Swiss commodities giant Glencore could take a majority stake in PolyMet Mining — the company trying to open the contentious copper-nickel mine near Hoyt Lakes — fueling fears for some over the future of an already controversial project.

Through an ongoing rights offering, PolyMet is looking to clear more than $240 million in debt it owes to Glencore, the world’s largest commodity trader. The rights offering, announced by the company when it earned its final permit, allows shareholders to purchase additional shares at a discounted rate, the proceeds of which are then used to pay off the debt.

The deal is fully backstopped by Glencore, meaning if the other shareholders fall short in raising the $265 million needed in combined debt and closing costs, Glencore has promised to fulfill the remainder.

That could result in Glencore’s ownership of PolyMet shares to grow from its current 28% to more than 50%, giving the company known for its shoddy labor and environmental record even more control in the project its long been involved in.

By becoming a majority shareholder Glencore would have substantial say in the direction of PolyMet, including the ability to replace corporate officers and hold more positions on the board of directors.

However, if every shareholder were to exercise their rights in the offering, the breakdown of current PolyMet shares would stay the same.

The rights offering began June 5 and shareholders can exercise the rights until market close on June 26. New shares will then be issued June 28.

Clearing that debt would increase PolyMet’s debt capacity, making it easier to raise the nearly $1 billion still needed to finance the project, PolyMet CEO Jon Cherry said.

“It gives us a clean balance sheet as we then work into the overall project financing,” Cherry said Monday.

Asked if Glencore intends on taking a majority stake in PolyMet through the rights offering, Glencore spokesperson Charles Watenphul said, “I am not going to comment specifically on the rights issue. We obviously support the long term potential of the PolyMet project.”

As for the labor and environmental concerns surrounding Glencore, Watenphul said the company operates in a transparent and positive manner.

Past abuses, current investigations cause worry

Opponents of PolyMet, who argue the project could send tainted runoff into the St. Louis River watershed and Lake Superior, say the prospect of Glencore taking a larger stake in the company would only increase its environmental risk.

Paula Maccabee, counsel and advocacy director of WaterLegacy, which is opposed to PolyMet, said the United Steelworkers’ ranking of Glencore as the second-worst company in 2015 and its environmental record, should give people pause.

“They are abusive to labor and then from an environmental perspective, they tend to leave environmental messes and walk away from them,” said Maccabee, who’s arguing in the Minnesota Court of Appeals that Glencore should be listed as a co-permittee on PolyMet’s recently approved permit to mine because PolyMet has relied so heavily on it.

The U.S. Commodity Futures Trading Commission is investigating Glencore for alleged corrupt practices and the Justice Department has subpoenaed Glencore for alleged money laundering and possible corruption.

Addressing concerns people have surrounding Glencore’s involvement, Cherry said PolyMet would adhere to high standards because, in part, it would ensure a return on investment.

“We have made commitments to build this project and operate it in a certain way, and we will continue to do that as long as we are here,” Cherry said.

Glencore’s long interest, investment in PolyMet

PolyMet, a Canadian mining company, first officially proposed the project in 2004, but it has been under consideration since 1999. For the last two decades, PolyMet — which has no other operations and no income until it can start mining and selling ore — has relied on loans and stock to fund the environmental review, permitting process, land exchange, engineering and design work and day-to-day company operations.

For the last 11 years, PolyMet has borrowed almost exclusively from Glencore, beginning in 2008 with a $25 million loan.

PolyMet continued to borrow and now owes $165 million in principle and almost $78 million in accrued interest to Glencore. The maturity dates on those loans were repeatedly extended. It was pushed back to the end of July, PolyMet said when announcing its rights offering and final permit in March.

During that time, the only money PolyMet borrowed from a different source was a $4 million loan from the Iron Range Resource and Rehabilitation Board in 2011 used to fund PolyMet’s land exchange. That loan has since been repaid, Cherry said.

Cherry said borrowing only from Glencore made sense.

“They’re (Glencore) our partner on the project and the arrangements of those loan facilities worked very well for our company at that time,” Cherry said.

Going forward, PolyMet still needs to raise almost $1 billion to get the mine up and running and has indicated that some of it could come from Glencore.

Beyond Glencore, Cherry said PolyMet was exploring “ a lot of options that are open to us going forward,” from banks, lenders and bond houses. For now, PolyMet is focused on clearing its debt through the rights offering, Cherry said.

Cherry maintains PolyMet will remain in control of its mine operations, no matter the results of the rights offering.

“It could be more than 50 percent,” Cherry said of Glencore’s potential ownership of shares as a result of the rights offering. “But it doesn't change the fact that we are, we would still be a publicly-traded company with a board of directors that represents the shareholders.”

But other precious-metal mines like the Eagle Mine in Michigan have gone through the permitting process under one company only to then bought out by another company shortly before production begins.

“The plan from the beginning was that PolyMet would be a Trojan horse, and once they got inside Minnesota, that horse would open up and what would come out would be Glencore,” Maccabee said.