Exploration payrolls down as producing mines add jobs
Minerals employment and industry spending dropped in 2014 compared with 2013 and 2012 but the decline is attributed mostly to sharp declines in expenditures for exploration.
The state’s larger producing mines added jobs in all three years, according to the latest minerals industry economic report by McDowell Group.
The report was recently released by the Alaska Miners Association. McDowell Group is a Juneau-based economic research firm.
The latest report shows 4,400 employed in mining in Alaska in total during 2014, down from 4,600 in 2013 and 4,800 in 2012. Payroll is also down, to $620 million in 2014 from $630 million in 2013 and $650 million in 2012.
However, payments to local governments, in taxes and in-lieu-of-tax payments, rose in 2014 relative 2013, to $17.4 million paid in 2014 compared with $17 million in 2013. Payments to municipalities totaled $21 million in 2012.
The totals include all jobs related to mining including exploration, metals and coal production activities and gravel mining.
Counter to the overall trend, the state’s six larger producing mines have been adding jobs mostly due to increased production and new development work in the mines.
For example, the Fort Knox gold mine near Fairbanks, a surface mine, employed 650 in 2014, up from 630 in 2013 and 548 in 2012. The Greens Creek Mine near Juneau, an underground multi-metals mine, employed 415 in 2014, 400 in 2013 and 390 in 2012; the Kensington Mine, an underground gold mine also near Juneau, employed 320 in 2014, 306 in 2013 and 300 in 2012; Pogo, another underground gold mine near Delta east of Fairbanks, employed 320 in both 2013 and 2014 (data for Pogo for 2012 was inconsistent in the McDowell reports); the Red Dog lead-zinc mine north of Kotzenue, a surface mine, employed 610 in 2014, 639 in 2013 and 604 in 2012.
The Usibelli mine near Healy, Alaska’s only coal mine, employed 140 in both 2014 and 2013, and 124 in 2012.
All of the state’s producing mines are doing well, but there has been a sharp drop in exploration spending over three years caused mainly by declines in metals prices, the recent weakening in China, a strong importer, and continued economic weakness in Japan and Europe.
Exploration spending dropped to $67 million in 2014, down from $180 million in 2013 and $275 million in 2012, according to the McDowell report. Exploration spending is a barometer for the mineral industry’s future because it results in new discoveries, a few of which typically become producing mines.
Mines tend to have long lives, typically several decades, once they get into production but eventually the ore is depleted and new projects need to be coming into the pipeline, which is a result of continued exploration.
In terms of immediate impact, the falloff in exploration tends to affect a number of smaller support companies including air taxi firms, camp and logistics service operators and a variety of technical-support firms such as laboratories.
Meanwhile, work is continuing on eight new mine development projects that are a result of discoveries made decades ago. Seven of these are far enough along in development planning that estimates of new jobs in production can be made. Those seven would add 3,615 permanent jobs if all are developed.
• The large Donlin Gold project near Crooked Creek, in the mid-Kuskokwim River region, which could employ as much as 1,400 production workers. Donlin Gold would be a large surface mine and it is now in an advanced stage of environmental impact statement work for its project after which a decision on construction could be made.
• Pebble, near Iliamna southwest of Anchorage. Although it is snarled in controversy and attempts by the U.S. Environmental Protection Agency to foreclose development, the large Pebble gold/copper/molybdenum project could create 1,000 production jobs. It would be a surface mine initially and possib ly an underground mine in later years to tap deep mineral resources.
Pebble has done extensive exploration and is at an advanced stage of engineering and mine planning. However, the company is seeking to resolve legal issues brought by the EPA’s attempt to foreclose mining before permits can be filed for development.
Both Donlin Gold and Pebble are in two of the most economically-depressed regions of the state where jobs are badly needed.
• Livengood gold project — North of Fairbanks, International Tower Hills is continuing development planning on the large Livengood gold project, a surface mine which could create 450 production jobs if it is developed. The company is now developing a new mine plan to reduce costs.
• PacRim Coal, near Anchorage — The company is working on development of the Chuitna coal project on the west side of Cook Inlet, about 50 miles west of Anchorage. The project is now at an advanced stage of permitting. Chuitna would be a surface mine and it would create 300 to 350 production jobs if the mine is built.
• Wishbone Hill — North of Palmer, in the Matanuska-Susitna Borough, Usibelli Mine Inc. is working on development of the Wishbone Hill coal deposit. If developed it would create 75 to 125 production jobs.
• Niblack and Bokan Mountain — In southeast Alaska two new mining projects are in advanced stages of development planning on southern Prince of Wales Island, near Ketchikan.
Niblack would be a multi-metals underground mine. If developed Niblack could create 200 production jobs. The second, Bokan Mountain, is a potential rare earths mine, also underground. If constructed it could employ 190.
An eighth minerals development project, for which the McDowell Group report did not include potential jobs, is the Upper Kobuk Minerals Project, a joint-venture of NovaCopper Inc., an exploration company, and NANA Regional Corp., the regional Native development corporation in northwest Alaska, which is also a large landowner.
This includes two projects, both significant copper discoveries, that are relatively near each other in the western Brooks Range, the Arctic deposit in the Ambler mining district and Bornite, on the upper Kobuk River. Both are in advanced stages of exploration and development plans have been done for Arctic.
The region is remote, however, and surface infrastructure would have to be built to the area before mines could be developed. The State of Alaska is working on a plan for a minerals access road to the region from the Dalton Highway, which transects the central Brooks Range, but the project is on hold at the order of Gov. Bill Walker.