The western Upper Peninsula needs an economic boost to overcome high unemployment, pervasive poverty, and a declining population.

That boost might come from the proposed Copperwood mine just south of the Porcupine Mountains Wilderness State Park.

The mine developer, Highland Copper Co., Inc., hopes to secure $425 million in project financing next year. Mining operations would start in 2029 at the earliest, according to the company. The mine would be located in Wakefield Township, north of the cities of Ironwood, Bessemer and Wakefield, in Gogebic County.

Highland says the project would bring 380 good-paying mining jobs to the region, comparable to the Eagle mine and mill in Marquette County. The Copperwood mine would also generate significant tax revenue for Gogebic County and Wakefield Township.

But what happens if the mine goes into operation and then shuts down 11 years later, as planned? How does the western Upper Peninsula achieve long-term, durable prosperity after the mining boom goes bust?

The Copperwood project would pay about $5.7 million per year in severance taxes, based on the taxable value of minerals produced, according to Highland Copper Co., Inc.

Gogebic County would net about $940,000 per year and Wakefield Township would net about $765,000 per year under the state’s distribution formula (author’s estimates).

That tax infusion could support the development of a stable, non-extractive economy in the western Upper Peninsula. But that won't be easy, or quick.

Local units of government are under fiscal stress due to a statewide cap on property taxes, declining state revenue sharing, inflation, increased demand for services, and public resistance to tax hikes. In the crunch, it’s tempting to use severance tax revenue for routine operational expenses.

Communities should take the long view instead, according to Prof. Gary A. Campbell, an economist at Michigan Technological University.

“The movement from the short-term benefits of mining to long-term benefits for the local community needs to follow the Hartwick Rule,” Prof. Campbell said in a telephone interview.  “Hartwick said that the economic rent [windfall profits] from mining needs to be invested in such a way as to create local income streams to replace mining income in the future.”

State and local officials, planners and economic development organizations (EDOs) have lined up to support that effort.

Those EDOs, including InvestUP, can help communities with systematic analysis and problem-solving, according to Dr. Iryna Lendel of the Upjohn Institute for Employment Research. They can get stakeholders “around the conference table” to plan initiatives and speak with a common voice in the competition for state-level attention and resources.

“Isolated, community-by-community approaches can limit the region’s potential," Lendel said. "InvestUP exists to energize regional economic development across the Upper Peninsula by bringing communities, institutions, and stakeholders together around a shared regional vision and common economic priorities."

New business enterprises come to a community if they can achieve a competitive advantage there, according to Lendel.

“Any business survives on figuring out a business model around competitive advantage,” Lendel said. “They need to have something that people want and that other businesses either don't have or have it in a more expensive way.”

Access to raw materials, manageable transportation costs, and clustering of related industries make for a competitive advantage, according to German economist Alfred Weber, a German economist who published his theory of industrial location in 1909.

But in a modern economy, a climate of innovation, driven by tech-savvy entrepreneurs and a research-oriented university, are also important factors, Lendel argues.

“The other part of competitive advantage could be and should be, technology and people,” Lendel said. “There are many very successful examples of developing businesses here that based on high technology” derived from research at Michigan Technological University in Houghton and Northern Michigan University in Marquette.

It's 93 driving miles from the population centers of Gogebic County to Michigan Tech, and even farther to NMU. That's an impediment to tech innovation, according to conventional wisdom, because it’s hard to spark creativity when university experts and local entrepreneurs are too far apart to meet in person.

Dr. Lendel disagrees.

"The UP has a different meaning of physical distance," she said. "Companies in the UP would rather look for the research in the UP through networking. Almost everybody knows everybody in their field and it would be easier to find connections and resources through the already developed UP innovation ecosystem (for example, through the innovation districts)," Lendel said in an email.

Gogebic County falls short on some predictors of economic success, according to the Upjohn Institute.

The housing stock is inadequate. About 40 percent of the units were built before World War II. This is much higher than the state average.

There’s no local, full-service hospital. It's 40 miles or more from Gogebic County population centers to the closest maternity ward and delivery room.

The UP is a severe child care desert, and that constrains parents’ ability to work.

Those deficits won’t be easy to overcome.

To compound the problem, Gogebic County is just now getting a strategic plan on the drawing board. It has a $50,000 state grant to set up an Economic Development Organization and work on the plan, but it’s one of the last counties in the Upper Peninsula to start the process.

“A way has to be found that uses some of the economic gain from mining to create an alternative economic activity that continues on after the mining is done,” Prof. Gary Campbell said in an email. “This is not an easy task and many areas have failed to do so leading to ‘ghost towns’ and areas of poverty afterwards.  It requires a working together of the mining company with the local community/government to achieve better results.”

Research facilitated by Google Gemini Pro AI.

Special thanks to Prof. Gary Campbell and Dr. Iryna Lendel for contributing to this report.