Mining

Mental Health Trust exploring Icy Cape prospect

The Alaska Mental Health Trust Land Office is evaluating a heavy mineral prospect near Yakutat that could change the course of the agency for generations. Icy Cape is a long stretch of beach owned by the trust at the entrance of Icy Bay that appears to hold world-class deposits of several heavy minerals, according to Trust Land Office Executive Director John Morrison. “It’s difficult to quantify the value of (Icy Cape) in terms of heavy minerals; it’s just mind boggling,” Morrison said in an interview. “There’s enough heavy minerals there to run a really large mine operation for over 100 years and we’re talking about hundreds of millions of dollars every year.” 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, Morrison described. Trust officials stressed that the resource evaluations are preliminary, but early drilling samples of the “ore” — sand, really — indicate up to 40 percent of the ore is heavy minerals in the broadest delta area near the point of the cape. Specifically, the samples are roughly comprised of 20 percent epidote, 19 percent garnet and 0.5 percent zircon. Epidote and zircon are semiprecious gemstones. Garnet has also been used as a gemstone for hundreds of years, but more recently the hard mineral has been put to use as an industrial abrasive on sandpapers and in sandblasting applications. It is also used in water filtration; garnet’s small pores allow for the passage of liquid while catching some contaminants. “We would be the only source for garnets on the West Coast,” Morrison said. “Specifically, there’s all sorts of metrics and parameters that the buyers of those types of materials would want and our garnets are the best you could have in terms of the size of the crystals and the way they’re fractured.” The Icy Cape sands also contain gold concentrates of about 1.4 grams per metric ton, according to the early exploratory results. The sands are comprised of two sediment patterns coming from opposite directions, those materials that have eroded and washed down from the steep mountain faces above and sediments that tidal and wave action have pushed up to the shoreline. If the 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 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. Morrison said 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, he said. The operation would likely start on a much smaller scale, however, of about 50 tonnes per hour, Morrison said, which would require about a $50 million investment. As a passive landowner the trust could expect to see about 20 percent of the gross revenue from any mine, but Morrison said he would hope to retain control as a more active investor and take “substantially more” risk and subsequent reward from the project. Trust Land Office revenues have varied greatly over its 20-year existence, as money from timber and land sales and other resource projects has come and gone. Since 2011, its annual revenue has been between about $10 million and $16 million; even a minority share of a $300 million per year mine would dwarf that. The City and Borough of Yakutat would also see a bump in its tax revenue from an Icy Bay mine operation, he noted. The processing, or relative lack thereof, required of the sand adds to the positivity of the prospect. Extracting the gold and heavy minerals doesn’t necessitate the intensive milling or chemical leaching common in large metal operations, meaning Icy Cape should theoretically be relatively simple to permit, according to Morrison. “It’s the sand. It’s placer mining. You literally just take a backhoe and scoop the sand into your separator as fast as you can and you get these various compounds,” he described. The Trust Land Office has held the Icy Cape property for almost all of its 20-year existence and held a timber sale there last year. Morrison said it has received interest from individuals wanting to placer mine gold at Icy Cape, but the plans were too small to entertain them. It was only recently when Icy Cape drilling samples from the 1990s were unearthed at the Alaska Geologic Materials Center in Anchorage that the Trust Land Office was spurred to do its own drilling last summer. This year the trust plans to conduct a low-altitude airborne magnetic survey and collect bulk ore samples to further delineate the resources. Then in 2017 the plan is to drill the magnetic anomalies to prove the high-grade, mineable zones, Morrison said. He added that the trust has already gotten interest from international mining companies that are supporting some of the exploration work and want to be a part of the larger development project. “I would say by the end of next summer we should be really headed down the path, depending on the results we get, of forming a joint-venture (partnership) to start the process of permitting a mine,” Morrison said. In the end, he forecasts small-scale production to start in five to eight years if all goes well. Elwood Brehmer can be reached at [email protected]

Package of tax hikes on fishing, mining and fuel stalls

A bill to raise taxes on fisheries, fuel and mining remains unscheduled for a House Finance Committee hearing after public objections. Gov. Bill Walker introduced a suite of proposals at the beginning of the session designed to hitch up taxes on state industries and individuals to help close the $4.1 billion budget gap. Fisheries, fuel, and mining tax increases had varied levels of support. Each remained on the committee backburners after being recommended to it weeks or even months ago. Senate Bill 132 and its mirror House Bill 249 were passed to their chambers’ finance committees on Feb. 29 and Feb. 24, respectively. The fisheries tax moved out of a lengthy House Fisheries Committee holding pattern on April 5. Mining taxes moved to the committee on April 1. To keep legislators from having to muster individual votes, the House Finance Committee folded the three industry tax increases into a three-part minibus on April 14. The adjusted tax minibus did not provide new estimates for the state’s likely revenue. Previous estimates for the three taxes indicated $80 million for the state. The bills’ complexities brought mixed receptions. Industry leaders acknowledged the need to pay for state services, but contested portions of the package they found inequitable.   At an April 16 hearing, the House Finance Committee responded to concerns by postponing a discussion scheduled for the next day. “After hearing public testimony last night,” said committee co-chair Rep. Steve Thompson, R-Fairbanks, “We’ve realized there are a lot of problems with the tax bill HB 249, and we’re going to set it aside for the time being.” In an April 15 committee hearing, the Alaska Chamber testified against the newly bundled tax increases. Chamber President and Chief Executive Officer Curtis Thayer said the state needs to look to its own finances before raiding the private sector.  “The public won’t support a host of new taxes,” Thayer said. “Not while the state is handing out double-digit raises. How can they when their friends and family members are losing their jobs?” Thayer said public employee contracts promise too much. He said that pay raises between 3.25 percent and 10.5 percent over three years are still being considered.  “They’re trying to fill a $4 billion dollar budget gap by hammering fishing and mining with $49 million in new taxes,” Thayer said. “Meanwhile, another $70 million in pay raises just widens the gap.” Fisheries tax increases in the omnibus received much of the same treatment as the standalone bill. Industry representatives repeated many of the same concerns they had voiced in the House Fisheries Committee. Objections were widespread concerning the various fishing sectors that would each be impacted by tax increases differently: canned salmon simply cannot handle a tax increase, floating processors and inshore processors need different treatment, developing fisheries cannot handle a tax increase, the state’s reputed fiscal loss on fisheries management is a red herring, and tax increases will make it harder for young fishermen to enter the industry. Fishermen previously wanted to make sure they would not be alone in tax increases. Committee chair Rep. Louise Stutes, R-Kodiak, held the bill earlier in session, saying she needed assurances that other industries would be taxed as well and that the existing fisheries taxes would be reexamined to maximize revenue to the state. With a modified bill and promises from the Department of Revenue to maximize existing fisheries taxes, the bill moved on to the House Finance Committee without opposition. Though the inclusion of the fisheries bill into an omnibus is a “step in the right direction,” said United Fishermen of Alaska, the states largest fishing industry group, they still do not support the package. Walker’s original bill would impose a 1 percent increase on both landings taxes and fisheries taxes on each fishery sector. The amended bill keeps the 1 percent increase for every fishery sector except the shore-based salmon cannery sector and the developing fisheries sector. A negative market outlook for Alaska fisheries caused many fishermen to reject the bill outright, saying they have little room to have more revenue scraped from their decks. Certain bill changes address two of the larger concerns for salmon canneries and developing fisheries. In previous testimony, representatives from the Pacific Seafood Processors Association spoke of the tax’s tone-deafness regarding the 2016 salmon market and how a tax increase could cripple canneries. Back-to-back years of large sockeye runs in the state’s largest salmon fishery, Bristol Bay, left salmon processors with a price-lowering glut of product. The U.S. dollar’s strength against key export market currencies added to the overstock to create a tough market outlook for salmon in 2016. Walker’s bill to increase state fuel taxes had support from some industry groups it would directly impact. The Senate Transportation Committee passed the bill onto the Finance Committee with lukewarm support on a 3-2 vote. Senate Bill 132, and its mirror House Bill 249, would raise the per gallon state fuel taxes as follows: highway fuel tax from 8 cents to 16 cents; marine fuel tax from 5 cents to 10 cents; aviation gasoline from 4.7 cents to 10 cents; and jet fuel from 3.2 cents to 10 cents. The legislation would correspondingly increase the per gallon highway fuel tax rebate for off-road use from 6 cents to 12 cents. In all, the tax hikes are projected to raise $49 million per year, according to the Revenue Department. The mining tax increase, originally HB 253, was badly received when introduced. It would raise the tax rate for mines with a net income of $100,000 or greater from 7 percent to 9 percent. This includes 14 mines statewide. The bill would eliminate a 3½-year tax exemption for new mines and implement a fee for mining licenses. Mining taxes collected $38.6 million in 2015 according to state records. The increase would collect another $6 million per year. DJ Summers can be reached at [email protected]

