Minnesota mining lease offer draws three bidders

The DNR today opened sealed bids for leases to explore for copper, nickel and other valuable metals on a mix of public and private land totaling 63,000 acres.

Only three companies placed bids for about 9,500 acres, or about 14 percent of what was offered.

In a small conference room at the DNR's St. Paul headquarters, Kathy Lewis, assistant director of Lands and Minerals, opens an envelope and reads a bid.

MMG is a conglomerate headquartered in Australia whose major shareholder is the Chinese government. MMG was the only bidder for 240 acres of land in central Aitkin County north of Lake Mille Lacs. Other parcels were in St. Louis and Lake counties.

Bill Sheehan represents MMG in Minnesota. After the bids are opened, he chats with two men who own the land covering the mineral deposits the company is interested in.

"We're just trying to find out if there's some value there at all. We'll be doing some exploration hopefully, and talking with you fellows," Sheehan says. "Can I buy you a cup of coffee?"

If MMG's bid is approved by state officials, the company will pay $1.50 per acre for the first year for the right to explore this little corner of Aitkin County. The price will increase over time.

The DNR says chances are nothing much will happen there. The agency projects that companies will drill to explore for minerals on only about 2 to 3 percent of the land they lease.

Many of the parcels the state was hoping to lease today contain special features such as an archaeological site, a trout stream, or an endangered or threatened species. Lewis said those lands will get extra attention when the mining company submits its plan.

"It can be simply an awareness of the issue and making sure a stream bank is protected or it can be as significant as saying 'you can't do exploration during these periods of months because of particular species.'"

There's been extensive exploration for copper, nickel and related minerals in northeastern Minnesota over the last 40 years, with some periods more active than others. Right now the state has 138,000 acres under lease. And that's just state-owned minerals; companies also lease or buy mineral rights from private owners.

So why so little interest in the parcels offered today?

The mining companies contacted for this story did not respond, but Frank Ongaro, executive director of Mining Minnesota, said the apparent lack of interest in this year's lease sale isn't part of any trend; he said there is varied interest from year to year.

"It's up to any individual company to determine what their interest is in an area," Ongaro said, "and how they view their current lease holdings and what their current and future exploration budget and plans might be."

Last year's lease sale became controversial when private landowners protested the sale of state-held mineral rights on their property. They tried, but failed to persuade the legislature to enact protections for private landowners.

The DNR has become more proactive about notifying landowners when a company has bid on the minerals beneath their land. But not until after the bids are opened.

Some environmental groups want the DNR to be even more forthcoming with information. One group is petitioning the DNR to prepare environmental reviews on the lands it offers for lease.

Betsy Daub with Friends of the Boundary Waters Wilderness said people statewide are concerned about even the possibility of copper-nickel mining.

"These are public resources after all, and I think the public is asking a lot of questions, and it would be wise for us to think ahead about how to provide that information in a way that works for the resource managers and works for the public at the same time," Daub said.

The DNR is now investigating the companies that bid Wednesday to ensure they have the financial and technical ability to carry out mineral exploration.