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In the U.P., nation's only nickel mine models the tensions of electric vehicle future

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Inside the Eagle Mine in Michigan's Marquette County. Keith King / Special to The Detroit News

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Michigamme Township — In the middle of the vast Upper Peninsula wilderness, the ground rumbles from Eagle Mine's massive trucks hauling high-grade nickel and copper ore around the clock from more than 3,000 feet into the earth.

Deep underground, miners work in near 90-degree heat as the dark rock walls shimmer in the light of headlamps and heavy machinery. That sparkle comes from minerals that will make their way across the world before, in some cases, heading back to Metro Detroit, where they will be used in batteries powering the next generation of electric vehicles.

Eagle is the only currently operating nickel mine in the United States. It's set to close in 2025 when its treasures are expected to be exhausted — an indicator of an impending crunch on Detroit automakers that are pouring billions into transforming their businesses from gas- and diesel-powered engines to battery-electric ones. 

More lithium, nickel and cobalt will be crucial to automakers realizing their plans. But as the auto industry and governments compete in a global race to secure the vital minerals, the nation’s only active nickel mine and the communities around it provide a vivid example of the environmental, economic and cultural challenges they face.

Nickel and copper ore shimmers in the walls deep below the ground at Eagle Mine in Marquette County, Michigan. At the bottom of the mine, the temperature nears 90 degrees and miners extract the ore by exploding sections of rock and collecting the debris.
Nickel and copper ore shimmers in the walls deep below the ground at Eagle Mine in Marquette County, Michigan. At the bottom of the mine, the temperature nears 90 degrees and miners extract the ore by exploding sections of rock and collecting the debris. Keith King, Special to the Detroit News

Right now, those minerals are largely sourced from other countries. President Joe Biden and many in Congress, locked in competition with China, want to make sure battery minerals needed to achieve EV goals more frequently go from ground to garage within U.S. borders. The nation doesn't possess the mining and processing scale to achieve that future, but its chief global economic rival does.

There are no other high-grade nickel deposits currently identified in Michigan, according to the U.S. Geological Survey. Mining of a nickel deposit in northern Minnesota — the only other proposed project in the country today — has stagnated amid court challenges, raising the prospect of continued reliance on foreign sources for the mineral. 

China is home to more than 75% of all battery production capacity and around 80% of global refining capacity for EV minerals, giving it immense influence over the battery supply chain. U.S. leaders believe China could weaponize that influence against them by using its power over the supply chain to retaliate in political and trade disputes. 

A man enters a tunnel dug with shovels in the Shinkolobwe cobalt mine in the Democratic Republic of Congo. The country is where half of the world's cobalt is located.
A man enters a tunnel dug with shovels in the Shinkolobwe cobalt mine in the Democratic Republic of Congo. The country is where half of the world's cobalt is located. SCHALK VAN ZUYDAM, ASSOCIATED PRESS

The push to source minerals domestically is also informed by human rights concerns in areas like the Democratic Republic of Congo, where half of the world's cobalt is — and where locals, including children, work in unsafe "artisanal" mines.

Automakers, seeking a more transparent supply chain, are also looking to partner with suppliers that can provide assurance of labor and environmentally friendly operations. In one recent example, General Motors Co. partnered with a lithium brine extraction project in Southern California that seeks to avoid the environmental damage of open-pit mining, which is water-intensive and poses groundwater contamination concerns. 

But re-shoring the supply chain isn't simple. New mining projects in the United States raise environmental concerns, can impact tribal rights, and are usually subject to long permitting and legal challenges. Once a mineral deposit is identified, it can take more than a decade for mines to begin producing as they navigate requirements intended to protect people and natural resources. 

Even when mines at home begin extracting ore, there is a dearth of U.S. processing facilities to turn it into the metal automakers need. Eagle Mine's ore — 1.5% of the nickel currently produced globally — is sent to Canada for smelting and refining, though it used to be shipped as far away as Finland and China.

Some Republicans in Congress want to tweak permitting to make it easier for new projects to break ground. With aggressive emissions reduction goals on the horizon — and a plurality of greenhouse gases still coming from transportation — Biden and allies are faced with threading the needle between environmental justice and economic development.

Eagle Mine's Canadian parent company, Lundin Mining Corp., is not currently exploring for more nickel deposits in the U.P. But the mine's management argues striking that balance is possible, and point to their own story as an indicator of both the challenges and opportunities ahead. 

Matt Johnson, external affairs manager at Eagle Mine, explains systems and processes at the mine's water treatment facility in Marquette County, Michigan. KEITH KING, SPECIAL TO THE DETROIT NEWS
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Matt Johnson, external affairs manager at Eagle Mine
We know (demand for) nickel is going to increase by 500% over the next couple of decades. But if it's going to take 10 years to build a smelter, if it takes more than 10 years to permit a new mine, we're going to be so far behind in natural resource capability to do anything in the low carbon economy.

"We know (demand for) nickel is going to increase by 500% over the next couple of decades. But if it's going to take 10 years to build a smelter, if it takes more than 10 years to permit a new mine, we're going to be so far behind in natural resource capability to do anything in the low carbon economy," said Matt Johnson, external relations manager at Eagle Mine.

