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Michigan's $50M support of copper mine project comes with caveat

Highland Copper on the spot to raise financing for Upper Peninsula mine
Site preparation work at Highland Copper's Copperwood Project (Company photo)

The State of Michigan is prepared to give a Vancouver copper company a funding kickstart to support a proposed mine in western Upper Peninsula.

The board of the Michigan Strategic Fund has approved a $50-million “performance-based grant” to Highland Copper Company. Final approval still needs to come from the state legislature.

The grant, which comes from a Strategic Site Readiness Program, is specifically intended for mine-related infrastructure development, meaning installing roads, communications and extending power to the site.

The Copperwood project situated at the base of the Keweenaw Peninsula near the southern shore of Lake Superior, an economically stagnate area with a rich copper mining history.

The grant comes with conditions. There were concerns from the state about Highland Copper’s ability to raise project financing. To pocket the funds, the company must secure US$150 million by the end of 2025, according to a published report.

The company needs to secure US$425 million to support a construction decision.

The mine site is fully permitted by the state. It contains 3.7 billion pounds of copper. The estimated underground mine life is 11 years. The company’s latest posted investor presentation did not include a timetable and a date to start construction or commercial production.

Approximately 380 direct mining jobs will be created, Highland said in the release, as well as substantial spinoff jobs and economic benefits from ongoing operational spending at the mine.

Copperwood is regarded by the state as a key source of  U.S. domestic copper supply to support the electric vehicle movement, the clean energy transition and a catalyst for economic growth in the region.

The project is being looked upon by Upper Peninsula leaders as a revival of mining in an area of the state that has endured industry closures over the decades. It’s hoped to provide an economic uplift that will lead more investment in the area that will spur the regional economy for decades.

But there are also concerns from an environmental non-profit group about contamination from the project’s tailings facility contaminating the ground and area surface water.

In a March 26 news release, Highland Copper CEO Barry O’Shea called the grant a “wonderful endorsement” from the state that gives Copperwood a significant financial lift.

“The aligned attention to detail and carefulness from the State of Michigan and its departments will help drive a successful and safe project for Michigan and the Upper Peninsula.”