Enbridge lights it up (globalnews.ca).
Steve Timmer
by Steve Timmer
Aug 2, 2019, 9:30 PM

Minnesota’s investment follies

Word comes via the Star Tribune that Minnesota’s investment board has invested in Glencore, Antofagasta, and Enbridge. Swell. In addition to the teensy conflict of interest it presents (all are supplicants to Minnesota agencies), this makes some members of the environmental community, well, gag, on a general level. Some people are asking for divestiture. As the article notes, Minnesota is capable of gagging, as in the case of Iran and Sudan, but the reflex is muted. Perhaps the state needs a moral swallowing study.

Our new State Auditor, who seems to have gone Capitol-complex native quickly, says:

[Julie] Blaha said she is open to a divestment conversation if there is a way to backfill the dropped stocks and bonds. However, she said the board needs a clear understanding about potentially reduced returns.

“Our job is to keep our promise” to retirees, Blaha said. “To give them what they earned.”

If we don’t invest in the fossil fuel industry, which is in the sunset of its life, or the cyclical mining industry, why, it will be like throwing our money into a hole! Julie Blaha sits on the state’s Investment Board. And the new AG, Keith Ellison, who does, too, says:

Their dual responsibilities [investment board and regulators] create an “optics issue,” Ellison said, but noted that professional portfolio managers do 99% of the investment work.

This is politician speak for, “Gee, it looks bad, doesn’t it?”

This is no such thing as a moral dodge, Keith, my friend. Just as Honeywell couldn’t say, at least with a morally-straight face, “We just make the bombs; we don’t drop them,” you can’t pass off investment decisions to the staff. We elect you, not them. They take instruction from you. Please correct me if I am wrong.

“Dual responsibilities” screams conflict of interest.

It is also a worthwhile exercise to examine the judgment that went into the investments that the state thinks are A-OK.

Enbridge – Enbridge is in the news because one of its pipelines just blew up in Louisiana. The good news, I suppose, is that it was a natural gas pipeline, so there wasn’t a bunch of icky stuff to penetrate the soil and water. I am sure that provides solace to the dead and injured.

Enbridge has the icky stuff pipeline “accidents” too, of course. Memorably, Enbridge also featured prominently in the worst inland pipeline accident in US history, in Michigan. This pipeline carried Canadian tar sand oil which is almost impossible to clean up, “tar” being the operative word here. It’s hard to make tar flow through a pipe (try it at home at your own risk); it must be diluted with benzene and other carcinogens to make it go. When a pipeline ruptures, all this stuff winds up in the surface and ground water. In the case of Michigan, that means into your Bell’s Two Hearted IPA, too.

Guess what the proposed Enbridge pipeline through Minnesota would carry? If you said Canadian tar sand oil, go get yourself a cookie.

What kind of a position does the state have in coal? We’d probably think that was stupid, but only marginally more so than other fossil fuels.

Buggy whip manufacturers were undoubtedly blue chip in 1900.

Glencore and Antofagasta. In addition to being, well, evil, the mining business is notoriously cyclical. It surprises me, really, that the state is invested in companies that flirt with junk status from time to time. It wasn’t so long ago that Glencore’s status as PolyMet’s sugar daddy was in peril. And times haven’t changed.

The people who have been skinned by miners, including PolyMet, are legion.

Please ask Karin Housley how she did on her investment in PolyMet, now that she has been diluted into oblivion by Glencore. You should have come to me in, oh, about 2012, Karin, and I would have explained the facts of life to you.

It is sad to say, but the state seems to be an especial sucker for mining. We put a half a million dollars into Twin Metals, between the IRRRB and DEED, then a joint venture with Antofagasta, and then Angofagasta said it really was no longer interested in Twin Metals and wouldn’t put any more money into it. Twin Metals tanked instantly, of course. You will never guess who bought the carcass.

If you guessed Antofagasta, go get yourself another cookie.

And who could forget about the time that the governor and others were reduced to having a video conference with a debtor in Bombay to beg for repayment of some $70 million in state funds paid to Essar Steel? Good times.

[N.B. I don’t think we ever got the money back. If we had, you’d have read about it.]

I would love to sell these people a used car. Seriously.

And along the way, Minnesota Power and Light wants to lighten the burden on the poor mining companies and raise rates to residential customers.

This would all be funny if it weren’t so tragic.

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