Controversial copper mine subsidy among $300M approved by Michigan lawmakers

• Lawmakers in Michigan House authorize $300 million in new taxpayer subsidies for four economic development projects
• $50M award for UP copper mine drew cheers from economic development officials but outrage from environmental groups
• Other state funding would go to Dow Chemical Company, University of Michigan and Detroit Diesel

LANSING — A Michigan House panel on Wednesday approved $50 million in state taxpayer subsidies to a proposed copper mine just outside Porcupine Mountains Wilderness State Park.

The controversial grant, which would pay for new roads, water lines, utilities and other infrastructure associated with the 505-acre mine, was among nearly $300 million in new incentives the House Appropriations Committee authorized Wednesday from the Strategic Outreach and Reserve (SOAR) fund.

Others include $120 million to modernize Dow Chemical Company facilities in the Midland area, $100 million for a proposed advanced computing facility in Ypsilanti spearheaded by University of Michigan and Los Alamos National Laboratory, and $27.7 million to upgrade a Daimler Truck subsidiary’s engine plant in Redford Township.

The Senate Appropriations Committee still needs to vote on each incentive to make them official. 

The advancing subsidies come amid legislative tension over large-scale corporate incentives funneled through the SOAR fund — the state’s business incentive program championed by Democratic Gov. Gretchen Whitmer — and whether payments to keep the program running should continue.

Related:

• Michigan approves $50M for Upper Peninsula copper mine — but with conditions
• Michigan pauses $50M investment to bring back copper mining to Upper Peninsula
• Bipartisan vibes as Michigan lawmakers seek to reform SOAR incentive fund
• Gov. Whitmer’s SOAR incentive fund, once a triumph, now faces headwinds

Rather than voting on each appropriation separately, committee members were prompted to cast a single vote to approve or reject all of the proposed grants. 

That drew rebuke from some, including Rep. Jason Morgan, D-Ann Arbor, who said while he supported portions of the package — particularly the U of M project in his district — he couldn’t vote “yes” if it meant giving taxpayer money to Copperwood.

“It was very unfortunate that we put members in a political situation where they have to vote against their conscience, or vote for their district,” he said.

The mining money drew cheers from UP economic development officials who say the project would bring badly-needed commerce to the region, and outrage from environmental groups and corporate subsidy skeptics who contend the mine threatens the region’s wilderness, water and way of life. 

Angry shouting erupted in the hearing room following the 17-10 vote to approve the funding (two members abstained from voting). 

But project supporters referenced polling showing widespread support for the mine across the UP.

“The people who support this project also love the Upper Peninsula,” said Marty Fittante, CEO of the regional economic development organization InvestUP.

Morgan and Rep. Natalie Price of Berkley were the only Democrats to vote against the incentive package. Two Republicans voted for it: Reps. Phil Green of Millington and Bill Schuette of Midland. 

Critics call project ‘dangerous’

The legislative action comes amid a near-yearlong battle over the proposed Copperwood subsidy, which first emerged in January during a meeting of the Michigan Strategic Fund board. 

The board, which oversees disbursements from the SOAR fund, initially hesitated to approve the $50 million grant for Canada-based Highland Copper Co. amid concerns about the company’s lack of investors. It later blessed the grant, under the condition that Highland Copper first must secure at least $150 million in other project backing.

Highland Copper has vowed to invest $425 million in the project, creating 380 jobs that pay $80,000 or more over an 11-year mine life. Annual state and local tax revenue from the mine could amount to $15 million.

But opponents of the mine contend the region’s wild landscapes and pristine water are more valuable than temporary mining jobs.

“That wilderness is replete with life forms that are already doing very important work in their own right,” said Nichole Keway Biber, who called the mine a “dangerous project.”

The EV transition has prompted a wave of new mining exploration in the UP, a former mining stronghold that once boasted dozens of active mines. Today there are just two metal mines still operating, leading to declining populations and high poverty rates across much of the Western UP. 

But amid a government-subsidized push to bolster the domestic supply of “critical” minerals used in EV batteries, a new wave of prospectors has fanned out across the UP looking for nickel, copper and other metals.

It’s unclear what, if any, role Copperwood would play in the EV transition. The company hopes to mine 64.6 million pounds of copper annually, but it’s not yet known where the metal would end up. 

