October 12, 2014
Those on the Iron Range understand the importance of mining, but many Minnesotans may not realize how significant this industry is in our state. This issue has been in the headlines due to the proposed PolyMet mine. Of course, the environment is frequently cited as a cause for concern, and we’ll investigate these aspects in this article.
Some facts about Minnesota mining and geology
Keegan Iversen, Libertarian candidate for State Auditor, stands beside a haul truck at an Iron Range taconite mine
Minerals extraction is a longstanding industry in Minnesota, beginning in the late 1800s. Taconite (iron ore) is the primary resource currently being mined. At least 100 years of taconite mining remain in the northern arrowhead region and Mesabi Range, according to Tony Sertich, Commissioner of the Iron Range Resources Board [1]. He further estimates that up to 500 years’ worth of metallic resources are available, especially iron, copper, and nickel. Tony Runkel of the Minnesota Geological Survey [2] estimates that up to 4 billion tons of extractable copper and nickel are present, making our state’s mineral deposit the largest ore body in the world!
Minnesota also contains deposits of precious metals which have never been mined. Preliminary estimates have inferred about 21 million ounces of gold, platinum, and palladium. The platinum and palladium deposits could be one of the largest outside the nation of South Africa.
These massive resources are the result of a geological rift which happened over one billion years ago, during an attempt to split the North American continental plate. Upwellings of magma from the earth’s interior deposited these minerals near the surface, although volcanism never occurred.
Today, Minnesota produces 80% of the iron mined in the US. Ongoing taconite mining operations have resulted in approximately 4400 mining jobs. These are high-paying jobs with an average salary of $78,000 to $100,000, according to Tony Sertich [1]. By contrast, other industries in the region such as tourism tend to be lower-paying jobs near the minimum wage. Mining has led to an additional 12,000 support jobs in the northern region.
Do Libertarians support mining?
Of course. Just as Libertarians support every industry which produces wealth that our advanced civilization needs, where all involved participate voluntarily, and when it is done responsibly with no negative effects upon others.
It’s difficult to imagine modern life without the essential products which come from mining. Iron is the key component of steel, a material found in every airplane, train, and automobile, in the structural members of multi-story buildings, in many household appliances, and in uncountable other products. Minnesotans are fortunate to be endowed with such massive resources, which seem destined to create new wealth in northern areas for decades or centuries to come, and which boost living standards for society at large.
The PolyMet project
The PolyMet Mining Corporation has proposed a new copper-nickel mine in the Mesabi Range. Copper and nickel have not been mined in Minnesota before, although these resources are much larger than all iron resources.
Processing of copper-nickel ore is more complex than with iron ore. The copper and nickel are frequently bound together with sulfur and thus called “sulfide minerals”. Upon exposure to air and water, these sulfides can become acidic and generate sulfuric acid. Therefore, the mine must include special processing to neutralize the acids while it is in operation, and special remediation to cover and seal the exposed rock once mining is complete. It is these aspects which have generated controversy.
Fortunately, sulfide mining has been conducted elsewhere in the US and around the world for many years, so technologies and methods have already been developed to address the potential problems.
An impact on the November election?
The proposed project has generated strong support and opposition.
It has also exposed a schism within the DFL. The Democratic Party has traditionally been comprised of both blue-collar labor and environmentalists. Iron Range miners understand that the prosperity of their communities and their own livelihoods are at stake, and they are strong supporters of the proposed PolyMet mine. Environmentalists have been leading the opposition.
The issue is impacting the State Auditor race. After it was revealed that incumbent DFL State Auditor Rebecca Otto sided with the environmentalists and voted against 31 mineral leases for the PolyMet project while on the state’s Executive Council, Iron Range DFLers were upset enough that numerous “Dump Otto” signs began appearing in yards.
But it seems unlikely that unhappy DFLers can stomach switching support to their longtime adversaries, the Republicans. Fortunately, they’ve been learning that they have a new alternative. Libertarian candidate Keegan Iversen for State Auditor has been traversing the Iron Range since summertime, visiting the communities of Babbitt, Cloquet, Ely, Eveleth, Kinney, Gilbert, Grand Rapids, and Virginia, inspecting mining operations, and introducing himself to residents of the Northland. Keegan Iversen has released a statement discussing his stance on mining.