Bokan mine development slowed as rare earth prices dip

Development of the Bokan Mountain rare earth mine is on hold as the company leading the project focuses on a new processing technology and waits for rare earth metal prices to rebound. Nova Scotia-based Ucore Rare Metals Inc. finished infill drilling and drilled groundwater monitoring wells in 2014, leaving it at a natural stopping point before moving towards the next steps of development. Ucore Vice President Randy MacGillivray said in an interview the company has delineated a resource of approximately 5 million tons that is 0.65 percent total rare earth metals. Bokan, located on the southern part of Prince of Wales Island in Southeast, would be an underground mine. Rare earth metals are used in small amounts in countless technology applications. Their prices have softened in recent years along with other, more well known metals and commodities. MacGillivray said because the mine would harvest up to 15 rare earth metals it is hard to set a definitive price point at which Ucore would initiate a full-fledged feasibility study or jump into the environmental impact statement process. “Certainly a movement towards increased metal values in the rare earth metal sector and or us being able to tie up an end user agreement with defined prices would encourage development,” he said. However, there is no timeline for starting permitting. Instead, Ucore has invested in molecular recognition separation technology that has been used for other metals but not with rare earths, according to MacGillivray. Generating a revenue stream from that investment could also help the junior mining company fund Bokan, he said. Based on Ucore’s preliminary economic assessment, the mine would cost $220 million to construct over two years and employ up to 300 people during that period. Ucore has “drilled off” a resource base to support operation for 10 years, which would require about 190 jobs, he said. MacGillivray said Ucore continues to strengthen its baseline environmental work for the project. In 2014, former Gov. Sean Parnell signed legislation authorizing the Alaska Industrial Development and Export Authority to finance up to $145 million for Bokan’s construction. Elwood Brehmer can be reached at [email protected]  

Greens Creek mine reports record silver production in 2015

Hecla Mining Co. announced annual results that included record silver production at its Greens Creek mine near Juneau. Greens Creek had production of 2.6 million and 8.5 million ounces of silver in the fourth quarter and full year of 2015, respectively, an increase of 4 percent and 8 percent over the same periods of 2014. It was the highest annual silver production since Hecla acquired 100 percent of the mine in 2008. According to the company, silver production increased over 2014 levels due to higher silver ore grades, particularly during the fourth quarter of 2015, as well as higher metallurgical recoveries. Overall, Hecla announced 2015 sales of $443.6 million and gross profit of $38.5 million, with net loss applicable to common stockholders of $87.5 million, and an adjusted net loss applicable to common stockholders of $34 million. Hecla President and CEO Phillips S. Baker Jr. said he was pleased with the results. “We believe we are one of few precious metals companies growing right now, not just in reserves but in production as well,” Baker said in a release. “Because our balance sheet allowed us to continue investing during the price decline of the last few years, we expect more than a 15 percent increase in silver production and about a 10 percent increase in gold production this year, positioning us to take advantage of the rally in prices we have seen in 2016.” At Greens Creek, capital spending was $46 million, including $20.7 million for a tailings pond expansion. Capital spending for Greens Creek in 2016 is estimated to be $48 million, of which approximately $14 million is for the tailings expansion project. Cash cost, after by-product credits, per silver ounce at Greens Creek was $4.18 and $3.91 for the fourth quarter and full year, respectively, compared to $2.74 and $2.89 for the same periods in 2014. The increase in cash costs, after by-product credits, per silver ounce for 2015 compared to 2014 is the result of lower by-product credits due to decreasing metal prices, partially offset by increased silver production.

Federal officials consider Donlin mine’s subsistence impact

BETHEL — Two federal agencies have weighed in on the potential impacts the proposed Donlin Creek mine could have on subsistence along the Kuskokwim River. Donlin Gold LLC estimates it could excavate about 34 million ounces of gold over three decades from the proposed open pit mine near the village of Crooked Creek, KYUK-AM reported. The Army Corps of Engineers predicts that the mine would have a minor to moderate impact on subsistence practices and resources. “Minor are impacts that tend to be low intensity, temporary duration, and local in extent typically to common resources that may experience more intense longer-term impacts,” said Keith Gordon, Army Corps Project Manager for the Donlin project. Alan Bittner, field manager for the Bureau of Land Management, agrees that subsistence could be affected by the mine proposal. “When we looked at all three major components of the project, it seemed like there was significant potential for subsistence resources to be affected,” Bittner said. Plans for the mine project also include barging on the Kuskokwim River and a natural gas pipeline spanning 300 miles to Cook Inlet. “Simply put,” Bittner said, “this is a pretty big project. There’s big components to it, and our finding is that the possibility exists in any of those major components to affect subsistence resources.” The BLM is planning to gather feedback from the public as it looks further into how subsistence resources and access to those resources will be affected by the project. “So our preliminary finding is that it may (be affected), and we need to hear from people about whether that’s true for them or not — the individuals who are actually in the communities and subsistence is a part of their life,” Bittner said. The Army Corps, which is the lead federal agency creating the project’s environmental impact statement, is also looking to engage with the community by responding to their critiques and considering any alternative solutions they may have for the project. “And if they can give us some of those reasons, give us some information about why we need to do more, that gives us something we can look back at and determine if the analysis needs to go to a deeper level or needs to be expanded,” Gordon said.

Nome graphite mine progress slowed, but ongoing

Development of the Graphite Creek mine near Nome has been delayed, but progress continues on the project that could become the country’s lone such mine. Executive chairman of Vancouver-based Graphite One Resources Doug Smith said his company is moving from exploration to the technical and economic evaluation phases of the project. At the same time, Graphite One is in the midst of another round of fundraising, “a never-ending requirement in the business of junior mining,” Smith noted. He said large drill samples are currently being technically evaluated and results that will feed into the mine’s preliminary economic assessment should be available in late February. The Graphite Creek prospect sits about 40 miles north of Nome on the northern slope of the Kigluaik Mountains on the Seward Peninsula. It is about 10 miles from spur-road access to that region’s Taylor Highway. Considered a high-grade, large flake graphite deposit, Graphite Creek would give the U.S. a stake in the graphite market that has been dominated by Chinese mines for decades. 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. Smith said Graphite One is continuing to collect environmental data in parallel with community outreach and preliminary economic assessment work that will hopefully lead to a favorable feasibility study in a couple years. “As soon as the water starts to flow then we have water samples to get and those types of things,” Smith said in an interview. Initial development is likely three years out if all goes according to planned and funding is available, according to Smith. Earlier company predictions had mine development starting as soon as 2017. Graphite One spent nearly $10 million exploring the deposit between 2012 and 2014. The current inferred resource is 154 million metric tons averaging 5.7 percent graphite; the indicated resource is 18 million tons with an average graphite content of 6.3 percent. The indicated resource is more than 1.1 million metric tons of in-situ graphite. Some of the highest concentrations are up to 10 percent graphite making for what is believed to be a very high-quality resource, according to Smith. No drilling was done in 2015. “Our focus has been on lab work,” Smith said. However, further infill drilling is still needed to determine the exact scope of the mine, he said — indicated resources stretch for 750 meters. Base assumptions are for a 50,000-ton per year mine with an initial 15- to 20-year life, with the understanding it could run much longer. “We have a significant amount of graphite there for many, many years given the size,” Smith said. “We’d look at a 50,000-ton per year operation that’s, as mines go, not a large operation, but as graphite mines go that’s good size.” He described the future mine as a large quarry without some of the requirements of other mines. That the main resource is on the surface, making it easier to access, is another big benefit to the project. “The graphite goes through a milling process and then it goes through a float-sink process, but it does not go through a leaching process like a metal mine would,” Smith said. Development costs should be in the $125 million to $150 million range, with further investment needed if upstream processing into concentrates optimal for shipping can be done on-site, he projected. The potential workforce at the mine is still unknown because whether it will be a year-round operation is also undecided, given the quarry-style and seasonal barge access at the Port of Nome could make for a seasonal mine. In that case, a more intensive summer mining operation could add to the workforce and lead to processing in the mining off-season, Smith surmised. Elwood Brehmer can be reached at [email protected]

