DEEP IN MINNESOTA'S NORTH WOODS, a doughy 24-year-old in a flannel shirt and camouflage baseball cap turns the wheel of a Ford F-150 pickup to steer from a paved two-lane highway onto a dirt road. As he taps the accelerator, majestic pines and birch rise out to the horizon. A few minutes later, a desolate clearing materializes on the right, stretching for at least a mile. "That's the Dunka pit," the driver says. "It was mined out for iron ore."
The truck rumbles on. The woods, still and quiet, have again closed ranks around the road, which grows narrower and bumpier. "Duluth Metals bought up a lot of this land for exploration," the driver says. "We'll see what happens."
Passing through an open gate, the truck drives into the federally owned Superior National Forest. A few minutes on, the old logging road veers sharply and the truck powers up a muddy hill.
There, in a small, man-made clearing, alongside a pit of burbling brown water, stands the reason for this trip. Hulking, painted bright yellow, humming loudly, it is the defining piece of machinery for this moment in northeastern Minnesota's history. It is a drill, and it is boring half a mile beneath the earth's surface, bringing up evidence of a wealth of valuable metals. The driver, Franconia mining company geologist Neil Smith, pulls up alongside the rig and cuts his engine.
"Here it is," he says, smiling.
Minnesota is on the cusp of a new kind of mining, for copper, nickel, and cobalt, as well as gold, silver, and palladium metals, which could produce the greatest economic boom in northeastern Minnesota in three decades. The third-largest untapped vein of nickel in the world, the biggest deposit of platinum in the country, enough copper to keep digging for decades: It all amounts to an immense treasure chest that mining companies, backed by deep-pocketed investors, are intent on prying open.
"These are important commodities for the United States and the world," says Henry Sandri, CEO and president of Duluth Metals, one of five companies planning to dig up the minerals in the North Woods. "If people think we're short of oil, they ought to look at the crunch we're in on these metals."
Then there are the jobs: Combined, the mining companies would likely employ upward of 2,500 full-time workers, earning an average of $50,000 a year, in addition to thousands more temporary construction workers.
"We've seen our communities shrink and our school districts consolidate," says state Rep. Tom Rukavina (DFL-Virginia). "This is a really important chance for us to rebound."
But sulfide mining, as it is known, carries with it a set of environmental hazards more severe than those posed by the more familiar iron ore and taconite industries. The leaching of acid and heavy metals from unearthed rock could threaten aquatic life in nearby streams, rivers, and lakes for generations to come.
Ann Foss, the Minnesota Pollution Control Agency's mining sector director, downplays these concerns, saying her agency will work with companies to "avoid, minimize, and mitigate environmental impacts."
But her words—and the regulatory machinery behind them—don't calm critics' fears. "This is a new, really big era in mining," says Janette Brimmer, policy director for the Minnesota Center for Environmental Advocacy. "With everything that implies—good and bad."
• • • • •
IN 1865, with the Civil War coming to an end, Gov. Stephen Miller dispatched an ambitious geologist to northeastern Minnesota. Following clues from a preliminary geological survey done a year earlier, Henry Eames made a beeline for the white-pine-studded eastern shore of Lake Vermillion. After few days of digging, he struck gold.
Word of the discovery spread quickly. By that fall, roughly 500 men, many of them returning war veterans seeking their fortune, had trudged from Duluth through dozens of miles of rugged, frozen forests, arriving at the banks of Lake Vermillion. A town soon rose around them, complete with general stores, saloons, a dozen or so ramshackle boardinghouses, and a post office with weekly mail delivery. By that summer, Winston City, as it was named, was home to 15 companies prospecting for gold.
Unlike the easily mined gold found in California, however, Minnesota's treasure was trapped beneath wickedly hard greenstone and encased in unyielding quartz. Two men swinging pickaxes could expect to spend a full day on a single six-inch hole. With the trace amounts of gold and the difficulty extracting it, the effort proved a fool's errand.
Within two years, as prospectors headed for new promises of gold in Montana, Winston City was all but abandoned. But one man stayed behind: George Stuntz, a master surveyor, had taken note of another buried treasure: rust-colored iron ore.
