Pebble, EPA pushing to settle lawsuit

With the sides reportedly closing in on a settlement, an Alaska federal judge agreed to hit pause on Pebble Limited Partnership’s lawsuit against the Environmental Protection Agency one more time. On March 20 U.S. District Court of Alaska Judge H. Russel Holland signed an order to stay proceedings in the suit until May 4, the deadline by which he expects Pebble and the EPA to have reached a deal to close the case, the order states. The sides originally proposed negotiating through a mediator but have been in direct talks of late, with the EPA represented by nonpartisan agency leaders and officials from President Donald Trump’s administration, according to the joint motion to stay the case. Initial talks about working out a settlement began early last August, based on court documents. A joint motion to pause the lawsuit was first filed Dec. 30 and approved by Holland Jan. 4. That stay was in effect through March 20. Having not yet reached a deal, the sides subsequently asked for another six weeks to negotiate. Pebble sued the EPA in September 2014 on the belief the EPA was biased in compiling the Bristol Bay Assessment, which determined a large mine in the Bristol Bay watershed would irreparably harm the region’s world-class salmon fisheries, among other impacts. The gold and copper mine proponents further contend the EPA violated the Federal Advisory Committee Act by improperly collaborating with mine opponents and not adequately consulting Pebble Partnership in the crafting of the Bristol Bay assessment. The EPA used the assessment as justification to move to stop Pebble from applying for federal environmental permits in 2014. In late 2014 Holland issued an injunction in the suit to stop the EPA from stopping Pebble until the court fight is resolved. “Active discussions between all parties involved have been positive and very constructive. We remain confident in achieving a prompt and fair resolution that follows the rule of law, supports the interests of the parties involved and allows the Pebble project to move into a normal course permitting process,” Pebble CEO Tom Collier said March 20. With a presumably more mine-friendly administration in the White House, leaders of Pebble’s owner company Northern Dynasty Minerals informed their investors in January that they plan to file for environmental permits this year. However, Northern Dynasty has said it will likely need to find another partner to develop the multibillion-dollar project and more than a decade worth of unfulfilled claims Pebble will start permitting has drawn sharp criticism even from traditional resource development advocates in Alaska. Meanwhile, Pebble is still waiting on the Alaska Department of Natural Resources to renew its two-year land-use permit for its Bristol Bay claims, which are on state land. Mine opponents argue Pebble Partnership has been lax in cleaning and maintaining its exploration sites leading to small cases of damage to the landscape. DNR has countered those claims, saying Pebble has met state environmental standards but the state agency has been slow to re-up the key permit.

Permitting process starts for Ambler road

Development of the Ambler Mining District road project is now in federal hands. The Bureau of Land Management issued a Federal Register notice Feb. 28 requesting public input regarding what topics the agency should consider in drafting the environmental impact statement, or EIS, for the mining access road. Early environmental and financial study work for the proposed gravel road running west from the Dalton Highway for 211 miles to the remote Ambler Mining District has to this point been led by the state Department of Transportation and more recently the Alaska Industrial Development and Export Authority. The Ambler Mining District stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage. It has long been identified as an area of great potential for copper, zinc and precious metals but access issues have largely inhibited development. Vancouver-based Trilogy Metals Inc., formerly NovaCopper, is one company that has been busy exploring multiple prospects in the region. According to Trilogy, its well-defined Arctic deposit in the Ambler district likely holds about 2.3 billion pounds of zinc, more than 1.7 billion pounds of copper, 40 million ounces of silver and a small amount of gold. Trilogy CEO Rick Van Nieuwenhuyse said in a December interview with the Journal the company is shifting its focus from resource delineation to engineering and environmental studies. At the time, Van Nieuwenhuyse said he was happy the state is continuing to pursue the Ambler road. Absent the road, mining the isolated region is simply not feasible, Van Nieuwenhuyse and others familiar with the project have said. The National Park Service will also be conducting an economic and environmental analysis concurrent with the BLM’s EIS to evaluate the best route for a segment of the road that would cut through Gates of the Arctic National Preserve. The Alaska National Interest Lands Conservation Act, or ANILCA, passed by Congress in 1980, contains language directing the Interior Department secretary to approve a road through the preserve on the anticipation the Ambler Mining District would one day be developed. ANILCA also generally prescribes a final EIS be completed within one year of the start of the scoping period. However, the BLM has extended that timeline substantially for the Ambler road project, citing its complexity and the multiple landowners and managers along the route as well as the need to have detailed consultation with the numerous isolated communities in the region. Thus, the agency has self-imposed a March 2019 deadline for publication of the draft EIS and the final document is due Dec. 30, 2019. In October 2015, Gov. Bill Walker gave permission for AIDEA to spend $3.6 million left from the prior capital appropriations to the Ambler road after “pausing” it and other large projects the state had undertaken to review their necessity and financial viability as the state struggles with nearly $3 billion annual budget deficits. While the Juneau access, Knik Arm bridge and Susitna-Watana hydro projects were all halted by the administration, the Ambler road survived. To date, the State of Alaska has spent $26.2 million studying the project, money approved in capital budgets since 2011. The Ambler road was a large part of former Gov. Sean Parnell’s statewide Roads to Resources initiative. Use of the road would mostly be restricted to mining activity, but it could also help provide lower-cost energy and other goods to villages clustered near both ends of the proposed route, proponents note. While state general funds have supported the project to this point, money for actual construction, which AIDEA estimates at between $305 million and $346 million, would be financed by the authority through bonds and recouped through tolls paid by Trilogy Metals or any other companies that develop resources in the area. The plan is very similar to the Red Dog mine-DeLong Mountain Transportation System in far Northwest Alaska that development proponents have cited as a model for other isolated resource prospects in the road-scarce state. However, many residents of the area are skeptical of the road and the mines. They contend the construction of the road could disrupt the Western Arctic caribou herd that migrates through the corridor and is a primary subsistence food source for the villages clustered at each end of the route. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage. John Gaedeke, a wilderness guide and owner of a remote Brooks Range lodge, founded the nonprofit Brooks Range Council in 2012 to fight development of the road. He wrote in an email that he is "truly dismayed the project has gotten this far," contending the Walker's authorization to continue it means the state will spend on it that should be funding services, such as public education, that have been impacted by recent budget cuts. He does not have any confidence the EIS process will adequately address the concerns regarding the project he and others have said AIDEA has not resolved because "an EIS process never says no to development, despite whatever impacts are outlined," according to Gaedeke. "The potential impacts I would like to see most thoroghly vetted is the extent to which this road will open the land to industrial development for coal, copper, gold and lead," Gaedeke wrote. "The cumulative impact is difficult to assess. The state wants to justify the road by claiming all the potential industries it could reach. If that is the case we must also look at their cumulative environmental impacts." Lois Epstein, Arctic program director for The Wilderness Society, also a professional engineer, said her organization is pushing back against Ambler development to support local governments and Native village corporations in the area that have passed resolutions in opposing the project. Epstein also questioned why the state continues to spend money analyzing the road without related commitments to build the mines the road would access. “In the end this project is going nowhere because the state doesn’t have the money for it,” she said. Alaska’s ongoing budget deficits have forced lawmakers to cut any discretionary spending out of the state capital budget, the source for previous Ambler road funding. AIDEA anticipates it would net up to $150 million from an Ambler toll road even after accounting for another $270 million in maintenance costs over the 30-year life of the road — on the expectation Trilogy’s Arctic deposit would be one of several mines to spring up after the road was built. The authority plans to evaluate options to fund the roughly $7 million it will take to complete the EIS once the scoping process is complete, according to spokesman Karsten Rodvik. The BLM’s public scoping period is open until May 30. Elwood Brehmer can be reached at [email protected]

Northern Dynasty calls critical report ‘misleading’