IG finds no bias in EPA Bristol Bay assessment

The Bristol Bay Watershed Assessment is on the up-and-up, at least according to the Environmental Protection Agency Office of Inspector General. Based on “obtainable records,” an Inspector General report issued Jan. 13 found no bias in how the EPA conducted its lengthy assessment of the potential impacts of mining within Bristol Bay watershed. The agency’s assessment process also met requirements for peer review and public involvement and followed appropriate procedures for verifying the quality of the information in the assessment before 1,000-plus page document was released to the public in early 2014, according to the report. While the report absolves the agency of misconduct regarding alleged bias, it notes that 25 months worth of missing government emails from the retired employee believed to be retired ecologist Phillip North could not be recovered and evaluated. Further, the IG notes that North used nongovernmental email to comment on a draft 404(c) petition submitted to the agency from tribes before it was officially submitted to the EPA. “We found this action was a possible misuse of position, and the EPA’s senior counsel for ethics agreed,” the report states. “Agency employees must remain impartial in dealings with outside parties, particularly those that are considering petitioning or have petitioned the agency to take action on a matter.” The 17-month IG review of the agency began in May 2014 and focused on the process used to develop the assessment. Its conclusion contrasts with a recent report authored by former Secretary of Defense William Cohen that was critical of the EPA’s process, finding the agency to be cozy with scientific and local Alaska Native groups that oppose Pebble Mine.  “EPA is pleased that the Inspector General’s independent, in-depth review confirms that our rigorous scientific study of the Bristol Bay watershed and our robust public process were entirely consistent with our laws, regulations, policies and procedures and were based on sound scientific analysis,” EPA Region 10 Administrator Dennis McLerran said in a formal statement. “We stand behind our study and our public process, and we are confident in our work to protect Bristol Bay.” The Bristol Bay Watershed Assessment ultimately determined that large-scale mining in the region would irreparably harm Bristol Bay’s world-class salmon fisheries that currently support much of the areas economy. Subsequently, the EPA used the assessment as its basis for using its Clean Water Act Section 404(c) authority to prohibit a large mine in the watershed, a proposal that would effectively kill the prospect of developing Pebble Limited Partnerships premier copper and gold deposits. The 404(c) action is on hold as a federal court tries to determine what the IG’s office and former Secretary Cohen could not agree on: whether the EPA conspired with Pebble opposition to reach the conclusion in the assessment. Pebble sought and received an injunction to halt the EPA’s work until the court case is resolved. Pebble CEO Tom Collier called the IG report an “embarrassing failure” and a “whitewash” in a formal statement. “Based on a limited number of documents received through (the Freedom of Information Act), we were able to place in front of the IG incontrovertible evidence that EPA had reached final decisions about Pebble before undertaking any scientific inquiry; that it had inappropriately colluded with environmental activists; that it had manipulated the scientific process and lied about its intentions and actions to both us and to U.S. Congress,” Collier said. “Just as importantly, our record shows that these abuses reach to the highest offices within the agency.” Officials from the EPA’s offices of the Administrator, Region 10, Water, Research and Development and a retired Region 10 ecologist, presumably Phil North, were interviewed for the IG report. Additionally, more than 8,300 emails sent or received by agency officials between January 2008 and mid-May 2012 were reviewed. North, who retired from the EPA in April 2013, has received national notoriety for his involvement in the Bristol Bay Watershed Assessment. Pebble supporters and general EPA critics have zeroed in on him as the likely link for the alleged collusion with mine opponents. Attempts by the IG to access North’s personal email through subpoena were unsuccessful, as his whereabouts are unknown, the report states. Because the IG could not find North, the office issued a subpoena to North’s lawyer, who refused to accept service on behalf of North. North also did not surface when subpoenaed for deposition last November in Pebble’s ongoing suit against the EPA in federal court. The IG recommended to the EPA that the agency incorporate examples of “misuse of position” in its ethics training as well as mandatory tribal training to define appropriate parameters for Tribal assistance by agency staff. Elwood Brehmer can be reached at [email protected]

YEAR IN REVIEW: Draft EIS for Donlin out; DNR issues Chuitna water decision

Donlin Gold reached a milestone Nov. 30 when the first draft of an environmental impact statement for the giant Western Alaska gold project was released by the U.S. Army Corps of Engineers. The draft EIS was 20 years in the making, as early resource definition work began at the Donlin claims in the Upper Kuskokwim River valley in 1995, according to Donlin Gold. A true mega-project, Donlin Gold’s $6.7 billion plan calls for a conventional open-pit mine 1.5 miles across and up to 1,200 feet deep about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. A tailings facility, large power plant, workers’ camp and 5,000-foot airstrip would accompany the mine. Also supporting the mine operation would be 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet that is needed to fuel the 227-megawatt capacity power plant. The mine itself would produce more than 33 million ounces of gold from about 500 million tons of ore over an initial 27-year operating life, or more than 1 million ounces per year. It would process 59,000 tons of ore per day, according to the draft EIS. However, Donlin General Manager Stan Foo said shortly after the release of the EIS that gold prices would have to rise above current levels — less than $1,100 per ounce — to make the project feasible. Donlin Gold submitted its EIS application to the Corps in July 2012. A final EIS and subsequent record of decision are expected in mid- to late 2017. Foo estimated the draft EIS at over 7,000 pages, a compilation of information rarely matched for any resource development project, he said. During three to four years of construction, the mine would employ about 3,000 workers; once in operation the workforce would average about 800 employees. Calista Corp., the regional Alaska Native corporation, holds subsurface mineral rights for the mine. The Kuskokwim Corp., the area village corporation, holds surface rights. The draft EIS examines five project alternatives beyond Donlin Gold’s preferred alternative and the requisite no-action alternative. Of those, three would change the project in an effort to reduce barge traffic — specifically diesel barges — on the Kuskokwim River, which area residents rely heavily on for travel and subsistence salmon harvests. —Elwood Brehmer 2. DNR issues unprecedented water rights decision As PacRim Coal’s proposed Chuitna Mine is still early in the permitting process, the company, the state and stakeholders are haggling over who’s allowed to be involved. In October, the Alaska Mental Health Trust Authority appealed a Department of Natural Resources decision to grant certain water reservation rights to a non-state entity for the first time ever. Chuitna Citizens Coalition received an instream flow reservation, or IFR, for the lower portion of Middle Creek, a salmon spawning stream in the proposed mine’s area. Only Chuitna Citizen’s Coalition’s IFR for the lower section was granted by DNR. The coalition had also filed IFR requests for the middle and upper reaches. The coalition characterized DNR’s decision as a “dodge,” and a concession to the coal industry at the expense of Alaska salmon. The trust, which is overseen by the Department of Natural Resources and has large land allotments from which revenues are to support mental health needs, called the DNR decision “arbitrary” in its October appeal, and a dangerous precedent for allowing private parties to derail resource development. The Chuitna Citizens Coalition IFR is the first granted to a private group, rather than state organizations. PacRim is also filing an appeal of the DNR’s decision. —DJ Summers 3. Usibelli halts exports Usibelli Mine Inc., Alaska’s sole producing coal mine, has seen a long run of coal exports come to an end, at least until the end of 2015. For years the company routinely exported 600,000 tons to 800,000 tons of coal, although there were periodic dips in Pacific coal markets. In 2014 and 2015 coal prices dropped again in line with prices for other commodities, and competition for the available Pacific coal market stiffened. What has also complicated matters is a new tax in imported coal levied in South Korea, a prime customer for Usibelli. Adverse swings in currency values, with the U.S. dollar now at high levels compared to those of other nations, make imports from the U.S. including coal very expensive. Usibelli has also shipped to Japan, which it did in 2015, as well as to China and Chile. Coal has been mined by Usibelli at Healy and shipped by rail to Seward, a south Alaska coastal port city. A loading facility there loaded to coal on ships bound for overseas ports. The company’s exports dropped to about 200,000 tons in 2015 and so far there are no sales planned fro 2016, the company said. However, the core market in Alaska for the company remains firm at about one million tons of coal yearly and this will increase a bit in 2016 as the Healy Unit No. 2 coal-fired power plant at Healy becomes fully operational. The plant can produce 50 megawatts. The plant is owned and operated by Golden Valley Electric Association, the Interior power utility. Golden Valley also owns the smaller Healy Unit No. 1, a 25-megawatt plant. Usibelli supplies coal to both plants along with power plants in Fairbanks and at Interior Alaska military installations. Export prospects for Usibelli may improve if coal prices turn up, however. Usibelli’s long-term prospects remain positive, however. Coal is abundant in Alaska and it is the least-expensive source of energy for power generation, and the special quality of Alaska’s coals, with an ultra-low content of sulfur, ease any environmental problems caused by emissions. In addition the Healy 2 plant has new-technology emissions control equipment. Usibelli’s coal resources are also ample. At the present rate of production the company has about 1,000-year supply. — Tim Bradner    

