In grim price market, state's miners have hope, plans for future
Still, the problem is worldwide and Alaska is positioned better than any region in attracting what exploration funds there are, according to Steve Borell, director of the Alaska Miners Association.
The state’s big advantages are that a huge area of land, about 150 million acres including state and Native-owned lands, is open to exploration. All of this acreage is underexplored and much of it is prospective for minerals, in terms of its geology, Borell said.
Another plus for Alaska is that it has major mines that have not only been developed in a high-cost, remote locations in recent years, but continue to operate despite low prices and poor market conditions, he said.
These include the Red Dog Mine in Northwest Alaska, now the world’s largest lead-zinc mine; the Fort Knox gold mine near Fairbanks and the Greens Creek silver and zinc mine near Juneau.
The Usibelli coal mine at Healy, in Interior Alaska, continues to sell about half of its annual production in Pacific export markets, successfully competing against coal from Australia and other sources.
And despite poor markets, companies are continuing development work. Permitting is continuing on the Pogo mine near Delta, a large, high-grade gold mine planned for development by Teck Cominco.
In Southeast Alaska, Coeur Alaska Inc. has initiated a new round of permitting for its large Kensington gold project, based on a new development plan that could lower production costs.
In Southwest Alaska, Nova Gold continues exploration on the large Donlin Creek gold mine, on land owned by Calista Corp., the Native regional corporation for the area. The company is working on a farm-out arrangement with Placer Dome, which has the lease with Calista.
Nova Gold has commissioned a scoping engineering study for development of the mine, which could lead to more advanced pre-feasibility engineering work next year. The company will also release new reserve estimates to the mine next spring.
But the market situation for many metals appears bleak. Zinc is at historically low price levels due to poor economic conditions in many industrialized nations, according to John Rense, chief operating officer of NANA Development Corp., the landowner at Red Dog Mine.
Technology changes have also led to substitutes for zinc, reducing reliance on the metal in many industries, he said. This means that even when there is an economic recovery, zinc prices may not return to robust levels.
The gold situation appears equally uncertain. Large amounts of gold are still held by governments and there is a long-term trend toward less reliance on gold to support currencies, and for governments to sell gold to raise cash.
In recent months, as soon as there has been an uptick in gold prices governments have sold gold, which then pushed prices back down.