Beneath the hills overlooking Lake Vermillion, Stuntz, with backing from a Philadelphia tycoon named Charlemagne Tower, laid the groundwork for an iron mine. In 1884, the Minnesota Mine became the first commercial iron mine in the state. Workers were shipped across Lake Superior from iron mines in Michigan. In 10-hour shifts, wearing soft hats with candles attached, they chipped away at the ore with pickaxes.
The Iron Range is actually three separate veins of iron ore, which started forming nearly three billion years ago, first from volcanic eruptions and later beneath shallow seas that long covered much of the state. Tower's mine was on what came to be known as the Vermillion Range, extending 25 miles in a narrow band from the Minnesota Mine east to the wilds beyond Ely. Further south, a square-shaped expanse of iron outcroppings, the Cuyuna Range—named partly after its discoverer, Cuyler Adams, and partly after his loyal St. Bernard, Una—opened a few years later. But the largest and most important of the three ranges was the Mesabi. A hundred miles long and about three miles across, with dense pockets of reddish ore, the Mesabi would quickly become the locus of iron mining in the state.
Leonidas Merritt, an elaborately mustachioed timber surveyor, was among the first to see promise in the Mesabi. At the time, Merritt was spending long days in the dense woods north of Duluth, scouring the land in search of towering, knot-free white pine trees for lumber companies. Although he had no background in mining or minerals, he'd heard about iron outcroppings along Lake Vermillion from his father, who'd been among the prospectors in the 1865 gold rush.
Resigned that Tower had claimed the best Vermillion ore, Merritt headed west. Together with three brothers and three nephews—collectively they would come to be known as the Seven Iron Men—Merritt scoured the wilderness with the assistance of a "dip needle," a primitive metal detector. Having thus identified a sizable chunk of what was to become the Mesabi Range, Merritt and his family capitalized on a landmark 1889 law severing mineral rights from surface land ownership. Borrowing money from a local banker, they snapped up the mining rights to thousands of acres of public lands.
But the brothers faced a challenge: They had rich iron deposits and plenty of immigrant laborers, but no efficient way of getting the ore to Lake Superior, where it could be shipped to steel refineries in Ohio and Pennsylvania. The Merritts' ambitious solution was to commission their own railroad. Bold though it was, their investment was poorly timed. Even as the ties were being laid, the panic of 1893 swept the country, drying up lines of credit and bankrupting homesteaders and tycoons alike. The Merritts, who'd borrowed heavily from New York financier John D. Rockefeller to build the rail, were forced to hand him their nascent mining empire.
Within a decade, these mines had been folded into what instantly became the largest corporation the country had ever seen. In today's business vernacular, U.S. Steel was a vertically integrated company. Founded in 1901 as a syndicate of world-class industrialists including Rockefeller and J.P Morgan, U.S. Steel owned not only 70 percent of the mines, but also the railroads to Duluth and the steam ships carrying the cargo across the Great Lakes, as well as the mills where the iron was smelted and alloyed with carbon to form steel.
Flush with record profits, the first billion-dollar company sank its windfall back into expansion, building even more steel mills and sending drillers fanning out across the Range to find new deposits. In 1885, more than 5,000 people lived in the mining towns north of Duluth. By the mid-1920s, the number had quintupled.
• • • • •
BY THE TIME OF WORLD WAR II, the Iron Range had come of age. Recovered from the Great Depression, towns had grown to small cities, with brick houses and paved, tree-lined streets. Immigration slowed to a trickle, then stopped. An Iron Range culture—resilient, left-leaning, and proud—took root. As the United States entered the war, the Range, already producing more than half the world's iron, ramped up production to unprecedented levels. In 1941, it produced more than 60 million tons of ore. As men left to fight a war thousands of miles away, miners, for the first time some of them women, took pride in providing raw material for the planes, tanks, and guns powering the effort.
But after the Axis powers were defeated, concerns mounted about the Range's future. The vast iron pits, once thought to be inexhaustible, were running low.
Happily, a far-sighted academic named Edward Davis was already working on a solution. As Davis knew, the ore that had been mined in Minnesota, known as hematite or natural ore, was about two-thirds iron. All around and beneath it, in far greater quantity, was a harder, less pure form of iron rock, called taconite. Although taconite had long been considered useless, Davis devoted his career to proving otherwise. With millions of dollars in grants from the state, he spent 40 years experimenting with different methods of extracting the iron from taconite ore. Eventually he solved the riddle: Taconite plants employed gargantuan crushing and grinding machines to turn the ore into a fine powder. Then, using powerful magnets, the iron was separated from the waste rock, formed into marble-sized balls, and baked at extreme heat to form pellets.
