Endless Permitting and Regulatory Process Threatens Mining Development in the U.S.

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Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S. is a world leader in developing sustainable and environmentally friendly mining operations. With 393 mining projects totaling $66 billion, the U.S. is the fourth largest country in the world for mining project development, behind Canada, Australia and Brazil. Regulations imposed by the EPA and state agencies ensure our environment is not harmed by mining and land reclamation activity. The implementation of these regulations adds considerable time and cost to the mining process and that process is lengthening. It can take anywhere from 5-15 years to develop and permit a mine in the U.S. Because of this, mining companies are choosing to invest in mining projects in other parts of the world where the permitting process takes a third of the time and is less complicated.

Last week's failure by the Wisconsin senate to revamp mining permit law is sending the wrong message to companies looking to invest in U.S. mining. Gogebic Taconite LLC (Palm Beach Gardens, Florida), a subsidiary of The Cline Group, had hoped the mining reform bill would help expedite a $1.5 billion taconite (iron ore) mine and processing plant it is developing in Wisconsin that would produce 8 million tons of taconite pellets per year. A second phase would invest an additional $1 billion to expand capacity. The planning for the mine started in 2010 and would provide much-needed iron feedstock for steel production both domestically and for export. Global steel production reached record highs in 2011 as production in countries like China and India grew significantly. Instead, the company has announced that it is cancelling development of the project.

"Mining may not be dead in Wisconsin, but it seems to be on life-support. SME is disappointed in the state Senate's inability to revamp the state's mine-permitting process in a timely manner this legislative session that would have taken into consideration environmental safeguards for responsible mining, as well as consider the positive economic impact of mines, like Gogebic, on the local communities in terms of high-paying, long-term employment," says John S. Hayden, director of public affairs and government relations for the Society for Mining, Metallurgy and Exploration (SME).

Mr. Hayden went on to say, "Wisconsin proved with the Flambeau Mine in Ladysmith in the 1990s that responsible mining can take place in environmentally sensitive areas and not cause the short- or long-term degradation that many believed would happen. Gogebic was forced to make a difficult business decision to leave the state until such time the legislature and state regulatory agencies are able work together to provide certainty to a company willing to locate in that state and that the legitimate regulatory process will not place the company's long-term investment in jeopardy."

Wisconsin's neighbor to the west, Minnesota, seems to be on a different path, as it is experiencing a boom in iron ore mining project activity. Essar Steel started construction last summer on a $1.1 billion taconite mine and pellet plant addition in Nashwauk, Minnesota. Structural erection of more than 27 buildings on the site has started, and completion is expected in 2013. A second phase could add $500 million to the price tag.

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