Serious obstacles for Nordic Mining’s mine at Førdefjord
The mining controversy at Førdefjord on the Norwegian west coast has attracted international attention. Norway is one of the few remaining countries in the world that still permits the dumping of mining waste in its fjords. Mining company Nordic Mining is desperately trying to push the project forward, but the chances of success are shrinking.
While the company itself actively celebrates progress at the preparatory construction site, there is more to the story: in reality, Nordic Mining is facing serious financial and legal problems, in addition to strong social opposition. The project can be halted, or entirely cancelled, on several grounds.
Here is an status on the Førdefjord mine from a critical point of view:
Two unsettled lawsuits
Rights to the minerals are not settled. Arctic Mineral Resources (AMR) is suing Nordic Mining’s operating company Nordic Rutile (NRU) over the rights to mine garnet. According to the Norwegian Mineral Act, garnet belongs to landowners whereas rutile belongs to the State. In Oslo in October 2021, the court confirmed that garnet is a landowner’s mineral, but can be expropriated when part of a mineral deposit also contains profitable amounts of rutile. If expropriation is granted, NRU/Nordic Mining will have to reimburse the value of the garnet to the landowners, in accordance with the Norwegian Constitution Article 105. The value of the garnet is estimated to be four times the value of rutile. Forced compensation of this magnitude can undermine the profitability of Nordic Mining’s project. The court ruling was a partial victory for AMR and the case has been appealed to the Supreme Court. In January 2023, two of the key landowner federations in Norway, NORSKOG and Norges Skogeierforbund, declared a third party intervention in support of AMR.
A competing company funded by the local landowners propose an alternative garnet mining project; a closed mine, that does not involve large amounts of surplus mining waste and its dumping in the fjord.
The Norwegian state is being sued for having granted invalid permits. Norway’s two largest environmental organisations have brought legal charges against the Norwegian state for breaching Norwegian and EU law by granting a license for Nordic Mining’s project. The law firm CMS Kluge is conducting the case on behalf of the organisations. The main points of appeal are as follows:
- The permits are based on an incorrect understanding of EEA legal environmental requirements
- There are better alternatives, which the administration was obliged to investigate and assess
- The environmental consequences will be more serious than foreseen in the permits
EU’s Water Framework Directive
Following complaints directed at Nordic Mining, the EFTA Surveillance Authority (ESA) has opened proceedings to review the plans for dumping in the fjord. ESA’s control body EFTA investigates whether submarine tailings disposal breaches the Water Framework Directive and related EEA law. In its preliminary conclusion, ESA has determined that the planned mine dumping in Førdefjord violates the EU’s mineral waste directive.
EU’s Mineral Waste Directive
In a letter to the Ministry for Climate and Environment, ESA wrote that the submarine tailings disposal contravenes the EU’s Mineral Waste Directive: “The Norwegian Government’s administrative practices for managing waste from extractive industries do not give comfort that the requirements and objectives of the Mining Waste Directive are met (Articles 5(2), 7(2)(c) and (4), 8(1), 11(3), 12(6), 14(1) and (3), and 17(1)).”
Lack of funding
The project is still not fully funded; 60 million USD is missing and Nordic Mining is struggling to secure capital. The lion’s share of the current financing package is a loan with an exceptionally high interest rate (12.5%) and a royalty agreement that seizes 11% of future gross income. The investment and sales agreement with Iwatani Corporation is conditional on the project being fully financed by March 31st, 2023 and further partnership is uncertain. In the absence of other means to secure finance, the company has carried out a number of issues (with more to come, most recently announced on February 2nd 2023).
The company has lost several partners and investors along the way; Barton Group and Nordea, previously among the company’s main shareholders, respectively withdrew from the purchase agreement for garnet and divested due to environmental concerns. Storebrand also sent a strong signal by actively excluding companies involved in submarine tailings disposal and mineral extraction on the seabed. In 2021, Aurubis withdrew from a similar agreement with mining company Nussir due to the planned mining waste disposal in Repparfjord not meeting sustainability criteria (the project is suspended). The financial world operates with increasingly strict requirements for responsible investment, environmental concerns and sustainability. The Engebø project struggles to defend its methods involving mountaintop removal, open pit mining, dumping waste in the fjord and its striking lack of social acceptance. It is highly uncertain whether Nordic Mining will be able to secure the required financing and retain current partners.
No waste management plan
In line with EU/EEA regulations, the waste management plan should have been an implemented part of the application for a discharge permit from the very beginning, prior to the awarding of a discharge permit by the Ministry of Climate and the Environment and an operating permit from the Ministry of Trade and Industry. The Norwegian Environment Agency did not enforce the statutory requirement for a waste management plan at the time of granting the discharge permit in 2015, but ordered the company to deliver this before the start of the project. Construction work is now underway and the company, ten years after the legal requirement applied in Norway, still has no approved waste management plan.
Additional requirements for upheld operating licence. Complaints on the granted operating license led to the Ministry of Industry and Fisheries strengthening the environmental requirements in 2022 and setting new conditions in the operating license. Before the company can start extraction, the operating plan must be approved by the Directorate for Mineral Management and this will only happen if the new environmental requirements are met.
Ocean dumping have no place in the green transition
Certain minerals will be needed in the future, but the method of procurement must be sustainable: reuse, recycling and substitution of minerals and reduced consumption are fundamental for a real green transition. There will be a need for additional extraction of certain minerals, but this must take place without unnecessarily large environmental damage and social conflict. Not all minerals are socially critical. Titanium dioxide, produced from rutile, is mainly used as white pigment in paint, varnish, plastic, paper and glass. It was previously added to foods, but was banned in the EU and Norway in 2022 as it can be genotoxic and carcinogenic.
There are alternative forms of operation that are more environmentally friendly. AMR has put forward a proposal to extract garnet from the Engebø mountain with underground mining, without ocean dumping and mountaintop removal. The EU’s water directive, which Norway is committed to in the EEA agreement, does not allow submarine tailings disposal if there is an alternative.
Violation of environmental requirements
In preparatory construction work, Nordic Mining has demonstrated an inability to comply with environmental requirements. Countless warnings and police reports have been issued for, among other things, inappropriate handling of asbestos, and several uncontrolled leaks and discharges of sediment into the fjord. The company itself has downplayed the incidents and is adamant that they follow the regulations, or they dismiss the incidents as insignificant «accidents.” This gives a clear indication of how the company deals (or does not deal) with current regulations and the environmental damage they cause.
The majority of the population as well as the environmental movement and professionals are in strong opposition. In a survey from 2021, 80% of Norwegians stated that they are against sea waste dumping (only 9% are in favor). The alleged positive contributions of the mine to local development are overestimated, if not outright false. The region has record-breaking low unemployment rates and stable settlement. The mine may create some new, short-lived jobs, but at the same time result in the closure of the local school, people moving away, and long-lasting negative consequences for existing businesses. 60 local businesses have signed a petition against the mining project at Førdefjorden. The Norwegian Institute of Marine Research, the state’s own advisers, have pointed to professional shortcomings in the impact assessment and declared that submarine tailings disposal does not represent sustainable use of the fjord. Massive protests have periodically impeded work at the site, and they have attracted broad support across Norway and gained international attention.
Weak odds for Nordic Mining
The future of the Engebø mine is highly uncertain. Nordic Mining is in a difficult position, being responsible for a mining controversy that is being pushed forward against all odds, confronting Norwegian and European law, activists, scientists and locals, and with a lack of funding. There are serious obstacles to the further development of the mine and the project runs severe risks of being dropped on several grounds.