Work has slowed to a crawl on a massive proposed iron mine that has served as Gov. Scott Walker’s signature job-creation effort.
Gogebic Taconite had aimed to submit a mining permit application this spring, but a key state regulator says it is unlikely the company will apply before 2016 because it isn’t conducting crucial water monitoring needed for an environmental impact study of the site in Iron and Ashland Counties.
Meanwhile, the company has cut its workforce to a half-dozen employees who are trying to redesign plans in light of an unexpected proliferation of wetlands that were found on the site last year, and a company spokesman said a proposed Iron County zoning ordinance has had a “chilling effect” on the project.
“We are taking a breather,” said corporate spokesman Bob Seitz. “We have to analyze a lot of things and do a lot of reassessing at this time.”
Last year the company announced it would cut about one-third of the $1.5 billion project that was to be in Ashland County because of actions by county leaders, and now Iron County officials are worried that the company will pull out completely, county zoning administrator Tom Bergman said.
“You know it’s an emotional roller coaster up here,” Bergman said. “They put the community in a difficult position by continually threatening to leave.”
With the highest unemployment rate in the state, Iron County desperately wants the hundreds of jobs the mine could offer, but county leaders also want to make sure the operation enhances, rather than degrades, the quality of life in the area, Bergman said.
Iron County Clerk Mike Saari said Gogebic Taconite president Bill Williams told him and county board chairman Joe Pinardi last week that he was not being allowed to spend any more money on the project for the time being. Williams declined to make a scheduled $20,000 payment to renew a lease option for two years on county land that is part of the 3,000-acre mine site, Saari said.
Saari said he and Pinardi persuaded Williams to agree to a new arrangement — $30,000 payable next year to cover 2015 through 2017, but the county board will need to vote on the new deal to make it legal.
“I hope they actually stay with the project, but who knows?” Saari said, adding that the county has done all it can reasonably do to help the company.
Williams said portions of the proposed mining ordinance told him the county didn’t want the mine, so he didn’t want to pay to extend the lease option.
“Is any company willing to throw good money after bad? No,” Williams said Friday.
Seitz said the company expects to build a mine, but there has never been a guarantee because the project is so complex.
The spokesman said a $10,000 annual lease payment may not seem like much in a $1.5 billion project, but operating expenses are viewed differently from capital costs, and the company has already paid $40,000 for the last four years without reaping any benefit.
Redesigning the mine
The Gogebic Taconite mine proposal has traveled a rough road. Walker and other Republicans who took control of state government in 2011 narrowly failed to loosen regulations on iron mining for Gogebic Taconite, and the company said it was walking away.
Republicans made the effort a top priority in 2013 and passed Act 1, which reduced the time the state Department of Natural Resources would have to review environmental concerns. Gogebic Taconite began drilling out test samples.
However, a year ago the U.S. Army Corps of Engineers confirmed what it has been saying since 2011 — that its review of potential damage to wetlands and waterways won’t proceed at the state’s accelerated pace, eliminating cost savings from a joint study. And last summer six Chippewa tribes asked the federal Environmental Protection Agency to study possible downstream water pollution from the mine before the state and Army Corps do their work.
The initial mining plan called for a two-stage operation. A pit spanning between 300 and 400 acres and up to 1,000 feet deep would be mined, with iron ore removed and waste rock stacked on 1,132 acres of Iron County forest land.
A second pit would be mined, with the waste rock used to fill the first hole. The second pit would fill with water for possible recreational use, Seitz said.
The site plan was based on maps made from aerial surveys, but surveyors walked the land last year and found significantly more environmentally sensitive wetlands on the hilly wooded property than had been seen from above.
The new state law permits a certain amount of damage to natural resources and allows the company to destroy wetlands if it pays to create wetlands elsewhere, but far too many sensitive acres would be wiped out by the original plan, Seitz said.
The cost of replacing wetlands could reach $60,000 an acre in some cases, he said. Seitz said he couldn’t estimate how many acres of wetland the original plan would have ruined.
Engineers are considering alternatives that would reduce the footprint of the waste pile, such as possibly mining four smaller pits, Seitz said.
Williams said examination of test borings has revealed a new picture of what lies beneath the ground, so the company is choosing new locations for groundwater monitoring wells and for collecting more core samples.
Larry Lynch, a state DNR hydrologist helping oversee the project, said it’s normal for a mine project to redesign as it learns more about a site.
“You start a project and the more you learn about the site and your ore body and processing requirement, the project will go through changes,” Lynch said.
Seitz said redesigning the mine is highly complex because it must take into account where deposits lie, what type of waste rock is present and where groundwater flows, and knowledge of these things is always evolving.
Seitz confirmed that the company stopped monitoring surface water flows and hasn’t installed groundwater analysis equipment in deep well holes it has drilled on the mine site. Those things are on hold until the redesign work is completed.
Lynch said 12 months of continuous surface water data would be necessary for the company to make its mining application.
Ordinance gives pause
Seitz said the proposed mining ordinance that the Iron County Board eventually will consider has given the company pause.
“That’s another thing we have to step back and digest,” Seitz said. “We have to figure out what their intent is, because what they’ve told us their intent is is a little different from what the ordinance says.”
The ordinance would give the county authority to require the company to conduct costly environmental impact studies that would duplicate what state and federal agencies mandate without the clear standards set forth in those regulations. If passed, the ordinance could also force the company to pay for experts to help the county interpret scientific data, Seitz said.
Bergman, the county zoning administrator, said that state law allows the county to pass such an ordinance, but officials are interested mostly in regulating things like truck traffic, noise and the appearance of the mining operation.
Those things could be addressed in a local impact agreement, which state law allows the community and the company to negotiate.
Investments for long-term gain
Bergman said he hopes an agreement could be struck that leaves the scientific analysis to state and federal agencies in exchange for Gogebic Taconite agreeing to make financial commitments to community improvement projects that would ensure the county gained long-term benefits from the mine.
Examples of such projects that local communities couldn’t afford without the help of a wealthy benefactor could include parks and trail systems that would enhance tourism revenue, and community buildings — perhaps things along the lines of a town square with a farmers market — that would encourage mineworkers to move their families to the county instead of commuting, Bergman said.
“I understand the company’s perspective that they want to do this as cheaply as possible,” Bergman said. “But for this to be a true economic boon for this area we need the people who work in the mine to live in our community, and so we have to have the community be attractive.”
A package of negotiated community investments could make Iron County more attractive to young people so that so many of them don’t move away, Bergman said.
Last year, the company said it would cut Ashland County out of the mining project because its mining ordinance would be too costly. Lynch said the company hasn’t revised the official plans to reflect the change.