Tag Archives: Steve Timmer

Northern Exposure

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Investor Bill Foote says he’s “looking at Lundin Mining for exposure to nickel ore,” because he thinks that Vladimir Putin might restrict the supply of nickel to the world. The standoff over the Crimea may send ripples across Lake Superior, where Lundin’s Eagle Mine is scheduled to go into copper and nickel production by the end of 2014. Eagle will be the only nickel mine operating in the United States, at least until the mining boom around Lake Superior really gets underway.

Foote and those considering his advice on nickel exposure should take note that the Eagle project may be on schedule, but still faces a number of obstacles. First, Lundin has not yet managed to build a haul road from mine to mill, and won’t until Marquette County seizes the Hingst property using eminent domain. That could get messy. In the meantime, Lundin will haul its ore around and through the city of Marquette. That will, at the very least, test the patience of its citizens. Oddly enough, Lundin CEO Paul Conibear touted the good roads and transportation routes around the mine from the moment Lundin acquired the Eagle Mine from Rio Tinto. Was he misled by the mining giant? Did he and his team fail to perform due diligence before making the largest acquisition in Lundin’s history? I doubt he would deliberately mislead investors.

It would be worth asking what due diligence was performed when it comes to the technology in place at the Eagle Mine as well. Debasish Mukhopadhyay, a Palo Alto based inventor who has licensed water purification technologies to General Electric, Intel and Aquatech, has brought a lawsuit against Lundin for “willful” infringement of his patented method of reverse osmosis. The trouble goes back to 2011, when Rio Tinto’s Kennecott Minerals awarded Veolia Water Solutions and Technologies a contract for building a wastewater treatment plant at Eagle Mine. Veolia installed its Opus reverse osmosis technology, which Mukhopadhyay claims infringes his patented process. No matter how the dispute will be settled — and the last news story I saw suggested that Debasish Mukhopadhyay wants a jury trial — there is a question whether this was looked into (and, if so, why it was not resolved) before Lundin purchased Eagle from Rio Tinto.

It’s not as if the reverse osmosis process is just some obscure, behind-the-scenes machinery, the stuff that only mining engineers and wastewater treatment geeks worry about. Most people living around Lake Superior have probably heard of reverse osmosis by now. At Eagle and in discussions of the Polymet project in Minnesota, reverse osmosis has been repeatedly promoted as a twenty-first century solution to the risks of sulfide mining. It’s central to what Steve Timmer calls the “miracle of immaculate extraction” and to the mining companies’ claims that they are going to mine responsibly and sustainably — whatever “sustainable” means when it comes to extracting ore from the ground. You’d think someone would have asked some hard questions about the high-profile technology and intellectual property Rio Tinto was selling along with Eagle, or tracked down Mukhopadhyay, who is hardly unknown in water treatment technology circles, if only to solicit his expert opinion on the reverse osmosis process used at the mine. Apparently no one did.

When uranium was detected in the water at Eagle last year, Kristen Mariuzza expressed her confidence “in the system and the methods being used to ensure that only clean water is released back into the environment”; and the Rio Tinto press release in which she was quoted held up reverse osmosis as one of the “two methods are recommended by the EPA for removal of uranium from drinking water.” (Elsewhere, reverse osmosis has been likened to the benign process used to produce bottled water.) There’s no doubt Mariuzza knows her stuff when it comes to reverse osmosis; and it’s surprising she was not familiar with the shady provenance of the Opus technology: after all, she was the Michigan DEQ official who reviewed and signed off on Rio Tinto’s wastewater treatment plans — before she stepped through a revolving door and went to work for Rio Tinto.

There will continue to be litigation around Eagle Mine’s groundwater discharge permit, which comes up for renewal this year. Four plaintiffs — Yellow Dog Watershed Preserve, National Wildlife Federation, Keweenaw Bay Indian Community, and the Huron Mountain Club — have charged that in 2007 the MDEQ approved an application that did not satisfy Part 632 of the Michigan Non-Ferrous Metallic Mining Law. As Mindy Otto cannily notes over at her blog, “it is clear that the 2007 groundwater permit standards set by the MDEQ are not suitable to regulate groundwater quality, and Eagle Mine LLC would likely agree”: that’s why they’ve asked the DEQ, this time around, to relax the water quality standards of the original permit, to accommodate or excuse their exceedances.

Of course it’s possible that Lundin went into this project with eyes wide open, fully aware of the permit litigation it was signing on to, ready to prevail against the patent-holder of its reverse osmosis technology or cover whatever costs a Mukhopadhyay lawsuit might entail, and confident that the Marquette County Road Commission would eventually bend and give the mining company its haul road. Maybe that’s just the cost and the risk of doing business. It’s at least equally possible, of course, that these are unforeseen complications, in which case they suggest a troubling pattern. Investors like Foote might wish to do a little due diligence of their own, lest their investment in Lake Superior mining expose them to a lot more than the ups and downs of the global nickel market.

Update 8 April 2014: Yesterday the US Supreme Court declined to intervene in the dispute over the permitting process, rejecting the Huron Mountain Club’s appeal of a decision by the 6th U.S. Circuit Court of Appeals.

