DNR to Auction Iron Range Mineral Rights

DNR to Auction Iron Range Mineral Rights

Postby PaddlerJimmy » Mon Apr 25, 2011 10:23 pm

Minn. DNR to Auction Iron Range Mineral Rights
Companies could prospect if landowner disagrees

Updated: Sunday, 24 Apr 2011, 10:24 PM CDT

DULUTH, Minn. (AP) - The Minnesota Department of Natural Resources opens bids this week for mineral leases that would allow companies to prospect for precious metals across northern Minnesota, even if the owner of the surface land disagrees.

Mining supporters claim the leases are an important step toward tapping the state's vast mineral wealth and creating hundreds of jobs and while raising money for the state through taxes and royalties, but critics tell the Duluth News Tribune that the system is stacked against landowners, some of whom don't realize they don't own what's under their own land.

In the auction starting Thursday, the state is offering 621 parcels of land for which it owns the mineral rights in Lake, St. Louis, Itasca and Koochiching counties. The parcels are in areas where mineral deposits are likely, but generally haven't been confirmed.

Ron Brodigan said he hopes nothing is found under his land. He started his Great Lakes School of Log Building in 1975 near Isabella because of its remote location.

"My neighbors and I are disgusted at the prospect of damage, noise and pollution we will be seeing within a year," Brodigan said.

He's also concerned about what underground exploration will do to his water wells.

The auction includes state mineral rights under 120 of Brodigan's 200 acres. He said he knew he didn't own his mineral rights, but he didn't think it would be an issue so far from any traditional mining area.

While the winning bidder must negotiate with Brodigan for access, state laws generally favor mineral rights over surface rights, meaning Brodigan can't simply say no to the mining companies.

Brian Kontio purchased land to build a cabin near Isabella last year. He also knew that the state held his mineral rights, but thought he was too far enough away from where miners found copper near Babbitt and Ely.

"Now, I realize that I am on top of a geological formation called the Greenwood Lake intrusion which possibly contains mineable quantities of platinum group metals. The joke's on me, I guess," Kontio said.

He said state notices of the auctions were vague.

"The average Joe who reads this notice is going to think that the state is selling mineral rights under state land, tax-forfeit land, not private land," he said.

The DNR auctions are held every year and have been recently drawing more interest from mining companies. More metals have been found in Minnesota and the prices for those metals have jumped to new highs.

The top bidder gets exclusive rights to the minerals for 50 years in exchange for a small lease fee and a commitment to pay royalties if mining ever starts.

The state has made millions of dollars in royalties from the mining of iron ore and taconite over the decades. Now the official state policy is to get the same royalties from mining precious metals.

"That's the goal as it's written in statute ... that these leases eventually become mining operations and bring in royalties," said Aaron Vande Linde, transactions manager for the DNR's Division of Lands and Minerals.

However, he said the prospecting rush may be slowing as mining companies catch up and confirm what's on leases they already own before bidding on more leases. The DNR will know for sure on Thursday, he said.

This week's bids will be reviewed to make sure the companies can make the payments they promise. The leases don't become official until the state's Executive Council -- the governor, lieutenant governor, secretary of state, state auditor and attorney general -- approve them in June.

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