Serving Northern St. Louis County, Minnesota

Why resort to guesswork when a study can inform debate?

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The ongoing debate in our pages between County Commissioner Tom Rukavina and Reid Carron, of Morse Township, is strong evidence of the need for a social and economic analysis of the effects of proposed copper-nickel mining in the Ely area.

Clearly, Mr. Rukavina and Mr. Carron disagree on the relative economic risks of copper-nickel mining within the Boundary Waters watershed, as well as the nature of our region’s economy— and this difference of opinion is at the heart of the current debate over the wisdom of the Twin Metals project in particular.

Mr. Rukavina opposes a social and economic study of a possible withdrawal of mineral rights from the area in question, apparently preferring to substitute his own beliefs for independent analysis. Mr. Carron has his own views to be sure, but is apparently willing to consider an independent perspective.

In his latest retort in this week’s paper, Mr. Rukavina accuses Mr. Carron of using facts “so off the wall, they don’t deserve a response.” Yet, in attempting to bolster his allegation, Mr. Rukavina makes a number of claims that are not well supported by evidence.

Mr. Carron, in a previous letter, had stated that the creation of a mine risks diminishing the values of residential properties in the vicinity. Mr. Rukavina claims otherwise, stating that “home values won’t be affected at all.”

Yet there is substantial economic analysis that has been undertaken throughout the world and in the U.S., on the property value effects of what most economists refer to as “disamenities,” which can include anything from industrial plants, to noisy highways, from wind turbines to mines.

These studies have consistently demonstrated that the introduction of such factors has a negative impact on residential property values, generally in direct proportion to proximity. Mr. Rukavina’s claim that there would be “ten people in line to buy” million dollar lake homes near a copper-nickel mine is exactly the kind of hyperbole for which he takes Mr. Carron to task. Wouldn’t it be advantageous for policymakers like Mr. Rukavina to actually have some basis for such claims? Or, conversely, wouldn’t it be best to know ahead of time the potential downsides of a copper-nickel mine? That’s what a study could provide.

Mr. Rukavina further suggests that the people who are living in lake homes near the proposed mine have been around mining areas for 135 years. That’s just not accurate. There hasn’t been active mining on the Vermilion Range for more than half a century, and a significant portion of the residents in question have never lived in mining areas, as Mr. Rukavina suggests. He also disregards survey data from a 2014 study by the University of Minnesota-Morris, in which 23 percent of residents of the four townships surrounding Ely indicated that mining would be an activity, or disamenity, that would prompt them to leave the area. Mr. Rukavina might question that data, but on what basis? Where’s Mr. Rukavina’s study on the question? If he doesn’t have one, why not take the time to gather the data? That’s what a study would accomplish.

Mr. Rukavina and Mr. Carron also disagree on the nature of the economy in northeastern Minnesota. Mr. Rukavina says that mining drives the region’s economy, while Mr. Carron suggests that fewer than three-in-100 jobs in the region are now directly attributable to mining. That particular debate is somewhat tangential, since the economic impact of mining is due to taconite mining, which is far less controversial than copper-nickel mining. But let’s take a look nonetheless.

While Mr. Rukavina’s perspective may have once been true, more recent data points to a far more diversified economy than what Mr. Rukavina might remember from forty or fifty years ago. A November 2014 study by the University of Minnesota Extension, entitled Economic Composition of Northeastern Minnesota: Industries and Performance by Senior Economic Impact Analyst Brigid Tuck, notes that the mining sector provides four percent of employment in the seven-county Arrowhead region, which is dominated by St. Louis County. Health Care is the single-biggest job creator, representing 18 percent of total employment, followed by Government (17 percent), Professional and Business Services (16 percent) and Trade (14 percent).

The study did indicate that mining provided $3.9 billion in output, or 27 percent of total gross regional product in the Arrowhead, the most of any sector. Then again, that figure was based on the value of the taconite produced in the region in 2012, which was the most recent year examined in the 2014 study. At the time, the price of iron ore was at near-record highs, averaging about $130/ton. Today, it’s running about $70/ton, which would put the sector’s current output at about $2.1 billion, or less than 15 percent of the region’s total output.

