A miner operating a drilling machine about 180 feet below ground at the Kennecott Eagle mine near Marquette, Mich. Kennecott is a Rio Tinto subsidiary. More Photos »
By EMILY LAMBERT
Published: May 24, 2012
IRONWOOD, Mich. — On the far northern reaches of the Upper Peninsula of Michigan, James Jacques drove on a rutted logging road to an old mining shaft surrounded by a chain-link fence.
Dug in the 1950s, the shaft was briefly active when copper-bearing rocks were discovered there. Sixty years later, Mr. Jacques is tasked with finishing the job by digging a new mine 900 feet down.
“From my perspective, it’s a once in a lifetime opportunity,” said Mr. Jacques, who works for a subsidiary of Orvana Minerals, a Canadian-based mining company.
This remote area of Michigan, long ago left for dead, is rediscovering its mining roots — raising hopes here and across much of the Lake Superior region that a mining revival is in the making. With copper and other metals trading on commodities markets at consistently high prices, companies are digging into long-neglected deposits for metals that could be worth billions of dollars.
Rio Tinto, the world’s largest mining company after BHP Billiton, is working on a $469 million mine that will produce nickel and copper. Hudbay Minerals, a public mining company, is leading an expected $225 million project to mine precious and heavy metals, including gold, silver, zinc and copper. Orvana has received approval to mine chalcocite, a mineral that is primarily copper, in a project here that the company says will create $2 billion in economic activity over 20 years.
Smaller exploration firms are joining the rush too, searching for new ore deposits and studying known ones. One of them, Highland Resources of Vancouver, British Columbia, is spending $11.5 million to explore and develop potential mines, including two copper mines near Calumet, Mich.
“The price of copper has held up even in the face of a worldwide economic downturn,” said Dr. Ross R. Grunwald, vice president for exploration for Highland. Regardless of recent dips in the market, Dr. Grunwald predicted worldwide demand and a looming shortage will send prices even higher.
Analysts say prices for metals like copper and zinc, as well as for iron ore, are likely to remain strong enough to warrant the flurry of projects. The JPMorgan metals and mining analyst Michael F. Gambardella said that even if some prices were to fall, factors like the low cost of making steel in the Midwest make mining in the region attractive for “quite some time.”
There are worries about the environmental fallout of the new mining, and about how sustainable a mining-led recovery might be. But supporters of the new ventures want this to be a welcome homecoming for an industry that shaped the region. From the 1840s to the 1880s, the Upper Peninsula turned out most of the country’s copper and, by 1880, a large chunk of its iron ore. Newspapers, cities, roads and parks still bear the names of miners, minerals, mining companies and other things related to mining.
Evidence of the new mining activity is already visible. East of here, in Marquette County, towns like Big Bay have seen an increase in construction and temporary workers renting hotel rooms and homes. In Marquette — the largest city in the Upper Peninsula, with 21,000 residents — the Border Grill restaurant owner Dan Torres estimates that the Rio Tinto mine is increasing monthly sales by $500 to $1,000. Rio Tinto will make its first tax payment this July and is expected to pay $4.3 million to local authorities.
The enthusiasm for mines to reopen is especially palpable here in Ironwood, where dozens of iron ore mines once employed thousands of people. Most everyone in town had fathers or grandfathers who worked in the mines, and some residents worked there themselves. Many recall that the downtown used to be so full on Friday nights that the police would be needed to control traffic.
A mural in the municipal building shows a panoramic view of the once-bustling city. A small, dusty museum in an old train depot is full of miners’ clothes, tools and discoveries, including a block of iron ore.
But by the time the last of the mining companies departed in the 1960s, Ironwood had lost nearly half its residents and the bulk of its economic foundation. The population now stands at just under 5,400, and unemployment in Gogebic County, which includes Ironwood, is 10.7 percent.
While some people have steady jobs in logging, manufacturing or at nursing homes, many residents patch together seasonal jobs by working at ski hills and painting houses. Many men have left for North or South Dakota to work at oil fields, leaving families behind.