It was nothing short of a revolution. By the late 1950s, eight huge taconite plants rose along the Mesabi Range, laying the groundwork for a vast swath of miles-wide taconite mines.
But taconite wouldn't free the Range and its miners from the whims of an increasingly fickle marketplace. Compounding matters, the reborn mining industry would soon face a new and alien foe: the environmental movement.
• • • • •
WHEN RESERVE MINING sought to build the first taconite processing plant in the late 1950s, it looked no further than Silver Bay, a lakeside town 50 miles north of Duluth. Lake Superior offered both a source of water for the refining process and a convenient place to dump the pulverized leftover rock, known as tailings.
A decade later, fishermen and resort owners began reporting a greenish slime in the lake. The National Water Quality Laboratory, only recently established in Duluth, launched an investigation, which concluded that the discoloration was caused by taconite tailings. The newly formed Sierra Club filed suit against the similarly novel Minnesota Pollution Control Agency, demanding that it take action. In 1971, the MPCA, headed by Grant Merritt, grandson of one of the Seven Iron Men, started monitoring the water.
The following year, the U.S. Environmental Protection Agency released a study reporting that "asbestos-like fibers" had been found in Duluth's drinking water.
The case went before Miles Lord, the storied activist federal judge. Among those testifying for Reserve was Edward Davis, the father of taconite and a Reserve employee. He insisted the tailings were harmless.
But Lord caught the company in a lie. While its officials insisted under oath that Reserve Mining had never considered dumping its tailings on land, internal documents initially withheld from the court showed otherwise.
Lord used the inconsistency to take the company to the woodshed. In a landmark ruling, Lord ordered Reserve Mining to stop dumping its tailings in the lake. Complying with the verdict took several years and cost more than $300 million. In 1987, the struggling company went bankrupt, putting thousands out of work.
Reserve wasn't alone. As taconite companies lowered production in response to weakening demand, the number of mining jobs plunged from 14,000 in 1979 to just 3,000 five years later.
While market forces—and, later, technological advancement—were to blame for most of the job losses, many blamed Reserve's demise on the federal court ruling. Judge Lord, for his part, never apologized for his hard line. "The only protection is to make it too expensive to kill," he said in an interview years later.
• • • • •
AS WITH IRON, the discovery of copper in northeastern Minnesota was accidental. In the late 1940s, a work crew carving out a road for logging hit a nugget of shiny rock just below the surface. The workers had stumbled upon the edge of what geologists call the Duluth Complex, a chunk of bedrock dating to the Midcontinent Rift, a rip in the earth's surface 1.1 billion years ago. The rift caused cracks in the floor of what would later become Lake Superior. As the magma spewed out, the heavy, sulfur-bonded metals sank to the bottom. The road crew had struck the edge of the rock formation, where the sulfides had settled nearest to the surface.
As word of the discovery spread, interest grew. By the mid-1960s, more than a dozen companies had snapped up mineral rights on a patchwork of federal, state, and privately owned land. Planning to mine copper and nickel both underground and in open pits, the companies drilled feverishly in a 95-mile band of bedrock extending north and east of Duluth.
But in 1974, when two companies announced plans to apply for permits to start mining, the state's Environmental Quality Board intervened. Fearful of unintended consequences, the agency put a moratorium on copper-nickel mining to allow time for a comprehensive study of the potential downsides. The review lasted five years, cost $4.3 million, and yielded a staggering 180 reports organized into five volumes.
"We did all sorts of crazy things that most people never even knew about," recalls Steve Piragis, who worked on the study as a young biologist. "We even had microphones along the road in downtown Ely to measure ambient noise."
The team of scientists identified two major environmental threats. First was acid mine drainage: The excavated waste rock, rich with heavy metals and sulfur, threatened, if exposed to both air and water, to poison the rainwater and groundwater flowing into surrounding streams, rivers, and lakes. Second, melting the crushed rocks under extreme heat to separate the metals would release sulfur dioxide, a toxic gas that would spread over nearby forests and watersheds, leaving a trail of acid in its wake.
