By Marvin Pirila
On July 22, 2014, two representatives of Kennecott Mining, David Simpson and Matt Jeschke, held an open meeting in the Cromwell city council meeting room to answer questions related to the potential mine in Tamarack.
Kennecott Mining is a company of Rio Tinto, an Australian based company with interests in copper, aluminum, coal, iron ore, nickel, and uranium.
How the Exploratory Mission got started
The project took root after an evaluation of drill core samples taken by the Minnesota Geological Survey. Approximately 9,000 drill cores or 3 million feet of core samples were taken across the state and shared with mining companies for further review. Based on their analysis, Kennecott chose areas to drill three test holes in hopes of finding more promising data. If they had come back with negative results, the mining company would likely have walked away. Drilling test holes in hopes of discovering rich veins of minerals is very expensive. The exploratory group is given limited chances, based on educated guesses, of finding positive results to move forward. Luckily, in this case, the first test cores showed up to 10 million tons of low grade nickel and copper.
Thus far, Kennecott has drilled 196 holes totaling 72,208 metres, equivalent to roughly 236, 903 feet or 45 miles.
They said that Minnesota uses very sophisticated geophysical equipment to map the substrate below surface. Even with the excellent initial data, drill cores over various areas are the only way to measure the worthiness of further exploration.
Geologists for Kennecott have studied 12 to 13 miles of area near Tamarack, stretching from three to four miles north to six to seven miles south. In all, the total project comprises more than 35,000 acres.
During its review from 2002-2008, the company found enough interesting geological substrate to keep looking. However, in 2008, the company contemplated walking away, but that changed when they found a good grade of copper north of town. Kennecott has not determined the exact boundaries of the promising mineral formation. They said that additional exploration is needed. Finding good places to mine is “hit and miss.” You might find nothing in one core, but a short distance away there may be a substantial find.
The Tamarack project lacks the high grade metals of the Duluth Metals and Polymet developments, farther north, but still holds hope for profitable mining.
What Kind of Mine is Likely
The depth to reach the copper, nickel, and platinum ranges anywhere from 65 to 4,921 feet. The depth determines the type of mining utilized; open pit, in situ, or a hybrid (both). In-situ leach mining involves pumping of a lixiviant (liquid medium used in hydrometallurgy to selectively extract the desired metal from the ore or mineral) into the ore body via a borehole, which circulates through the porous rock dissolving the ore and is extracted via a second borehole.
The Exploratory Process Expands for a Year
Kennecott manages many mines and exploratory projects around the globe, deciding year-to-year which project(s) are likely to return the biggest return for the investment. The Tamarack project has not yet convinced Kennecott leadership that it is worth the money that would have to be invested. The project is still under evaluation, and beginning next month the company will begin to drill more holes. This drilling phase should last approximately one year.
The investment by Talon Metals Corp. (Road Town, Tortola, British Virgin Islands) into the project helped Kennecott offset some of the exploratory costs, while still maintaining rights to manage the project. In its June 26, 2014, press release Talon announced it had acquired the "right to acquire a 30% interest in the Tamarack Project, with a potential pathway to owning 100% of the project." In all, Talon agreed to pay $30 million over three years for its rights. If Kennecott opts to sell the project to Talon, they would do so for the price of $107.5 million.
Kennecott maintains two offices in Tamarack, a core shed and an office across from each other on Warren Street. They said they have an “open door” policy and anyone with questions or comments is free to stop in at any time. The core shed is said to employee up to12 people, comprised of five Aitkin County employees and seven geologists from Duluth. The office people essentially manage different contractors such as environmental scientists, baseline hyrdrologists, and drillers.
Talon Metals Corp.
Warren Newfield, Chairman of Talon, stated in the press release that "Over the past two years, the Talon team has reviewed and considered more than 700 projects, and we have finally identified a project [Kennecott's Tamarack Project] that could be a company-maker."
The release also included, "...in the event Talon elects to purchase the Tamarack Project, Talon would acquire a project that may still rank near the top of global nickel-copper-platinum projects."
Among the investment highlights cited by the press release were: "Large igneous intrusive complex with 18 km of strike length, which is comparable in footprint size to some of the world's largest and most prolific nickel-copper-platinum intrusive complexes; high grade semi-massive, massive and mixed mineralized zones, which are potentially open in all directions; and excellent infrastructure with gird power and a railway line on site."
The enthusiasm of Talon Metals Corp. shared in its press release is tempered by the more cautious approach of Kennecott. Whereas the first is encouraging investment, the second is still evaluating the decision to mine or not.
Pre-Feasibility Phase and Possible Order of Magnitude Assessment
The next step is the pre-feasibility phase where options are evaluated and a decision is made to mine or walk away. This can take up to two years for completion. If they continue with the project, it then enters a process where the order of magnitude is determined, a process taking one to two years. The order of magnitude would decide whether mining was going to be open pit, in situ (done via bore drilling from the surface), or a hybrid of both.
Permitting and Infrastructure
If the project is deemed feasible, then there is the process of permitting and building the required infrastructure (buildings, roads, etc.). This process alone would take another nine to 12 years to complete. The permitting process itself can take up to 10 years or more. In all, if the mine was approved by the company today, it would be another 12 to 20 years before it would be operational. There would be some temporary construction work up front, but the true mine itself is well away yet.
