Sidebar: Mining

Minnesota Minerals: Not Just for Minnesotans

In the 1890s, Louis W. Hill, the son of Great Northern Railroad Company founder James J. Hill, began buying mineral rights on the Mesabi Range. For numerous legal and regulatory reasons, the mineral rights owned by the Hills and related companies were put into trust in 1906. Today, Great Northern Iron Ore Properties is a publicly traded trust that owns more than 67,000 acres of property in northern Minnesota, according to the trust’s website.

The trust is scheduled to dissolve in April 2015, 20 years after the death of the last survivor named in the original document. After final distributions to certificate holders, the mineral rights and active leases, will be transferred to Glacier Park Company, a wholly owned subsidiary of ConocoPhillips Company.

At the turn of the 20th century, several Mesabi Range mines merged. “The consolidation of mines,” according to, “led to the formation of U.S. Steel in 1901.” A century later, U.S. Steel sold 760,000 acres of mineral rights in more than a dozen states to RGGS Land & Minerals Ltd. LP, according to media reports. Minnesota-specific information about the 2004 sales isn’t available, but the privately held Texas-based company is considered to be one of the largest owners of mineral rights in Minnesota.

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Juniors and Majors

Mining companies fall into two categories. Juniors are exploration companies that raise millions of dollars in venture capital to prospect for new mineral deposits. Because Vancouver and Toronto have emerged as venture capital centers for the mining industry, juniors are often headquartered in Canada.

Majors are the mine owners and operators. When juniors have enough evidence to indicate substantial mineral reserves, the majors step in with the money and expertise to turn a find into a mine. For example:

  • NorthMet is a proposed open pit copper-nickel mine. PolyMet Mining Corporation, a mine development company based in Canada, is the junior. Poly Met Mining Inc. is the Minnesota subsidiary. GlencoreXstrata, headquartered in Switzerland, owns about a third of PolyMet stock and would be the major at a future NorthMet mine.
  • Twin Metals Minnesota LLC is a Minnesota-based joint venture created to develop an underground copper-nickel mine.  The junior is Duluth Metals, a Canadian company that owns 60% of Twin Metals as well as other mineral rights in Minnesota. Antofagasta PLC, a Chilean copper giant, owns 40% of Twin Metals and would be the major of the future mine.

These relationships aren’t secretive. The information is readily available on company websites. But for mining opponents, the complex relationships raise red flags about maintaining financial assurances and responsibility for environmental damages.

“State level regulation of multinational corporations is extremely challenging,” said Kathryn Hoffman, an attorney with the Minnesota Center for Environmental Advocacy. “Even the juniors are only kind of local.”

DNR officials indicate that in most instances the parent company, the major, will be responsible for the financial assurance. Regardless of who holds the responsibility, the law dictates that financial assurances meet several criteria, among them being “fully valid, binding, and enforceable under state and federal law,” and “not dischargeable through bankruptcy,” according to Minnesota Administrative Rules, Chapter 6132, Part 1200.

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An Overview of Minnesota’s Mineral Lease Sales

The price of metallic mineral leases in Minnesota seems pretty reasonable. Annual rates on 50-year leases begin at just $1.50 per acre, increasing to $30 an acre after 12 years. But leases are awarded to the highest bidder, based on royalties offered above established base rates. That’s where the big money comes in—if it comes in. More than 99% of the time, a leaseholder lets the lease lapse without drilling a single hole, according to DNR statistics.[i]

The Division of Lands and Minerals in the Department of Natural Resources manages the lease sales.  Not everyone can bid. Participants must be licensed to do business in Minnesota, qualified to conduct exploratory borings, and be both technically and financially able to fulfill the terms of the lease. So the bidding pool is small. In mid-2013, just 11 companies held nonferrous leases to state mineral rights.[ii]

The process begins with letters to potential bidders, who, along with state geologists, offer data and recommendations on areas of interest. The DNR evaluates these areas, taking into account other land uses and special considerations, then creates a map indicating the parcels (approximately 40 acres per parcel) being offered for lease.

Next, the DNR issues a public notice of the intent to hold a sale, followed by a seven-week public comment period. After public comments are compiled, the DNR opens the sale, giving companies 30 days to submit bids.

Four months have passed since that first letter to potential bidders before DNR officials open the bids and post the results. But the sales aren’t final until the State Executive Committee—the governor, lieutenant governor, attorney general, secretary of state, and state auditor—approves them.

In most cases, the state owns both the surface and mineral estates. When a lease runs beneath a privately owned surface estate, however, the owner is notified after the bids are opened but before final approval by the Executive Committee.

Complaints by surface owners in 2011 and 2012 prompted the DNR to revise lease sales. The new process, which will stretch roughly nine months, provides more detailed information at the outset, includes interactive maps on the DNR website, and offer a longer public comment period.

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[i] Minnesota Department of Natural Resources, Division of Lands and Minerals. (2013.) Statistics accessed October 2013 at

[ii] Ibid. Statistics accessed October 2013 at