The owners of the Pebble mine project fired back Friday against claims from a New York stock investment firm that the prospect is not economically or politically viable. Northern Dynasty Minerals Ltd. called the Feb. 14 report from Kerrisdale Capital Management — which holds a short position in Northern Dynasty and could benefit from its stock value dropping — “unfounded” and “unsupported speculation.” Kerrisdale alleges mining major Anglo American Plc, which withdrew from the Pebble project in 2013 after investing more than $500 million in it, did so because internal calculations put the project’s capital cost at close to $13 billion, not the $4.7 billion published in Northern Dynasty’s 2011 preliminary project assessment. At the time, Anglo American CEO Mark Cutifani called Pebble “a deposit of rare magnitude and quality” and said the decision to leave the project was part of a larger effort to focus on projects in the company’s portfolio with the highest value and lowest risk. If fully developed, Pebble would be one of the world’s largest open-pit gold and copper mines. The deposit’s location at the headwaters of the Bristol Bay drainage — also home to one of the world’s largest salmon fisheries — has made it an extremely controversial project in Alaska and nationwide. Vancouver-based Northern Dynasty states declining market conditions led its former partner to pull out of the project. Anglo American would have had to invest another $900 million to earn its 50 percent interest in Pebble, according to Northern Dynasty. The mining company also notes repeatedly in its rebuttal that Kerrisdale relied on unnamed sources the investment firm claims had worked directly on the project and says it recently raised $37 million from investors, proof that people with accurate information about Pebble still have faith in it. Northern Dynasty’s stock value fell by about 30 percent in the hours after the release of the Kerrisdale report, which called it “worthless.” It rebounded to finish trading Feb. 14 down 18 percent for the day finished the week down 24 percent since the critical report was made public. On Feb. 15, Rosen Law Firm, which calls itself “a global investor rights” firm, filed a class action lawsuit against Northern Dynasty for buyers of the company’s stock since September 2013, claiming Northern Dynasty has mislead investors about Pebble’s potential. Similar lawsuits are common following a short seller report and “any such suits will prove equally baseless,” Northern Dynasty responded. Kerrisdale further contends the more than a dozen instances since 2004 in which Pebble leaders have said publicly the project would move into the permitting phase shortly lend solidify the notion that the project can’t be economically developed. Pebble Limited Partnership spokesman Mike Heatwole said in an interview that the company is somewhat caught in a “catch-22” on the issue, with stakeholders demanding a mine plan while internally needing to follow deliberate processes. He noted that large projects in Alaska regularly take a decade or more to develop and each time new technical or financial information is acquired it impacts multiple aspects of a project and slows the overall evaluation. “What we’re probably guilty of is being overly transparent about our plans,” Heatwole said. “We start out a year with the best of intentions in terms of where we want to be in terms of rolling things out and for a variety of reasons internally those have shifted.” In recent years Pebble has been forced to allocate its resources to fending off what it considers to be an unjust Environmental Protection Agency, Heatwole added. To that end, Northern Dynasty believes the EPA under the President Donald Trump will allow Pebble to be appropriately evaluated. Under President Barack Obama the EPA moved to block the project before the requisite environmental permits were applied for. The agency has used its authority under Section 404 of the Clean Water Act to “veto” development projects in the past. However, Pebble and general resource development advocates contend the agency overstepped its bounds in regards to Pebble and was biased from the outset in its evaluation of the project. Pebble and the EPA are currently in mediation to settle a lawsuit brought by the mining company on that issue. Pebble was successful in obtaining an injunction against the EPA that halted its attempt to preemptively veto the project. “Northern Dynasty and its technical advisors will provide full support to the lead federal regulatory agency to ensure that the environmental impact statement (EIS) completed at Pebble will be a rigorous scientific assessment of the environmental impact of a mine design that will incorporate robust engineering and environmental approaches and technologies,” the company’s response states. “This will clearly demonstrate to the agencies and stakeholders that Pebble meets and exceeds all relevant federal and state environmental standards.” On the state level, Northern Dynasty contends Kerrisdale paints a jaded picture of public consensus against Pebble in Alaska. Kerrisdale’s report notes a 2014 ballot measure in which two-thirds of Alaska voters were in favor of requiring legislative approval for Pebble in the even state and federal regulators green lighted it. Heatwole said the company didn’t bother to campaign against the measure because it is clearly violates the state constitution. “What is absolutely clear is that many Alaskans are concerned about the EPA’s preemptive actions, and they want the project to be fully but fairly evaluated under the U.S. National Environmental Policy Act,” Northern Dynasty’s rebuttal states. Northern Dynasty adds that the State of Alaska, under former Republican Gov. Sean Parnell, joined the Pebble Partnership as an intervenor plaintiff in another lawsuit questioning the EPA’s statutory authority to block the project. An appeal in that suit, which was dismissed by a federal District Court because the EPA had not finalized the process to block Pebble, is also on hold pending the outcome of the other litigation and the agency’s subsequent determination.   Elwood Brehmer can be reached at [email protected]

Report: Pebble shares are ‘worthless’

A New York investment firm tore apart claims by the owners of the Pebble mine project that developing the prospect is economically viable in a no-holds-barred report released Feb. 14. Kerrisdale Capital called Vancouver-based Northern Dynasty Minerals Ltd., “worthless” in its 21-page report, contending sources directly involved in evaluating Pebble before Anglo American walked away from the project in 2013, despite spending roughly $500 million on it, said Pebble would cost close to $13 billion to construct, not the $4.7 billion capital cost Northern Dynasty arrived at in its preliminary project assessment. “In the past decade, Northern Dynasty has hired at least two major engineering firms to prepare preliminary feasibility studies of Pebble laying out its economics in detail, yet it has failed to publish their findings — because they were damning,” Kerrisdale alleges. The firm also acknowledges repeatedly in the report that it holds a short position in Northern Dynasty, meaning the firm could benefit financially if the value Northern Dynasty stock declines. If developed to full-scale, Pebble would be one of the world’s largest open-pit gold and copper mines. It would also require construction of significant support infrastructure, including its own deepwater port and a nearly 90-mile access road. The deposit’s location at the headwaters of the Bristol Bay drainage — also home to one of the world’s largest salmon fisheries — has made it an extremely controversial project in Alaska and nationwide. To that end, Kerrisdale cites a 2014 statewide Alaska ballot measure in which Alaskans overwhelmingly opposed the Pebble project. Whether the ballot measure, which requires the state Legislature to approve the project above and beyond state and federal regulators, is constitutional on the state level has been questioned; however it exemplifies Alaskans’ stance on Pebble, mine opponents argue. Northern Dynasty stock fell by about 30 percent in the hours after Kerrisdale released its report and finished trading Feb. 14 down 18 percent. Alaska Native, commercial fishing and environmental groups opposing the mine quickly grabbed the report and touted it as proof Pebble should be stopped. Northern Dynasty issued a short statement of its own Feb. 14, promising a more detailed response by the end of the week. “The rebuttal will expose the many inaccuracies and outright misstatements in the Kerrisdale report,” Northern Dynasty said. “Northern Dynasty’s Pebble project is indisputably one of the worlds largest undeveloped copper/gold deposits with a potential mine life which is measured in decades. Kerrisdale cites no technical or scientific studies whatsoever and relies on unnamed persons who were purported to have been involved with the project several years ago. Investors should not rely on the Kerrisdale report and should await the company’s detailed response now in progress.” The report lists more than a dozen instances dating back to 2004 in which Pebble Limited Partnership and Northern Dynasty leaders said publicly the project’s environmental permits would be applied for, but that has yet to occur. Sen. Lisa Murkowski, who has condemned the Environmental Protection Agency’s attempt to ban Pebble under the Obama administration before it starts as a violation of the federal regulatory process, has also criticized the Pebble Partnership for not making good in its promises to release a plan for the project — thus allowing it to be appropriately evaluated. Pebble sued the EPA for attempting to “veto” the project, accusing the agency of a biased decision-making process. The EPA has not faired well in that case and is currently working to settle the lawsuit outside of court and an injunction preventing a preemptive veto is still in place. President Donald Trump’s election renewed hope among the mine’s proponents that Pebble could get a better shake under the new administration. In January, Northern Dynasty leaders told investors the company plans to file for Pebble’s permits in 2017. Kerrisdale notes the project would forever face the threat of further EPA action under another presidential administration on top of the in-state opposition. The agency’s authority to a halt a development project at nearly any time under Section 404 of the Clean Water Act is rather clear; whether the actions the EPA took to arrive at that conclusion for Pebble were legal is what is disputed. Elwood Brehmer can be reached at [email protected]

Graphite prospect near Nome holds big potential

There is ample development potential in Alaska’s lone graphite prospect, according to a preliminary economic report on the mine venture. The Graphite Creek flake graphite deposit near Nome is being pursued by Vancouver-based Graphite One Resources. A preliminary economic assessment of the resource and Graphite One’s plans to extract and process it found the project could have a value to investors of more than $1 billion and a payback period of just four years. If developed, Graphite Creek would be the country’s only operating graphite mine and give the U.S. a stake in the graphite market that has been dominated by Chinese mines for decades. Considered a high-grade, large flake graphite deposit, the Graphite Creek prospect sits about 40 miles north of Nome in the Kigluaik Mountains on the Seward Peninsula. It is about 10 miles from spur-road access to that region’s Taylor Highway. Specifically, the prospect runs for 11 miles along the north flank of the small mountain range, with portions of it exposed at ground level. “It’s been a long road to the (preliminary economic assessment),” Graphite One CEO Anthony Huston said in a formal statement. “As we move into the next phase of development, we will continue to work closely with Alaska state authorities and the local communities around the deposit, including Alaska Native corporations, to unsure that our project meets the highest environmental, safety and sustainability standards.” The junior mining company spent nearly $10 million exploring the prospect from 2012 to 2014 and has since shifted to economic and environmental evaluations. While earlier company predictions had mine development starting as soon as 2017, delays in advancing the project have pushed construction and startup into the 2020 timeframe. Flake graphite is a primary component of potent lithium-ion batteries — the power cells for electric cars and storage banks for some renewable energy projects. The average lithium-ion battery is 16 percent graphite by weight, according to the U.S. Department of Energy. The Graphite Creek deposit holds more than 5.7 million metric tons of indicated and inferred graphite in ore with a resource grade of at least 7 percent, according to the company. That resource base would support a milling operation of about 1 million metric tons per year for at least 40 years, the assessment states. Graphite One representatives have described the prospective mine as similar to a large gravel pit; graphite mining does not require the chemicals and metallurgical processes often found in hard rock metal mining. The company is planning for an on-site processing facility that would produce up to 60,000 tonnes per year of semi-refined, 95 percent graphite concentrate. Capital costs for the mine and mill and associated infrastructure are estimated at $233 million. From there, the concentrate would be trucked in shipping containers to Nome and then barged to a separate manufacturing plant, likely in Washington, where it would be refined again to a 99.95 percent graphite concentrate. The resulting coated spherical graphite and purified graphite powder — which is the “rejected” graphite that could not be processed into coated spherical graphite, according to the company — would be the marketed finished products. The cost for the manufacturing plant is estimated at $130 million, for an all-in project cost of $363 million. Graphite One General Manager Dave Hembree said during a talk to the Alaska Miners Association last November that the company would prefer to site the manufacturing facility in Alaska if a suitable location with low-cost power could be identified. At full production of nearly 42,000 tonnes per year of coated spherical and 13,500 tonnes of powder graphite, the project would produce about 55,000 tonnes of graphite concentrate at an operating cost of $1,774 per tonne, the assessment states. Graphite One forecasts the blended market price for its products would be at least $5,000 per tonne. “With the prospect of a low-cost, 40-year mine life using half of the identified graphite resources, and given our projected production costs and conservative price assumptions, we are confident that Graphite One has the potential to become a reliable provider of graphite materials critical to clean-tech, high-tech and national security applications,” Huston added. Elwood Brehmer can be reached at [email protected]