Land is Leased during Exploratory Period
Kennecott has not bought any land, but rather leases the areas of exploration. The majority of the land is owned by the state, meaning lease payments in the hundreds of thousands goes into DNR coffers. Privately held properties are managed via individual leases.
The state of Minnesota has 12 million acres.
If the mine becomes a "go" then mining companies will buy properties at Fair Market Value (FMV) from individuals. This FMV is based only on the above ground value, and nothing that exists underground, as those rights belong to the state. Minerals on state or county lands would simply be paid via the usual lease arrangements as granted under Minnesota Statute (2013), 93.25, Subdivision 1.
Subd. 2 requires, "All leases for nonferrous metallic minerals or petroleum must be approved by the Executive Council, and any other mineral lease issued pursuant to this section that covers 160 or more acres must be approved by the Executive Council. The rents, royalties, terms, conditions, and covenants of all such leases shall be fixed by the commissioner according to rules adopted by the commissioner, but no lease shall be for a longer term than 50 years, and all rents, royalties, terms, conditions, and covenants shall be fully set forth in each lease issued. The rents and royalties shall be credited to the funds as provided in section 93.22."
Local Area Benefits most from Mining Money
Minnesota Statute 93.22 specifies how mining revenues are disbursed. Subd. 1, states that:
(a) All payments under sections 93.14 to 93.285 shall be made to the Department of Natural Resources and shall be credited according to this section.
(b) Twenty percent of all payments under sections 93.14 to 93.285 shall be credited to the minerals management account in the natural resources fund as costs for the administration and management of state mineral resources by the commissioner of natural resources.
(c) The remainder of the payments [80%] shall be credited as follows:
(1) if the lands or minerals and mineral rights covered by a lease are held by the state by virtue of an act of Congress, payments made under the lease shall be credited to the permanent fund of the class of land to which the leased premises belong;
(2) if a lease covers the bed of navigable waters, payments made under the lease shall be credited to the permanent school fund of the state;
(3) if the lands or minerals and mineral rights covered by a lease are held by the state in trust for the taxing districts, payments made under the lease shall be distributed annually on the first day of September to the respective counties in which the lands lie, to be apportioned among the taxing districts interested therein as follows: county, three-ninths; town or city, two-ninths; and school district, four-ninths;
(4) if the lands or mineral rights covered by a lease became the absolute property of the state under the provisions of chapter 84A, payments made under the lease shall be distributed as follows: county containing the land from which the income was derived, five-eighths; and general fund of the state, three-eighths; and
(5) except as provided under this section and except where the disposition of payments may be otherwise directed by law, payments made under a lease shall be paid into the general fund of the state.
If the Kennecott project in Tamarack went forward, both Carlton and Aitkin counties would benefit financially. As it would be its first and only mine, this would be a dramatic boost to the city and the county.
Environmental Record & Environment Concerns
The company prides itself on preserving the environment while mining the minerals needed for critical industries. Even during the exploratory process, the proper safeguards are taken to minimize damage to the environment. This is done by drilling test holes in winter or using matting to make access to the site. Mr. Simpson said the lower lands, and their usually higher levels of surface water did not affect mining operations. The risks were no higher or lower because of the geological features of the area.
Research shows that the sulfide concerns of environmentalists tend to ignore the technological advances of the current period, and remain largely based on mining practices of decades ago.
The representatives used the Ladysmith, Wisconsin mine as an example. The mine there runs underneath the Flambeau River and up to 140 feet of it on the surface. It is an open pit mine, where all sulfide residues are secured within cement casing.
Environmentalists filed suit claiming the mine was contaminating the waters. In court proceedings, it was determined that the waters were actually more contaminated upstream. The court dismissed that portion of the suit and cited the company for allegedly failing to have the proper permits. In a highly unusual ruling, the court ruled there would be no legal costs awarded to the winning party (environmentalists in part). The company, still dissatified with the ruling, argued that the permits were correct, appealed and won. In the end, environmentalist’s pleaded a case lacking sufficient evidence of wrongdoing.
The Tamarack Mine would be only the Second Nickel Producing Mine in the U.S.
If the Tamarack mine were to be mined it would be only the second nickel producing mine in the United States. The only one currently in existence is the Eagle Mine in Michigan that employs 200 to 300 people.
The Environment can be Safeguarded while Mining Expands
Minnesota and the greater U.S. will never see energy and strategic mineral independence until those claiming “inevitable harm” learn that current mining practices are far from those of old. Hunting, fishing, and other environmental concerns can be addressed without hindering mining. They can and should co-exist. The economy of the northern section of the state, as well as Tamarack, are in need of jobs and revenues. Likewise, Minnesota as one of the highest taxed states in the country, would benefit greatly from leases, royalties, increased employment, and greater tax revenues. Minnesota has a chance, with mining, to advance its educational, health, and economic systems dramatically -- all with little to no damage to its environment.
At the present time, no one knows for sure if the mine will become reality, but if it does, the change will be big.
Comments or further discussion is possible with Kennecott via Matt Jeschke at email@example.com.