EPA releases Bristol Bay risk assessment, peer review


Mining Year in Review

The major news event for the state’s mining industry in 2012 was the release of the U.S. Environmental Protection Agency’s unprecedented Bristol Bay Watershed Assessment as a possible forerunner of an action by the agency to preempt development of the large Pebble copper/gold project near Iliamna, southwest of Anchorage.

The assessment was developed at the request of tribal and fishing groups in the Bristol Bay region who oppose mine development and want EPA to exercise authority it has to block projects by usurping authority of other federal agencies under the Clean Water Act.

EPA declined to take that step but did do the watershed assessment as a possible aid in future Clean Water Act decisions, the agency said. Meanwhile, the assessment itself, in draft form, was reviewed by an independent science panel convened by the EPA. The panel made extensive comments on the draft including questions on its purpose, which was unclear, several scientists said.

EPA now says it will convene a second review panel, but has given no date as to when that will happen or when the draft assessment will be published in a final report.

Meanwhile, the Pebble Partnership, a joint-venture of Anglo American and Northern Dynasty Minerals, is continuing to work on finalizing a mine plan and applications for permit to federal and state agencies.

The companies have criticized the EPA for basing its assessment on hypothetical scenarios of a mine rather than waiting for the permit applications to be filed with a mine project the partnership hopes to actually develop.

A concern of the state of Alaska over the EPA’s assessment is whether the agency will actually attempt to block a mine at Pebble even before permit applications are filed. There are cases in other states where the agency has interceded in an ongoing permitting action and blocked a permit, and at least one case where a permit was revoked after it had been issued.

But there are no cases where EPA has moved to preempt development before permits were filed and particularly in such a large area as the Bristol Bay region.

State officials are concerned not only over the precedent the action would set for EPA to use in blocking other Alaska projects, but also the fact that if Pebble could not move forward it would impair development of extensive state-owned lands in the region.

If it is developed, Pebble would most likely be a large combination surface and underground mine. There two deposits, one a low-grade ore body which would be most efficiently mined with a surface mine, and the second a deeper, high-quality ore deposit that would likely require an underground mine.

2. More gold found at Pogo

Miners at Pogo, an underground gold mine near Delta in the eastern Interior, are finding a lot more gold. Production began in 2005 in the ore body first tapped at Pogo, but new exploration has now identified several adjacent gold ore deposits that may be sufficient to keep the mine operating for two more decades, and perhaps longer.

The mine also reached a milestone in July when its 2 millionth ounce of gold was produced. Pogo’s production is now from the Liese Zone, the first ore body that was tapped. Newly-discovered reserves have been found in the nearby East Deep deposit and two more ore bodies, North Zone and “4021” are also being explored.

The gold resource at the Liese zone is estimated at about 2.6 million ounces. As of mid-2012 exploration in the adjacent East Deep deposit by itself had added an additional 1.2 million ounces of resources. There are indications of additional gold mineralization all through Pogo’s block of mining claims, which cover 87 square miles of state lands. Pogo now employs about 300 full-time staff and an additional 100 contractor employees, although the numbers vary with the season.

3. Interior mines expand, near development

The large Fort Knox Mine just off the Steese Highway northeast of Fairbanks has been producing since 1995 and its operator, Fairbanks Gold Mining Inc., continues to expand the pit as well as a heap-leach facility that extracts gold from very low quality ore. Fairbanks Gold Mining is also now expanding the mining pit at Fort Knox and is planning another expansion when this one is complete.

The mine, a major employer and municipal taxpayer in the region, appears set for several more years of production. Northwest of Fairbanks, on the Elliot Highway, International Tower Hills is at an advanced stage of development planning for another surface gold mine near Livengood. If it proceeds to construction, this mine would likely be even larger than the Fort Knox mine. As of August 2011, 23.7 million ounces of gold had been identified at Livegood in proven, inferred and indicated gold resources. A recent development is that metallurgical work on ore samples from the project indicate a gold recovery of 77 percent to 88 percent from four key types of rock that will be mined. What is under development now is a plan for the mine that would be in a preliminary feasibility assessment, a key stage in the planning for a mine. The current schedule calls for the PFA to be published in the first half of 2013. International Tower Hills has not released an estimated capital cost for the mine, but it could top $1 billion.

4. Donlin Creek Mine begins long-awaited permitting

Donlin Gold, the 50-50 partnership of Barrick Gold and NovaGold Resources, initiated its applications for state and federal permits in 2012, a key step in development of a large gold mine in the middle Kuskokwim River region that has long been anticipated. About 33.8 million ounces of gold resources have been identified at the Donlin Creek prospect, but is still uncertain whether the mine would actually be built there.

The capital cost, about $6 billion, is hefty, and energy for the mine is still an unresolved question. The latest plan is to use natural gas to power mine equipment with the gas imported by pipeline from Southcentral Alaska. However, a source for the gas has yet to be determined, and Southcentral Alaska communities are facing their own uncertainties about natural gas supply.

Donlin Creek is in the middle Kuskokwim River region of the state near the small community of Crooked Creek. It is on surface land owned by the TKC Corp., which is owned by several local communities, with subsurface lands owned by Calista Corp., the Alaska Native regional development corporation for the Yukon-Kuskokwim region.

If the mine were to move into construction and production between 800 and 1,400 full-time jobs would be created for the 27 years of mine life now estimated. About 3,000 would be employed in construction.

There are additional indications of gold mineralization in the immediate area, so if the mine is developed, its life would likely be extended beyond the 27 years estimated for the current mining plan.

Tim Bradner can be reached at [email protected].

12/19/2012 - 10:38am