Iron mining issue raised again in Iron County with a new proposal

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Reads as if Dollar Bill, Tiny Tim and Bobbi Seitz are back only new names.

At a private morning meeting this Wednesday at Hurley Wisconsin’s Iron Nugget the president of LaPointe Iron, David Adams, vice president, David Meinecke and a representative of Global Minerals Engineering, Paul Eger floated a potential new mining project for Iron County.  LaPointe owns much of the Penokee land and mineral rights, at the site of the recently proposed and abandoned GTac mining project.  We learned that a similar meeting with representatives from Ashland is also scheduled.

The stated purpose of the meeting was to determine “how Iron County feels about mining.”  Present were members of the Iron County Board, Opal Roberts, Vic Ouimette and Jim Kichak.  Also present were  Jack Giovanoni and Kelly Klein of the Iron County Development Zone, Leslie Kolesar, Iron County Mining Impact Committee chair and Peter Sturgul an Ironwood, MI resident and retired engineer.  Noticeably absent from this group were any citizens who opposed the last mine proposal which could very well bias LaPointe's impressions.

LaPointe hints at its plans

Saying that GTac had pretty much fouled up its attempt at developing the deposit, LaPointe indicated it would be different this time with a “much larger, more professional mining company.”  In fact they indicated that they had more than one interested party at this time but wouldn’t begin to negotiate with them until their lease with GTac expires in September of this year and until they were sure of Iron County’s position on mining.  

Mining economists suggest that only a very large mining company such as Anglo/Australian BHP Billiton or Brazil’s Vale could control market conditions sufficiently to compete.  America’s Cliff Resources, although a large company, is struggling financially and is closing plants.

When asked about the economics of mining this deposit LaPointe indicated that “better technologies are available" [than what GTac proposed].  From answers to other questions by Iron County board member Vic Ouimette and retired mining engineer Peter Sturgul it appears that LaPointe is reviving the concepts of its 2003 proposal to develop a direct reduction (DR) or nugget mill.  Direct reduction mills produce pure iron nuggets or even actual iron or steel product on site rather than taconite pellets which are only 63 to 67 percent iron.  (Read about the shift from taconite to nuggets here.) This process saves tremendously on shipping costs and represents an up to 10 times value-added advantage.  The end product can be easily shipped by rail or even truck from the mill eliminating costly lake boat shipping.  At the higher value added figure this type of mine/mill could be profitable at much lower volumes.  However, similar mills in Minnesota have yet to show good profits, partially due to much higher (up to 50%) initial investment cost and the shrinking U.S. steel market.  

It was suggested that a mill could be placed in Ironwood, MI, across the border from Hurley.  Raw ore could be shipped by short line rail from the mine site(s) to the mill along existing rail grades, many of which would have to be reacquired from private owners.  Of course, location of the mill in Michigan would pretty much remove and profit tax income from Wisconsin communities.

LaPointe stated that it would not need the existing Iron County leased land for storage of waste rock.  This fits with the practice of “high grading”  where only the least expensive to mine ore close to the surface would be removed.  Because of the geometry of the Penokee deposit a narrow band of the ore is right at the surface.  At lower annual volumes of ore the top 100 to 200 feet of ore in the deposit could be mined for many decades before the volume of waste rock would become prohibitive. And, because much of the Penokee overburden, the Tyler Shale, is classified as a pyritic shale, avoidance is desirable to reduce acid mine drainage.

LaPointe has the cores

It was brought out that LaPointe Iron is now in possession of the core samples and logs from both the GTac exploration and the older U.S. Steel (USX) explorations from the 1960's and 70's.  The company stated that they have hired a geologist to evaluate them.  They have also reached out to the USGS and the Bad River Watershed people to cooperate in continuation of surface water testing.

What about tax income under this proposal?

LaPointe also stated that it would favor a tonnage tax over the state’s current net proceeds tax (tax on profits).  This could favor the counties but a quick analysis indicates that with the lower volume of ore and higher added value of the product of a DR plant, the locals could see less tax revenues.  A combination of taxes on both profits and volume would be most advantageous to the local communities.

Is the Pine Lake Deposit in play?

While stating that the Penokee deposit represents upwards of 25% of the U.S. reserves, LaPointe representatives also raised the fact that Iron County also has a smaller but richer magnetite lode in its Pine Lake Deposit.  That deposit stretches from Moose Lake in central Iron County through the north end of the lakes region to Marinesco Michigan. The richest ore lies directly east of Pine Lake and continues east to Lake Evelyn along County Highway G.  

The purple Pine Lake Deposit is superimposed over a Google earth

image of Iron County.  The group of gray circles represent the Pine Lake 

exploration of the 1980's.  All of the land under the dots is currently owned

other lakes in the area.  The yellow line is US 51

It was previously explored in the 1980’s by Chicago Tube and Iron and subsequently sold to Iron County.  With a direct reduction mill within 14 miles along an existing rail grade, this site could be attractive.  With the recent destruction of the Wisconsin DNR and the onerous Chapter 295 Ferrous mining law in place, the high environmental sensitivity of this area may become a non-issue from the state permitting perspective.

But what about Native American rights in the ceded territories?

When asked about whether the Bad River and other Chippewa tribes are being or should be included in the conversation, LaPointe stated that their attorneys had studied the Voight decision and determined that the tribes had no usufructuary rights in the area.    They said that since the land is now or had been in private title the Native American rights to have an influence on what happens to the land are void.   Attorneys we consulted on this issue disagree to the extent that the Tribes have air and water standards that have to be met.  As to the ability of the tribes to hunt, fish and gather, as long as the properties are in managed forest law, they are considered to be public and therefore open to the tribes for hunting, fishing, gathering and occupying. LaPointe said they had tried to reach out to the tribe but were unsuccessful.


At the conclusion of the meeting LaPointe officials stated that because of the value of Iron County’s iron ore deposits, between $6 and $100 billion, the properties “will be mined in the future.”  A sale of the property to some environmental preservation organization is apparently not in the cards.

A different beginning 

In contrast to GTac’s secrecy and behind the scenes dealings with Iron County, we found in the several interviews for this article that people were refreshingly more open and willing to answer questions.  Kelly Klein and Opal Roberts were especially candid.  That’s a good start.  There are, however, many, many more questions to be asked and answered to discover the scope, value, problems and probability of this project.
LaPointe is acting like a serious and more responsible mining enterprise.  They are not promising "jobs next fall."  They are admitting up front that a project like the one being considered is very tenuous and most likely not to happen for many years, perhaps decades.  What they are suggesting is much less environmentally invasive than the giant project envisioned by GTac.  Of course, the devil is in the details.

The coincidental timing of this new proposal with Governor Walker’s dismantling of the DNR and his run for president raises some troubling questions, however. Is this just an opportunity for the governor to show he is trying to create jobs?  

We would also suggest that LaPointe talk to some of the sincere opponents of mining in Iron County to get their perspective and allow them to state their concerns.

We were not able to reach LaPointe Iron or Bad River Band representatives for this article.

Posted 10 hours ago by