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STEPHANIE HEMPHILL: Steve Koscheck looks at a drill site near his river point resort on the South Kawishiwi River.

STEVE KOSCHECK: This goes 24/7.

STEPHANIE HEMPHILL: A contractor for Ely-based Duluth Metals is drilling a 6-inch hole about 3,000 feet into the Earth. A trickle of water runs to a pit a few feet away. The pit holds water and a scum of gray muck, finely ground rock from deep in the Earth.

STEVE KOSCHECK: If you were to analyze all that, there's probably copper nickel in that. But look what it's going into. It's going into the swamp. And that's all this is, is a network of spruce swamps, all interconnected. This all goes into Birch Lake, all this water.

STEPHANIE HEMPHILL: When the drilling is done, workers will bury the muck on site. That's what the state requires. The trouble is, around here, there are so many wetlands, it would seem impossible to keep the muck out of the water system. Duluth Metals says there won't be enough mineral waste here to be any cause for concern.

This drilling is a precursor to what could be a deep shaft mine. More than half a mile below the surface of the Earth, a mine would produce tons and tons of ground-up waste rock. And this is sulfide rock. When it's brought to the surface, a chemical reaction occurs that produces sulfuric acid.

If the rock is not carefully isolated from air and water, it can acidify nearby streams and wetlands, possibly enough to poison the life in the water. In many mines, discharges also contain traces of heavy metals such as lead, arsenic, and manganese. The problem is called acid mine drainage, and it's happened wherever copper mines have been drilled.

The advocacy group Friends of the Boundary Waters Wilderness has organized a canoe trip for reporters to show how close the mining operations are to the wilderness. We put in at entry point 32 on the South Kawishiwi River. We passed turtles sunning themselves on rocks and a pair of mergansers keeping a close eye on their young brood.

JASON ZABORSKY: This is where all the mining exploration is going on, just to the east of the river.

STEPHANIE HEMPHILL: Our guide, Jason Zaborsky, points out that the drilling is going on about three miles south of the edge of the Boundary Waters. But here, the river turns north and then flows into the heart of the wilderness.

JASON ZABORSKY: Into Fall Lake and then into Newton and Basswood Lake. Across the upper and lower Basswood Falls into Crooked Lake, into Iron Lake, across Curtain Falls, and into Lac La Croix. So all really well-known Boundary Waters lakes.

STEPHANIE HEMPHILL: The Friends of the Boundary Waters has backed legislation at the state level to beef up requirements on financial assurance, similar to the escrow fund that BP has agreed to set aside in the Gulf of Mexico. Last year, the Minnesota measure died in committee. Some of the neighbors here around the edge of the Boundary Waters want to go further. They want the state to prohibit sulfide mining unless a company can point to one place in the world where a mine has operated without polluting water. Since a similar law passed in Wisconsin, no mines have been built in the state.

The exploration is happening on the southwest edge of the Boundary Waters. 15 miles to the west is the town of Ely. There are varying opinions in Ely on the exploration and possible mine development. The area has long been dependent on jobs in mining, logging, and tourism.

Some people are excited about a new source of good-paying jobs. They still remember when an underground mine down the road in Sudan used to ship tons of rich iron ore. It closed in 1962 and now is a state park.

Duluth Metals has an office in Ely in a house on a quiet street. The walls are covered with colorful geologic maps. And in an attached garage, there are lots of core samples from those drill sites down the road. David Oliver is project manager. He's very excited about the minerals that lie more than half a mile beneath the surface on 1,500 acres near the South Kawishiwi River.

DAVID OLIVER: We have now drilled 170-some drill holes that verify a resource in excess of 900 million tons that was never on the books before.

STEPHANIE HEMPHILL: He says a mine tapping into that resource could employ 400 people for decades to come. Copper and nickel and the associated precious metals are used in everything from electric wires and computers to catalytic converters and rechargeable batteries. So demand is going up all the time. The combination of higher prices and improved technologies to recover the minerals is generating a new excitement about a deposit that geologists have known about for a long time.

David Oliver discounts worries about polluted groundwater. He says the core samples are solid, nearly free of cracks. So it wouldn't be easy for any polluted groundwater to travel through this ancient rock. And he says the waste rock will contain so little sulfur that the kind of pollution that has occurred at other mines is unlikely.

DAVID OLIVER: This is deemed below any threshold that would generate acid drainage. It just doesn't have enough sulfur to do it.

STEPHANIE HEMPHILL: Until recently, a different company, Polymet, was the front runner in the race for copper nickel in Minnesota. Polymet's property is just south of the land Duluth Metals is exploring. The Minnesota DNR and the US Army Corps of Engineers did a draft environmental impact statement for the Polymet project, but the Federal Environmental Protection Agency did a scathing review of the work, saying it was inadequate. It will take more than a year to redo it.

Meanwhile, Duluth Metals's new partnership with the Chilean company Antofagasta provides enough money to move that project ahead quickly. David Oliver says Duluth Metals should be ready for environmental review in about three years. Reporting from Ely, Stephanie Hemphill, Minnesota Public Radio news.