Legislation filed to require commissioner consensus on Pebble

JUNEAU — A measure intended to add roadblocks for Pebble mine got its first hearing Jan. 31 in the Legislature. House Bill 14, proposed by Rep. Andy Josephson, D-Anchorage, would require the Legislature to approve any permitting documents or authorizations for mines within the Bristol Bay Fisheries Reserve. Pebble Mine, proposed for the headwaters of the Bristol Bay watershed, is within the reserve. Speaking to the House Special Committee on Fisheries, Josephson said his goal was to strengthen a ballot initiative passed by voters in 2014. Ballot Measure 4, approved by two-thirds of voters, gives the Legislature the final say on Pebble Mine and any other “large-scale metallic sulfide mines” considered for the fisheries reserve. Josephson’s bill would require the Legislature to approve each step of the permitting process, not just sign off at the end. “This takes the intent of the initiative and makes it stronger. I’m confident it does that,” Josephson said. Last year, Pebble Mine appeared to be dead. It had been abandoned by Rio Tinto and Anglo American, two of the world’s largest mining companies, and was fiercely opposed by the Environmental Protection Agency and fishing groups across Alaska. The mine’s fortunes changed with the election of President Donald Trump, who is proposing to appoint an EPA director who favors “regulatory rollback.” On Jan. 31, Josephson said that if the EPA is no longer willing to be a watchdog, that duty will fall to Alaskans. “Now, we can be the bulwark,” Josephson said. The EPA’s preliminary reports about the mine, drafted during the administration of President Barack Obama, found that the mine’s construction would have significant effects on the Bristol Bay salmon run, the world’s largest wild run. “It’s going to rest upon our shoulders, not the federal government’s, to protect this fishery,” Josephson said. Rep. Mike Chenault, R-Nikiski, asked whether it made sense for the Legislature, an organization with limited mine permitting experience, to judge projects. “This is the most important environmental fisheries decision in Alaska’s history, in my opinion. If there’s a little bit more effort involved in that, I’m OK with that,” Josephson said. Speaking against the bill was Deantha Crockett, executive director of the Alaska Miners Association. She cautioned that the 2014 ballot measure — and by extension Josephson’s bill —might be illegal because they could act as a legislative veto of a permitting decision made by the executive branch, which is led by the governor. That could run afoul of the Alaska Constitution’s separation-of-powers provisions. Mike Heatwole, spokesman for the Pebble Partnership, agreed with Crockett’s assessment as he spoke to the committee by phone. The bill was held in committee, and no additional hearings have yet been scheduled. House Bill 14, would also require that before the Legislature weighs in, the commissioners of Natural Resources, Environmental Conservation and Fish and Game each determine that mine backers have proven beyond a reasonable doubt that their operations will not be a danger to the fishery, fish or wildlife in the region. The bill doesn’t mention Pebble by name, and Josephson said there are a number of large claims in the area. But he said the bill has a lot to do with Pebble, a massive copper and gold prospect that’s been closely watched, and debated, for years. Critics of Josephson’s proposal raised concerns about politicizing the permitting process. During a legislative hearing Jan. 31, questions were raised, too, about the constitutionality of the initiative. Heatwole also testified that the bill would add more levels of bureaucracy to the permitting process. “This really is an unprecedented level of scrutiny for any project,” he said. Josephson points to the Bristol Bay region as a special area. “At some point, the state might just very well permit this stuff. And I don’t have confidence that the state has the manpower or the expertise to monitor a dam for, you know, 1,000 years,” he said in an interview. It’s not clear what traction Josephson’s bill might get. Before voters passed the initiative, legislative proposals to place restrictions on large-scale mines in the Bristol Bay area or to require legislative approval prior to permitting went nowhere.

Chugach Alaska Corp. makes California carbon credit deal

ANCHORAGE (AP) — An undeveloped Alaska coal field, California’s offsets for carbon pollution and thousands of acres of forest are the unlikely players in a complex agreement that is expected to generate millions for an Alaska Native organization. The agreement protects the land from development and sets up financial benefits for the Chugach Alaska Corp., a regional Alaska Native corporation representing 2,500 Aleut, Eskimo and Indian shareholders around Alaska’s Prince William Sound. Many largely rely on commercial fisheries and a subsistence lifestyle. The corporation will preserve 115,000 acres of its forested land that will be used to calculate credits purchased by California polluters through the state’s “cap and trade” program to reduce greenhouse gas emissions. It’s not an unusual move, with protected forests in Michigan, South Carolina, New Hampshire, Virginia, Wisconsin and Arizona feeding into the program, said Dave Clegern, California Air Resources Board spokesman. Alaska’s effort to join California’s aggressive program to fight climate change comes as President Donald Trump’s administration has vowed to loosen environmental protections and disputed global warming. Participants in the deal say other Alaska Native corporations are pursuing similar projects. They declined to disclose the price of their agreement, saying the terms are confidential. Potential payoffs from the carbon offsets, however, are expected to run in the millions for a long period of time, according to Josie Hickel, a Chugach senior vice president and shareholder. “This is an opportunity to provide financial benefits for our shareholders for years to come,” Hickel said this week. “And it’s a way to do it with a balanced approach to how we look at and manage our resources.” The agreement signed in December also calls for Chugach to sell the coal rights on 62,000 acres to New Forests, a sustainable forestry investment firm. New Forests, in turn, is retiring those rights and transferring them to two conservation groups, the Nature Conservancy and the Native Conservancy land trust. “This is precedent-setting for numerous reasons,” including the benefit of keeping intact the pristine environment and the region’s fishing way of life, said Dune Lankard, founder of the Native Conservancy land trust, located in the coastal fishing town of Cordova, about 50 miles from the Bering River coal field. He said his group will safeguard the field at the edge of the Copper River Delta, home to sensitive wetlands, highly valued wild salmon fisheries and habitat for subsistence species including moose, deer and millions of migratory birds. “We’ll actually be the defenders and protect this land from ever being developed by anyone,” Lankard said. Of the land being protected, the forest and the coal field overlap on 11,000 acres. The carbon offsets will be based on the corporation’s commitment to maintain the number of trees in the forest, said Brian Shillinglaw, investment programs director for New Forests. Before that can happen, a detailed forest inventory must be done, which can take more than a year before going through California’s regulatory process. Then, the carbon offsets, or credits, can be sold to businesses regulated under the California program. “It’s a win-win,” Shillinglaw said. “It’s really a signal that California’s climate policies are leading to a situation where, in this case, the forest is more valuable left standing and coal is most valuable left in the ground.” Follow Rachel D’Oro at .

Pebble revived: Owner plans to file for permits in 2017

Alaskans are used to seeing apocalyptic images about the Pebble mine. TV ads opposing the large copper-gold prospect near Iliamna cast images of toxic sludge cascading down mountain valleys into Bristol Bay, killing all the salmon. Is the hype shoe now on the other foot? It’s jarring, but sponsored-content pitches are now showing up on mainstream Internet sites touting Pebble, posted not by owner Northern Dynasty but by people touting Pebble’s stock. The headline blares: “Is this tiny gold miner about to soar? Will Trump open development of the world’s biggest gold mine … right here in America?” With a new friend in Washington — meaning President Donald Trump — Pebble’s ultimate development is a no-brainer, the story goes. “I want to share with you one of the most extraordinary opportunities I've seen in my career … You could potentially make up to 1,000% over the next year with a small company that owns the entire thing,” stock analyst Porter Stansberry writes. Stansberry is promoting his market-research newsletter, he acknowledges. “This mine, by the way, is in Alaska,” he says, “and there's estimated to be more than 107 million ounces of gold. There's so much gold here that if it is all mined, it will equal nearly 2 percent of all the gold that has ever been mined throughout all of history ... in the entire world.” Stansberry may be stretching things but he is not far off. According to a Northern Dynasty investor presentation from Jan. 9, the company intends to apply for its Clean Water Act Section 404 permit in 2017 and initiate the National Environmental Policy Act process that would have the U.S. Army Corps of Engineers as the lead federal agency. Things aren’t that simple, of course. Even if Trump rolls over the U.S. Clean Water Act and agencies that administer it, mainly the Environmental Protection Agency and the U.S. Army Corps of Engineers, Pebble must still deal with state of Alaska mining regulations, which are stringent, and an ambivalence toward the project by Gov. Bill Walker, who said he opposed the project during his run for office in 2014. All that said, it is clear that Trump’s election has given the project new life. An effort by the EPA under former President Barack Obama to shut the project down, by preempting permits for large mines in Bristol Bay, is likely to be scuttled by new EPA administrator Scott Pruitt. Northern Dynasty has already succeeded in stopping the preemptive veto effort with a federal court injunction, and that case is now in mediation. Pebble must also raise money, which it is now doing. As long as the EPA preemption was hanging over it, money was hard to raise. Since Trump’s election, however, the company stock price has tripled to near a four-year high earlier this month. Northern Dynasty’s major partner, Anglo American, pulled out of the project in late 2013 after spending more than $550 million on exploration and development. Rio Tinto also divested its 19 percent share in the project. A major mining company will have to join the project, though, as Northern Dynasty lacks the staff and funding to construct the project. Northern Dynasty will also have to deal with inevitable litigation from mining opponents. “Regardless of federal politics, the people of Bristol Bay remain steadfast in our dedication to protecting Bristol Bay and in opposition to mines like Pebble that threaten our traditional way of life,” said United Tribes of Bristol Bay Executive Director Alannah Hurley in a Jan. 24 statement. “We are anticipating welcoming home over 40 million salmon in 2017 and will continue the fight to protect our watershed as we have for countless generations.” Pebble spokesman Mike Heatwole couldn’t comment because of the pending financing but he had said previously that a lot of work is needed to prepare the permits. “We do have additional drilling, environmental and engineering before permitting can be completed. There is also work required for finalizing the permit applications,” Heatwole said in a past interview. Northern Dynasty CEO Ronald Thiessen told Bloomberg News Jan. 23 that $150 million will be needed over four years to do permitting. About $750 million has been invested to date at Pebble including $150 million in environmental studies, Thiessen said in a presentation to investors. Pebble’s measured and indicated, and inferred, resources of copper, gold, molybdenum and silver make it one of the largest undeveloped mineral prospects in the world, Thiessen said. After the EPA action is resolved, which Thiessen expects in April, it will take three to four years to obtain federal and state permits, according to the Northern Dynasty investor presentation with first production as early as 2024. Once applications are filed six months will be needed for “scoping” for the environmental impact statement, or EIS; one to one-and-a-half years for preparing the draft EIS; six months to one year for public comments on the DEIS; one year to a final EIS and record of decision, or ROD, by the lead federal agency, according to a Northern Dynasty presentation made to investors. The ROD is the final major step before the main federal permit, a corps Section 404 authorization, is issued. That timeline may be optimistic, however, given EIS schedules typical for large, complex mining projects. For example, the large Donlin Gold project on the Kuskokwim River is on a five-year schedule with its EIS, and there are not the kind of complications there that are present at Pebble. However, Pebble will also have to get its state permits and opponents to the mine will likely shift their focus from soliciting support within the EPA to the state Legislature and state administration. Walker’s appetite for taking on fierce opposition to the mine from residents in the Bristol Bay region is uncertain given his preoccupation with a large state budget deficit and his promotion of a state-led natural gas pipeline project. In December the state Department of Natural Resources put a brake on issuing new surface access permits to Pebble Partnership for lands at the mine site. The existing permits expired at the end of 2016 but the company was granted a 90-day extension while the department considers a slug of adverse public comments to new miscellaneous land use permits requested by Pebble. Heatwole said the land-use permits merely authorize access to the site for monitoring. Any new drilling, which will be needed for permit applications, will require amendments to those permits, he said. However, if Pebble is built it would stimulate the state’s economy with about 3,000 new jobs during construction and $1 billion in annual operating expenses, about equal to one of the major North Slope oilfield operators, Thiessen told investors. The mine would also boost the Bristol Bay economy, and would increase the tax base of the Lake and Peninsula Borough by 600 percent over 2013 levels according to the Northern Dynasty presentation. Tim Bradner is co-publisher of Alaska Legislative Digest and a contributor to the Journal of Commerce. He can be reached at [email protected]  