Donlin environmental impact statement released

Twenty years in the making, the first draft of an environmental impact statement for the Donlin Gold mine proposed for Western Alaska was released Nov. 30. “It’s still a long path ahead of us, a lot of challenges ahead of us, but (the EIS) is a significant milestone,” Donlin Gold General Manager Stan Foo told the Resource Development Council of Alaska Dec. 3. Early resource definition work at the site began in 1995. A true mega-project, Donlin Gold’s $6.7 billion plan calls for a conventional open-pit mine 1.5 miles across and up to 1,200 feet deep about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. A tailings facility, large power plant, workers’ camp and 5,000-foot airstrip would accompany the mine. Also supporting the mine operation would be 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet that is needed to fuel the 227 megawatt capacity power plant. To the south and east, a 30-mile road would connect the mine to a new barge port on the Kuskokwim. Further down the Kuskokwim, port cargo landing facilities would be expanded in Bethel, and new diesel storage tanks would be needed Dutch Harbor. In all, the direct supply chain in Donlin’s proposal from Cook Inlet to Dutch Harbor would cover approximately 1,050 miles. Donlin Gold is a joint venture between Barrick Gold Corp. and NovaGold Resources Inc. The natural gas pipeline would initially be only about half full as the average load of the power plant will be about 150 megawatts, according to Foo, leaving potential capacity for natural gas that could be used by local communities to offset high-cost, diesel-sourced heat and power. Assuming the cost of using Donlin’s pipeline and developing natural gas infrastructure in the region would be the responsibility of a third-party developer, Foo said. He said the scope of the Donlin project meant compiling a stock of information rarely matched in scale, much like the project proposal. The draft EIS, which is primarily shared in electronic form, would surpass 7,000 printed pages, he surmised. The mine itself would produce more than 33 million ounces of gold from about 500 million tons of ore over an initial 27-year operating life, or more than 1 million ounces per year. It would process 59,000 tons of ore per day, according to the draft EIS prepared by the U.S. Army Corps of Engineers. “Very few mines in the world produce more than 1 million ounces of gold each year,” Foo said. However, gold prices will need to improve between now and the time Donlin decides whether or not it plans to move forward with construction. Foo said the mine would not be feasible at today’s gold prices of less than $1,100 per ounce. The tailings storage facility, which would be the first full-lined facility in Alaska, he said, would cover approximately 2,300 acres. During three to four years of construction, the mine would employ about 3,000 workers; once in operation the workforce would average about 800 employees. Calista Corp., the regional Alaska Native corporation, holds subsurface mineral rights for the mine. The Kuskokwim Corp., the area village corporation, holds surface rights. Both have been “very supportive of the project,” Foo said. Donlin Gold submitted its EIS application to the Corps in July 2012. A final EIS and subsequent record of decision are expected in mid- to late 2017. The draft EIS examines five project alternatives beyond Donlin Gold’s preferred alternative and the requisite no-action alternative. Of those, three would change the project in an effort to reduce barge traffic — specifically diesel barges — on the Kuskokwim River, which area residents rely heavily on for travel and subsistence salmon harvests. The reduced barging options include using liquefied natural gas-powered equipment at the mine, thus reducing the need for diesel fuel; constructing an 18-inch diesel pipeline from Cook Inlet to the mine, which would replace the natural gas line; and moving the port site from Jungjuk Creek 69 miles downstream to Birch Tree Crossing to reduce the distance freight and diesel would travel on the Kuskokwim. An alternative that would use a dry stack method of tailings storage instead of the tailings pond and dam proposed by Donlin would avoid the risk of a tailings dam failure. The tailings under this option would be dewatered in a filter plant and saturated into a compactable cake material, according to the draft EIS. That material would then be spread into thin layers with bulldozers in a dry stack tailings area. The last alternative would shift the natural gas pipeline route slightly through the South Fork Kuskokwim valley. Comments on the draft EIS can be submitted to the Corps through April 30.

Mining sector in turmoil as Anglo American sheds jobs

LONDON (AP) — The decision by a London-based mining company to shed 85,000 jobs is the sign of a global industry in crisis, with conglomerates reassessing their huge operations to cope with a drop in demand from Chinese factories for metals and other raw materials. Anglo American said Dec. 8 it will shed some 63 percent of its workforce in a radical restructuring meant to cope with tumbling commodity prices. It will streamline its global business from some 55 mines to around 20. CEO Mark Cutifani said the drop in commodity prices requires “bolder action,” even though the company has delivered on performance and previous business restructuring objectives. He pledged to provide more details later. The dividend was suspended for the second half of 2015 and 2016. Investors reacted with dismay. The company’s share price fell 11 percent to 327.30 pence. Mining companies around the world are facing tough times as economic growth slows in China, whose manufacturers’ need for raw materials has driven a years-long boom in mining in countries like Australia and Brazil. China accounts for as much as 40 percent to 50 percent of global commodity demand, according to consultants PwC. Its economic growth is forecast to drop below 7 percent a year from double digits in recent years — and commodity prices are tracking it lower. “Mining companies are feeling the wrath of the collapse in commodity prices,” said Gianna Bern, who teaches finance at the University of Notre Dame in Indiana and expects others across the industry to also either cut or suspend their dividends to cope. “Companies are weathering some very tough economic times.” The price of copper has dropped about 30 percent in the past year; gold 11 percent; iron ore has about halved. Companies have focused on cutting costs and reducing capital spending, but market values have continued to decline among the top 40 companies — losing some $156 billion, or 16 percent, of their combined market value in 2014, PwC said. “With few exceptions, the commodity price outlook remains dim, forcing miners to keep up their guard,” PwC said in its report. “As the old saying goes, survival will be of the fittest, and for miners also the leanest.” Just as first there was a big boom in commodities, now there’s an equally big bust, said Julian Jessop, the chief global economist at Capital Economics. “I think the pendulum has swung too far to pessimism but as long as you have pessimism, you’re going to get these big cuts.” Anglo American is not alone. Shares in Glencore slid about 30 percent in one day in September amid concerns over its ability to service sky-high debts at a time of low market prices. Glencore shares have since stabilized as the company announced the sale of several mines, but they were down another 9 percent on Tuesday. Rival BHP Billiton fell 6 percent and Antofagasta 5 percent. But Anglo American is different from others in that two commodities in its portfolio — diamonds and platinum — are labor intensive to extract, said Kieron Hodgson, a mining analyst at Panmure Gordon & Co. The company said it provides some 40 percent of the world’s newly mined platinum from South Africa and Zimbabwe. De Beers and its partners produce a third of the world’s diamonds by value, employing more than 20,000 people around the world. As Anglo American moves to rationalize its business, it will reduce its assets by 60 percent. It will consolidate from six to three businesses. The company will also move its London office to “co-locate” with DeBeers, its majority-owned diamonds business by 2017. Some $3.7 billion of cost and productivity improvements are underway and set to be completed by 2017. Cutifani also confirmed Anglo will sell the phosphates and niobium businesses during 2016. “We will set out the detail of the future portfolio in February, with the aim of delivering a resilient Anglo American and a step change in the transformation of the company,” he said. Some analysts wonder if it will be enough. “It’s underwhelming as a package,” Hodgson said. “The business needs to reappraise itself in a manner that gives it a future.” Hodgson said that if commodity prices recover, Anglo is likely to achieve its targets. But if commodity prices drop again, the company risks having to raise cash from investors through a share issue, he said.

