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Tuesday, February 18, 2020

A plan to mine the Minnesota wilderness hit a dead end. Then Trump became president

The election of President Donald Trump, with his business-friendly bent, turned out to be a game-changer for the project.

By: New York Times | Published: June 26, 2019 8:08:31 am
A plan to mine the Minnesota wilderness hit a dead end. Then Trump became president Fall Lake, near Winton, Minn., part of the Boundary Waters, a vast landscape of federally protected lakes and forests along the border with Canada. The Trump administration has worked at a high level to remove roadblocks to major copper mine which Antofagasta, the Chilean mining giant, wants to build here. (NYT)

Written by Hiroko Tabuchi and Steve Eder

In the waning months of the Obama administration, a Chilean conglomerate was losing a fight with the US government over a copper mine that it wanted to build near a pristine wilderness area in Minnesota.

The election of President Donald Trump, with his business-friendly bent, turned out to be a game-changer for the project.

Beginning in the early weeks of Trump’s presidency, the administration worked at a high level to remove roadblocks to the proposed mine, government emails and calendars show, overruling concerns that it could harm the Boundary Waters, a vast landscape of federally protected lakes and forests along the border with Canada.

Executives with the mining company, Antofagasta, discussed the project with senior administration officials, including the White House’s top energy adviser, the emails show. Even before an interior secretary was appointed to the new administration, the department moved to re-examine leases critical to the mine, eventually restoring those that the Obama administration had declined to renew. And the Forest Service called off an environmental review that could have restricted mining, even though the agriculture secretary had told Congress that the review would proceed.

An Interior Department spokesman said it simply worked to rectify “a flawed decision rushed out the door” before Trump took office. Several senior department officials with previous administrations, however, said they were surprised by the swift change of course for the little-known Minnesota project, which was not a focal point of Trump’s presidential campaign.

For the family of billionaire Andrónico Luksic, which controls the Chilean conglomerate, the policy reversals could provide a big boost to its mining business. Since the change in administration, the Antofagasta subsidiary Twin Metals Minnesota has significantly ramped up its lobbying in Washington, according to federal disclosures, spending $900,000.

But the mining project’s breakthrough, already unpopular with environmentalists, has drawn additional scrutiny and criticism because of an unusual connection between Luksic and two of Trump’s family members.

Just before Trump took office, Luksic added a personal investment to his portfolio: a $5.5 million house in Washington. Luksic bought the house with the intention of renting it to a wealthy new arrival to Trump’s Washington, according to Rodrigo Terré, chairman of Luksic’s family investment office, which handled the purchase.

The idea worked. Even before the purchase was final, real estate agents had lined up renters: Jared Kushner and Ivanka Trump.

The rental arrangement has been a point of concern for ethics experts and groups opposed to mining near the Boundary Waters, and has focused national attention, particularly among some Democrats in Congress, on an otherwise local debate.

The Wall Street Journal first reported about the house in March 2017. At that time, Twin Metals was suing the federal government over the mining leases, but the Trump administration’s direction on the mine since then had only begun to take shape.

In recent months, the scrutiny has grown. In March, Rep. Raúl M. Grijalva, D-Ariz., chairman of the House Natural Resources Committee, wrote a letter with other lawmakers to the interior and agriculture secretaries raising significant concerns about the proposed mine.

The letter said the two departments’ actions “blatantly ignored scientific and economic evidence.” It also mentioned the “interesting coincidence” surrounding the rental of the Luksic house to Trump’s relatives. Separately, a group in Minnesota opposed to the mining, Save the Boundary Waters, has called the rental arrangement “deeply troubling” and has seized on it to cast doubt on the administration’s actions.

The White House and representatives for the couple declined to answer questions about whether the rental deal had been reviewed by ethics officials. “Both Mr. Kushner and Ms. Trump follow the ethics advice they received when they entered government service,” said Peter Mirijanian, a spokesman for Kushner’s lawyer, Abbe Lowell.