Silver, gold production steady in Southeast

The metal mines of Southeast Alaska had consistent and positive production in 2016, according to year-end results released by the operating companies. Hecla Mining Co. reported Jan. 10 that its Greens Creek underground, primarily silver mine on Admiralty Island west of Juneau produced 9.3 million ounces of silver during the year, the highest production level since the company took full ownership of the mine in 2008. One of the most productive silver mines in the world, Greens Creek accounted for more than half of silver production from all of Hecla’s four active mines in 2016, which was a record silver year for the company, according to CEO Phil Baker. The Idaho-based company operates three other silver-centric mines; one each in Canada, the Lower 48 and Mexico. “The 17.2 million ounces of silver produced and the 46 million silver equivalent ounces produced mark the third consecutive year we have broken our 125-year production record, a result of our strategy of investing in organic growth,” Baker said in a company release. Investments to increase production through a period of depressed commodity prices along with “ongoing strong performance of Greens Creek allowed Hecla to generate substantial cash flows this year and we expect well into the future,” Baker said further. Overall, Hecla ended the year with $198 million in cash and short-term investments, a $43 million increase versus 2015, according to the operational report. In 2015 Hecla began a three-year, $44 million project to expand its dry stack tailings facility at Greens Creek, which the company expects to support the mine until 2027 or 2028. The 9.3 million ounces of silver Greens Creek produced last year was about 10 percent more than the 8.4 million ounces extracted in 2015. Hecla attributes the increase to both better grade or and better resource recovery. Silver production at Greens Creek has increased each year since 2012, when the mine ore gave up nearly 6.4 million ounces. On the flipside, gold production at the mine fell by 11 percent year-over-year to 53,912 ounces, the result of lower grade ore, according to Hecla. Production of both precious metals in the fourth quarter was down more than 10 percent compared to 2015 as well. Greens Creek also produces lead and zinc. The Greens Creek mill processed an average of 2,229 tons of ore per day in 2016. The 2016 year-end numbers for gold production at the underground Kensington mine north of Juneau look a lot like the final 2015 figures. Kensington, a gold-only mine owned by Chicago-based Coeur Mining Inc., produced 124,331 ounces of gold in 2016, down slightly from 126,266 ounces in 2015, according to a company release. The average gold grade of 0.21 ounces per ore ton and 94.7 percent resource recovery rate were also in line with 2015. Overall milling was also down slightly from 660,400 tons in 2015 to 620,200 tons last year. Opened in 2010, Coeur said in a company statement that the 2016 production at Kensington was in-line with company expectations and that production this year should be similar. The company also said development of the nearby Jualin deposit is on schedule and about two-thirds complete. Couer said previously that it expects gold production at Kensington to approach 150,000 ounces per year when full-scale mining of Jualin commences in 2018. Elwood Brehmer can be reached at [email protected]

State, Doyon, miners opposed to Eastern Interior plan

The State of Alaska and mining proponents are once again at odds with Bureau of Land Management; this time the dispute is over the agency’s updated plan to manage 6.5 million acres of federal lands in Eastern Alaska. On Jan. 5 BLM released the decision documents to its Eastern Interior Resource Management Plan that would keep approximately 4.8 million federal acres off-limits to development, namely mining in the region known for gold production. Much of that land was previously set aside by prior actions, but Gov. Bill Walker’s administration contends the management plans for the four subunits — White Mountains, Steese, Draanjik and Fortymile — ignore historic legislation regarding lands in the state. The Eastern Interior Resource management plan pertains to BLM-managed lands across a massive triangle of Eastern Alaska from just north of Fairbanks; east to the Canadian border; north to the edge of the Arctic National Wildlife Refuge; and south to Wrangell-St. Elias National Park including the Alaska Highway corridor. The four subunit records of decision are the result of the environmental impact statement process that began way back in 2008. The previous land management plans for the Eastern Interior were enacted in 1986. “People rely on these public lands for their livelihood, for subsistence, for recreation, for access to state and private lands and many other reasons,” BLM Fairbanks District Office Manager Geoff Beyersdorf said in a formal statement. “Over eight years, we have listened and taken the public’s concerns into account. With approval of these plans, we can move forward with management of these public lands in a way that balances use, development and conservation.” In a 13-page Aug. 29 formal protest letter to BLM Director Neil Kornze that reads more like a court complaint, Senior Alaska Assistant Attorney General J. Anne Nelson wrote that BLM’s then-proposed Eastern Interior plan does not allow for conveyance of lands selected by Alaska Native Claims Settlement Act corporations without revising the areas targeted for conservation. James Mery, vice president of lands for Doyon Ltd., the Interior Alaska Native regional corporation, also protested the management plan on several fronts. Mery wrote that while BLM met with Doyon leaders to discuss the plan in 2015, the agency did not adequately address how changing large areas of critical environmental concerns, or ACECs, would impact the company’s use of its lands adjacent to or “effectively enveloped by the ACEC.” Mery specifically referenced ACECs designated for caribou and Dall sheep habitat within the Fortymile Eastern Interior subunit. The Fortymile River drainage is an area known for small placer gold mining operations. “Given the agency’s consultation obligations to (Alaska Native corporations) and the agency’s knowledge of the substantial economic, historic and cultural interest of Doyon and its shareholders in the area, BLM should have engaged in further consultation with Doyon regarding the specific proposed revisions to the ACEC boundaries in an effort to address Doyon’s access concerns,” he wrote. Doyon selected about 770,000 acres within the Eastern Interior area to be conveyed by the federal government, and 755,000 of those acres are within the Fortymile subunit. The agency’s response to possible Native consultation issues states that conservation withdrawals in the plan would not impact conveyance of Native-selected lands and that an access corridor through the Fortymile ACEC to existing Native corporation lands was proposed. According to BLM, land conveyances under either ANCSA or the Alaska Statehood Act are administrative procedures that trump land use guidelines established in the resource management plan. “The BLM also modified the boundary of the Fortymile ACEC to exclude the Fortymile (Wild and Scenic River) corridor, partially in response to Doyon Ltd.’s request,” the protest response document states. However, the agency also notes more generally that Native corporations are “over-selected and not all selected lands will be conveyed.” Assistant state attorney Nelson argued further that the plan “frustrates” the state’s ability to get title to the remaining federal lands it is owed and disregards the agency’s own conclusion in a 2006 report — in response to the 2004 Alaska Land Transfer Acceleration Act — that about 95 percent of historic federal land withdrawals have outlived their usefulness. Nearly 160 million federal acres in the state have been withdrawn, or removed, from possible conveyance to the State of Alaska or private interests primarily for conservation as parts of the numerous public land laws pertaining to Alaska. The Eastern Interior plan instead retains the withdrawals and “unnecessarily and unjustifiably complicates land management in the planning area,” Nelson wrote. She also insists the plan perpetuates a common theme among recent Interior Department agency decisions because it “expressly seeks to curtail mineral exploration and development in an area that has significant mineral potential and a rich mining history, including the oldest mining district in the state,” Nelson wrote. “The plan doubles down on this effort by failing to recommend lifting any existing withdrawals until new substitute withdrawals are in place.” Sen. Lisa Murkowski called the conservation withdrawals in the plan “intentionally excessive” in a release slamming the planning documents, a sentiment shared by Rep. Don Young in a statement from his office. Murkowski, chair of the Senate Energy and Natural Resources Committee, said the habitat protections should be more targeted to protect subsistence interests. Instead, “BLM has continued to disregard its multiple-use mission and the livelihoods of Alaskans as it seeks to impose unnecessary conservation designations,” she said. Alaska Department of Natural Resources Commissioner Andy Mack furthered that sentiment in a Sept. 28 letter to BLM Alaska Director Bud Cribley. According to Mack, not only does the plan hamper the title transfer of state-selected federal lands, it also challenges the state’s ability to build on its resource-based economy, as 40 percent of BLM lands in the Fortymile subunit are off limits to mineral leasing. “Further, the areas of the (Fortymile) subunit that are recommended as open to mining have low mineral potential; therefore, there is little likelihood that mining will occur in any areas recommended as open in the subunit,” Mack wrote. According Alaska BLM spokeswoman Lesli Ellis-Wouters, the entirety of the planning area is withdrawn from mineral development unless the Interior Secretary approves lifting from withdrawal status the 1.7 million acres recommended in the plan. Ellis-Wouters also wrote in an email that the Draanjik and Fortymile plans recommend new withdrawals of more than 5,000 acres, which triggers an Alaska National Interest Lands Conservation Act Requirement for the agency to seek approval from Congress. Alaska Miners Association Executive Director Deantha Crockett concurred with the state’s stance in a litany of points protesting the plan, most focused on how it limits future mining activity in the region. In its retort, BLM notes there are still 1.7 million federal acres in the vast region open to mineral leasing. Additionally, there are about 10,000 acres of federal mining claims in the Fortymile region that predate the withdrawals and thus have been grandfathered in along with active placer operations on state claims within the Fortymile Wild and Scenic River corridor, according to the agency. There are another 11,200 acres of federal mining claims in the Steese and White Mountains areas; and overall the Eastern Interior Planning Area held more than 15,100 active state claims in 2013, BLM states. Elwood Brehmer can be reached at [email protected]