Alaska, British Columbia sign transboundary MOU

Gov. Bill Walker and British Columbia Premier Christy Clark signed a Memorandum of Understanding Nov. 25 committing to cooperation on transboundary issues, particularly related to concerns in Southeast over mines on the Canadian side of the border. The MOU will create a Bilateral Working Group on the Protection of Transboundary Waters that will facilitate the exchange of best practices, marine safety, workforce development, transportation links and joint visitor industry promotion. It will also explore other areas for cooperation such as natural resource development, fisheries, trade and investment and climate change adaptation. The neighboring U.S. state and Canadian province will work together on water quality monitoring, scientific information exchanges, resource sharing and facilitating access to information and soliciting input from First Nations, Alaska Native Tribes, and other stakeholders. Lt. Gov. Byron Mallott will lead the Alaska side of the working group and the Minister of Environment and Minister of Energy and Mines will lead the BC side. “As our next door neighbor, Canada plays a significant role in many Alaska industries, including trade, transportation, and tourism,” Walker said. “This MOU underscores that connection, and I thank British Columbia Premier Clark for her support and cooperation in advancing this important relationship “As we work to improve our state’s economy, it is important that we actively reach out and foster good relationships with our trading partners and neighbors with whom we share so much in common.” In an interview with the Journal, British Columbia Minister of Energy and Mines Bill Bennett said the MOU signifies a “change in how we do business” between Alaska and BC. “How we were doing business was the state and province cooperated on mine approvals and permitting that takes place in British Columbia that has potential to impact Alaska,” he said. “But there wasn’t very much public awareness of that relationship and it was incredibly difficult for Tribes and conservation groups and fishing groups to get information on our processes. “We realized that was a shortcoming of our approach and Alaska realized they needed to communicate more with Alaskans on the opportunities the state has to be involved in our process. It’s a matter of opening our doors to acquiring information and making it easier. We’re adding to the opportunities for them to be involved. “This is sealing the deal by having the two leaders sign a deal that says ‘we’re going to do a better job on issues between the jurisdictions.’” There was initially some confusion among the Southeast stakeholders who have been pushing for action on transboundary issues. They had been presented the draft of a statement of cooperation on Nov. 16 by Mallott and told they had two weeks to provide comments to the state. After the announcement, Salmon Beyond Borders, a coalition of Southeast stakeholders representing Tribes, fishing and conservation groups, released statements blasting the timing of the signing and the nonbinding nature of the agreement. A spokesperson from the governor’s office clarified to the Journal that the MOU signed Nov. 25 was not the one presented to the stakeholders for comment Nov. 16, and that the comment period has been extended to Dec. 11. The MOU signed Wednesday is the “umbrella agreement,” Bennett said, which creates the working group that will facilitate the access and cooperation between the two jurisdictions. Southeast stakeholders have repeatedly called for the involvement of the International Joint Commission, which regulates disputes under the Boundary Waters Treaty of 1909. “Since day one, the fishing industry has called on the state and Congress to secure legally binding agreements between the U.S. and Canada with substantial habitat protection and mitigation requirements to ensure the state’s interests are protected,” said Dale Kelley, Executive Director of the Alaska Trollers Association, in the Salmon Beyond Borders press release. “Alaska has instead signed non-binding agreements with British Columbia that offer no visible means of holding Canada, or the mining companies, accountable for mitigating our losses should accidents like the one at Mt. Polley occur in the region.” Kelley was referring to the Mount Polley mine tailings disaster on Aug. 4, 2014, that spilled millions of gallons of mine waste into the Cariboo region of British Columbia, polluting several lakes and watersheds. Concerns over mine waste polluting Alaska watersheds have been elevated by several proposed cross-border mines, particularly the proposed KSM mine near the Unuk River watershed that will also require a large tailings dam structure; there is also ongoing acid rock drainage flowing into a tributary of the Taku River from the abandoned Talsequah Chief Mine. R. Brent Murphy, vice president of environmental affairs for Seabridge, the owners of the proposed KSM mine, wrote in an emailed statement that, “Seabridge wants to clarify that our proposed TMF (tailings mine facility) associated with the KSM Project is not situated in the Unuk watershed or a watershed that drains into Alaska, contrary to the assertions of those who are the most vocal with regards to transboundary development. Our TMF will be situated within the Nass watershed, a watershed that drains entirely into Canadian waters.” Murphy also wrote that naturally occurring acid rock drainage is currently occurring in a Unuk tributary. “We also want to highlight that the water quality within the Unuk River is currently being impacted by naturally occurring acid rock drainage originating from the exposure of the Mitchell Deposit within the head waters of Mitchell Creek (which is a tributary of the Unuk River),” he wrote. “This naturally occurring acid rock drainage results in naturally elevated concentrations of many metals within the river, including copper, iron and zinc. These elevated concentrations have been identified during our extensive baseline sampling of the Upper Unuk River and associated watersheds, which has been ongoing since 2008.” After Bennett visited the Talsequah site in August, government agencies issued a letter to the owners of the mine Nov. 10 that they have 90 days to come up with a plan to stop the acid rock drainage. Although the drainage has been ongoing for years, tests by several government agencies have found that fish in the Tulsequah River are not being affected by the discharge. Regarding the Tulsequah mine, Bennett said the company has told the province it will have a plan to improve the site but that it will stop short of reopening the water treatment plant because the small exploration company doesn’t have the financing. “We think we have some opportunities here to have the company improve the site,” he said. “The best thing would be to develop the site, create cash flow for the company that can open the treatment plant, operate the mine, then close the site, remediate the site, and stop the leaching. That would all be paid for by company as opposed to the public. “That’s what BC has been trying to see happen for 20 years.” He said the fact no harmful effects have been measured by agencies on either side of the border affects how the province is approaching the mine, but that could change if damage was being done. “If the scientists in Alaska and British Columbia were saying that the drainage was harming the water, harming the fish, we’d obviously have a different reaction,” he said. “I think we should do more study, more monitoring, to make sure about the impacts. “If it was determined that there is a negative impact, I think BC would have to take more dramatic action and we’d be responsible for that site. The government would probably have to take it over. I don’t see it happening any time soon, but I acknowledge that it’s a possibility in the future.” Bennett also said there is a “fundamental misunderstanding” of what role the International Joint Commission, or IJC, could play on Alaska-BC transboundary issues. As sub-national jurisdictions, Alaska and BC cannot sign legally binding documents, and the IJC could only get involved if both the U.S. and Canada agreed to it, and if there was a complete breakdown in communications between the nations. He noted that there is a “tremendous amount of pressure on both jurisdictions” related to preserving watersheds from mining impacts and the signing of the MOU is a strong public commitment to working together. “It’s there for the world to see,” he said. “It’s shortsighted to say it won’t impact BC or Alaska.” Andrew Jensen can be reached at [email protected]

