Al Gedicks Letter to Orion Finance: No Social License for Aquila

November 1, 2016

Mr. Oskar Lewnowski, CIO
Orion Mine Finance Group
1211 Avenue of the Americas
Suite 3000
New York, NY 10036
Dear Mr. Lewnowski,

I am writing in regard to Orion’s 19% investment in Aquila Resources’ Back Forty metallic sulfide deposit in Michigan’s Upper Peninsula. Recent events have highlighted growing opposition to the project that may be of great interest to your shareholders.

Have you seen the recent headlines about the recent public hearing that brought over 350 people to the Stephenson high school to voice their concerns about Aquila’s mine permits on October 6, 2016? These headlines reflect deep public dissatisfaction with the proposed mine after the Michigan Department of Environmental Quality gave preliminary approval for the permits for the Back Forty project.

“Strong Feelings Erupt at Back Forty Mine Hearing” Peshtigo Times, 10/12/16

“Battle Lines Drawn in Fight Over U-P Mine” 10/7/16

“Emotions about mine run hot” Eagle Herald, Marinette/Menominee 10/8/16

Or are your shareholders aware of the recent demonstrations and public forums organized by the Menominee Indian Tribe of Wisconsin and their supporters protesting the failure to consult the tribe about the violation of sacred sites within the Back Forty mine footprint?

“Menomonee Nation holds rally against Back Forty sulfide mining project” News from Indian Country, October 2016

“Mine plan troubles tribe” Wisconsin State Journal, 10/23/16

I suspect you may be unaware of the significant community opposition to this proposed mine because Aquila’s CEO, Barry Hildred, has misrepresented the local community in an October 3, 2016 presentation before mining industry professionals at the recent Precious Metals Summit and in statements to the local media.

When asked whether there was any opposition to the Back Forty project, Hildred said, “The opposition tends to be small. These were the same groups that opposed the Eagle mine [in the U.P.]. They’re not well-funded and there are no national groups challenging the permit.” (

“There are no bad surprises”

When asked whether Aquila had done its homework to insure that there would be no bad surprises for the project, Hildred replied, “There are no bad surprises.”

No bad surprises? Just a week before Hildred assured his audience of broad community support for the project, the Marinette County Board, by a 28-0 vote, adopted a resolution that “strongly opposes Aquila’s Back Forty metallic sulfide mine and urged the Michigan Department of Environmental Quality to deny a permit for the Back Forty project.” Aquila Resources was invited to address the board before the vote but declined to send a representative to the meeting.

The resolution (see the Eagle Herald story on 9/21/16 enclosed) cited concerns over long term leaching of acid-producing wastes into the groundwater and the river, the risk to human health and the environment in Wisconsin as well as Michigan, the threat to the sturgeon population in the Menominee River and the irreversible loss of significant cultural resources of the Menominee Indian Tribe of Wisconsin, including Native American gravesites.

A company that cannot or will not defend its project before elected officials in a community that draws its drinking water downstream from the proposed mine has no social license to operate.

On October 25, an Environmental Protection of Air and Water Quality resolution was stricken from the agenda by the Menominee County Board of Commissioners to prevent a public discussion of concerns about the Back Forty proposed mine.

As the extensive news reports, letters to the editor, op eds, and feature articles in environmental and Native American publications assembled in this packet demonstrate, the characterization of the opposition as “small” and “composed of the same groups that opposed the Eagle project” is wildly inaccurate. Over 2,000 members of the public wrote to the Michigan Department of Environmental Quality to express serious concerns about the Back Forty project. Thanks to a Freedom of Information Act request, we know that 98 percent of all signatures and comments opposed the project (see report by Save the Wild U.P. enclosed).

While the individual citizens, groups and Indian tribes opposing this project may not be well-funded, this does not mean they are incapable of exercising considerable political influence over the permitting process and whether this mine will ever be built.

If you doubt the power of organized local opposition to defeat controversial mining projects I urge you to Google the defeat of Exxon’s Crandon, Wisconsin project in 2003, Aquila’s Lynne project in Oneida County, Wisconsin in 2012 and Gogebic Taconite’s Penokee Hills project in Iron and Ashland Counties in Wisconsin in 2015. All three cases involved Indian tribes and grassroots citizens groups organized against destructive mining projects.

Barry Hildred may know a great deal about financing mining projects but he appears to know very little about what mining risk analysts like Ernst & Young have termed the “social license to operate” (SLO). According to Ernst & Young, the fourth greatest risk to mining investors comes from “ignoring community voices and their environmental and public health concerns. Mining projects that generate protests and civil unrest are bad for business.” (Top 10 Business Risks Facing Mining and Metals, 2016-2017, p. 4).

“The mining world has changed dramatically,” wrote Wayne Dunn in a special report to The Northern Miner, a Canadian mining industry newspaper. “Projects can be stopped dead by local people and communities, dashing shareholder’s hopes and often destroying executives’ careers. Project management has become exponentially more complex as social issues no longer take a distant backseat to technical issues.” (90:28, 9/3/04, p. 6).

The term “social license to operate” emerged in response to a perceived threat to the mining industry’s legitimacy as a result of environmental disasters in the late 1990s. The Fraser Institute, a mining industry think tank in Vancouver, British Columbia says the social license to operate “refers to the level of acceptance by local communities and stakeholders of mining companies and their operations.” It “is based on the idea that mining companies need not only government permission [or permits] but also ‘social permission’ to conduct their business. Increasingly, having an SLO is an essential part of operating within democratic jurisdictions, as without popular support it is unlikely that agencies from elected governments will willingly grant operational permits or licenses.”

The Fraser Institute warns that “the lack of an SLO is associated with social conflict, loss of machinery due to vandalism, higher financial costs, increased difficulties in hiring skilled labour, costly delays of mine operations, and possible mine shutdowns due to community opposition to the mine.”

Serious concerns about the mine permit application have also been raised by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers that have forced Aquila to withdraw its wetland permit because it failed to identify regulated resources on the project site and within the proposed impact area. That permit application will need to be resubmitted.

Please review the extensive documentation of community opposition in this packet and make your own judgment about whether this project has a social license to operate.


Al Gedicks, Executive Secretary

Wisconsin Resources Protection Council

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