Terré called the lease a simple real estate transaction that happened to involve the incoming president’s family.

“I do not believe there was anything unethical or inappropriate about this business transaction,” he said.

Both Mirijanian and Terré said the rental was not related to the Minnesota mine.

“There is no correlation in any way,” Mirijanian said.

They were “two entirely unrelated matters” and tying them together was “based on unfounded rumors and speculation,” Terré said.

An Interior Department spokeswoman said that neither Kushner nor Ivanka Trump been involved in discussions about the mine.

Nonetheless, several ethics experts said they would have cautioned Kushner and Trump against renting the home, given the Luksic family’s business before the administration.

“There may be nothing wrong,” said Arthur Andrew Lopez, a federal government ethics official for two decades who is now a professor at Indiana University’s Kelley School of Business. “But it doesn’t look good.”

Wealth beneath the wilderness

The Boundary Waters hold a special place in American geography: More than a million acres of lakes and forests provide a rich habitat for thousands of species, including the gray wolf and Canada lynx. But below the surface and beyond lies richness of another sort, an estimated 4 billion tons of copper and nickel ore — believed to be one of the world’s largest undeveloped mineral deposits.

The mining giant controlled by the Luksic family, Antofagasta, took full control of the project in 2015, and its executives have called it the company’s “most advanced international opportunity.” Antofagasta, which is publicly traded in London, is poised to benefit from the growing use of copper in renewable-energy technologies like wind and solar. It lists Luksic as a board member, and his younger brother, Jean-Paul Luksic, as chairman.

The company has spent more than $450 million so far on the project, run by the subsidiary, Twin Metals Minnesota. It says the project will generate hundreds of mining jobs.

The promise of employment resonates in Minnesota’s Iron Range, which has lost a quarter of its mining jobs since 2000.

“The mining industry brings a tsunami effect for the community with regard to jobs, schools, everything,” said Andrea Zupancich, the mayor of Babbitt, a town of 1,500 near the proposed mine.

Antofagasta’s environmental record, however, has raised concerns. In Chile, the company’s Los Pelambres copper mine has suffered toxic spills, according to environmental groups. The company said the mine had experienced only “minor incidents involving limited spills” which were not toxic, and said it was proud of its environmental record.

In a 2016 analysis, Thomas Tidwell, who was then chief of the U.S. Forest Service, warned of risks to the Boundary Waters from the proposed Twin Metals mine, including the leaching of harmful metals. Mining, he concluded, risked “serious and irreplaceable harm to this unique, iconic, and irreplaceable wilderness.”

Twin Metals called the analysis “riddled with errors” and said “environmental risks will be properly managed.”

Still, the fears have divided nearby residents.

“In the summer, we drink out of this water,” said Susan Schurke, who runs Wintergreen Northern Wear, an outdoor clothing company. “Once that’s tainted, it’s over. How can we risk that?”

When the Obama administration moved to block the project in 2016, Twin Metals sued. The company said in a statement then that the administration’s move threatened jobs and would “hinder access to one of the world’s largest sources of copper, nickel and platinum — resources of strategic importance to the U.S. economy and national defense.”

Just as the mining company’s hopes appeared to be on the ropes, it got a welcome surprise: Trump’s election, and the promise of a pro-industry agenda.

Celebrity tenants in Washington

With a new administration on its way to Washington, Luksic contacted a real estate broker he knew for help with an investment idea: buying residential properties in Washington, including a luxury home, to rent out.

With the help of the broker, Rodrigo Valderrama, Luksic’s family investment office, which through corporate entities owns a portfolio of real estate in the United States, bought two condominiums in the capital. One was never rented and later sold at a loss.

As for the luxury home, Valderrama spent weeks touring homes and alerting brokers that he had an interested client. One house he saw was on Tracy Place, in the Kalorama neighborhood, being handled by the real estate firm Washington Fine Properties.

Ivanka Trump and Kushner were using the same firm for their hunt for a house to rent. With Kushner’s parents tagging along, they saw the six-bedroom, 7,000-square-foot Kalorama home as well.