The Environment
We can be thankful for the environmentalists, who first began raising public awareness of human activity on our environment. Prior to this, few gave much thought to the environment. Littering, hunting of species to near extinction, pollution of rivers, and other problems were rampant before the first Earth Day in 1970. Some mining operations before that time were conducted with little consideration to their impact on nearby rivers, lakes, and natural habitat. Some old mines are still federal Superfund sites today, with cleanup being paid for by taxpayers.
A clean environment is something the public has learned to appreciate, as we all enjoy fishing, camping, hiking, and other outdoor recreation.
Unfortunately, many environmental advocates have gone beyond a reasonable standard and have pressed an absolutist position. Some environmentalists oppose all mining, even if done responsibly. But such hard-nosed opposition doesn’t make sense, especially with the livelihoods of so many people in the Iron Range at stake.
Mineral resource development might be an ideal activity for the US, rather than in less-developed countries where standards are more lax. Americans have an expectation of a clean environment, and public pressure will help impel any mining to be done responsibly. Furthermore, mining companies which operate in the US are experienced at environmental remediation, and they have the know-how and access to the modern technologies and processes necessary to mitigate any environmental effects.
The core principle of the libertarian philosophy is that people should have broad freedom to make their own decisions and act at their own discretion, except when their actions negatively impact others. Thus, Libertarian officials will make sure that mining operations do not affect their neighbors, that the water quality of nearby lakes and streams is preserved, and that taxpayers will not be called upon to clean up a mess once mining operations are complete. We will hold mining companies accountable for their actions.
Make no mistake, Libertarians support a clean environment.
Libertarian solutions
Here are some solutions which Libertarians can offer that would benefit the mining industry, the livelihoods of those in the Iron Range, AND promote good environmental stewardship:
– Establish an escrow fund. PolyMet and other mining companies could pay into an escrow fund, to the amount of perhaps 3 to 5% of their gross revenue, which would be specifically intended for environmental remediation. This fund could be tied to the property but also to the company, under a special arrangement. Why is this a good idea? Because mining companies can go bankrupt. Should that happen during an economic downturn or for any other reason, funds would still be available for cleanup and costs would not be thrust onto taxpayers. The fund could not be claimed by creditors as part of the company’s assets. However, should the company sell its operation to another company, the new company would be able to utilize that fund under the same arrangement. The fund could be utilized for such things as installing an impermeable clay liner to cover exposed rock, restoring topsoil, replanting trees and vegetation, restoring the pH level (acidity) of any man-made lakes to normal levels, and introducing fish and native plant life to such lakes. Should the company expand mining into another area even as it’s ending operations elsewhere on the same property, the fund could be drawn-down for the area being closed. Once mining is fully complete and the environment has been restored to satisfaction, the company could claim any escrow funds which remain back to its general treasury. This would incentivize the most environmentally-responsible conduct possible during operations, so the company could repatriate the greatest amount from the fund to itself in the end.
– Cut government bureaucracy which favors large corporations. Many do not realize the extent of the permitting being required of PolyMet. Is just one permit needed? Two? Not even close. Try 21! Each of these 21 permits [3] must be applied for separately with various governmental agencies, along with an extensive back-and-forth process until they are granted, an ordeal which can last many years. How many? The time from discovery until production of a mineral resource averaged about 5 years in the 1980s. It’s now approximately 15 years. The lengthening of the discovery-to-production time is shown by this chart. This bureaucratic process favors large corporations, because no small or mid-sized mining company could afford to pay attorneys and accountants to shuffle paperwork for fifteen years. Nor is it productive or generate real wealth for society. Libertarians don’t have a problem with large companies who act responsibly. But the system shouldn’t be restricted to only large corporations; small companies and upstart entrepreneurs should have a chance to compete as well.
