Financial Risk and the Need for Financial Assurance

The proposed PolyMet NorthMet open pit sulfide mine would put Minnesota’s environment at risk from long-term pollution.  The ecological and economic risks to residents and taxpayers have not been fully assessed or revealed.  These risks are essential to assessment of the potential impacts of the project, the alternatives considered, and the necessary studies to identify all significant potential impacts, as required in environmental review.
 
A Critical Part of Financial Assurance is Making Sure that the Corporate Deep Pockets behind PolyMet are Held Responsible for Any Risks.  Glencore, a foreign corporation with $158.8 billion in assets (in August 2014), provides a huge share of PolyMet's financing and will control the first five years of production if the PolyMet mine moves forward.
What do we know about Glencore?

 Glencore, which merged with Xstrata in 2013, is a $150 billion multi-national corporation that is PolyMet’s primary investor and joint venture. Glencore  is notorious for illegal dealings with rogue states (Iran, South Africa), financial manipulation to evade local taxes, human rights violations, denying workers their earned wages, and pollution from mines and smelters worldwide.

Read WaterLegacy's PolyMet & Glencore Report (2011)

Read IndustriALL targets Glencore for anti-union behaviour Nov 20, 2014

... reports from the 32 delegates representing IndustriALL affiliates from 14 countries were a testimony of “the consistent brutality and disrespect for workers' and unions' rights displayed by Glencore throughout its operations, all of which are in clear contrast to the public mirage created by its public relations machines,” ...

WaterLegacy's work
PolyMet & Glencore: An Overview
When we read in January 2011 that the PolyMet company had obtained significant financing from Glencore International (Glencore), WaterLegacy undertook an investigation of the relationship between PolyMet and Glencore, and of Glencore’s economic and environmental track record across the globe.
 
*  Note:  It is not clear that financial assurance will be considered in the current revision of PolyMet's supplemental EIS now under revision, even though it is a required element of environmental review.  Nor is there certainty that Glencore's deep pockets will be available to Minnesota taxpayers to cover mine closure, post-closure care, and potential health, safety or environmental catastrophes.
WaterLegacy results
WaterLegacy’s PolyMet & Glencore Report, prepared with Elliot Wyse, William Mitchell Law School Intern, provides information underscoring the need for financial scrutiny of the PolyMet project:
  • PolyMet has stated that it may not have insurance available to cover liabilities for environmental pollution;
  • Glencore, a multi-billion dollar privately-held foreign company founded by pardoned U.S. tax exile, Marc Rich, has been named by European NGOs as the “Worst Corporation of the Year” – globally;
  • Glencore has cut jobs at the Mopani copper mine in Zambia, Africa when copper prices fluctuated, creating a boom and bust for the local economy. Observers report that infrastructure in the host community has been left derelict;
  • Environmental problems at Glencore’s Mopani mine have resulted in fish kills and drinking water contamination resulting in hospitalizations of 800 people;
  • Glencore’s Prodeco coal operation in Columbia was fined $700,000 in 2009 for numerous environmental violations; its Cerrejon plant is notorious for displacing indigenous peoples and razing their villages;
  • Glencore’s South American operations have also been criticized for systematic firings of union workers and intimidation through the use of armed guards;
  • Glencore’s Metaleurop copper processing subsidiary removed corporate resources, leaving workers uncompensated and imposing on France a $411 million unfunded pollution liability.
With this troubling background, it is critical that the Minnesota Department of Natural Resources and the U.S. Army Corps of Engineers conduct a rigorous analysis of both, PolyMet’s financial resources and the track record and resources of Glencore, its financial and strategic partner in the environmental review process, where alternatives are analyzed.
Ongoing work
Financial Assurance Needed in Environmental Review
In February, 2010, the United States Environmental Protection Agency’s compliance division highlighted the absence of financial assurance information in giving the PolyMet draft environmental impact statement (DEIS) a failing grade. The U.S. EPA wrote:
 
“EPA believes financial assurance information should have been included in the DEIS. The amount and viability of financial assurance are critical factors in determining the effectiveness of these activities, and EPA believes it is necessary to analyze and disclose financial assurance factors in the DEIS to determine the significance of the impacts and inform decisions about the project.”
 
Yet, as reported by Josephine Marcotty in the Star Tribune’s “Copper mine's risks spotlighted” story, the development of financial assurance information in PolyMet’s environmental review process is far from certain. Ms. Marcotty reported that Larry Kramka, director of the Lands and Minerals Division of the state Department of Natural Resources, said the decision on when to address financial assurance has not been made. "We have not determined the level of treatment that it will get within the environmental impact statement."
 
Responding to the U.S. EPA compliance division’s request that financial assurance be included in the environmental review process, Mr. Kramka told the Star Tribune, "We get all sorts of advice on what we should and shouldn't do," he said. "The EPA is one."
 
What Can You Do?
Use the Contact Form on the web site for Governor Mark Dayton.
 Where the form states Question/Comment/Request, paste the following text (or draft your own variation):
 
The PolyMet sulfide mine project is the first non-ferrous mine project proposed in Minnesota. PolyMet has few financial resources and no track record, and its financial backer, Glencore International, has been rated by European NGOs as the “Worst Corporation of the Year” due to economic and environmental risks it has imposed on host communities. The U.S. EPA has told our agencies that financial assurance information should be included in environmental review. Please make sure that the Minnesota DNR includes a detailed analysis of financial costs and financial assurance in the supplemental EIS for the PolyMet Project. Even citizens who support sulfide mining agree that the mining companies, not Minnesota taxpayers, must be held accountable to prevent long-term pollution.
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