In the space of a week, Luksic’s representatives agreed to buy the house and closed on the all-cash transaction, while their would-be tenants waited for the purchase to be complete.

The two sides, working through brokers, agreed on rent of $15,000 per month. Terré described it as being in the “high range” for the area, which some real estate agents confirmed. Still, that rent was significantly lower than what the couple had discussed paying for another more expensive house, according to interviews.

Terré said both sides were aware of each others’ identities before the rental deal was finalized.

“We disclosed our name and the name of my boss,” he said in a telephone interview. Mirijanian said the couple had decided to lease the home before knowing the landlord’s identity. He did not directly respond to questions about whether they learned of that identity before signing the lease.

Luksic has written on Twitter that he does not know Donald Trump or any member of his family, and only met Trump briefly at a New England Patriots football game years ago. Terré said Luksic “has not had any interactions with the Trump White House.”

Critics of the Luksic family say they were suspicious of the Washington investments because of Luksic’s past in Chile, where he has faced claims of attempts to win favor with the family of a former Chilean president. The Luksic family, one of the world’s wealthiest, has interests spanning banking, manufacturing, energy, shipping and beer.

Luksic came under fire for meeting with the son and daughter-in-law of Michelle Bachelet, who was running to be president of Chile at the time, as they sought a $10 million loan for their company from Banco de Chile, which is controlled by the Luksic family conglomerate. After Bachelet’s 2013 election, the bank approved the loan.

A spokesman for Bachelet said an investigation into the meeting did not lead to any charges. Representatives for Luksic said that he never discussed the loan with Bachelet, and that regulators found “there was absolutely nothing irregular about the bank’s approval of the loan.”

Mining obstacles start falling away

The Trump administration’s efforts to smooth the way for Antofagasta’s mining ambitions began less than two weeks after the inauguration, when Interior Department officials began re-examining the leases, government emails show.

The message from an early meeting, according to an attendee who spoke on condition of anonymity, was that officials should prepare for a change in direction.

Officials also made sure the incoming interior secretary, Ryan Zinke, not yet in the job, was briefed. In an email, one Interior Department official described that effort as a “fire drill.”

The administration’s efforts are documented in part in thousands of pages of government emails and calendars, many obtained through records requests by Louis V. Galdieri, a documentary filmmaker, and the Sierra Club, an environmental organization.

A key meeting occurred in early May, when Antofagasta’s chief executive, along with other executives and lobbyists, discussed the issue with the White House’s top adviser on domestic energy and the environment, Michael Catanzaro. The company said it wanted to reverse the Obama-era decisions, which it said were illegal and inflicted “undue damage.”

The next month, Interior Department officials learned that the White House had “expressed interest in the Twin Metals matter,” according to an email sent by a department lawyer marked “TIME SENSITIVE.” Soon after, top interior appointees traveled to the Minnesota site.

That December, the department reversed course on denying the company’s leases, and Twin Metals withdrew its lawsuit. The Interior Department formally renewed the leases last month, with some restrictions.

Twin Metals scored another victory in September when the Forest Service cut short its mining-ban review. An agency spokesman said it had determined that neither the study nor a ban was needed.

A Twin Metals spokesman, David Ulrich, said the company’s outreach was part of a long-running effort to share its views with the federal government. Obama administration officials had also visited the mining site, he said.

“We are confident that this world-class mineral resource can be developed safely and with a minimal impact to the environment,” he said in a statement.

The mine still faces a yearslong permitting and approval process. Engineers have been drilling boreholes and wells to study the region’s geology and water, and the company is preparing an operating plan.

“The last administration created some challenges,” Ulrich said during a tour of the site on the Boundary Waters’ edge. “But it was never not moving forward.”

On a trip to Minnesota in April, Trump was jubilant about the restoration of mining.

“Under the previous administration,” he said at a truck factory, “America’s rich natural resources were put under lock and key.” The changes since then, he said, were “really pretty amazing.”

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