Kennecott Eagle Minerals

The Eagle has landed

Kennecott Eagle Minerals has been feeling its way through the tough new mining law and regulations enacted in the State of Michigan in 2004. General manager Jon Cherry talks to Gay Sutton about the challenges of the process and why the new law will benefit the mining community.

 

Mining in the United States today is light-years from the popular image of the old miner with a mule, a cart and a pickaxe. High-tech and comprehensively regulated, the industry uses the latest science, technology and mining practices to safeguard health and wellbeing, to improve the efficiency of the mining and extraction processes, and to prevent contamination from the mine jeopardizing the natural environment. Interestingly, it’s the State of Michigan—which has been in deep economic recession for the past 10 years—that is pioneering even more stringent mining environmental legislation.

Intuitively, you would expect this to stifle mining, which would be a disastrous consequence for the traditionally strong mining communities, not to mention the Michigan economy. Shockingly, more than half the private-sector job losses across the whole of the US in the past 10 years have occurred in Michigan. However, the reverse looks likely to be true, according to Jon Cherry, general manager of Kennecott Eagle Minerals, a Rio Tinto company that has been the first to pick its way through the legislation and is now investing an additional $469 million in the construction of a new nickel and copper mine in Michigan’s Upper Peninsula.

Kennecott has been engaged in exploration for many years in this mineral-rich area, and Cherry has represented the mining community during the early formation of the new legislation—working with environmental groups, state regulators and elected federal, state and local government officials and state legislators to design laws that everyone could buy into.

“Some people believe that you have to choose between mining and protecting the environment. But mining and environmental care are not mutually exclusive. You can design a mine in such a way as to protect the environment,” explains Cherry. “That’s what these laws aim to do, and that’s how our company has always operated.”

There are several unique points to the legislation. First, requirements for dedicating funds to cover end-of-life closure costs are stringent. The bonds must be signed over to the State rather than held by the company, and the State has the authority to demand increases annually as may be necessary to reflect changes in the operations and to cover costs projected to cover reclamation needs, should unforeseen circumstances require the State to be engaged in reclamation. The law requires that environmental issues must be addressed and not left lingering, so as to perpetual care.

The most interesting aspects of the law, however, cover how mines are designed and how the permitting is managed. Two years of environmental baseline data must be collected before mine design begins. The potential impact of the mine design on that baseline data is then assessed. “This then becomes an iterative process to reach the final design.”

Perhaps most significantly, there are proscribed timelines for the entire permitting process, giving local communities extensive opportunities to engage in the process through multiple public hearings. “This, however, provides business certainty,” Cherry says, “as it occurs over a 220-day period, and businesses can plan for that.”

The new law certainly sets the environmental bar very high, and Cherry has no doubt about its importance. “Not only is the statute good for the environment, it’s good for business. And mining companies that are not able to achieve that high standard probably shouldn't be mining.”

The regulations also resonate with Kennecott’s standard business procedures. “We design our mines backward,” Cherry explains. “Before we begin designing a mine, we work with the local communities to determine the best post-mine use of the land. Once we have that vision, we put together a design that addresses the various environmental issues and allows us to reach that desired endpoint. We then take the plans through the permitting process.”

In the case of Kennecott Eagle, the mine and surface facilities are located in a timbered area used by local communities for leisure activities. The plan, developed in partnership with community groups, is to return the land to outdoor recreational use after closure.

The mill facilities, meanwhile, are being located on a brownfield site some 25 miles south of the mine at Humboldt, which has several benefits. It will minimize disturbance to the timbered mine site, regenerate an old disused mill site, and bring a significant number of jobs to a depressed area. “At the end of the mine’s life, the community here is interested in seeing it reused by future businesses. There are two opportunities: it can be turned into a regional milling center and used by other mines in the area, or, because the infrastructure is in place, it can be used by other industries moving into the area.”

One of the critical design factors for both the mine and the mill is water management. Although the top of the ore body is just 200 feet below the surface, the mine has been designed as an underground operation rather than an open pit in order to reduce environmental disturbance on the surface. Rock will be brought to the surface and placed on a double-lined highly impermeable pad. “We have about 300 inches of snow a year at the site. Any water that comes into contact with the rock on the surface will be collected, analyzed and treated,” Cherry says. The site is to be equipped with water capture and holding facilities and a large water treatment plant. “The discharge from this plant will be cleaner than drinking water.”

At the mill site there is little waste other than tailings, and as part of the sustainable development plan these will be placed in an old iron ore pit adjacent to the mill. Water plays a key role in moving the crushed ore through the flotation process (where nickel and copper concentrates are extracted) and then to the tailings pit, and this is managed in a closed loop.

The water is removed from the tailings reservoir and recycled through the process. “Studies from previous mining operations have shown that any water that could discharge into the local environment from the pit is clean,” Cherry says. “Nevertheless, as a contingency we’re building a water treatment plant here that is capable of treating all the water in the pit if it’s ever needed, and it will always be on standby.”

The biggest challenge facing Kennecott with the Eagle mine project is that it was the first to have to satisfy the new mining law. “So we—the regulators and the public—were all feeling our way through the process with this first application, and I’m glad it was our company that was the first to go through it,” Cherry says. “There have been many lessons learned along the way, including how absolutely important it is to reach out to the community and the regulators ahead of the more formal permitting process.”

Over a long period of time, Kennecott, as part of Rio Tinto, has developed a number of vehicles for communicating with the public and incorporating their needs into a mine plan, and these have proven their worth. “One of these is an advisory group that includes elected officials, environmental groups, businesses, universities and community representatives. And it’s a two-way dialogue,” Cherry explains. “We use it to inform the community about what we’re doing. But just as important from my perspective is that we get feedback from them in terms of what they want to know, what they’re hearing, and their suggestions for changing the mine design and making improvements.” The advisory group is not required under the new law. “However, it enables us to take extensive community baseline data, to examine the impacts and the benefits of our project to the community.”

The Eagle project is in the midst of this assessment right now, “and this will help us identify how the public perceives the project, where we’ve excelled and where we simply need to do more.” The most obvious benefit to the community is that it’s an additional $469 million investment in the local community. During the three-year construction period some 500 contractors will be employed on the two sites. Once up and running, the operations will require over 200 full-time employees over the seven-year life of the mine.

In the long term, having worked through the requirements of the legislation and proved that it can be done, Cherry believes the business certainty created by the new law will encourage other mining companies to invest in exploration and mine development in Michigan

Kennecott, meanwhile, is wholly committed to the region. It currently holds roughly 450,000 acres of mineral rights in the area and has an extensive ongoing program of exploration, not only with a view to extending the life of the Eagle Mine but also looking for additional nickel ore bodies in the region.

Having successfully navigated the new legislation and demonstrated that it can work very well, the company is in a great position to follow through on this exploration. http://www.eagle-project.com/