British Columbia to clean up mine near Juneau

JUNEAU — Canadian officials say they will take action to prevent polluted water from a decades-old mine from entering the Taku River, a key source of salmon caught in southeast Alaska. British Columbia Ministry of Energy and Mines Minister Bill Bennett told CoastAlaska News experts will explore different options, including plugging leaking tunnels from the defunct Tulsequah Chief Mine. The acidic water has been carrying pollutants into the Tulsequah River, which is a tributary of the Taku near Juneau. The mine hasn’t operated since 1957, and the two companies that tried to reopen it in the last 20 years have been unsuccessful. Canadian officials had ordered the site’s most recent developer, Chieftain Meals, to clean up the site, but the company went bankrupt last fall. “They were not able before freeze-up to do anything about the settling pond that exists beside the river that captures the runoff from the hill that the old mine was built into,” Bennett said. A government contractor took care of improperly stored chemicals and petroleum products. “Even though the water that’s been tested by both Alaska and British Columbia has shown no negative impacts on aquatic organisms, it’s still against our rules for that water to be flowing into the Tulsequah River. So, one way or the other, we have to stop it,” Bennett said. Chris Zimmer, Alaska campaign director for the group Rivers Without Borders, has been calling for a cleanup of the site for years. “In the past, B.C. was simply saying we’re going to let the mining companies come in, develop the mine and clean it up. I think now Minister Bennett realizes that after two bankruptcies that this mine isn’t one that will be developed and B.C.’s now going to have to responsibility for the cleanup,” Zimmer said. But Bennett acknowledges that a new company could take over the Tulsequah mine, which is owned by a Canadian firm. Any new developer would have to adhere to higher standards for the site, Bennett said. “We would need an ironclad commitment from any new buyer that they were going to do what’s necessary immediately. And if we can’t get that, then the government would act on the closure and remediation plan and just simply close the site down,” Bennett said.  

Year in Review: Mining

Alaskans worried about the potential impact of upstream Canadian mines on Southeast Alaska fisheries officially got their voices heard by the State Department after years of asking for federal intervention. An assistant secretary of state wrote in an October letter to the Alaska congressional delegation that the State Department is actively engaged with Canadian officials to protect the “transboundary” watersheds that bisect the U.S.-Canada border along Southeast Alaska. The October letter was in response to a September request from Sens. Lisa Murkowski and Dan Sullivan and Rep. Don Young to Secretary of State John Kerry requesting the State Department to establish a formal way for Canadian officials to consult with U.S. federal and state agencies and Alaska Native tribes during Canada’s mine permitting process, similar to the domestic environmental impact statement process. It was the second such letter the delegation had sent to Kerry since May. Numerous Southeast Alaska environmental, commercial fishing, and Alaska Native groups have called for IJC involvement in recent years, but the commission can only be spurred by a formal call from either the State Department or Canada’s Global Affairs Department. The delegation characterized the State Department response as a significant positive step, but far from a resolution to the issue. The massive 2014 Mount Polley mine tailings dam failure in the Upper Fraser River drainage validated concerns about gaps in Canada’s environmental protections, the Alaska Native, commercial fishing and conservation groups contend. Also in October, on the same day as the State Department letter, Alaska Lt. Gov. Byron Mallott signed a Statement of Cooperation with British Columbia to form a working group of relevant state departments and provincial ministries to improve stakeholder involvement in transboundary issues. The State Department was also pleased to learn Congress may provide funding for baseline water quality monitoring in Southeast watersheds such as the Stikine, Taku and Unuk rivers, which has been a priority of the Alaska lawmakers. — Elwood Brehmer 2. Icy Bay shows promise for Mental Health Trust The Alaska Mental Health Trust Land Office spent 2016 reviewing a unique mining opportunity with the potential to change the financial course of the quasi-state agency. Icy Cape, a long stretch of beach owned by the trust at the entrance of Icy Bay near Yakutat on the edge of the Gulf of Alaska, appears to hold world-class deposits of several sought-after heavy minerals, according to Trust Land Office officials. The minerals are literally grains in the beach sand on a parcel of coastline that stretches for more than 30 miles and totals roughly 48,000 acres. If preliminary resource indications are proved on a larger scale, the minerals and metal in a tonne of Icy Cape sand could be worth $190 at current market prices, the Trust Land Office estimates. The trust is conservatively projecting that a full-scale mining operation could process up to 250 tonnes per hour for 270 days each year; that adds up to more than $300 million in gross revenue per year for 100 years. It is likely to start on a much smaller scale, however, of about 50 tonnes per your, which would require about $50 million in investment. The Trust Land Office manages roughly 1 million acres of land across Alaska for resource development, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. Trust leaders said they hope to further delineate the prime mineable zones of the beach and start down the process of funding and permitting the project, which would likely take several more years before first production. — Elwood Brehmer No. 3: Northwest Arctic Borough severance tax lawsuit The Northwest Arctic Borough has filed for summary judgment to dismiss a lawsuit brought against it by Teck Resources, the Canadian owner of Red Dog Mine 90 miles north of Kotzebue. Teck filed a lawsuit against the borough on Jan. 15, alleging the borough’s new severance tax is unconstitutional. The borough insists it has the taxing authority granted to any home rule government. The new severance tax would increase the amount Teck pays the borough from $12 million in 2015 to an estimated $30 million to $40 million in 2016. The mine, the world’s largest zinc source and a large lead producer, forms the backbone of the region’s economy. The state formed the borough in 1986, coinciding with the mine’s development and opening in 1987. Because the new borough would take time to decide its tax structure, it enacted a payment in lieu of taxes, or PILT, agreement with Teck in 1987. Under the PILT, Teck has paid approximately $140 million to the borough and the borough school district over the years. The borough relies on Red Dog for about 70 percent to 80 percent of its annual revenue, alongside its annual $12.5 million state general fund allotment. The borough levies no property or sales taxes on private citizens or any other taxes on businesses. — DJ Summers

Mining at Ambler district advances, as does road

After a brief timeout in 2015 for monetary considerations, progress is being made on both ends towards development of the metal-rich Ambler mining district. Trilogy Metals Inc., formerly NovaCopper Inc., is in the midst of evaluating the results from its $5.5 million 2016 summer drilling program at its Northwest Alaska prospect. While any drilling that contacts the metal veins helps further define the resource base, Trilogy Metals CEO Rick Van Nieuwenhuyse said in an interview that the recent work focused on gathering pre-permitting environmental and engineering data. “It’s all geotechnical (drilling) for pit slope stability, hydrology and metallurgy, and then the fourth component is what we call waste rock characterization,” Van Nieuwenhuyse said. “We spent many, many years now studying the ore and now we have to study the rest of the rock.” Vancouver-based Trilogy Metals changed its name in September from NovaCopper to more accurately reflect the multi-metal resource it is pursuing, according to a company statement. The recoverable value is mostly in copper, at about 65 percent, but about a quarter of the resource value is in zinc and another 15 percent is precious metals — silver and gold — with very small amount of lead, Van Nieuwenhuyse described. For more than a decade the company has focused its work on the Arctic deposit, one of several prospects in the broader Ambler mining district, which stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage. The well-defined Arctic deposit holds more than 1.7 billion pounds of indicated copper at an average resource grade of nearly 3.3 percent. It also has 2.3 billion pounds of zinc at 4.4 percent, 40.8 million ounces of silver and 550,000 ounces of gold, according to Trilogy Metals. If developed, it would be an open-pit mine with an initial 12-year life and a startup cost approaching $720 million based on preliminary estimates. Van Nieuwenhuyse said the company is pushing to develop Arctic first, but it also has another highly prospective deposit, known as Bornite, not far to the south. Trilogy Metals will “definitely be out in the field next year,” he added, but what exactly the work program will entail still needs to be hashed out by the company’s board of directors sometime in the first quarter of 2017. “We’ve only drilled three years there and in that three years we’ve outlined over 6 billion pounds of copper with not a lot of drill holes,” Van Nieuwenhuyse said of Bornite. The Arctic work is leading up to a multi-year pre-feasibility study and permitting process, the plans for which should also be clearer as spring approaches, he said. Ambler road Building any mine in the Ambler corridor is contingent upon also building a road to get to it in one of the most remote parts of the state, a task that has been left to the state’s Alaska Industrial Development and Export Authority. AIDEA’s current plan is to construct a 220-mile gravel industrial access road that would skirt the southern edge of the Brooks Range and connect to the Dalton Highway east of the Ambler area. Use of the road would mostly be restricted to mining activity, but it could also help provide lower-cost energy and other goods to villages clustered near both ends of the proposed route, proponents note. To date, the State of Alaska has spent $26.2 million studying the project, money approved in capital budgets since 2011. The “Ambler road” was a large part of former Gov. Sean Parnell’s statewide Roads to Resources initiative. Critics of the project contend the state shouldn’t be spending public money on what would ostensibly be a private road. Additionally, residents of the villages near the route have been vocal opponents — more so of the road than mines — arguing it would impact caribou herds that migrate through the area and are a vital subsistence food source. While state general funds have supported the project to this point, money for actual construction, which AIDEA estimates at between $305 million and $346 million, would be financed by the authority and recouped through tolls paid by Trilogy Metals or any other companies that develop resources in the area. The plan is very similar to the Red Dog mine-DeLong Mountain Transportation System operation that development proponents have touted should be a model for other isolated resource prospects in the road-scarce state. AIDEA anticipates it would net up to $150 million from an Ambler toll road even after accounting for another $270 million in maintenance costs over the 30-year life of the road — on the expectation Trilogy’s 12-year Arctic deposit would be one of several mines to spring up after the road was built. AIDEA spokesman Karsten Rodvik said the authority filed its EIS application with the Bureau of Land Management earlier this year. The application was deemed complete in September and the state and federal agencies are in the process of revising the scope of work for the broad permitting document, according to Rodvik. Concurrently, the National Park Service will be leading an environmental and economic analysis. The vast majority of the road corridor is on state and Alaska Native corporation land, but it would also have to cut through a small portion of Gates of the Arctic National Park and Preserve. Long eyed for its mineral potential, a right-of-way to the Ambler mining district through the federal park was included in the Alaska National Interest Lands Conservation Act, or ANILCA, passed by Congress in 1980. The actual Ambler mine prospects are on state and NANA Regional Corp. property. In October 2015 Gov. Bill Walker approved AIDEA to spend $3.6 million left from the prior capital appropriations to the Ambler road after “pausing” it and other large projects the state had undertaken to review their necessity and financial viability while the state is mired in $3 billion-plus annual budget deficits. AIDEA has said it would likely need another $6.8 million to finish the EIS, but given the state’s financials it’s hard to envision another capital appropriation to get the money. Those opposed to the state spending more on the project have said Trilogy Metals should pay for the rest of the work, but the company has declined to commit to the obligation. Van Nieuwenhuyse has said Trilogy Metals would contribute through the tolls, also noting the company doesn’t want to pay to permit the road that could be used by other companies in the future. The company is happy with the path AIDEA is on now, he said. A source close to the project said AIDEA is tentatively planning to self-finance the rest of the EIS with its own funding mechanisms. Rodvik said the $6.8 million figure “is relevant, but that can change pending the scoping outcome.” He added, “We will look at potential funding next steps once the scoping portion of the EIS process is completed.”