Fittante said the new mine could return prosperity to a region that has lost schools, hospitals, downtown businesses and more amid a population exodus that is happening because the region’s “present economic structure does not work.”

In partnership with Australian mining giant Kinterra, Highland also hopes to revive the former White Pine mine that closed in 1997 on the east side of the Porkies, claiming enough metal remains underground to sustain another 22 years of mining.

Opponents contend the area surrounding the Copperwood is among the worst possible places for a mine, citing its close proximity to Lake Superior and the storied 60,000 acre Porcupine Mountains wilderness.

Copperwood plans to store mining waste in a 320-acre basin. Opponents fear a leak or rupture would imperil the lake and the Presque Isle River. They also fear noise and development associated with the mine will harm the region’s tourism economy and rural lifestyle.

Highland Copper has secured many of the state permits it needs to develop the mine, although it is seeking renewal of an expired air permit.

Other incentives for Michigan projects approved by lawmakers Wednesday include:

University of Michigan supercomputer lab

Roughly $100 million in state funding would support a planned $1.2 billion supercomputer and artificial intelligence lab in Ypsilanti, a collaboration between the University of Michigan and the Los Alamos National Laboratory. 

During a Tuesday Michigan Strategic Fund board hearing — where the economic development panel made up of Whitmer appointees first signed off on the plan — Los Alamos officials said they’ve outgrown their facilities in New Mexico and chose Michigan after a competitive nationwide search. 

“We had to have a place that had adequate physical infrastructure in terms of power and water to house modern superconducting facilities, and we also wanted a place that had great intellectual infrastructure as well,” Charlie Nakhleh of Los Alamos National Laboratory said. “Michigan just kind of came screaming up out of the search.” 

The grant is expected to create 200 permanent research jobs over the next 10 years that pay about $200,000 apiece, according to state estimates. The government funding is expected to contribute to site development, construction and other costs of setting up the planned computing facilities, which are expected to become fully operational by 2030. 

Research conducted at the lab is expected to focus on cybersecurity, advanced manufacturing, quantum sciences, computing, biomedical science and clean energy research. 

MEDC officials likened the possibilities of the project to Michigan State University’s Facility for Rare Isotope Beams, which operates as a user facility for the U.S. Department of Energy Office of Science.

Chris Kolb, vice president of government affairs for the University of Michigan, told lawmakers Wednesday that the partnership would bring hundreds of high-paying jobs to the state, create a pipeline for research talent and make Michigan a “magnet for investment” in artificial intelligence and national security.

Republicans questioned the need for such a large investment into the University of Michigan, considering the university’s multibillion-dollar endowment and high tuition costs. 

“I’m just trying to justify why the University of Michigan would need another $100 million…when they are already flushed,” Rep. Donni Steele, R-Orion Township, told fellow lawmakers.

Electric vehicle parts production

Another $27.7 million in pending critical industry program grants would help fund Detroit Diesel Corp.’s expected $285 million expansion into manufacturing components for medium and heavy-duty electric trucks in Redford Township.

In addition to the state funding, the company is up for a 15-year personal property tax exemption worth roughly $3.3 million for following through with the planned investment.

State estimates predict the project will preserve 2,000 existing jobs and create up to 436 new hourly and salaried positions, 335 of which would be production jobs with a median hourly wage of $25.86 and 101 salaried employees with an estimated annual salary of $113,000. 

Company representative Matt Pfaffenbach told the Michigan Strategic Fund board this week that despite extensive production networks in Oregon, North and South Carolina and abroad, the company wanted to continue its long history in Michigan.

“It’s ideal to continue this investment and expand our facility as well as our capabilities to leverage that for the future,” he said. 

Dow Chemical modernization

House lawmakers also approved, with little fanfare, a $120 million critical industry program grant to modernize Dow Chemical Company’s facilities in the Midland area.

The funding will help cover infrastructure improvements, building renovations, new building construction and equipment upgrades to Dow’s silicone manufacturing operations to support electric vehicle batteries and other technologies, according to state documents. 

The Michigan Strategic Fund board gave initial approval to incentives for the project in July. 

Under the plan, Dow Chemical Company is expected to chip in at least $785 million and retain at least 5,000 full time positions in Michigan.