PolyMet offers $544M in financial assurances for mine costs

By STEVE KARNOWSKI Markets Associated Press

PolyMet Mining Corp. is offering the state a $544 million package of financial assurances to serve as an insurance policy to protect taxpayers from potentially having to cover the costs of closing and cleaning up a controversial copper-nickel mine it wants to build in northeastern Minnesota.

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The company said the package of surety bonds, irrevocable letters of credit and a trust fund would be sufficient to cover all costs, including treating the mine's wastewater "as long as necessary," if the mine were to close and the company couldn't cover the costs.

PolyMet used an estimate of 100 years in its financial modeling, spokesman Bruce Richardson said. But the company isn't saying that's how long the water would need treatment. He said new purification technologies, as they're developed, may shorten the required time.

The financial assurances package has been one of the most contentious issues in the fight over the proposed mine near Babbitt and processing plant near Hoyt Lakes, which would be Minnesota's first copper-nickel mining operation. PolyMet's critics say copper-nickel mines elsewhere have a long track record of environmental damage from acid mine drainage — and of going bankrupt — and leaving taxpayers stuck with the cleanup costs.

The package is a key component of PolyMet's updated application for a permit to mine , which was released Wednesday by the state and runs about 22,000 pages, including appendices. The permit to mine is one of the most important of the roughly 20 state and federal permits that PolyMet needs to obtain.

The revisions reflect feedback from technical experts with the Department of Natural Resources and its outside consulting company.

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Minnesota law requires PolyMet to submit bankruptcy-proof assurances before the department can approve the permit to mine. The plan is meant to ensure that the state has enough money to close the mine and reclaim the site if PolyMet can't, and it must cover costs for long-term monitoring and water treatment.

"We're pretty excited about this," PolyMet President and CEO Jon Cherry told The Associated Press. "This is the last thing we believe is required before the state can release the draft permit for comment."

Toronto, Canada-based PolyMet expects to operate the mine for about 20 years. But how long the wastewater will require treatment has been a hard-fought issue. Mine opponents contend it could be 500 years or more, and are demanding the state ask for $934 million up from the company. Cherry strongly disputes both numbers.

The Minnesota Center for Environmental Advocacy, which is trying to block the mine, issued a statement late Wednesday saying it was going through the company's application revision.

"We're having our experts review it and will let Minnesotans know what is in it as soon as we are able," the group said, noting that the state has not yet deemed the application complete.

Cherry said the company's cost estimate is high because the water treatment plant is designed to meet the state's tough water-quality standard for protecting wild rice. The state currently limits discharges of sulfates into waters where wild rice grows to 10 milligrams per liter.

The Minnesota Department of Natural Resources said Wednesday that it will review the revised application. If the department determines the application meets all legal requirements, it will schedule a public comment period.

Once the department puts the draft permit out for public comment, Cherry said, PolyMet will begin working with lenders and investors on an overall financing package that will include the financial assurances. Swiss commodities giant Glencore owns 29 percent of PolyMet's stock and has the option to raise its stake to 35 percent.