Pebble suits proceeding; DNR rebuts reclamation report

Pebble Limited Partnership is asking for legal fees to wrap up one lawsuit against the Environmental Protection Agency and hopes to settle another out of court. The company pursuing the embattled massive copper and gold mining project in the Bristol Bay area filed a motion in U.S. District Court of Alaska Nov. 22 to recover $227,056 in attorneys’ fees stemming from a suit filed in October 2014 in which Pebble claimed the EPA withheld documents after a Freedom of Information Act request. While the suit was ongoing the EPA released more than 320 documents to Pebble related to its FOIA filing, and additional documents were shared during a June 2016 private review of the materials ordered by Judge H. Russel Holland. Pebble filed the FOIA request in January 2014 — shortly after the EPA released its Bristol Bay Watershed Assessment that determined a large mine would cause irreparable harm to the region’s world-class salmon fisheries — to unearth the process the agency used in reaching the conclusions in the Bristol Bay Assessment. The mining company has claims the assessment is based on hypothetical scenarios and it was developed strictly as a means to substantiate the EPA’s predetermined effort to prohibit the Pebble project. Pebble ultimately contends the EPA should cover its attorneys fees “because it substantially prevailed in obtaining scores of improperly withheld documents that it would not have obtained” if not for the suit. The legal action caused the agency to produce “scores of previously “undiscovered’ documents” and Pebble successfully challenged about 75 percent of the documents the EPA had withheld under privilege claims, the motion states. In a related lawsuit also before Holland, Pebble and the EPA have agreed to go before a mediator and negotiate issues prior to a trial. Here, Pebble sued the EPA in September 2014 on the belief the agency was not objective in compiling the Bristol Bay Assessment and violated federal laws by improperly collaborating with mine opponents in the crafting of the Bristol Bay assessment. Pebble spokesman Mike Heatwole said the group is hopeful the whole suit can be resolved outside of court, but declined to offer any further detail on the issues being negotiated. A Justice Department spokeswoman said the attorneys representing the EPA could not comment on the ongoing litigation. The motion to enter mediation was filed Oct. 27, but Heatwole said he did not think the sides had convened yet. Pebble reclamation controversy After a preliminary review, the Alaska Department of Natural Resources is downplaying the conclusions drawn in a report published Nov. 3 that is highly critical of Pebble’s efforts to clean up after its extensive exploration program. Conducted by the Center for Science in Public Participation, or CSP2, and titled, “Investigation of Reclaimed Drill Sites, Pebble Prospect,” the report concluded that more than 40 percent of the 107 exploration drill sites the CSP2 team inspected had “environmental issues” including dead vegetation, water leaking from the boreholes and open drill casings. The report proves a need, at a minimum, for increased monitoring of Pebble’s exploration sites, according to a release by United Tribes of Bristol Bay, the group that commissioned the work and has fought hard against Pebble. “DNR needs to stop rubberstamping Pebble’s (miscellaneous land use) permits and instead require Pebble to clean up the mess it left behind before taxpayers are stuck with the cleanup bill,” UTBB Executive Director Alannah Hurley said in a statement when the report was released. Pebble has applied with DNR for a two-year MLUP permit to allow it to continue reclamation and maintenance work through 2018 on the more than 1,300 holes it drilled during exploration and its equipment that remains at the claims. Pebble’s activity occurred on state land. Pebble Partnership was not required to put up a reclamation bond to back its work because it did not cumulatively impact more than five acres of land. The group chose to conduct operations via helicopter, thus reducing its footprint, and all of its temporary facilities were placed on “tundra mats,” which limit impacts to vegetation that will grow back once the equipment is removed, according to DNR officials monitoring the project. A report following a DNR inspection of Pebble’s work this summer concluded that Pebble’s “operation is in good condition and is consistent with industry standards.” DNR spokeswoman Elizabeth Bluemink said agency staff requested a full copy of the report from CSP2 after the summary was released in early November and found the Montana-based research group “may have misunderstood or misstated” some requirements of the state’s reclamation statutes and land use permits. “For example, dead vegetation, as observed by both DNR and CSP2 in the field, does not constitute a violation of permit conditions,” Bluemink wrote in an email. Further, the exposed drill casings highlighted in the report are “allowed, and expected” in exploration projects, according to Bluemink. She noted that DNR and staff from other state agencies have performed 56 field inspections of Pebble since 2003, the most for any mineral exploration project in the state. At the same time, the state welcomes public input and uses pertinent information provided from any source in regulating state lands. “A number of the observations reported by CSP2 could be helpful to DNR as it continues to regulate (Pebble’s) activities,” Bluemink wrote. “DNR staff will be able to take the CSP2 observations into account when we visit those sites in the future.” Elwood Brehmer can be reached at [email protected]  

For Livengood project, smaller is better

A smaller, simpler plan for developing the Livengood gold prospect has greatly improved the project’s economic viability. Vancouver-based International Tower Hill Mines Ltd., or ITH, released an optimized pre-feasibility study for the Livengood project Oct. 24 that determined a mine about half the size of what the company originally planned could reduce development costs by about $950 million and operational expenses by 28 percent. As proposed, Livengood would be a conventional, open-pit mine near the Dalton Highway about 70 miles north of Fairbanks. First investigated as a 14-year mine processing 100,000 tons of ore per day with a $2.8 billion capital cost in a 2013 feasibility study, the latest report downsized the operation to a $1.8 billion development handling 52,600 tons of ore per day over 23 years. “Livengood’s fundamentals are compelling, with a substantial gold resource, favorable jurisdiction, proximity to infrastructure and great leverage to the gold price,” International Tower Hill's CEO Tom Irwin said in a release. “We are committed to advancing our basic engineering and metallurgical work to further de-risk the project and prepare for future permitting.” A smaller, longer-lived Livengood would produce slightly less gold, about 6.7 million ounces of the precious metal as opposed to the original estimate of nearly 7.9 million ounces. Annual production of 294,100 ounces from the smaller mine would be 52 percent of the initial plan, closely mirroring the reduction in ore processing, according to the study. The Livengood prospect holds more than 8.9 million ounces of proven and probable reserves at an average resource grade of 0.71 ounces of gold per ore ton. While running a smaller operation for longer seemingly butts against the traditional notion of achieving economies of scale, ITH spokesman Richard Solie said the junior mining company took a holistic look at its plan to ultimately reduce the ore processing cost from more than an esimated $10 per ton to $7.48 per ton. The corresponding cost of production dropped from $1,481 per ounce of gold to $1,247 per ounce under the scaled back scenario. Gold is currently selling for about $1,270 per ounce. For much of 2011 and 2012 it sold for between $1,600 and $1,800 per ounce but prices dropped to a recent bottom of about $1,050 late last year. For starters, Solie said the latest study led ITH to move to a coarser initial ore grind, which would require less power and save money. “Part of why you grind it up smaller is so you can get more gold out of it. But we didn’t lose much recovery when compared to how much we gained in cost (savings),” Solie said. Along that same vein, employing a secondary crushing of the ore before sending it to the mill to be ground would allow for a more efficient use of power, he added. Increasing the grade of the slopes in the mine pit and cutting the leach circuit time from 32 hours to 24 hours after gaining a better understanding of the ore in place reacts to the chemical processes were cost savers as well, according to Solie. ITH also discovered it could save about $100 million up front by forgoing the construction of water reservoirs that were initially thought to be needed for mine start-up. “As it turns out we have enough water in the actual aquifers to meet the need,” Solie said. Being within a two-hour drive of Fairbanks also persuaded ITH to move ahead without a significant cost of doing business that is common to other remote Alaska mines, an operations camp. The smaller Livengood mine is modeled as a commuter mine, in which employees would congregate each day at a muster point in Fairbanks and take “a nice cushy ride up to the site” via bus each day, Solie said. While it adds to the length of the workday, he noted ITH also prefers the ability of its future employees to stay more engaged in their community and spend additional time with their families. “It’s a different culture when your people are living in a town rather than living out at a camp and there’s elements of that we like,” Solie said. “We like the idea of people sleeping in their own beds. We think that’s positive.” Elwood Brehmer can be reached at [email protected]

