http://www.duluthnewstribune.com/event/article/id/157382/

Published January 13 2010

Bids for Northeastern Minnesota mining rights up sharply over ‘09

Six mining companies bid on 123 mineral rights parcels across Northeastern Minnesota on Tuesday in a silent auction held by the Department of Natural Resources to encourage prospecting.

By: John Myers, Duluth News Tribune

Six mining companies bid on 123 mineral rights parcels across Northeastern Minnesota on Tuesday in a silent auction held by the Department of Natural Resources to encourage prospecting.

The state offered 458,040 acres of state mineral interests across parts of St. Louis, Carlton, Itasca, Aitkin, Pine, Benton and Morrison counties — including large tracts just outside Duluth. No bids came for parcels in Pine, Benton or Morrison counties, DNR officials said.

Many of the parcels offered in the auction were outside areas traditionally considered mining hot spots as geologists expand their search for valuable minerals.

The 123 bids are up from 32 received last year, said Marty Vadis, director of the DNR’s Division of Lands and Minerals. Still, most of the 1,164 parcels offered were not bid on.

Interest was especially high in western Carlton and Aitkin counties, where several companies bid and near where Kennecott Mining Co. announced last year it had found significant deposits of copper, nickel and other valuable metals around Tamarac.

Mining industry leaders say the movement of the proposed PolyMet copper mine project through the state and federal environmental review process has spurred more interest in valuable non-iron metals in northern Minnesota. Skyrocketing prices paid for copper, gold, platinum and other minerals have helped fuel the push.

The bids will be screened to make sure the companies can make the payments as promised. The leases don’t become official until the state’s Executive Council — the governor, lieutenant governor, secretary of state, state auditor and attorney general — approves them in March.

Mineral exploration auctions are held about once a year by the DNR. Federal agencies do the same for exploration access under national forests.

Tuesday’s high bidders will pay an annual fee during exploration, between $1.50 and $35 per acre per year. But their bids were accepted based on which companies offered the state the highest royalty per ton should any actual mining occur.

Private land could be affected

The state owns the mineral rights under about 12 million acres of land, most of it state-owned — but not all.

Some mineral rights owned by the state are under private property, including under parcels of state school trust land sold by the state over the years but for which the state retained mineral rights.

The state didn’t offer any parcels for which it doesn’t own the mineral rights. And most of the mineral interests offered by the state Tuesday are under land owned or managed by the state, such as county tax-forfeited land or state forests.

Many Iron Range homeowners, for example, don’t own their own mineral rights.

If you don’t know whether you own the mineral rights under your property, check your property abstract. Any severance between surface and mineral rights must be recorded in the abstract, Vadis noted.

Prospecting companies that bid on those severed mineral rights must negotiate with landowners for access but could ultimately demand that surface property owners give them access to the minerals; in that case, surface property owners must be compensated.

“We try to avoid that, if at all possible,” Vadis said. “But occasionally we get interest expressed for [state-owned mineral rights] where the state doesn’t own the surface rights.”

Before Tuesday’s auction, the DNR had 105,019 acres of state mineral interests leased to private companies.