– Establish clear responsibility for monitoring mining. Of the 21 permits mentioned above, 5 are required by federal agencies and 16 by state agencies. They include the US Fish & Wildlife Agency, the US Forest Service, the US Army Corps of Engineers, the Minnesota DNR, the Minnesota Department of Health, and numerous other agencies [3]. Oddly enough however, local governments (counties, townships, and municipalities) are charged with primary authority for regulating metallurgical mining in Minnesota. Such a convoluted maze is a disaster waiting to happen. Should any pollution occur, it doesn’t take much to imagine the finger-pointing between these branches and agencies as they try to determine who is responsible to take action. This demonstrates precisely why Libertarians are needed in office, to clean up this bureaucratic mess created by the Democrats and Republicans over many decades. Furthermore, the state is in the process of negotiating a complex contract with PolyMet to govern mining on the property. No doubt it’ll be quite voluminous. The longer the document, the more its language can be debated by attorneys and tied up in lengthy court battles spanning years in the event pollution occurs. By contrast, Libertarians would suggest something brief and clear. No complex language and no loopholes. Perhaps just one page, such as:
“PolyMet Mining Corporation is hearby granted permission to conduct mining on the NorthMet Project property. PolyMet shall bear sole responsiblity for funding the inspection and testing of nearby properties and waterways, and to provide for such inspection and testing by an independent firm or organization. PolyMet shall further be solely responsible to remediate any contamination upon neighboring properties as soon as it may be discovered, and shall fully reimburse all affected property owners for any harm incurred. PolyMet shall take all measures available and shall bear sole financial responsibility to ensure that, once mining is complete and changes to the topography are considered, full and permanent restoration of the environment and natural habitat shall be performed, including prevention of future soil, surface water, and groundwater contamination due to previous mining activities.”
– Consider market-based oversight. Even without the regulatory maze discussed above, government agencies have not been good regulators. Government agencies have tended to focus on whether permits were obtained and upon levying fines if some technicality of the permit has been violated, in order to extract revenue for themselves. That is the wrong approach. The proper approach is to focus on any harm to neighbors or the environment, and to ensure that it is remediated and any affected parties compensated. Alternatives to government-based oversight are needed. If the mining company is insured, its insurance company might make for a better regulator. After all, insurance companies like to receive premiums but not make payouts. That provides a strong profit-incentive to ensure that pollution does not occur, because they would be on the hook to provide compensation. Insurance companies could be the vehicle to perform independent inspection and testing, as they’ll want to ensure that they won’t have to pay any claims.
– Reimburse royalties directly to taxpayers. Finally, because the proposed PolyMet mine would be on state-owned land … our land … the state would receive a royalty (fee per ton) on processed ore. This revenue should not remain at the discretion of politicians to blow on their favorite big government programs. Instead, Libertarians would propose that any such royalties received from mining be reimbursed directly back to state residents. That could occur by an annual check or as an income tax credit to every state taxpayer. Any such revenue belongs to the people, not the government.
Libertarians strongly support mining in the Iron Range. As Minnesotans, we are fortunate to be endowed with abundant resources which will provide real wealth to people in the Northland area for decades to come, and which also provide the raw materials for many products we depend on for modern living. However, Libertarians also understand the environmental concerns, and we will not tolerate irresponsible mining which harms its neighbors or leaves a mess behind. It needn’t be an either-or decision. Modern mining companies know how to handle sulfide mining and mitigate its effects. We have the technology.
Also, kudos to this student from Macalester College, who offered a more well-reasoned approach to this issue than most sorry reporters in the media, who’ve used hype and fear to promote an anti-mining bias among the public.
Finally, it’s important to point out that wealth creation leads to better environmental stewardship. The environment is more often disregarded in poorer countries, where the main concern of people is just to survive. But here in Minnesota, where mineral wealth continues to bring about a higher standard of living, the public has an expectation of a clean environment … and that same wealth gives us a greater ability to ensure it.
For Liberty,
S.L. Malleck
LPMN Vice Chair
Unlinked References:
[1] Tony Sertich, Commissioner of the Iron Range Resources Board, Society for Mining Metallurgy and Exploration Conference, 13 September 2013, Brooklyn Park, Minnesota.
[2] Tony Runkel, Minnesota Geological Survey, same event as above.
[3] Jess Richards, Minnesota Department of Natural Resources, same event as above.
Concerned about the expansion of government control and the erosion of individual liberty? Please consider joining and becoming active with the Libertarian Party of Minnesota. Libertarians support liberty on all issues, all the time! Libertarianism is a philosophical and political movement to promote personal freedom, strong civil liberties, a genuinely free marketplace, and peace.
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