Antofagasta sues U.S. in bid to revive Minnesota copper project

By Ernest Scheyder

(Reuters) - Antofagasta Plc's Twin Metals subsidiary sued the U.S. government on Monday in a bid to revive its proposed Minnesota copper and nickel mine, which Biden administration officials had blocked this year over concerns it could pollute a major recreational waterway.

The suit, which had been expected, said the lease cancellations in January by the U.S. Department of the Interior were "arbitrary and capricious" and that Twin Metals should have the right to prove its project can meet environmental standards.

The underground mine would, if built, be a major U.S. source of copper and nickel, two metals crucial for the green energy transition. The only existing U.S. nickel mine is set to close by 2025.

A measure passed by Congress this month would link the electric vehicle tax credit to minerals produced in the United States or in allied nations, a requirement that Twin Metals said shows its mine should be built.

Representatives for the Interior Department declined to comment on the lawsuit.

Twin Metals asked the U.S. District Court in Washington to restore the leases, which were first granted in 1966 and have been passed between successor companies. No mining has taken place at the site.

"Our leases were illegally canceled by the government, and we want to stand up for what's right and what's prescribed by law," said Dean DeBeltz, Twin Metals' director of operations and safety.

Opponents say that U.S. environmental standards are too lax and even if Twin Metals were to meet them, the proposed mine could pollute the Boundary Waters Canoe Area Wilderness, a 1 million-acre (405,000-hectare) preserve on the U.S.-Canada border.

"A water-rich environment is the wrong place to mine," said Becky Rom of the Campaign to Save the Boundary Waters, a Minnesota conservation group. "The lawsuit is almost a (last ditch) effort on their part to try to somehow shoehorn in a mine."

Both DeBeltz and Rom live near the proposed mine site, and both have used their personal proximity to argue for and against the mine, respectively.

The White House last fall proposed a 20-year ban on mining in the Boundary Waters, a separate but related step to halt the mine. That proposed ban is in the regulatory review process now. Congress is considering legislation that would permanently ban mining in the region.

Ivan Arriagada, chief executive of Chile-based Antofagasta, told Reuters earlier this month that he expects the rising demand for EV metals to work in the project's favor.

"The wave seems to be moving in the direction of realizing that these projects need to be done," he said.

(Reporting by Ernest Scheyder; additional reporting by Clara Denina; Editing by David Gregorio; Editing by Chris Reese and David Gregorio)