Alaska, BC sign transboundary MOU

This story has been updated with clarification and a comment from Seabridge Gold Inc. Vice President of Environmental Affairs R. Brent Murphy. Gov. Bill Walker and British Columbia Premier Christy Clark signed a Memorandum of Understanding Wednesday morning committing to cooperation on transboundary issues, particularly related to concerns in Southeast over mines on the Canadian side of the border. The MOU will create a Bilateral Working Group on the Protection of Transboundary Waters that will facilitate the exchange of best practices, marine safety, workforce development, transportation links and joint visitor industry promotion. It will also explore other areas for cooperation such as natural resource development, fisheries, trade and investment and climate change adaptation. The neighboring U.S. state and Canadian province will work together on water quality monitoring, scientific information exchanges, resource sharing and facilitating access to information and soliciting input from First Nations, Alaska Native Tribes, and other stakeholders. Lt. Gov. Byron Mallott will lead the Alaska side of the working group and the Minister of Environment and Minister of Energy and Mines will lead the BC side. “As our next door neighbor, Canada plays a significant role in many Alaska industries, including trade, transportation, and tourism,” Walker said. “This MOU underscores that connection, and I thank British Columbia Premier Clark for her support and cooperation in advancing this important relationship “As we work to improve our state’s economy, it is important that we actively reach out and foster good relationships with our trading partners and neighbors with whom we share so much in common.” In an interview with the Journal, British Columbia Minister of Energy and Mines Bill Bennett said the MOU signifies a “change in how we do business” between Alaska and BC. “How we were doing business was the state and province cooperated on mine approvals and permitting that takes place in British Columbia that has potential to impact Alaska,” he said. “But there wasn’t very much public awareness of that relationship and it was incredibly difficult for Tribes and conservation groups and fishing groups to get information on our processes. “We realized that was a shortcoming of our approach and Alaska realized they needed to communicate more with Alaskans on the opportunities the state has to be involved in our process. It’s a matter of opening our doors to acquiring information and making it easier. We’re adding to the opportunities for them to be involved. “This is sealing the deal by having the two leaders sign a deal that says ‘we’re going to do a better job on issues between the jurisdictions.’” There was initially some confusion among the Southeast stakeholders who have been pushing for action on transboundary issues. They had been presented the draft of a statement of cooperation on Nov. 16 by Mallott and told they had two weeks to provide comments to the state. After the announcement, Salmon Beyond Borders, a coalition of Southeast stakeholders representing Tribes, fishing and conservation groups, released statements blasting the timing of the signing and the nonbinding nature of the agreement. A spokesperson from the governor’s office clarified to the Journal that the MOU signed Wednesday was not the one presented to the stakeholders for comment Nov. 16, and that the comment period has been extended to Dec. 11. The MOU signed Wednesday is the “umbrella agreement,” Bennett said, which creates the working group that will facilitate the access and cooperation between the two jurisdictions. Southeast stakeholders have repeatedly called for the involvement of the International Joint Commission, which regulates disputes under the Boundary Waters Treaty of 1909. “Since day one, the fishing industry has called on the state and Congress to secure legally binding agreements between the U.S. and Canada with substantial habitat protection and mitigation requirements to ensure the state’s interests are protected,” said Dale Kelley, Executive Director of the Alaska Trollers Association, in the Salmon Beyond Borders press release. “Alaska has instead signed non-binding agreements with British Columbia that offer no visible means of holding Canada, or the mining companies, accountable for mitigating our losses should accidents like the one at Mt. Polley occur in the region.” Kelley was referring to the Mount Polley mine tailings disaster on Aug. 4, 2014, that spilled millions of gallons of mine waste into the Cariboo region of British Columbia, polluting several lakes and watersheds. Concerns over mine waste polluting Alaska watersheds have been elevated by several proposed cross-border mines, particularly the proposed KSM mine near the Unuk River watershed that will also require a large tailings dam structure; there is also ongoing acid rock drainage flowing into a tributary of the Taku River from the abandoned Talsequah Chief Mine. From R. Brent Murphy, Seabridge: “Seabridge wants to clarify that our proposed TMF (tailings mine facility) associated with the KSM Project is not situated in the Unuk watershed  or a watershed that drains into Alaska, contrary to the assertions of those who are the most vocal with regards to transboundary development.  Our TMF will be situated within the Nass watershed, a watershed that drains entirely into Canadian waters. "We also want to highlight that the water quality within the Unuk River is currently being impacted by naturally occurring acid rock drainage originating from the exposure of the Mitchell Deposit within the head waters of Mitchell Creek (which is a tributary of the Unuk River). This naturally occurring acid rock drainage results in naturally elevated concentrations of many metals within the river, including copper, iron and zinc. These elevated concentrations have been identified during our extensive baseline sampling of the Upper Unuk River  and associated watersheds, which has been ongoing since 2008.” After Bennett visited the Talsequah site in August, government agencies issued a letter to the owners of the mine Nov. 10 that they have 90 days to come up with a plan to stop the acid rock drainage. Although the drainage has been ongoing for years, tests by several government agencies have found that fish in the Tulsequah River are not being affected by the discharge. Regarding the Tulsequah mine, Bennett said the company has told the province it will have a plan to improve the site but that it will stop short of reopening the water treatment plant because the small exploration company doesn’t have the financing. “We think we have some opportunities here to have the company improve the site,” he said. “The best thing would be to develop the site, create cash flow for the company that can open the treatment plant, operate the mine, then close the site, remediate the site, and stop the leaching. That would all be paid for by company as opposed to the public. “That’s what BC has been trying to see happen for 20 years.” He said the fact no harmful effects have been measured by agencies on either side of the border affects how the province is approaching the mine, but that could change if damage was being done. “If the scientists in Alaska and British Columbia were saying that the drainage was harming the water, harming the fish, we’d obviously have a different reaction,” he said. “I think we should do more study, more monitoring, to make sure about the impacts. “If it was determined that there is a negative impact, I think BC would have to take more dramatic action and we’d be responsible for that site. The government would probably have to take it over. I don’t see it happening any time soon, but I acknowledge that it’s a possibility in the future.” Bennett also said there is a “fundamental misunderstanding” of what role the International Joint Commission, or IJC, could play on Alaska-BC transboundary issues. As sub-national jurisdictions, Alaska and BC cannot sign legally binding documents, and the IJC could only get involved if both the U.S. and Canada agreed to it, and if there was a complete breakdown in communications between the nations. He noted that there is a “tremendous amount of pressure on both jurisdictions” related to preserving watersheds from mining impacts and the signing of the MOU is a strong public commitment to working together. “It’s there for the world to see,” he said. “It’s shortsighted to say it won’t impact BC or Alaska.” Andrew Jensen can be reached at [email protected]

Resource heavyweights gather at momentous time for Alaska

It’s November, and time for the big Resource Development Council annual conference. This year, more than any other, huge issues loom for Alaskans including the proposed $50-billion plus North Slope gas pipeline and liquefied gas project and the state’s fiscal troubles, with $3 billion-plus annual deficits. All will be discussed at the conference. RDC is a pro-development advocacy group representing all of Alaska’s industries that touch on use of the state’s rich natural resources. That includes tourism, which relies on an unspoiled wilderness landscape as its prime attraction. Tourism companies work side-by-side with oil and gas, minerals, fisheries and forest products companies in RDC, which demonstrates how these industries are not only compatible but reinforce each other. Organized labor is active in RDC too, because the state’s human resources, its labor force, are critically important. Municipalities are members and participants, too, because what happens in the state’s basic industries, which are mainly resource-driven, affects them. The annual meeting held in November is where all of this comes together, where all the state’s business and political movers and shakers rub shoulders, trade information and frequently move off into side-meetings. If there’s any one place where one can see who drives the state’s economy, this is it. This year’s conference, scheduled for Nov. 18-19 at the Dena’ina Civic and Convention Center in Anchorage, is expected to attract about 1,200, as it has in recent years. Briefings on all the state’s major industries are on the agenda as well as economic trends and updates on key federal and state regulatory issues. Joe Marushack, president of ConocoPhillips Alaska, will discuss his company’s positioning for the future in Alaska; Steve Butt of ExxonMobil, senior project manager of the Alaska LNG Project, will update the conference on the proposed North Slope gas pipeline and LNG export project; Dan Fauske, president of the Alaska Gasline Development Corp., will discuss the state’s role in Alaska LNG, and Kenai Peninsula Borough Mayor Mike Navarre will discuss how his municipality is preparing to deal with a huge construction project, although it is still some years off. There will also be briefings on activities of smaller oil and gas companies, such as BlueCrest Energy with its Cosmopolitan oil project in Cook Inlet; Caelus Energy with a new North Slope oil project, and Hilcorp Energy on that company’s work in redeveloping Cook Inlet oil fields and several mature North Slope fields acquired from BP. Mining companies will also talk about their operations and plans, including Eric Hill, general manager at the Fort Knox gold mine near Fairbanks, and Jan Trigg, community relations manager at the Kensington gold mine near Juneau. RDC’s members include several hundred businesses and groups and a large number of individual members, according to Marleanna Hall, the newly-appointed executive director. As an organization, RDC is unique in a number of ways. There are few, if any, similar organizations in other states that represent diverse interests and with a focus on responsible development of natural resources. Beyond its big annual conference, RDC is known, at least in Anchorage, for its biweekly breakfast meetings that typically feature presentations by business and agency leaders. All of these are posted on RDC’s website, Hall said. The group also offers a unique service to its members by representing them before federal and state agencies on often-complex regulatory and environmental issues. Many of these — endangered species is one example — may or may not have immediate effects on company operations but the potential of disruption is there. Through its engagement with the regulatory agencies RDC makes its members’ views known and also keeps its members informed on regulatory actions. The organization has also takes a leadership role at times in advocating legislative solutions to problems, one example being how state agencies allocated costs to private firms when development permits were applied for. In this case the solution worked out by RDC and its members, a framework on how agency staff costs are allocated, was enacted into law. A recent RDC initiative is with the state Department of Natural Resources’ decision on granting in-stream flow reservations to non-governmental groups. Hall testified in hearings on the issue, which has raised many concerns, and RDC has also submitted detailed comments to the state DNR. In another effort, RDC helped get its members out to support Hilcorp Energy’s planned Liberty offshore project in the Beaufort Sea. The U.S. Bureau of Offshore Energy Management is taking public comments on the application by Hilcorp to do the project. “This is very important because now that Shell has left the Arctic, at least for now, there are opposition groups that are shifting away from Shell to target this proposal,” Hall said. Another past effort was in combating the U.S. Environmental Protection Agency’s new “Waters of the United States” rule, which threatens to sharply expand that federal agency’s role in regulating Alaska development projects. In response to a lawsuit from 13 states including Alaska, a federal judge recently issued an injunction prohibiting the EPA from administering the rule.   The 36th Annual Alaska Resources Conference  November 18-19, 2015 • Dena’ina Civic & Convention Center, Anchorage, Alaska Resource Development Council - Growing Alaska Through Responsible Resource Development. For more information, visit akrdc.org. Wednesday, Nov. 18 7 a.m. Registration/Check-in/ Exhibits Open Eye-Opener Breakfast in Exhibit Area – Sponsored by Wells Fargo 8 a.m. Opening Remarks Ralph Samuels, RDC President, Vice President, Government and Community Relations, Holland America Line Governor Bill Walker (invited) Alaska Economic Trends: 2016 Outlook Neal Fried, Economist, Alaska Department of Labor Alaska Industry 2015 Year in Review and 2016 Outlook Oil & Gas: Kara Moriarty, President and CEO, Alaska Oil and Gas Association Fisheries: Glenn Reed, President, Pacific Seafood Processors Association Forestry: John Sturgeon, President, Koncor Forest Products Mining: Karen Matthias, Managing Consultant, Council of Alaska Producers Tourism: Scott Habberstad, Director of Sales and Community Marketing, Alaska Airlines 10 a.m. Gourmet Break – Sponsored by ConocoPhillips Alaska, Inc. 10:30 a.m. ConocoPhillips Alaska: Positioning for the Future Joe Marushack, President, ConocoPhillips Alaska, Inc. Global LNG Market Update and Framing the Opportunity for Alaska Felipe Arbelaez, Chief Commercial Office, BP Supply & Trading 11:30 a.m. Networking Break Noon Keynote Luncheon: Sponsored by Northrim Bank It’s Still North to the Future: Moving Ahead in the Arctic Wayne Westlake, President and CEO, NANA Regional Corporation Rex Rock Sr., Chairman and President, Arctic Slope Regional Corporation 1:30 p.m. Alaska Can’t Quit Now: Why the Arctic Still Matters Randall Luthi, President, National Ocean Industries Association Marine Freight Transportation: Safety and Environmental Stewardship Charlie Costanzo, Vice President, Pacific Region, American Waterways Operators What Alaskans Need to Know About Federal Overreach Bill Kovacs, Senior Policy Advisor, U.S. Chamber of Commerce 3 p.m. Gourmet Break – Sponsored by Colville, Inc. 3:30 p.m. Pebble vs. EPA: Finally Some Real Progress Tom Collier, CEO, Pebble Partnership Point Thomson: Dawn of a New Era Gina Dickerson, Point Thomson Project Manager, ExxonMobil 4:30 p.m. VIP Networking Reception – Hosted by ExxonMobil open to conference registrants and speakers Thursday, Nov. 19 7 a.m. Exhibits Open Eye-Opener Breakfast in Exhibit Area – Sponsorship Available 8 a.m. Real Solutions to Alaska’s Budget Crunch Cheryl Frasca, Former Director State of Alaska Office of Management and Budget, 2002-2006 Mike Navarre, Mayor, Kenai Peninsula Borough Give the State Some Credit: How Oil Tax Credits Are Changing Alaska’s Investment Game Benjamin Johnson, President, BlueCrest Energy, Inc. Casey Sullivan, Director, State Public Affairs, Caelus Energy Alaska, LLC Hilcorp: Boosting Efficiency and Production in Alaska Greg Lalicker, President, Hilcorp 10 a.m. Gourmet Break – Sponsored by Stoel Rives LLP 10:30 a.m. Communities and Mining: Why it Works Eric Hill, General Manager, Kinross – Fort Knox Mine Jan Trigg, Manager, Community Relations and Government Affairs, Coeur Alaska – Kensington Gold Mine Wayne Hall, Manager, Community and Public Relations, Teck Alaska Incorporated Lance Miller, Vice President, Resources, NANA Regional Corporation 11:30 a.m. Networking Break Noon Keynote Luncheon: Sponsored by Holland America Line Navigating Alaska’s Inside Passage and Policy Linda Springmann, Vice President, Deployment and Tour Marketing, Holland America Line 1:30 p.m. Progress Report on the AKLNG Project Steve Butt, Senior Project Manager, Alaska LNG Project Dan Fauske, President, Alaska Gasline Development Corporation Mike Navarre, Mayor, Kenai Peninsula Borough 3 p.m. Grand Raffle Drawing Send-off Champagne Toast – Sponsored by CLIA Alaska