Update 9 April 2014: Debasish Mukhopadhyay has voluntarily withdrawn his patent-infringement lawsuit. “Court documents did not indicate why the suit was dismissed.” In the past week alone, Lundin has cleared two significant legal hurdles. My more general question about due diligence stands.

Update 4 June 2014: Eagle Mine has not yet overcome all legal hurdles. The Michigan Court of Appeals yesterday heard oral arguments over the permitting process in National Wildlife Federation v. Michigan Department of Environmental Quality.  An Eagle Mine press release made all the predictable statements and reassurances, and the local news station, ABC10, dutifully ran it without question or comment. The trial also brought over 500 members of the Keweenaw Bay Indian Community to Lansing — the most attendees ever recorded at a Michigan Court of Appeals hearing, according to Yellow Dog Watershed Preserve.

Time Out of Mind

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I leave tomorrow for Lake Superior. On Thursday the 24th, Ken and I are going to show our film at Michigan Tech, where there’s a conference called Writing Across the Peninsula, and then, on Saturday the 26th, at the DeVos Art Museum in Marquette. I’m going up a little early to do some exploring, traveling north along the western shore of the lake to Palisade Head and then inland (west), through Finland and into the area around Ely, Babbitt and Hoyt Lakes, Minnesota. That’s where Polymet Mining has proposed a huge open pit sulfide mine. It will be my first visit and maybe one of the few chances I get to see the area before the mining begins. After that, it’s never going to be the same. Or at least not in my lifetime — or in the lifetime of anyone alive today.

Polymet recently disclosed in a Preliminary Supplemental Draft Environmental Impact Statement that water runoff from its mine will have to be treated for the next five hundred years — “a minimum of 500 years,” just to meet water quality regulations. The proposal in its current form clearly violates Minnesota Rule 6132.3200, which requires that “the mining area” be “maintenance free” upon closure; but Polymet and its legions of apologists have already found some wiggle room here, arguing that state law allows for “perpetual treatment” as long as enough money is set aside and as long as the company can prove that it’s meeting federal and state water standards. For Polymet, it seems, this is just the start of a negotiation.

The Mining Examiner quotes Frank Ongaro, Executive Director of Mining Minnesota: “There’s no doubt it can be done, that it’s allowed. The concept is sound; the details have to be worked out by the experts.” I honestly don’t know how anyone can say things like this with a straight face. Five-hundred years: the experts just need to work things out. No doubt about it.

When I first heard about the five-hundred year disclosure, I tried to think of a place where mining was done five-hundred years ago: the best I came up with was Cerro Rico in Potosi, Bolivia, where conquistadores set up silver-mining operations in the sixteenth-century. Potosi is now considered one of the most polluted places on earth. Of course, the Spanish crown did not set out the sorts of guarantees that Polymet is willing to set out; but apparently the mining company shares the crown’s illusion that its empire will last forever. Or at least they would like us to think so: they would like us to set aside our doubts and entertain the fantastic idea that they will provide water-treatment facilities for the maintenance of their copper mine for the next five-hundred years.

Mind you, the country’s only been in existence for 237 years, and Minnesota was only admitted to the union in 1858 — 155 years ago. The EPA only started operations in 1970; its workers only just got back on the job yesterday, after being furloughed during the shutdown. Why are we being asked to believe in the perpetuity or even the resilience of the EPA, the Minnesota DNR, or any government institution or form of government? Who can say what’s going to happen fifty years from now, let alone five hundred? Will there be a Minnesota DNR or an EPA in 2063? Will there be a Polymet? Minnesota? How about 2100? 2413? Insofar as history is about holding people to account, this is nothing more than historical fantasy: there’s no guarantee or even promise of accountability when you are talking about five centuries. As Steve Timmer would have it, nobody is going to be around to keep Polymet’s grave clean.

Time out of mind is the phrase this whole proposal conjures for me. The expression comes from English law. “Time out of mind” or “time immemorial” is a time before anyone can remember: a property or holding, a way of passage or a benefit has been enjoyed so long that those who claim it no longer have to prove ownership or their right to it; nobody can remember a time when it wasn’t so. In this case we are being asked to project that far into the future — way past the horizon of what we ordinarily consider the future, way beyond the time anyone can foresee.

Projecting that far into the future, time out of mind, is also a distorting lens. It’s easy when looking that far ahead to overlook what we know will really happen to the area in the near term, just in the course of constructing and operating an open-pit sulfide mine. Mine pollution that lasts for five-hundred years is a huge and terrifying prospect, no doubt, but that dread prospect might also have the weird effect of eclipsing (or normalizing) the more immediate environmental and social consequences of mining and the industrialization mining brings. Water Legacy estimates that the Polymet project will take 6,600 acres of forests out of public ownership, destroy or impair at least 1,500 acres of wetlands and result in 168,000,000 tons of permanent waste rock heaps and 228,000,000 tons of tailings waste. Add to this the haul roads, the mill operations, air and noise pollution, the effects of clear-cutting and deforestation, shifts in population, economic distortion, and so on.

It’s important to pull back, change the lens, and see clearly what’s going to happen, what’s already happening, to the waters and the wilderness areas, the Lake and all life around it, within our lifetime, and what effect our actions now will have for generations to come.