Rio Tinto gets OK to start US mine construction

TRAVERSE CITY, Michigan (AP) – Mining giant Rio Tinto said Wednesday it would spend $469 million developing the Kennecott Eagle nickel and copper mine in Michigan's Upper Peninsula, with construction starting this summer.

The mine should begin producing minerals by late 2013, the Anglo-Australian company said. It expects Kennecott Eagle to yield annual averages of 17,300 metric tons of nickel and 13,200 metric tons of copper over six years. It will be the only U.S. mine with nickel as the primary mineral.

Rio Tinto said in February 2009 it was delaying work on the project because of poor market conditions. The announcement Wednesday signals the company's renewed confidence in Kennecott Eagle, spokeswoman Deborah Muchmore said.

“The long-term demand outlook remains strong for both nickel and copper and bringing Eagle on stream will give us greater benefit from that growth,” Andrew Harding, CEO of Rio Tinto Copper, said in a statement.

Aside from the underground mine, the investment will cover costs of buildings and other infrastructure, plus upgrades of the Humboldt Mill near Ishpeming, where mine rock will be crushed and minerals extracted. It also will pay for a new road between the mine and the mill.

The project has divided the local community. American Indians and environmental activists have conducted vigils and sit-ins recently at the site in Marquette County's Yellow Dog Plains, saying the drilling would desecrate sacred ground and pollute waters that flow into nearby Lake Superior.

A protester was convicted Tuesday of trespassing on state land leased to Kennecott Eagle, and two others are scheduled for trial in August.

Rio Tinto said Wednesday the mine's construction won approval “under some of the most stringent environmental permitting rules in the U.S.”

“This reflects an environmentally responsible and community-focused operation,” Harding said.

Although the company says it has secured all necessary permits, opponents insist Kennecott Eagle can't legally move forward because the U.S. Environmental Protection Agency has yet to issue a permit for underground wastewater injection.

“It is a misrepresentation at best for them to claim anything other than that,” said Michelle Halley, attorney for the National Wildlife Federation.

Kennecott Eagle initially applied for the EPA permit but now says the water system has been redesigned in a way that makes it unnecessary. EPA says it is still investigating the matter.

State regulators issued environmental permits in 2007, but opponents are challenging them in court.

The company says its operation will employ about 200 full-time workers in the economically struggling region, while about 500 contractors will be hired for construction.

Rio Tinto said it is exploring for additional mining opportunities in the Upper Peninsula, which it called a “highly prospective region” for nickel and copper.