Damage Deposit Details
“Financial assurance” is a damage deposit held by a government agency that is supposed to protect taxpayers from being stuck with the bill for cleanup costs. Sulfide mines like PolyMet have a long track record of leaving behind pollution that continues well after the company that created it is gone.
PolyMet’s proposed mine would leave behind pollution requiring expensive water treatment for hundreds of years, maybe even forever. Nobody expects PolyMet to exist after their only mine stops operating after 20 years. That’s why it’s critical that PolyMet’s proposal include accurate calculations of the amount of money needed to protect taxpayers and specify what financial instruments are the most likely to be safe. A number of excellent comments on PolyMet’s supplement draft Environmental Impact Statement from experts and members of the public showed the need for better work to ensure that Minnesota taxpayers are protected.
At least $400 – 700 million damage deposit is needed to protect Minnesota taxpayers
“…the financial surety for this project could be in excess of $400 million. This is very significant potential impact not only to the financial requirements of the mine owners, but also to the citizens of Minnesota, who are ultimately accountable should the mine operator go bankrupt without an adequate financial surety to close the mine and treat waste water. If the mine operator were to go bankrupt without an adequate financial surety public funds for closure would either need to be provided, or the public would bear the environmental consequences of not properly closing the mine. Either way, the public would pay, probably for centuries.” – Dr. David Chambers
“…simulation of volatile investment returns and inflation rates show the the minimum beginning balance for the Long Term Treatment Fund required to ensure water treatment for 500 years after closure is $333 million, and quite possibly $500 million or more. The Long Term Treatment Fund set aside is above and beyond the estimated $50-200 million mine closure and reclamation cost estimates in the SDEIS.” – Matthew Tyler
There are few details about PolyMet’s financial assurance in the mine plan
“The [PolyMet] SDEIS merely outlines the purpose and requirement of financial assurance, and does not propose any particular mechanism for the protection of the lands and waters and Minnesota taxpayers. Although Minnesota law recognizes various mechanisms to meet required financial assurance, the only method that will protect the public and the environment from multiple forms of risk associated with the NorthMet project is a fully funded trust fund…” – The Nature Conservancy
…[Anyone's] ability to calculate the cost of water treatment for 500 years is probably impossible. The further out one tries to “predict” or estimate water pollution based on modeling gets less and less reliable the further into the future one models. No one knows what the financial markets will be like in 500 years, how much technology will have changed, the rate of inflation, the proper discount rate, and many other factors. – Minnesota State Auditor Rebecca Otto
“Comment #28: We understand that the [Minnesota Department of Natural Resources] will not calculate detailed financial assurance until the Permit to Mine process, although it might have additional information before the [Final] EIS is issued. Recommendation: The [Final] EIS should include additional information on financial assurance as available.” - U.S. Environmental Protection Agency
This puts Minnesota taxpayers at risk
“Likewise, the public is the final resting point for any financial surety. If there is a bankruptcy or other applicable failure to perform that requires the use of the financial surety, and this surety is lacking the public either makes up the deficit with tax dollars, or bears the environmental costs of not performing the reclamation, water treatment, or any other costs related to the deficit in the financial surety. With this much money at stake, regulatory agencies should want the most thorough review possible before allowing a project to go forward.” – Dr. David Chambers
“Several alternatives for meeting the requirements of financial assurance are outlined in Minnesota Rules. In this case, only U.S. government Treasury securities held within a bankruptcy-proof trust fund under the complete control of the Minnesota DNR meets the objectives outlined in Minnesota’s Rules and protects the Minnesota taxpayer.” – Alan Thometz, CFA
“My request to our elected officials is to be wary of overestimated benefits and underestimated costs and risks. Once PolyMet exposes the sulfur laden ore to the elements, Minnesota does not want to be facing our own “too big to fail” scenario, at tremendous cost to our taxpayers and to our environment.” – John Gappa