2016 is a milestone year for miners

Alaska’s miners will have an opportunity to look back at the progress of three of the state’s flagship mines at the annual Alaska Miners Association convention that kicks off Nov. 6 in Anchorage. This year is a milestone year for the mining industry in Alaska; it marks the 10th anniversary of operations at the Pogo underground mine and the 20th year of production at the Fort Knox surface mine. Both located near Fairbanks, they are the state’s premier gold mines. In addition, Hecla Mining Co., which owns the underground Greens Creek silver mine near Juneau, just celebrated its 125th birthday. At 26 years old, Greens Creek is not a young mine, but with record production of 8.5 million ounces of silver in 2015, it remains the largest active silver mine in the country and one of the most productive in the world under Hecla’s guidance. Alaska Miners Association Executive Director Deantha Crockett said she is particularly looking forward to Nov. 11, a day of the convention that will be devoted to highlighting the achievements of the trio and reminiscing about stories and events that have led to the anniversaries. “On the day that we talk Pogo, Fort Knox and Hecla we’re actually only having one (discussion) track because we know that the vast majority of our attendees are all going to want to go to that,” Crockett said. A few days prior, new Alaska Attorney General Jahna Lindemuth will headline the convention’s speakers on Nov. 8 with an hour-long dialogue likely on a host of topics. Crockett said the Alaska Miners Association was “incredibly excited” to hear of Lindemuth’s appointment as Alaska’s top attorney by Gov. Bill Walker in late June because she came to the position from the private sector and has significant experience handling resource development matters. Lindemuth’s talk will undoubtedly include the state’s decision to establish a framework for transferring land owned by Alaska Native tribes into federal trust status. Walker has directed her to lead the state’s involvement in the complicated and sensitive issue that could have far-reaching implications for resource work in the state. “How resource development projects are impacted by decisions that come out of the Native lands into trust issue and the status of those lands — it’s a major issue to watch for us and so finding out how the state plans to navigate that will be useful for pretty much all Alaskans,” Crockett said. She added, “The attorney general is so instrumental in the litigation that comes against resource development permits and the consistent federal overreach that we’re dealing with that I don’t expect to have any shortage of topics for her to address.” Following Lindemuth by a day will be Murray Hitzman, head of the Energy and Minerals division of the U.S. Geological Survey, discussing the future of the agency in the state. Crockett noted that anyone interested in resource development should want the USGS to be active in Alaska — continuing to map the vast state and delineate its resources — fundamental activities that the State of Alaska cannot afford to support as it deals with multi-billion dollar budget deficits. Finally, miners cannot gather without talking about their prospects. While exploration for large projects in the state has dipped in recent years for several reasons, one of the bright spots for the industry is Constantine Metal Resources’ Palmer project in Southeast Alaska near Haines, a high-grade copper, zinc, silver and gold deposit that would be an underground operation if developed. Constantine announced in September that it began construction of a 2.5-mile road to the project as it wrapped up its 2016 exploration drilling program that included seven drill sites. “(Constantine’s) healthy drilling season should provide a lot more results and we should get an update as to what we can expect out of that project, so that’s very exciting,” Crockett said. Elwood Brehmer can be reached at [email protected]

U.S. State Dept has interest in upstream Canadian mining projects

The U.S. State Department has taken a positive step to recognize the concerns some Alaskans have with upstream Canadian mining projects, but the issue is far from resolved, according to the members of Alaska’s congressional delegation. Assistant Secretary of State for Legislative Affairs Julia Frifield wrote in an Oct. 6 letter to the delegation that the State Department is actively engaged with Canadian officials to protect the watersheds that bisect the U.S.-Canada border along Southeast Alaska. “The Department of State intends to continue to work, in coordination with other U.S. government agencies, to ascertain what the Canadian federal government is doing to meet U.S. concerns about protecting this sensitive shared ecosystem from potential transboundary pollution during mine development, operation, impoundment design, and post-closure, and through bonding practices,” Frifield wrote. The Oct. 6 correspondence was in response to a Sept. 8 joint letter from Sens. Lisa Murkowski and Dan Sullivan and Rep. Don Young to Secretary of State John Kerry requesting the State Department to establish a formal way for Canadian officials to consult with U.S. federal and state agencies and Alaska Native tribes during Canada’s mine permitting process, similar to the domestic environmental impact statement process. It was the second such letter the delegation has sent to Kerry since May. Numerous Southeast Alaska environmental, commercial fishing, and Alaska Native groups have called for IJC involvement in recent years, but the commission can only be spurred by a formal call from either the State Department or Canada’s Global Affairs Department. They’re worried about the potential impacts of large metal mines in British Columbia at the heads of large rivers that support commercial and subsistence salmon harvests and flow through the province and Alaska’s panhandle. The massive 2014 Mount Polley mine tailings dam failure in the Upper Fraser River drainage validated the concerns, the groups contend. IJC intervention was originally intended only when both governments submit a “letter of referral” asking for the commission to resolve a dispute. Over time that procedure has morphed and both countries have at times singularly requested IJC involvement, which has often been granted. The commission’s recommendations are nonbinding but generally adhered to in an effort to maintain a cooperative relationship between the countries. Alaska’s delegation also asked for, among other things, the State Department to determine whether an International Joint Commission is the appropriate avenue to find out if Canadian mines are using best practices for treating wastewater and mine tailings, “especially in light of the scientific reviews of the causes of the Mt. Polley tailing disposal dam failure,” the delegation wrote. Frifield noted Canada examining its entirety of its environmental review process; results are expected early next year. Murkowski said in an Oct. 14 joint delegation release accompanying the letter that she is encouraged that the Obama Administration is taking an elevated interest in the transboundary watershed issue — including an August meeting in Alaska between the Central Council of Tlingit and Haida Indian Tribes of Alaska and a State Department-Environmental Protection Agency contingent. “That being said, I remain disappointed that the State Department refuses to address our questions and suggestions, such as to consider appointing a special representative for U.S.-Canada transboundary issues,” Murkowski said. “And it is unacceptable that Secretary Kerry has yet to meet directly with Alaskans on such a hugely important issue. The State Department’s response is a step in the right direction, but we still have a long way to go until Alaskans’ concerns are adequately addressed.” The State Department was also pleased to learn Congress may provide funding for baseline water quality monitoring in Southeast watersheds such as the Stikine, Taku and Unuk rivers, which has been a priority of the Alaska lawmakers. Young said the state and country share an interest in developing their natural resources, but open lines of communication when development in one could impact the other. “Ongoing and proposed mining activities in Canada have brought tremendous concerns to the people of Southeast Alaska -- specifically with the Tlingit and Haida people – which is why I have always engaged with the delegation to prioritize and facilitate outreach between all parties involved. Although I am pleased to hear about certain progress being made to implement portions of the memorandum of understanding and to address the concerns of Alaskans, I still believe there’s much work to be done.” Sen. Sullivan concurred, saying, “I am glad the Department of State and other Administration officials have finally initiated steps to engage key stakeholders as well as the governments of Canada and British Columbia on these pressing transboundary water issues. Yet, further progress is necessary to address the questions the delegation and Alaskan stakeholders have raised.” Also on Oct. 6, the date on the State Department letter, Alaska Lt. Gov. Byron Mallott signed a Statement of Cooperation with British Columbia to form a working group of relevant state departments and provincial ministries to improve stakeholder involvement in transboundary issues, an agreement the State Department was anticipating, according to Frifield. Elwood Brehmer can be reached at [email protected]

Agreement reached with Canada over B.C. mining projects

Alaska Lt. Gov. Byron Mallott signed an agreement with Canadian officials Thursday, marking a step toward cooperation in protecting Southeast Alaska’s border-straddling rivers from proposed mining projects in British Columbia. The Statement of Cooperation establishes a working group of commissioners from three Alaska State Departments and deputies from two Canadian ministries to facilitate ongoing discussions on transboundary mines between the Alaska, B.C. and stakeholders from tribal and environmental groups. “I am pleased that we were able to move forward with this measure,” Mallott stated in a Thursday press release. “It is another step in Alaska’s commitment to open and transparent collaboration with our Canadian neighbors on the vital issue of safeguarding our precious transboundary watersheds that feed our people and nourish our cultures.” Mallott signed the SOC in Anchorage, conferencing via video with B.C. Minister of Energy and Mines Bill Bennett and Minister of Environment Mary Polak, who also signed the SOC. Mallott has worked with Canadian officials and tribal and environmental organizations to draft the statement since late 2015. “British Columbia and Alaska have a long history of working together and supporting each other, as good neighbors do,” Bennett said in a prepared statement. “This Statement of Cooperation between British Columbia and Alaska ensures we are working together effectively on trans-boundary water quality, environmental assessments and permitting for mine projects, and reporting on mine discharges, operations and closure.” The statement is legally non-binding, but does not preclude Alaska from seeking federal intervention in the issue, something environmental, tribal and fishing industry groups say is crucial to protecting Alaska’s salmon interests. “It’s not legally binding, so overall things don’t change,” Frederick Otilius Olsen Jr, Chair of the Tribal Transboundary Mining Working Group said by phone. “This is an international issue and we need international solutions. This being nice across the border is nice, but that’s all it is, it’s just nice talk.” Olsen was referring to intervention from the International Joint Commission, a U.S.-Canadian federal group tasked with settling disputes over shared waters. Olsen and officials from 11 other Southeast tribal, environmental and fishing industry groups have previously signed letters asking for IJC intervention. Alaska’s Congressional delegation has also requested federal intervention through the IJC, petitioning Secretary of State John Kerry to explore the issue in two letters, the most recent sent Sept. 8. Olsen cited a May report from British Columbia’s Auditor General which found “major gaps in resources, planning and tools,” in B.C.’s mining regulation. The report also found B.C.’s mines underinsured for watershed cleanup by $1.2 billion, money that would be needed for a cleanup in the event Canadian mines pollute Alaskan waters. “The SOC is just one step,” Heather Hardcastle, campaign director for Salmon Beyond Borders said in a phone interview Thursday. “Alaskans have been seeking for a while now binding agreements that can only come from intervention from the federal government.” Olsen and Southeast Alaska Conservation Council’s Guy Archibald also expressed concern over some of the statement’s language, which they say is too vague. Archibald stressed that the phrase “significant degradation,” as it’s defined in the SOC, could leave the door open for mine pollution. “No lowering of Alaska’s water quality by BC mines should be allowed,” Archibald wrote in an email to the Empire. “In Alaska, any lowering of water quality requires the polluter to go through a public process. … Even under a permit, the lowering of water quality cannot be to the point where the designated uses, such as maintaining aquatic life, are lost. Is this giving BC the right to lower our water quality to that point without it being considered significant?” Kevin Gullufsen can be reached at [email protected]

