Chris Cline became a billionaire through his investments in Illinois coal mines. His privately held Foresight Energy is rolling in profits while other coal companies are failing.
Now Cline hopes to repeat his fortune mining a different mineral, a form of iron ore called taconite, from a giant open pit mine in Wisconsin.
Coal has many detractors, so Cline is accustomed to being in the cross hairs of environmentalist groups. But because Cline's coal mines are underground operations their impact on the immediate environment is obscured.
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That wouldn't be the case with his proposed taconite mine. Proposed by Gogebic Taconite, which Cline bought a few years ago, the mine would be built in the far northern reaches of Wisconsin near the town of Mellen, in an area crossed by rivers and streams that flow north into Lake Superior.
Wisconing Gov. Scott Walker is in favor of the mine, which is expected to generate 8 million tons a year of taconite and support 700 direct jobs. Naturally, the Sierra Club and Native American tribes are against it.
I read with great interest over the weekend this article about the controversy in USA Today. The story barely mentions Cline, focusing instead on the concerns of the Bad River Band of the Lake Superior Tribe of Chippewa Indians. The Chippewa are naturally concerned about pollution and environmental destruction that the mine could bring to the Bad River watershed, which is six miles from their reservation, which borders Lake Superior.
The tribe is worried that heavy metals will pollute streams, hurting walleye and sturgeon, potentially impacting drinking water, and also causing light pollution that would mar the darkness of the night sky.
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The mining company of course says that it can develop the mine responsibly in keeping with federal and state laws. When the ore is exhausted in 35 years, the land would be reclaimed and turned into a park, with the vast pit mine turned into a lake.
Gogebic was instrumental in rallying support for a law, signed by Gov. Walker in March, that streamlines the permitting process for the mine. Before the law, anti-mine groups could have dragged out permitting and appeals indefinitely. Now, the state is compelled to respond quickly to Gogebic's environmental impact study and public hearings on the project will be limited. Even though labor unions supported the new law, no Democrats voted for it.
Not mentioned in the USA Today story: iron ore mining is nothing new in the region around Lake Superior. According to the U.S. Geological Survey 97% of America's domestic iron ore supply came from mines in Michigan and Minnesota. Nealy all that production came from eight mines owned by three companies. The U.S. produces 53 million tons of iron ore per year. Compare that with China at 1.3 billion tons and Australia at 525 million tons.
This region of Wisconsin has even been mined in the past, but (according to this report) that ended 40 years ago. Cline is believed to be leasing the land from RGGS Minerals, owned by Houston oilman Russell Gordy, who owns large expanses of ranch land across the west.
Chris Cline, 55, was worth $1.2 billion at Forbes last count. He owns 60% of Foresight Energy, which has filed to go public and boasted $130 million in net income in 2012 on sales of 15 million tons of coal.
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In the 1990s, Cline — a former miner and son of a coal miner, from Beckley, West Virginia — had the foresight to buy up coal reserves in the Illinois Basin. No one had wanted the coal after the 1992 amendments to the Clean Air Act because it was high in sulfur content, and create lots of sulfur dioxide when burned for electricity. Cline saw that America’s coal-fired power plants were being upgraded with “scrubbers” and other pollution control technology to remove the sulfur from plant emissions. In time those plant owners would realize that they could buy high-sulfur coal at a big discount, and still keep emissions low. So Cline started buying Illinois Basin coal, acquiring mines from the likes of U.S. Steel and Exxon.
Cline’s once-ignored mines still have big, easily dug seams. As a result his costs, at roughly $22 per ton, are significantly lower than the $50 per ton incurred at the average mine east of the Mississippi. Being the cheapest ton on the market means that even with the Obama administration and Environmental Protection Agency siding with the Sierra Club in a war on coal, Cline’s mines will probably end up being the last ones standing.
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