"We have to make these decisions today. We can't just talk about it, we have to do it."

'Money under the ground'

The story of Eagle Mine dates back to the late 1970s, when the U.S. Geological Survey reported the likelihood that the area would have copper and nickel minerals. 

Rio Tinto Group, one of the world's largest mining companies, discovered the mineral deposit on state-owned land in 2002. The state created new rules regulating non-iron ore mining and Eagle Mine applied for a permit the same month the rules were released in 2006.

They got the green light from the state nearly two years later. It took another seven years until the first ore was mined — an atypically quick timeline for a U.S. mining project, Johnson said. 

Eagle extracts minerals by boring holes in the rock filled with explosives, setting them off, hauling out the rock, and crushing it into smaller pieces for processing. Then, it backfills the mined area with extra rock and concrete. The crushed rock is added to chemical tanks filled with air bubbles that separate out the nickel and copper to create a concentrate.

A group of opponents — the National Wildlife Federation, local environmental group the Yellow Dog Watershed Preserve, the Keweenaw Bay Indian Community and the Huron Mountain Club — challenged the state's decision in court over environmental and, for the tribe, religious concerns. They were worried about the potential impact of acid leaching from the rock, which can harm local waterways and human health. The suit continued for nearly a decade, during which time the mine changed hands from Rio Tinto to Lundin.

Similar challenges arise nearly everywhere a new mine is proposed. In a few of many examples nationwide, environmental and tribal groups have fought a copper mining project in Arizona for more than 25 years. Opposition continues against a proposed nickel, copper and cobalt mine near Minnesota's Boundary Waters Canoe Area Wilderness. And local groups are mobilizing against a prospective open pit lithium mine in North Carolina. 

Steve Ayotte, of Negaunee Township, Michigan, discusses Eagle Mine's contentious past while having dinner with friends in downtown Negaunee, Michigan. He says that years after the mine opened, he feels it has been good for the community.
Steve Ayotte, of Negaunee Township, Michigan, discusses Eagle Mine's contentious past while having dinner with friends in downtown Negaunee, Michigan. He says that years after the mine opened, he feels it has been good for the community. Keith King, Special to the Detroit News

The state eventually determined Eagle's permit was valid, leaving many former mine opponents who spoke with The Detroit News feeling helpless.

Still, today, residents of surrounding communities expressed frustration about the project's contentious beginnings and raised concerns about what will happen — both economically and environmentally — after the mine shutters. But many also felt the company has brought important work opportunities to the community.

And, so far, no environmental catastrophes have come to pass. There have been some minor water quality changes around the site, but the state and local monitors say Eagle has not violated its permit since opening.

Steve Ayotte, a retired correctional officer who grew up in the region and lives in Negaunee Township, joined his wife and friends at Tino's Bar and Pizza in downtown Negaunee in July. He recalled a person coming to town in the mid-2000s to push for the mine to open. 

"He said, 'it doesn't matter how much you hate us opening up this mine. It's going to open up. It's going to get here, and there's nothing you can do about it.' I was thinking at the time, 'screw you.' But he was right. It did," Ayotte said. But "it's been good for the area, no question about that. It's a lot of jobs."

Eagle Mine, Marquette County
Andy Morrison, The Detroit News

Darlene Turner, supervisor of nearby Powell Township, vigorously opposed the mine when it was first proposed because she felt it would disrupt the area's remote beauty. 

"This here was back in the wilderness. It was like our playground," she said. "So that hurt. Economical change — you can't prevent it, it's going to happen. There was too much money under the ground that we had to learn how to live with it."

The mine built a paved road opening up the area, and the trucks traveling through the region's cities have been an added stressor, she said. Having the mine as a neighbor has been bittersweet, but she's come around to it. The mine has created around 400 jobs, pushed the installation of new power lines and roads in her township, and contributed nearly $4 million in taxes to nearby Michigamme Township since the first ore was mined. 

"There's a lot of pluses, and it does outweigh the minuses. We do still have some rural area out there. It's just different."

Critical need ahead 

The mine estimates there are only a few years worth of ore left to mine at Eagle. The price of nickel is on an "upswing" and appears poised to keep rising, said Darby Stacey, managing director of the mine. 

While the EV market doesn't make up a huge percentage of nickel use right now (it primarily goes to making stainless steel), "all of the growth of nickel has gone to EVs."

That's expected to continue, with nickel demand growing by 44% over 2020 levels by 2025, according to industry forecaster Benchmark Mineral Intelligence. Lithium-ion batteries are slated to make up more than 90% of global nickel sulfate use by 2030, according to the Department of Energy. 

As demand grows, experts expect trouble. The DOE has identified high-grade nickel as "the most critical" need in the battery supply chain in the short term and warned "there could be a large shortage of Class 1 nickel in the next 3-7 years" because existing production won't be able to keep up with global demand. 

John Bozzella, president of the Alliance for Automotive Innovation, urged Congress in April to invest in strengthening the battery supply chain and noted that Chinese companies produced around 80% of all battery raw materials in 2019. 