In 1979, the state finally finished the study and lifted the moratorium, inviting companies to submit their proposals. But in the time it took to investigate, the sweep of events had made it irrelevant. Oversupply from new mines in other parts of the world and competition from alternatives like fiber optics and plastic had drastically undercut the price of copper. No longer worth the expense to unearth, the treasure remained locked in the ground.
• • • • •
HENRY SANDRI IS NOT one to hide his enthusiasm. From his corner office in exurban Oakdale, beneath a framed pencil drawing of men with pickaxes toiling in a California gold mine, the silver-haired chief of Duluth Metals leans forward and speaks in a measured voice at once soothing and contagiously optimistic as he lays out his young company's fortuitous position.
"The demand for metals is exploding," he begins. "You look at what the Chinese have done in the last 10 to 15 years—it's virtually equivalent to what the United States, Canada, and all of Europe did in all of the industrial revolution. And it took us 150 years! And look at them today: People want cars. People want TVs. People have cell phones. What's that made out of? Aluminum, copper, steel, and nickel."
A Diet Dr. Pepper close at hand, Sandri shows off a computer-modeled 3-D image of a chunk of rock the company has named the Nokomis Deposit. On the computer screen, the plot is niftily overlaid onto a grid of Manhattan, stretching from the Financial District to Ellis Island, or about four times the size of downtown Minneapolis. "We've drilled 93 holes to date," Sandri says. "Every one has hit ore mineralization."
The numbers are unmistakably impressive: The Duluth Complex as a whole accounts for 95 percent of the country's known nickel supply, a third of its identified copper, and over three-quarters of its discovered platinum. With the prices of these metals increasing more than five-fold in the past few years—copper sold for 70 cents a pound in 2002; now it's at nearly $4—the bounty is potentially worth hundreds of billions of dollars to the five companies that have claimed a stake in it.
The mining could also be a windfall for the state, promising to provide more than $1 billion in education funding, millions of dollars annually in state and local taxes, and a few billion dollars more in new equipment and infrastructure investment.
And already, the would-be mining boom has created some new work. In addition to hiring geologists, the companies have contracted with several dozen workers to operate drills in three-man teams around the clock. Among them is Noah Ruhinen, a cocksure 25-year-old who gave up his managerial duties at a Herbert and Gerbert's restaurant in Fargo last year for a job on the rig. He's already worked his way up from a lowly helper to a full-fledged driller making more than $40,000 a year. "They just handed me a career," he says, knocking back a beer.
• • • • •
The future of the mining depends on the fortunes of one company: PolyMet, which sits atop the biggest trove yet discovered: a proposed 2.5-mile-long open pit expected to yield 700 million tons of minerals.
The Vancouver-based company acquired the rights to its site in 1998, as metal prices rebounded. In 2004, the company bought a mothballed taconite processing plant for $500,000 and a million shares of company stock.
The move put PolyMet front and center. Suddenly, it had not just a mine site, but also a processing plant with the heavy rock-crushing equipment it would need to turn the minerals into cash.
Four years later, PolyMet leads the pack of sulfide mining companies poised to finally capitalize on the Duluth Complex. But first it will need approval from regulators.
For PolyMet, making its case to the authorities hasn't come cheap. To date, it has spent at least $13 million on everything from testing samples of leftover waste rock to shrinking the mine's footprint to producing lengthy reports pored over by the state's Department of Natural Resources and Pollution Control Agency and the U.S. Army Corps of Engineers.
The company claims that new technologies will enable it to extract the minerals with little damage to the environment. Instead of smelting the ore, PolyMet plans a multi-step process featuring an autoclave—essentially an industrial-size pressure cooker—which can separate the metals from the remaining ore with no air or water pollution. The company plans to store its most sulfuric and metal-rich waste rock on liners while the mine is running, then put some of it back in the water-filled hole, keeping it from contact with the air, while covering the rest with soil and trees. PolyMet hopes to start cutting down the spruce and draining the marsh atop its site early next year.
