Antofagasta, the massive international copper-mining giant behind the proposed Twin Metals project, needs to start playing straight with Minnesotans, particularly residents here in the North Country. …
Antofagasta, the massive international copper-mining giant behind the proposed Twin Metals project, needs to start playing straight with Minnesotans, particularly residents here in the North Country. Their proposal for an underground copper-nickel mine just upstream of the 1.1 million-acre Boundary Waters Canoe Area Wilderness has sparked division in our region that is, undoubtedly, creating a drag on the local economy.
Nearly a quarter of residents in the townships surrounding Ely told University of Minnesota pollsters back in 2014 that the new mining in the local area would likely prompt them to leave the area. That’s concerning enough, considering that Ely’s surrounding townships generate more than half of the community’s income, thereby fueling the Ely economy.
That’s a reality that can be quantified. What’s tougher to recognize is the degree to which uncertainty over Ely’s future direction has been harming the local economy in recent years.
If nearly a quarter of existing residents would consider leaving the area in the event that a mine is opened, how many prospective new residents have simply chosen to look and invest elsewhere rather than consider Ely? If the amenities that attract new residents to the community are threatened, it’s only rational for people to be cautious.
If there were the potential for a huge economic payoff from a mine, one might at least be able to accept the sort of limbo in which Antofagasta has placed the community. Every year that the Twin Metals project casts a giant question mark over Ely’s future, is another year during which the community is likely underperforming its potential.
We’ve previously reported on the study conducted by two Harvard economists, who found that the area would be better off, in terms of community income, without a mine. Yet, Ely currently is experiencing the worst of both worlds: fear of a mine is almost certainly limiting new investment and in-migration from those attracted by the region’s natural amenities. At the same time, the prospects for the Twin Metals mine remain far more remote than many mine boosters in the community care to admit.
The widespread opposition to the Twin Metals proposal in Minnesota certainly doesn’t bode well. While the Trump administration appears intent on ignoring the law in its mad dash to complete an environmental review, it is the state of Minnesota that will issue any permits for the mine. And a broad majority of Minnesotans do not support a dangerous sulfide-based mine on the edge of the Boundary Waters.
But that’s mere politics. In the end, mines are about money, and on that score, the prospects for the Twin Metals project look even bleaker. It’s noteworthy that Twin Metals issued a mine plan late last year that failed to include any financial projections. The trouble is, any independent financial projection would expose the truth about Twin Metals, and that is, that it cannot operate profitably under anything close to current or even historical prices for copper or nickel.
Let’s be blunt— at current metal prices, even PolyMet, a proposed open pit mining operation that obtained its processing facility for pennies on the dollar— can’t make a buck. PolyMet’s 2018 financials showed a marginal ten-percent return on investment with copper at $3.29 per pound (it’s currently at $2.68 per pound) and nickel at $7.95 (currently at $5.68). If an open pit mine can’t make it, the prospects for an underground operation, with a substantially higher upfront investment requirement than is the case with PolyMet, is nothing more than pie-in-the-sky.
The Twin Metals project is banking solely on the theory that copper prices are going to increase sharply over the next two decades, eventually making extremely low-grade deposits like those found in Minnesota economical. Anything is possible, of course, but the odds are against it. A recent World Bank estimate projected that copper demand will increase by just seven percent between 2017 and 2050. That’s not seven percent annually. That’s seven percent, period. Besides, metal recycling is largely built into all green technologies, which means the economy will make more efficient use of metals in the future.
All of which makes the current talk of a Twin Metals mine so self-defeating for Ely’s economy. Supporters of the mine spin a tale of economic woe in the absence of a mine, which discourages new investment, while the future risk posed by talk of the mine keeps the alternative economy, based on outdoor amenities, stuck in first gear. It’s a lose-lose.
That’s why Twin Metals needs to put up or shut up. If they can’t produce an independent financial projection that shows the mine will be able to operate profitably at anything close to current metal prices, they should pack up and go back to Chile. As it stands today, they’re only hurting Ely’s economy.