Jobs and Economic Issues

Sulfide Mining Overview | Risks to Clean Water | History of Pollution | Threat to the Economy | What You Can Do

Jobs and economic development are the most common arguments in favor of allowing sulfide mining in Minnesota. While nobody denies new jobs are needed, especially on the Iron Range and across northern Minnesota, there are at least three problems with expecting an economic boom from sulfide mining:

  1. Harm to existing sustainable businesses, including tourism and recreation, which depend on clean water,
  2. Sulfide mining’s history of inflated job predictions, and
  3. Unstable communities caused by rapid fluctuations in mine employment.

Northern Minnesota, especially communities near the Boundary Waters and Lake Superior, have strong tourism and recreation industries. Canoe outfitters, resorts, cabins, restaurants, fishing guides, and many more businesses depend on the area’s reputation for beauty and solitude, along with clean water. The region is also growing as a destination for tele-commuters and retirees who live there for the outdoor opportunities and high quality-of-life.

Even if mining companies do hit their job predictions, it is usually for a short time. As global demand for metals fluctuate, and as different parts of the mine are developed, the need for workers rise and fall quickly. This means a cycle of hiring and lay-offs which can devastate communities, hurting small businesses which depend on steady populations.

The bad with the good

A 2007 study by Dr. Thomas Power, an economist at the University of Montana, found that new mines in northern Minnesota would likely have a limited impact on the local economy. This is due to the massive numbers of jobs lost since the peak of iron mining in the 1970s, and emerging and existing economic engines, like medical and tourism.

“Metal mining and processing also have negative aspects. They disturb the land in ways that often prevent real reclamation, leaving behind a degraded natural landscape. They often create water pollution problems such as acid drainage, continuing indefinitely into the future, requiring perpetual treatment and containment. Metal mining earnings and jobs tend to be very volatile, leading to community instability and long-term decline. These are real economic costs associated with metal mining.”

Additionally, sulfide mining companies often make predictions about jobs that will be created never pan out. Already, PolyMet has reduced its predicted job numbers by 20 percent from original estimates.As automation increases in the industry, corporate profits rise while job opportunities decline.

The “resource curse”

It is natural to assume that the presence of natural resources mean good things for a region’s economy. But research in the past couple decades has revealed that countries dependent on resource extraction actually suffer more than they benefit.

An article in Fortune magazine in 2003 described Venezuela’s struggles after significant oil reserves were discovered:

Far from an anomaly, Venezuela is a classic example of what economists call the “natural resource curse.” A 1995 analysis of developing countries by Jeffrey Sachs and Andrew Warner found that the more an economy relied on mineral wealth, the lower its growth rate. Venezuela isn’t poor despite its oil riches–it’s poor because of them.

How could that be? For the same reason so many entertainers go bankrupt. Showered with sudden windfalls, governments start spending like rock stars, creating programs that are hard to undo when oil prices fall. And because nobody wants to pay taxes to a government that’s swimming in petrodollars–”In Venezuela only the stupid pay taxes,” a former President once said–the state finds itself living beyond its means.

Resources