Gold prices rising as Donlin mine keeps plugging on EIS

With gold prices on the rebound, it’s full steam ahead for the Donlin Gold mine in Western Alaska. Donlin Gold spokesman Kurt Parkan said in an interview that “things are moving along pretty steadily” as the company continues through the federal environmental impact statement, or EIS, process. A variety of other state and federal permits are being sought in concert with the multi-year EIS process, according to Parkan. As far as the EIS goes, the ball is the U.S. Army Corps of Engineers’ court for now. The Corps is the lead permitting agency for the project. “We’re still waiting to hear back from the Corps of Engineers on follow-up that might be necessary after they had a chance to review the (public) comments that they’ve received,” Parkan said. The Corps, which received about 540 written comments during an extended public comment period, is expected to come back to Donlin with any unresolved issues that arose from public comments or that it discovered by the end of September, he added. Release last November of the draft EIS marked, to that point, the culmination of 20 years of work on Donlin. Early resource definition of the gold prospect began in 1995. Donlin Gold is a 50-50 joint venture of Canadian mining companies Barrick Gold Corp. and NovaGold Resources. A $6.7 billion endeavor with a footprint from Cook Inlet to the Aleutian Islands, the Donlin Gold mine is the definition of a megaproject. At the heart of the project is a prospective conventional open-pit gold mine 1.5 miles across and up to 1,200 feet deep located about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. At that size, Donlin is projected to be the largest open-pit gold mine on Earth. As initially planned, Donlin Gold would produce about 1.1 million ounces of gold per year over a 27-year mine life for a total of about 33 million ounces of the precious metal. The mine site, on lands owned by The Kuskokwim Corp. and Calista Corp., the area village and regional Native corporations, respectively, would also include a fully lined, 2,300-acre tailings facility to store the processed ore. Support infrastructure would include a 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet need to supply fuel to the 227-megawatt capacity power plant at the mine site. The pipeline has also been viewed as a first, indirect step to getting lower cost natural gas to numerous villages in Western Alaska that currently rely on fuel oil their primary heat and electricity sources. A 30-mile road would connect the mine to a new barge port on the Kuskokwim. Further down the Kuskokwim, port cargo facilities would be expanded in Bethel, and new diesel storage tanks would be needed Dutch Harbor to supply fuel for equipment at the mine. The EIS includes an alternative that calls for LNG-powered equipment, which would reduce the risk of a barged fuel spill on the Kuskokwim, but also require construction of an on-site natural gas liquefaction plant. Once Donlin has heard back from the Corps, Parkan said it would likely take the company until late 2017 to release the final EIS, pushing back the overall timeline slightly. The Corps of Engineers’ project EIS website estimates a final EIS early next year. “It always takes a little longer than you hope it would,” Parkan said. The public comments on the project were mostly in line with what was expected, he said. However, a stance opposing the project emerged from the Yukon-Kuskokwim Health Corp. because jobs at the mine could provide a means for people in the region to move elsewhere while making a long range commute to the mine on a rotating work schedule. Parkan said simply that Donlin Gold feels the up to 1,400 jobs the mine would support would ultimately be a significant benefit to the Yukon-Kuskokwim region that is one of the poorest in the country. “People are already moving out of the region because they don’t have jobs,” he said. “If you bring jobs into the region you might stop that flow of outmigration. People could stay home and take care of their families; they could afford to hunt and fish, which is part of the problem that exists now.” Donlin estimates up to 3,000 workers will be needed during construction if the mine is built. The company has often touted its record of about 90 percent local hire during the exploration and study phases of the project. The concerns over outmigration were one of several points raised by the Yukon-Kuskokwim Health Corp. in opposition to Donlin, which included potential damage to the salmon and wildlife resources people in the region rely on for subsistence harvest. When the draft EIS was released last year, Donlin General Manager Stan Foo said the project would not be built at gold prices at the time of less than $1,100 per ounce; and while the long-term viability of the project is not completely at the mercy of metal prices any one day, gold is currently trading at about $1,350 per ounce. Parkan said there is no definitive price at which the mine is a go. Donlin’s owners are committed to getting through permitting and then will evaluate how gold prices could impact the project, he said. “The more above $1,200 (per ounce of gold) the happier we are,” Parkan added. Elwood Brehmer can be reached at [email protected]  

Wishbone Hill permit awaits federal call after court order

Usibelli Coal Mine Inc.’s operating permits for its Wishbone Hill coal development are “in limbo” after a July 7 federal court order, according to officials in the state Department of Natural Resources. Alaska Coal Program Manager Russell Kirkham said the state is waiting on a decision from the federal Office of Surface Mining, Reclamation and Enforcement before it acts on the coal permits. “We have not taken the step to terminate the permits,” Kirkham said. “Right now the permits are there but they’re pretty much in limbo until the final order comes out.” Usibelli’s Wishbone Hill is a longstanding proposed surface coal project on state land northeast of Palmer along the Glenn Highway. U.S. District Court of Alaska Judge Sharon Gleason’s July 7 ruling ordered the Office of Surface Mining to reevaluate its November 2014 decision that indirectly validated Usibelli’s permits for the mostly idle project. A group of environmental organizations, including Cook Inletkeeper, Alaska Center for the Environment, the Sierra Club, and the Chickaloon Village Traditional Council, sued the Office of Surface Mining in March 2015, claiming the Interior Department agency did not enforce its own requirement to pull permits if mine work does not start within the permit period. Gleason largely agreed, and determined that the federal regulators failed to follow the law by allowing DNR to implicitly renew and extend the permits without the commencement of mining activities. The permits to operate can be renewed for up to five years or extended for three. The State of Alaska holds primacy over federal coal mining regulations. Thus, DNR handles all permitting and the Office of Surface Mining intervenes only if required to do so. Specifically, language in the federal Surface Mining Control and Reclamation Act stating operating permits “shall terminate” if mining activity has not occurred within the permit period. Gleason wrote, it “is unambiguous, in that a surface mining permit terminates by operation of law if mining operations have not timely commenced under that statute, unless an extension has been granted pursuant to the statute’s terms.” Kirkham said the federal mining regulators are working on a new decision that jives with Gleason’s ruling and the state is waiting for that decision, which is expected soon, before taking further action. “In this case the district court, reversing the federal Office of Surface Mining, held that the termination provision of a federal surface coal mining statute is self-executing. The decision was not, in itself, a ruling on the validity of the Wishbone Hill permits. Instead the court has remanded the matter to the federal agency for further proceedings where that question and others may be resolved.  We are continuing to review the decision and appropriate next steps,” according to a statement from the Alaska Department of Law. Office of Surface Mining Western Region officials, located in Denver, could not be reached for comment. Usibelli acquired the Wishbone Hill project in 1997 from North Pacific Mining Corp., a Cook Inlet Region Inc. subsidiary. The mining company then applied for and received several five-year permit renewals from DNR through 2014. The first state permits to operate the mine were issued to Idemitsu Alaska Inc. in 1991. Idemitsu was granted one extension before it sold the project to North Pacific Mining in 1995. Early coal mining operations started in 2010 when Usibelli began work on a road to the mine site. About that same time, Usibelli started a feasibility study on the project, according to company spokeswoman Lorali Simon. Office of Surface Mining Western Region Division Manager Robert Postle wrote in the November 2014 notice to state coal regulators that DNR was correct in not taking action against Usibelli for operating at Wishbone Hill without permits because the company’s permits had not been terminated. However, that was only because DNR didn’t follow the appropriate procedure when it implicitly granted extensions to the companies that owned Wishbone Hill before Usibelli by not actively pulling the permits, according to Postle. “To terminate a permit, the regulatory authority must take affirmative action based on the record,” Postle wrote in 2014. “In this case, DNR failed to do so, and consequently, Usibelli was not operating without a permit. I find that DNR, consequently, had ‘good cause’ for not taking action against Usibelli for operating without a permit. I also find, however, DNR had a responsibility to issue prompt determinations on the failure of Usibelli’s predecessors to initiate mining and that it failed to do so. This situation cannot be allowed to happen again.” The 2014 notice to the state was spurred by a citizen’s complaint filed with the Office of Surface Mining by several of the same groups that filed the lawsuit against the federal agency. The complaint requested federal action to stop coal mining operations at Wishbone Hill until Usibelli obtained valid permits. Usibelli, which operates the state’s lone active coal mine near Healy in the Interior, has invested millions of dollars in Wishbone Hill and still has plans to bring the mine, Simon said, but a myriad of factors have always prevented that. She said DNR has been continuously apprised of Usibelli’s plans and consequently kept approving the permits and that Gleason “erred because she did not recognize the state’s primacy” over coal mining operations. “Because the ball is in (the Office of Surface Mining’s) court, we’re waiting to see what OSM says to DNR,” Simon said. Elwood Brehmer can be reached at [email protected]  


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