Rio Tinto Given Go-Ahead for Controversial Michigan Nickel-Copper Mine

Researched by Industrial Info Resources (Sugar Land, Texas)--After seven years of delays, Kennecott Eagle Minerals Company (Ishpeming, Michigan), a subsidiary of Rio Tinto (NYSE:RTP) (London, England), last week received the green light to begin construction of a grassroot nickel and copper mine near Michigamme, on Michigan's Upper Peninsula (U.P.). Concerns about the environmental impact of the mine, as well as disturbance to Eagle Rock, a site considered sacred by the local Anishnabe people, were at the heart of the delays.

In a controversial move, Michigan's Department of Environmental Quality (DEQ), which on January 17 was integrated into the state's new Department of Natural Resources and Environment, announced that Eagle Rock need not be part of the decision regarding the mine's construction. "Michigan mining law referenced buildings that are places of worship," said DEQ spokesperson Bob McCann. "Eagle Rock doesn't fit into that under Michigan mining law, therefore it doesn't apply in this case."

While environmental groups and the Anishnabe people have expressed disappointment in the decision, the news has been welcomed by others. State Senator Mike Prusi, who spent more than 20 years as an iron ore miner, said: "During these challenging economic times, we need to support new business in Michigan without creating unnecessary roadblocks to progress. Michigan has strict mining regulations in place to protect our environment, and hopefully yesterday's decision will signal an end to years of continuous anti-mining lawsuits that have needlessly delayed the creation of hundreds of jobs in the U.P."

In a press release issued by Rio Tinto, the company stated that production should begin in 2013, and that 2010 should bring clearing and grading of the site, as well as construction of a $10 million water-treatment plant. "Today's decision by the state is great news for our project and a community and region that has been anticipating the job opportunities and economic contribution our project will trigger," Rio Tinto/Kennecott Eagle Minerals General Manager Jon Cherry. "Permitting this project has been a very rigorous process that has enabled Kennecott to develop an exceptionally responsible design and approach to mining in the 21st Century in Michigan." Rio Tinto estimates that the project will cost $300 million and will provide about 700 construction and mine operations in the area.

In addition to the construction of the mine, Kennecott is also planning to refurbish a former iron ore mill in nearby Humboldt (about 12 miles away) to support the activities of the new mine. The mill was constructed in the 1950s, but has not been in operation since the 1990s. Kennecott purchased the mill in September 2008 and plans to spend about $80 million performing clean up, environmental reclamation, and equipment upgrades, which include the installation of crushing and concentrating equipment to prepare the nickel and copper for processing and smelting elsewhere. M3 Engineering & Technology Corporation (Tucson, Arizona) is acting as engineering contractor on the project, which is expected to provide between 100 and 200 contract jobs during the reclamation and construction phases. Upon completion, the mill will provide 50 to 70 full-time jobs. Rehabilitation of the mill is expected to kick off in May of this year and be completed in late 2011.

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