Investing in infrastructure and consumer incentives "can help address near-term challenges," Bozzella said, but "they will contribute to sustained U.S. leadership in automotive innovation only if they are aligned with supply-side realities."

Currently, a quarter of global nickel deposits are controlled by China through projects in Indonesia. Like cobalt and lithium, the U.S. mostly relies on nickel imports for electric vehicle batteries, though officials consider the supply chain more stable because that import reliance is on allied nations like Canada, Norway, Australia and Finland.

Lundin, Eagle Mine's parent company, only opens mines where there’s likely to be high-quality ore, where safe mines can be operated and in what they call “good jurisdictions.” That means a stable government that doesn’t have a track record of taking resources out of private companies’ hands. 

The U.S. is considered one of the best jurisdictions for those reasons, Stacey said. There’s also an educated workforce who can meet the needs of an advanced operation. Lundin also has mines in Sweden, Portugal, Chile and Brazil.

Darby Stacey, managing director of Eagle Mine, says unpredictable permitting processes can make it challenging for new mines to open.
Darby Stacey, managing director of Eagle Mine, says unpredictable permitting processes can make it challenging for new mines to open. Keith King, Special to the Detroit News

But in the U.S., long and unpredictable permitting processes can make it difficult for new mines to come online, said Stacey, Johnson and Jeff Murray, operations manager at Eagle. It can take more than a decade and hundreds of millions of dollars of investment before breaking ground, which can make it a gamble for some companies.

“Having some surety on the length of the process on the back end, because of the investment that’s been made upfront, it’s very important for the company," Stacey said. "That’s where most projects kind of fall down."

The promise of a low-carbon economy is pushing mining industry advocates, automakers and environmentalists closer together in Washington as they grapple with how to safely get what's needed to transition to green technology.

Democrats and environmentalists say mine reclamation and recycling — two ways to recover existing minerals without opening new mines — should be the focus. Republicans and industry advocates argue that EV batteries are so comparatively new that mining must come before recycling.

"Everybody can see right now that we're going to need more of this stuff to power the new economy, and it's got to come from someplace," said Jim Lyon, vice president for conservation policy at the National Wildlife Federation. "I think it's redefining some conversations in the communities about how to do this."

Federal momentum

Few Democrats have publicly signed on to Republican efforts to accelerate mine permitting, but the $1 trillion infrastructure package brokered between the two parties includes some policies that would move in that direction. 

Legislation from Sen. Lisa Murkowski, R-Alaska, seeks to alleviate red tape for critical mineral mine permitting.
Legislation from Sen. Lisa Murkowski, R-Alaska, seeks to alleviate red tape for critical mineral mine permitting. Sarah Silbiger, AP

Legislation from Sen. Lisa Murkowski, R-Alaska, that seeks to alleviate red tape for critical mineral mine permitting was included in the bill, which passed the Senate in August and is expected to be voted on in the House before the end of September. The bipartisan bill also establishes a grant program for critical mineral mining, recycling and reclamation research, and dedicates an additional $100 million annually through 2024 for pilot projects for processing, recycling and developing critical minerals. 

Biden proposed $16 billion for mine reclamation in his initial infrastructure proposal, and the Democrats' $3.5 trillion social spending bill being crafted in Congress directs lawmakers to put a portion of $198 billion toward hard rock mining. 

The Department of Energy recommended in early June that Congress replace an 1872 law that allows people to stake claims and get exclusive rights to mineral deposits on public lands without paying royalties, which may provide another opportunity for bipartisan agreement on reform. 

Biden's focus on re-shoring supply chains to decrease dependence on China is one of the few continuities with former President Donald Trump. But some experts, like Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines, say it's an "inherently flawed" pursuit to attempt to beat China in a global race to dominate the battery supply chain. 

China is home to more than 75% of all battery production capacity and around 80% of global refining capacity for EV minerals. Seen here is SVolt’s battery factory in Changzhou.
China is home to more than 75% of all battery production capacity and around 80% of global refining capacity for EV minerals. Seen here is SVolt’s battery factory in Changzhou. SVolt Energy Technology Co.

China doesn't have the constraints that the U.S. does — a democratic process intended to protect the environment and communities around mines. Even with accelerated policies, the U.S. will remain reliant on other countries, he said. 

"If you don't think that we're living in a connected world, you're simply not paying attention," Bazilian said. "Trying to fight that is, in my opinion, absurd."

But as a rare area of agreement between Republicans and Democrats in Congress, the debate over how to build up the domestic supply chain for EVs is unlikely to fade any time soon. 

"There is this fundamental tension between clean energy relying upon extractive industries," said Abigail Wulf, director of critical minerals strategy at Securing America’s Future Energy, which advocates for electrifying transportation and bringing more of the EV supply chain into the U.S.

"This is the trade-off at the end of the day. But it's something that we will need to think about in order to obtain some of these national security, economic competitiveness goals that we're hoping to achieve in this race for an electric future."

rbeggin@detroitnews.com

Twitter: @rbeggin

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