I would certainly agree that the economy of the Mesabi Iron Range is significantly dependent on mining, but the Arrowhead is a big place and outside the confines of the Mesabi Range, the impact of mining on the economy is actually quite limited.

What is disturbing is the notion that major decisions regarding the future of the Ely area economy (which is not part of the Mesabi Range) could be made without a better understanding of the true and current nature of the local economy and the benefits and risks associated with copper-nickel mining. We shouldn’t be making major decisions based on preconceived notions and our own biases.

Mr. Rukavina and others have regularly tried to portray this debate as one of “mining versus tourism.” As my own research on the subject (see Ely’s Golden Goose, Timberjay, Aug. 4, 2017) has revealed, while the Ely area economy certainly benefits from mining incomes and the influx of tourism dollars, the primary economic driver is locally-based spending derived from residents, both permanent and seasonal, living in the surrounding townships. These are families with above average household incomes, the vast majority of whom work in professional sectors, government, or own and operate their own businesses. They are, in many cases, not dependent on local employment and many have indicated they would move if the amenities that have attracted them to the area are diminished in any way. And nearly a quarter have pointed to copper-nickel mining as the factor most likely to cause them to leave the area.

For a policy maker to put this well-established economic model at risk, without fully understanding its nature and the downside risks associated with copper-nickel mining near Ely, is sheer foolhardiness. Mr. Rukavina certainly recognizes that the Twin Metals mine isn’t going to happen any time soon. That means we have the luxury of time to take a hard look at the questions and the debate highlighted by the exchange between Mr. Rukavina and Mr. Carron.

While some might have suspected an analysis undertaken by the Obama administration would have leaned too far to the environmental perspective, surely they can’t believe the same about a review overseen by the Trump administration. Yet here they are, fighting tooth and nail, to prevent any independent analysis of the costs and benefits associated with copper-nickel mining on the edge of the Boundary Waters. It kind of makes me wonder… what is it about gathering actual data that has Mr. Rukavina so rattled?

Comments

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Minnesota Miners

It is so nice to see that somethings never change. Anyone with an ounce of sense would know that if a new mining project such as Twin Metals may one day the price of residential property would skyrocket overnight. Where exactly do you and Reid think the construction and trades workers are going to live during the construction phase. How about where are the actual miners going to go when production starts. They all will be looking for homes to bring their families to. You and the elite preservationists are doing more to scare people away from here than any potential mining every will. Your constant doom & gloom chicken little syndrome will continue to drive them away.

We on the pro mining side didn't draw the line between mining and tourism. The elite preservationists did by starting this whole process with Becky writing a letter requesting a PEIS. The funny thing is that she repeatedly denied doing so until her letter became public knowledge. There is a policy and procedure for new mines, PolyMet is currently 13 years into the process. It has been the longest and most through process in Minnesota history. We think that process will prevail in the end for Twin Metals. They need to have the chance to try. If they can't prove they can do it so be it, just don't cut them off before it even has a chance.

One last thing before I am done, not really sure I would be holding Reid Carron up as an example of anything right now after what he said in the NYT.

Sunday, October 15
Reid Carron

I pity Minnesota (Chilean) Miners. It was must feel awful to lack the courage--the character--the moral fiber--to post under your own name.

Monday, October 16
Minnesota Miners

Reid thanks for reinforcing what you said in the NYT article.

Monday, October 16
Steve Jacobson

And here he apologized and said he didn't really mean that all miners aren't as smart as him and his wife!

Monday, October 16
jtormoen

Sorry, Mr. H ... looks like the horse trough will remain full. But you tried.

Tuesday, October 17
Steve Jacobson

In the future will everyone please refrain from using the threat that people will move if the mining goes through! Trust me they won't be missed. it certainly is not a threat to me anyways. I believe they will have plenty of help available to help them move.

Tuesday, October 17
Hardrockminer

Reid

We really have had enough of your insults.

Sunday, November 5