals are located in rocks containing sulfides. When sulfide is exposed to air and water during metal extraction, the interaction can generate sulfuric acid. Steps can be taken to treat water contaminated with sulfuric acid at the source (PolyMet is proposing treatment through reverse osmosis), but untreated discharge (known as “acid mine drainage”) can escape, and severely impact water quality and aquatic life. Since sulfuric acid can take years to develop, the environmental impact statement on the proposed mine estimates water may need to be treated for 200–500 years.

The chance that PolyMet will be around for that length of time is nil. But this doesn’t necessarily mean it won’t cover the cost of water treatment for that duration. Like many mining states, Minnesota state law now requires mining companies to offer “financial assurance” for cleanup costs before mining commences. Under such arrangements, the state determines the amount required, and the type of “bankruptcy-proof” funding that will be used to secure it; it is assumed that the interest generated on the funds will cover costs over time. This system has been devised to ensure taxpayers don’t get saddled with the burden of cleanup costs, but it has had a mixed record elsewhere, largely because costs can be underestimated.

Indeed, it isn’t clear how much money PolyMet would have to put up to cover the immediate and long-term costs of reclamation and cleanup; the House environmental committee will consider testimony from the DNR and members of the public in attempting to determine what kind of financial assurance would be required form the company. While PolyMet maintains 200-500 years of downstream remediation would only be necessary in the unlikely, worst-case scenario that high volumes of untreated water leak offsite, the company admits that it doesn’t know how long it will need to monitor and treat water after the mine’s closure. It has offered a preliminary estimate that such costs would run about $6 million annually, but this figure has been disputed.

All of this uncertainty makes it difficult to weigh the proposed benefits of the mine against its anticipated costs to determine if the project is in the public interest – especially since the purported economic benefits of the project are in dispute. PolyMet should be able to use modeling to present a plausible treatment window; if it can’t, the worst-case scenario of 200-500 years should be used to determine the required financial assurance. Not only is that the only way to ensure the project’s environmental impacts can be adequately addressed – it’s the only way for Minnesotans to be sure the mine makes long-term financial sense for the state.

Of course, regardless of its financial merits, the possibility that the mine could produce centuries-long environmental impacts has been enough to incite fierce opposition to the project from some corners.