But after four years of negotiating with the regulators, PolyMet is already more than two years behind its original schedule. "Sometimes it's a frustrating process," concedes LaTisha Gietzen, PolyMet's vice president for environmental, government, and public affairs. "It would be nice if it was a bit more efficient."
Not everyone is so restrained. Jim Watson, a millwright who lost his job in 2001 when LTV Steel shut down and who now works part-time for PolyMet, speaks for many in the region. "It's gotten ridiculous," he says. "The government needs to let this thing get started. We've run out of patience."
• • • • •
BY THE TIME BILLIE and Mike Rouse arrived in Babbitt in the early 1990s, the town was a shell of its old self. Built to house workers for Reserve Mining's huge taconite pit in the late 1950s, Babbitt was transformed by the company's closure three decades later into a crumbling hamlet bereft of hope and jobs—an outpost for retirees. The Rouses, who own a motel that has been partially rented out for months by drillers working in the nearby forest, hope that new mines could bring prosperity back to the town.
"There'd be younger people with children moving in," Mike Rouse says. "That's what people's memory of the mine is: a town full of life and children."
The Rouses live just north of Babbitt, on the western shore of Birch Lake. Close to the southern edge of the Boundary Waters, the lake is serenaded by loons and has a bountiful supply of walleye. But with three companies drilling scores of core samples within spitting distance of the eastern shore, it has also become ground zero for sulfide prospecting in Minnesota.
While Duluth Metals, Franconia, and upstart Encampment Minerals all plan underground mines, which would chop down less forest and unearth smaller quantities of sulfuric waste rock than would PolyMet's open pit a few miles to the south, Billie Rouse worries about the potential for acid mine drainage.
"Lots of promises are made that nothing will ever happen to the water," she says. "I'm a person that doesn't believe in never. I want to know what the plan is in case something goes wrong."
There's reason for concern. In 2006, the environmental group Earthworks released a sobering report finding that though mining companies uniformly predict full compliance with regulators, 76 percent of the 183 mines studied wound up leaching toxic contaminants in excess of the established water quality standards.
One of the worst cases was the Summitville mine in the high desert of southern Colorado. When Galactic Mining Limited bought the long-abandoned gold mine in 1984, it promised 400 well-paying jobs and nearly a million dollars in annual tax revenues.
But in 1991, tens of thousands of gallons of water contaminated with cyanide, sulfuric acid, and heavy metals seeped into the Alamosa River. The toxic stew killed all the fish 17 miles downstream. Where the river was used to irrigate crops, the acidic water rusted out farm machinery. After Galactic abandoned the mine the next year, the EPA declared Summitville a Superfund site.
In addition to a dead river and vanished jobs, Galactic also left behind a huge unpaid bill. While the company's owner coughed up $32 million after a fierce court battle, the actual cost of the cleanup has reached $185 million and counting.
The companies interested in the Duluth Complex are quick to distance themselves from Galactic. The rock in the Colorado mine had more sulfur in it, they point out, and there are no plans to use cyanide to extract minerals here. Moreover, they add, they will be held to strict scrutiny by state regulators on how they deal with their waste rock. First they will have to separate it by level of toxicity. Then they'll be required to safely treat and store it. In addition, they note, the state will require them to post a bond covering anticipated restoration costs.
"We have a chance to mine here in a state that cares about the environment as opposed to somewhere it might be done with less restrictions," says Frank Ongaro, president of MiningMinnesota, a sulfide mining industry group.
But the proposed Minnesota mines share enough in common with Summitville and other disaster sites to concern skeptics. Like Galactic, local mining companies intend to store their acidic waste rock on plastic liners. Though PolyMet envisions covering some of the crumbled rock with soil and planted trees, that wouldn't stop most rainwater from seeping through. A key issue before regulators is whether to permit plans requiring costly water treatment plants to run in perpetuity—an outcome that industry, government, and environmentalists all hope to avoid.
"Perpetual treatment is a risky proposition," says the Minnesota Center for Environmental Advocacy Policy's Brimmer. "Most corporations don't like bills that go on forever."
To Billie Rouse, it's less a question of taxpayer money than what kind of world will be left to future generations. Her beloved Birch Lake is four miles upstream from one of the world's great environmental treasures. "There will not be another Boundary Waters," she says. "You may create a mall or a mine, but you will never create a Boundary Waters again."
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