Pebble conflict moves to Capitol Hill following latest report

The fight over the proposed Pebble mine at times makes politics look tame. That impassioned battle resumed on Capitol Hill Nov. 5 when the House Committee on Science, Space and Technology heard from those on the front lines of both sides. The committee also received testimony from former Maine senator and Defense Secretary William Cohen, whose recently published report about the Environmental Protection Agency’s involvement in the matter has once again made Pebble a topic of national debate. Published Oct. 6, “The Cohen Report,” as it is known, questions the objectivity and scientific process of the EPA’s Bristol Bay Watershed Assessment. The assessment is the baseline document used by the EPA to justify its attempt to block Pebble development through its Clean Water Act Section 404(c) authority, which gives the agency the power to prohibit projects that would have an “unacceptable adverse effect” on fish, wildlife or wetlands habitat. The title of the hearing, Examining EPA’s Predetermined Efforts to Block the Pebble Mine, leaves little wonder about the sentiment of committee chair Rep. Lamar Smith, a Texas Republican. “Secretary Cohen’s report lays out evidence that shows collusion and a cozy relationship between the EPA and groups actively opposed to the Pebble mine,” Smith said in a statement to open the hearing. In its ongoing lawsuit against the EPA in U.S. District Court of Alaska, Pebble contends the agency violated the Federal Advisory Committee Act by working with anti-mine groups to develop the Bristol Bay Watershed Assessment and shunning Pebble from the process. Additionally, the mine developers claim the agency had already determined it would use its 404(c) authority to prohibit a large mine on Pebble’s copper and gold claims before the multi-year assessment process officially began in 2011. The judge in that case, Judge H. Russel Holland, granted Pebble an injunction about a year ago, halting the 404(c) process until the suit is resolved. The EPA argues it met with Pebble representatives 30 times while drafting the assessment and that Pebble had additional opportunities to have its voice heard. The Federal Advisory Committee Act, or FACA, requires government agencies remain impartial and hold open meetings — published in the Federal Register — with both sides of contentious issues represented. Pebble Limited Partnership board of directors chair John Shively, a former Alaska Department of Natural Resources commissioner, said Nov. 5 at the Alaska Miners Association annual meeting in Anchorage that EPA Region 10 Administrator Dennis McLerran lied to him in a letter sent when the assessment began by claiming it was not aimed at stopping Pebble. Shively also asserted that the EPA lied to the public about how the movement to stop Pebble began. “I spent a fair amount of time in rural Alaska and I never believed that Tribal governments out in Southwest Alaska had any idea what Section 404(c) of the Clean Water Act was,” Shively said. Pebble insists it has evidence obtained through Freedom of Information Act Requests that prove the EPA helped draft the petition submitted by six Bristol Bay-area Tribes that urged the agency to invoke its 404(c) power and spurred it to begin the assessment. “Unfortunately, it appears that the Pebble mine project is another victim of this EPA’s extreme agenda,” Smith stated. “In fact, one of the former EPA employees who this committee found to have colluded with environmental groups to stop the Pebble mine project fled the country when Congress attempted to interview him.” The employee Smith referenced is former Kenai-based EPA biologist Phillip North, who was scheduled to be deposed in Anchorage Nov. 12 by Pebble and EPA attorneys. Pebble has said it believes North is in Australia, but his exact whereabouts are unknown. In an interview with the Redoubt Reporter published July 17, 2013, North said he planned on sailing around the world with his family after his retirement from the agency. The 364-page Cohen report supports Pebble’s claims. At the same time, groups opposed to the mine have hammered Cohen’s assertion that it is an independent document because Pebble Limited Partnership commissioned it. Former Republican Alaska Senate President Rick Halford testified to the House committee that before learning of Pebble he had never opposed a mine project. However, the size and location of the proposal by Pebble Limited Partnership forced him to take a stand against its development. “The size of the Pebble deposit is beyond imagination,” Halford said. “The pit would be well over a mile deep in places, and the footprint would cause the direct loss of between 24 and 94 miles of stream; 1,200 to 4,900 acres of wetlands; and 100 to 450 acres of ponds and lakes. The waste would be stored on site in perpetuity.” While not directly responding to Halford, Shively said Nov. 5 back in Anchorage that the impact of the mine has been vastly overblown. “The idea that you could build something (on) several thousand acres, with the kind of grade that we have — over 99 percent of what we take out of the ground is basically just dirt — how we could devastate a fishery is beyond me, but that’s what people have been told,” Shively said. He described the mines the EPA drafted as “fantasy mine plans.” Shively added that the EPA’s requirements for an acceptable mine in Bristol Bay are for a project that is uneconomically small. “(The EPA) designs mines that fail; we’re going to design a mine that succeeds,” he said. Halford also cited more than a dozen claims by Pebble that it would begin the federal permitting process, the first of which came in 2004. He called those claims “empty promises” to start the public review process which would bring resolution to the issue for area residents. Cohen’s report omits the fact that Pebble itself has been the only thing stopping the project from entering the National Environmental Policy Act review process, Halford said. Sen. Lisa Murkowski, who has been a harsh critic of the EPA under President Obama, also criticized Pebble back in 2013 for not releasing a formal mine plan that could be reviewed. Shively insisted Pebble Limited Partnership will enter the review process on its own timeframe, not the opposition’s timeframe. Halford added that the EPA’s involvement in evaluating what would be the largest open-pit mine in the country that would lead to obvious environmental impacts should not be a surprise. “As a resident of Bristol Bay, I can tell you that nothing seems predetermined to me in EPA’s actions,” Halford testified. “EPA collected information and data, met with and listened to both sides, and engaged in extensive outreach to all the stakeholders. I do not believe that EPA’s engagement itself was out of the ordinary as it is common for developers and the public to seek EPA’s perspective in advance of formal project initiation.” Elwood Brehmer can be reached at [email protected]