The hope is that mining will bring some of those people back. Signs in some windows and on the highway into town proclaim support for the new mining wave. Orvana has yet to put a shovel in the ground, but it has received hundreds of résumés, many dropped off by people who had left town and were back visiting family.
Marquette County, in addition to the Rio Tinto mine, is buoyed by Northern Michigan University and two surviving iron ore mines, among other things, so it does not share the unemployment problems of Gogebic County. But other erstwhile mining counties are in even worse shape. In April, the unemployment rate in Ontonagon County was 13.9 percent, in Keweenaw 12.9 percent and in Baraga 16.3 percent. By comparison, the statewide rate was 8.3 percent.
“We desperately need good-paying jobs for this area,” said Keith Johnson, director for the western Upper Peninsula region at the Michigan Works agency. “It might be just 10 or 15 years, but it’s going to be 10 or 15 years that we can truly enjoy.”
In the woods outside of Marquette, Rio Tinto last fall started blasting to reach an ore body that was identified in 2002 and is as much as 1,000 feet below the surface.
The mine’s footprint is a 130-acre, secure construction zone. Rio Tinto cleared all the trees except on a rocky outcrop sacred to a local Native American tribe, and has put up facilities including a water treatment plant. Next to the outcrop is a long, dark tunnel wide enough to accommodate a truck.
On a brisk day in April, red-clad miners drove a piece of heavy machinery called a rock bolter to the end of the tunnel and used automatic arms to pound in bolts and affix industrial-strength netting to the walls and ceiling to prevent rockfalls.
Rio Tinto plans to start pulling ore out in 2013. Adam Burley, president of Rio Tinto’s Kennecott Eagle Minerals subsidiary, was transferred from London to oversee the operation. He said the company hopes to develop more mines nearby and has a “portfolio of advanced, encouraging targets.”
Some 150 miles south, Hudbay Minerals, working with the public exploration company Aquila Resources, expects to apply this year for permits for a mine that the companies estimate would create hundreds of jobs and generate $27 million in taxes.
The economic risk of the new efforts is that mining could be a temporary fix. Orvana, for example, plans to run its mine here in Ironwood for 13 years; it would need an additional seven years for construction and reclamation. After that, it is anyone’s guess.
“I think people in fact have significantly exaggerated expectations in terms of what mining is likely to do for the local economy,” said Thomas M. Power, a professor emeritus of economics at the University of Montana, who spent summers as child in this region. He warned that mining towns never succeed in the long term and would be better off diversifying in other ways.
There are environmental risks as well. Some are concerned the mining could hurt waterways and especially Lake Superior, the largest freshwater lake in the world by surface area. A collection of environmental groups said that state and provincial laws, and enforcement, are inconsistent and inadequate.
In Michigan, mining companies submit internal environmental assessments to the state. But Michigan does not require a more stringent environmental impact statement that would involve third parties. And so far federal oversight has been largely delegated to the state.
The Keweenaw Bay Indian Community, concerned about the pollution, has asked the United Nations to investigate. The United States in 2010 endorsed the United Nations Declaration on the Rights of Indigenous Peoples, which recognizes the rights of natives to protect their lands and resources.
“No entity is really looking at all of these impacts at any one mine, much less all the impacts across the whole basin and really thinking about what would this mean for the region and Lake Superior, the headwaters of the Great Lakes,” said Michelle Halley, a lawyer for the National Wildlife Federation, which is one of several parties suing to stop the Rio Tinto mine. The group has made suggestions on how Orvana could make its plans more environmentally friendly.
Just over the state line in Wisconsin, Gogebic Taconite dropped a proposed $1.5 billion, open-pit iron ore project after lawmakers failed to adopt a bill that critics say would have relaxed environmental regulations and limited public input in the permitting process.
Gogebic Taconite is now drilling for iron in Michigan.
“It’s great that it’ll cause jobs,” said David Hill, 29, an Ironwood resident who is out of work. “I’m just hoping they’ll do it safely. That’s No. 1. Sometimes it’s not about money, but what are you doing to the land that you live on.”