Dayton wants firm for study of PolyMet finances

Gov. Mark Dayton
Gov. Mark Dayton, Sept. 17, 2015.
Tim Pugmire | MPR News file

Gov. Mark Dayton revealed Thursday he will seek legislative permission to hire an outside law firm to examine the financing behind the proposed PolyMet Mining Corp. copper-nickel venture in northern Minnesota before his administration would issue a final permit.

In an interview Thursday with The Associated Press, the Democratic governor said his administration would approach a joint House-Senate panel as soon as next month for sign-off. Dayton said he hopes to bring a firm aboard by January to conduct a financial review alongside the environmental permitting process already underway.

"I've made it clear to the company that their financial capability to build this and then to operate it was going to be a critical component of my decision of whether the project will go forward or not," Dayton said.

Dayton said he wants proof PolyMet and its investors have the wherewithal to build and operate a copper-nickel mining operation that could cost $500 million or more. It would go beyond the financial assurance guarantees that officials plan to require the company to provide to cover cleanup costs down the road.

"It would be hard for me to imagine anybody would be going through all they have done and the costs involved if they didn't see a way to be able to finance the project if it were to be approved," Dayton said of the first-of-its-kind project on Minnesota's Iron Range that has stirred heated debate over its potential environmental impact.

Dayton's remarks took PolyMet officials and critics by surprise.

"Wow. That is new," said Aaron Klemz, spokesman for Friends of the Boundary Waters Wilderness, one of several groups that have been fighting the project. "Certainly we applaud that. We think it's great."

Those groups have called on the state to require rock-solid financial assurances from PolyMet to ensure that all cleanup costs will be covered and that taxpayers won't get stuck with the bill, and they've expressed concerns in recent weeks about the financial health of its parent company.

PolyMet is a wholly owned subsidiary of Swiss-based global commodities giant Glencore PLC, which has been hammered by the global slump in copper and other metals prices. On one day alone last month, Glencore's share price plunged by around a third as investors worried about the impact on earnings and its ability to meet its debt repayments. This month, Glencore put copper mines in Australia and Chile up for sale and said it was slashing its zinc production by a third.

But PolyMet spokesman Bruce Richardson said the project remains financially sound. He said its "true value" lies in the processing facilities and infrastructure that are already in place "as well as the 3.6 billion pounds of metal that lies in the ground." The metal is worth more than $8 billion, he said, and Glencore continues to support the project "financially and otherwise" and to meet its obligations to it.

"We have no doubt that this project will be financed and provide long-term benefits ... to the region and the state," Richardson said. And he said the company will be able to provide whatever financial assurances the law requires for cleanup costs.

Dayton will embark next week on a tour of similar mines in Michigan and South Dakota -- one highlighted by PolyMet advocates and the other by opponents -- to give him an on-the-ground picture of this type of metal mining.

An exhaustive environmental report is due in November. If all goes as planned, PolyMet would approach the state next year for almost two dozen air, water and other permits. Dayton expects his administration would have to decide by summer 2016 on a final "permit to mine," a step he said he will be heavily involved in.

The request for outside legal help will be made to Legislative Advisory Commission, which includes Dayton's finance agency chief as well as the most senior lawmakers from both parties.

Senate Majority Leader Tom Bakk, DFL-Cook, couldn't be reached for comment. House Speaker Kurt Daudt, R-Crown, also wasn't immediately available.

Dayton said the law firm, likely one that specializes in environmental law, is a critical part of conducting due diligence on a project of this magnitude. "I'm not trying to borrow trouble," he said.

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