MN State Agency Makes $4 Million Loan To Polymet. Could Be Illegal

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Loan Arranger May Be Illegal

State Loan Arranger May Be Illegal

A $4 million loan approved today by a Minnesota state agency for a mining company to purchase land may be illegal says an environmental watchdog group. The Iron Range Resource and Rehabilitation Board this afternoon granted Polymet mining a $4 Million loan to buy land and then exchange it with the US Forest Service for land to build a copper mine. The vote was 9-0

Prior to the vote, The Center for Biological Diversity has sent a letter to the IRRRB advising it that granting the loan may violate the Minnesota Environmental Policy Act. The letter says:

Because an environmental impact statement is currently being prepared for the PolyMet proposal, a governmental decision cannot be made to grant any related permit until the environmental impact statement has been determined to be adequate. Minn. Stat. 116D.04, subdiv. 2b; Minn. R. 4410.3100, subp. 1. “Permit” is specifically defined to include “the commitment to issue or the issuance of a discretionary contract, grant, subsidy, loan, or other form of financial assistance, by a governmental unit.”

From our limited understanding of the proposed loan to PolyMet, it would appear that any issuance of this loan or related financial agreement is prohibited until final completion of the environmental review process, and an adequacy determination for the environmental impact statement (if such adequacy determination for this mining proposal ever occurs).

According to the group, this is not the first time that Polymet and a governmental unit have “jumped the gun” on this proposed mining project. In 2007 a judge ruled in Wetlands Action Group v. St. Louis CountyWAG v. St. Louis County (4-17-07 order)

Partial approval, endorsement, or complete approval of a local government unit prior to the completion of environmental review may give the public and the parties involved in the project a false perception of authorization. Transparency, diligence, cooperation, and fair dealing are all critical components in the environmental review process. Compromising these components inhibits the purpose of environmental review from coming to fruition.

Polymet calls the loan an important step to create jobs

In a press release, Polymnet says the loan will be used

” to purchase forest land, wetlands, and lakes with high recreational value that would become available for public use and enjoyment. These properties, which PolyMet currently has under purchase option, would be purchased for future use as part of a proposed land exchange for surface rights at the proposed NorthMet mine site currently controlled by the U.S. Forest Service.

“The $4 million loan will be secured by the land to be acquired from proceeds of the loan, carry a fixed interest rate of 5% per annum, and will be repayable on December 31, 2015. Subject to regulatory approval, the Company has also agreed to issue warrants giving the IRR the right to purchase up to 400,000 shares of PolyMet common stock at US$2.50 per share at any time until December 31, 2015.

“‘By providing this loan, Iron Range Resources is helping to advance regional growth and secure public access to important lands,’ said Joe Scipioni, president and CEO of PolyMet. ‘This source of funds from IRR is an important step in PolyMet’s effort to create jobs in northern Minnesota to the benefit of the local, regional, and state economies. Bringing the former LTV plant back into operation, producing high value copper, nickel, and precious metals, is both an exciting and strategic opportunity.'”

Michael McIntee

Michael McIntee is a former network TV news executive with more than 30 years of broadcasting experience. He began his broadcasting career at the University of Minnesota's student radio station. He is an expert producer, writer, video editor who has a fondness for new technology but denies that he is a geek. More about Michael McIntee »

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