A company that wants to build an underground copper-nickel mine near the Boundary Waters Canoe Area Wilderness in northeastern Minnesota criticized the U.S. Forest Service on Tuesday for saying it may deny renewal of the mineral leases needed for the $2.8 billion project near Ely.

MINNEAPOLIS (AP) - A company that wants to build an underground copper-nickel mine near the Boundary Waters Canoe Area Wilderness in northeastern Minnesota criticized the U.S. Forest Service on Tuesday for saying it may deny renewal of the mineral leases needed for the $2.8 billion project near Ely.

Twin Metals Minnesota said the Forest Service's statement "suggests a disturbing predisposition or bias" against renewing the leases even before the federal agency opens a 30-day public comment period next Monday. The company said it's “evaluating all options” to protect its property and due process rights, and says it's entitled to renew the two leases, which were first issued in 1966 and last renewed in 2004.

The Forest Service announcement was the second major blow to Twin Metals in recent months. In March, Gov. Mark Dayton said the state wouldn't authorize access to its lands for the project. Company representatives had said little publicly since then before issuing Tuesday's statement, but have been working behind the scenes and lobbied the state's congressional delegation last month.

The federal agency said it had not made a final decision on the renewals. But it said it was “deeply concerned” because the leased areas are within a watershed that flows into the Boundary Waters, and by the “inherent risks” of mining copper, nickel and precious metals there. The metals are tied up in sulfide-bearing minerals, which can leach sulfuric acid and heavy metals when exposed to air and water.

“Those risks exist during all phases of mine development, implementation and long-term closure and remediation,” the Forest Service said, citing the potential harm to water quality and contamination from acid mine drainage.

Twin Metals, which is owned by Chilean mining giant Antofagasta PLC, countered Tuesday that it's still developing its mining plan, so any opposition to renewing the leases is premature. The company promised its eventual mining plan will get a “rigorous environmental review” under state and federal law.

Environmental groups that consider copper-nickel mining to be a grave threat to the pristine Boundary Waters applauded the Forest Service announcement, just as they did with Dayton's decision.

Twin Metals and its supporters say the vast but untapped copper, nickel and precious metals deposits under northeastern Minnesota can be mined without harming the environment, while creating about 850 full-time jobs plus hundreds more construction and indirect jobs in an economically struggling corner of the state.

A different copper-nickel project, the proposed PolyMet open-pit mine near Babbitt, would be smaller but is much further advanced. PolyMet cleared the environmental review process in March and is preparing to apply for permits. The company, whose largest shareholder is Swiss-based global commodities giant Glencore PLC, says it would create about 360 permanent jobs.

The Forest Service plans to hold a public listening session on the leases in Duluth on July 13.

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