Mining deal will bring more jobs, environmental concerns to N. Minn.

Duluth Metals has announced a partnership with one of the world's leading copper mining companies, a deal that's expected to provide money to start an underground mining project south of Ely.

The new deal catapults the low-profile Duluth Metals into prominence after existing in the shadows of Polymet's better known and more developed copper-nickel mining project.

The new partnership is with Antofagasta PLC, a British company considered one of the world's leading copper miners. Duluth Metals Chairman Christopher Dundas explained in a conference call that Antofagasta would provide up to $227 million for a 40 percent share of what they call the Nokomis project.

"We think it's a huge validation that they've come into Minnesota; a huge validation for Duluth and Nokomis, that they've chosen to be involved with us," Dundas said.

"The Duluth Complex [in] northern Minnesota is on a global perspective."

Duluth Metals is planning an underground project south of Ely.

Antofagasta has sales of more than $3 billion and operates large copper mines in Chile as well as rail transportation and water projects. Dundas said the new joint venture will not only speed up the Minnesota mining project; it may get a lot bigger.

"I think that one of the strong features of the relationship is the ability to plan, to find, and we fully expect that with the size of our resource there's great potential to upscale our project," he said.

Duluth Metals is considered the second likely non-ferrous mining project in Northeast Minnesota just behind PolyMet Mining Corporation. PolyMet passed an important milestone when its Environmental Impact Statement was put up for public comment. But PolyMet's mineral reserves are less than half those projected by Duluth Metals.

Whether you consider it good news depends on whether you see the threat of highly-toxic pollution or hundreds of jobs coming out of the mine.

A mine this size can only be good for the region's economy, according to Jim Skurla, Director of the Labovitz School of Business and Economics at the University of Minnesota-Duluth. And, he said, it demonstrates the world interest in Minnesota's ore reserves.

"The Duluth Complex [in] northern Minnesota is on a global perspective," Skurla said. "Everybody's watching that. In fact it's one of the hot markets, globally, for non-ferrous mining, so that northern Minnesota is on everybody's radar right now."

He said a project like this generates wealth for many others in support industries from maintenance to tires. And he said the potential of non-ferrous mining could some day rival the size of the region's taconite industry.

Copper-nickel mines have left a legacy of sulfuric acid water pollution in other areas. But Frank Ongaro, Executive Director of the industry group Mining Minnesota, said projects like Duluth metals will demonstrate a new clean way to mine these minerals.

"There's a perfect example of a company who's currently mining copper the old way, strongly interested in investing in mining and processing copper the more, new, modern, environmentally responsible way," Ongaro said.

The problem is that the ore found in non-ferrous mines, when exposed to oxygen, can create sulfuric acids.

Friends of the Boundary Waters Policy Director Betsy Daub said the new partnership is alarming if it brings that possibility closer to reality. Duluth Metals will mine in a watershed that flows north, toward the popular canoe and camping wilderness.

"I'm not convinced that the Minnesota public is really wanting to see this kind of risk of contamination and disruption of that natural resource base up there for short term profits for mining companies, where we're left with a perpetually altered environment up there," Daub said.

Duluth Metals officials say they will continue exploring and conducting preliminary studies. With the additional capital, Duluth Metal's Chairman said the project has a realistic chance of mining in four or five years.