Unintended Consequences, But Not Unforeseen

There is a move afoot to develop an open-pit iron ore mine in northern Wisconsin and Michigan's upper peninsula within an ancient mountain range--the Penokee Mountains.

The discussion of the proposed mine has focused exclusively on the potential environmental impacts, State mining laws, and the economic impact on local communities. I would like to raise two questions: (1)how will a mine in the Penokees impact on what remains of the iron ore/taconite industry on Minnesota's Iron Range? And (2)how will Australia's expanding iron ore production impact a Penokee mine?

The opening of Minnesota's Iron Range contributed significantly to the decline and loss of Michigan's and Wisconsin's iron ore industry 100 years ago. The older deep shaft mines could not compete with the new open-pit mines. Will not a Penokee mine with the latest technology from the ground up prove to be just too competitive for what remains of iron ore production on Minnesota's Range? One consequence may be increased pressure to increase non-ferrous metal production on the Range as the successor to iron ore production, which will increase the risk of environmental degradation from the technologies used to mine sulfide ore bodies.

Australia is in the midst of significantly increasing its exports of iron ore, with a number of mines currently coming on-line and scheduled for full production within the next two years. This is in the context of a glutted global iron ore market. Australia would appear to be in a position to more than compete with the U.S. mining industry in supplying the Asian markets. Coupling a competitive disadvantage with an oversupply does not bode well for a new mine in the Penokee Mountains, much less an existing mine on Minnesota's Iron Range. (For background, try this link: http://www.prairiebizmag.com/event/article/id/15745/)

Who will lose if the proposed Penokee mine is less economically viable than estimated? Will it not be the local communities and the State of Wisconsin at large? Once in production, taxes, fees, and other payments to local units of government are all predicated on a profitable operation. The less profitable the venture, the less income that will accrue to those impacted by the mine and those bearing the financial responsibility to ameliorate those impacts. The projected windfall will dry up just as the tornado leaves destruction in its wake. The mine operators' cut shows up on the expense side of the ledger; stockholders and units of government will share in the profits (after expenses), if and when there are any. Expenses are paid first and are carried forward year after year minimizing or eliminating profits.

What assurances are there that the proposed mine can be successful both in its own right and without destroying our neighbors and our neighbors' communities, which lie to the west?