Draft EIS nearly ready for Donlin, in the works for Chuitna

Mining companies involved with several important projects aren’t ready to press the button on construction just yet, but they are positioning things to be ready to go when metals and commodity prices tick up, as they surely will. One large project being watched closely is Donlin Gold in the mid-Kuskokwim River region west of Anchorage, a potential $6.7 billion surface gold mine. After years of work the U.S. Army Corps of Engineers is expected to publish a draft environmental impact statement, or DEIS, later this month, James Fueg, Donlin Gold’s technical services manager, told the Alaska Miners Association at its annual convention in Anchorage Nov. 5. Publication of the DEIS would be followed by a series of community meetings in the Yukon-Kuskokwim region, including one hearing in Anchorage. If things proceed as hoped, the final EIS would be published in early 2017 following by a Record of Decision later that year. The big question following that is whether the mine will be economic and profitable enough for its developers, Barrick Gold and NovaGold Resources, to commit to spending several billion dollars on construction. Communities in Southwest Alaska have a lot riding on the decision. Calista Corp., the Alaska Native regional corporation for the Y-K delta, is the subsurface minerals owner. The Kuskokwim Corp., a consortium of local village corporations, owns surface lands at the mine site. If Donlin Gold is developed it will be a major employer in the region, now one of the state’s most economically-depressed areas. The prospect itself has 34 million ounces of gold in the measured-and-indicated reserve category, a classification that means companies have a high degree of confidence in the estimate, and another 11 million ounces that are “inferred” resources, or gold estimated to be present but requiring more definition. Chuitna Another large mine project closer to Anchorage that is inching along in its regulatory approvals is the Chuitna coal project, on the west side of Cook Inlet. The mine is planned by PacRim Coal, the owner of coal leases on state-owned lands. Dan Graham, manager of the project, told the Alaska Miners Association convention that the U.S. Army Corps of Engineers expects to have a draft EIS by late April or early May 2016, a milestone in a regulatory process that has taken several years. Graham said the Corps recently completed its internal review of a draft of the document, an important step, and has turned the draft over to other federal and state agencies that are cooperating in the EIS. “We also received our first permit Sept. 25, a minor air quality permit from the state,” Graham told the conference. If the Chuitna project receives final regulatory approval and is approved by its owners for development, construction would require two to three years and the mine itself would have a 25-year production life, Graham said. It is likely that would be extended by new resource additions, which is common with mines. Chuitna has been in the news recently because of an active opposition campaign by environmental groups who protest the company’s plan to mine through a creek that is salmon habitat. Graham said the company plans to create alternative habitat and in any event to restore the habitat along the creek when mining is complete, a procedure that has been used elsewhere in Alaska in disturbed areas. Also, PacRim can work with a decision by the state Department of Natural Resources to award a water rights application to a nongovernmental organization in a lower area of creek outside the mine area, Graham said. The principle of the DNR’s decision, the first award of water rights to an entity other than a government agency, is disturbing as a precedent, he said, but PacRim will ensure that adequate water is flowing through the lower part of the creek. The Chuitna project has had a long and tortured history and not all of the problems and delays can be laid at the feet of government agencies and opposition groups, Graham told the miners. Some of the blame is shared by the company, he said, which made several changes in scope and design. While these are overall improvements, the result has been delays and complications for the regulators, he said. “There are lessons to be learned from this,” Graham said, The state coal leases were originally awarded in 1968 to the Wilson-Bass-Hunt group, who were exploring in Alaska at the time. In the 1980s the Bass-Hunt group, which now owns PacRim Coal (Wilson has dropped out) entered a joint-venture with Diamond-Shamrock. The groups did substantial development work for a large surface coal mine. Major permits were granted in 1987 and an environmental impact statement was approved in 1990. However, the Pacific coal market had meanwhile slumped. Diamond-Shamrock exited the project and Bass-Hunt regrouped to continue working. There were changes in the project design and a relocation of a proposed port, all which meant changes to the permit applications. A major event occurred in 2010, however, when the U.S. Army Corps of Engineers took over as lead agency on a new EIS effort, replacing the Environmental Protection Agency. That was in the ninth year of planning under the revamped development plan, Graham said, and it also meant the Corps had to gear itself up to supervise a major Alaska mining project, which it had previously not done. “We had a situation where we were working with two different lead agencies, and over nine years there were 21 changes in key personnel associated with the project,” Graham said. It took some time, but the Corps rose to the challenge. “They scrambled to get up to speed on coal mine permitting. They were able to bring in specialists from other coal-mining states and to send Alaska personnel outside for training,” he said. The draft EIS is now in its final stages. Long lead times Donlin Gold has had an incubation period almost as long. The mid-Kuskokwim has been a historic placer mining area, which meant that explorers knew it was a good place to look for gold, mainly the lode gold sources of the placers. The gold prospect at Donlin Creek was actually discovered in the 1970s by prospecting crews working with Calista Corp., which had just selected lands under its Alaska Native Claims Settlement Act entitlements. After gold was found, Calista worked to get a mining company interested and after several unsuccessful attempts succeeded in attracting Placer Dome, a mid-sized mining company, for a more extensive exploration. Exploration drilling began in the 1980s and a very large gold resource was defined. However, a plunge in gold prices caused the company to suspend exploration. A small “junior” exploration company, NovaGold Resources, stepped in with a plan to invest and continue exploration in return for a share of the project. Placer Dome accepted, and NovaGold’s work resulted in more gold being located. Eventually the smaller company earned a 50 percent share. Meanwhile, in 2006, Barrick Gold, a major mining company, acquired Placer Dome and took over as operator and as NovaGold’s partner. Barrick poured in more funds for exploration and in 2006 and 2007, at the peak of exploration, the project was spending $2 million a week, Fueg told the AMA. Local hiring and contracting was a priority and even in its exploration phase the project became an economic stimulus for villages in the region. The engineering and design efforts were substantial and an initial capital cost estimate of $4 billion grew to $6.7 billion as the project scope changed, including the addition of a 314-mile 14-inch pipeline from Southcentral Alaska that would bring natural gas to the project. Energy costs were always a major concern and the project team investigated alternatives like wind and peat-fueled power generation along with barging large volumes of diesel up the Kuskokwim River. Finally the gas pipeline was decided on as the most practical alternative. Livengood Another big mine project is making progress, although it has been under the radar for a while. This is International Tower Hills’ Livengood gold project, a potential large surface gold mine on the Elliot Highway 70 miles north of Fairbanks. There are 15 million ounces of measured-and-indicated gold resources, a category in which mining companies have a great deal of confidence, and another 4 million ounces of inferred gold resources, where further exploration is needed. “We are one of North America’s largest known, undeveloped gold resources, and we’re right on a paved, all-weather highway,” said ITH President Tom Irwin. Irwin is a mining veteran who led the development of the Fort Knox mine, and who is also a former state Natural Resources commissioner. If it were developed the Livengood mine would be similar to the Fort Knox gold mine also near Fairbanks but larger, Irwin said. ITH is reworking a plan for a mine the company developed in 2013 but which proved too expensive for current gold prices. The cost estimate was in the range of $2.8 billion to $2.9 billion for a mine that would process 100,000 tons of ore per day. The project team went back to the drawing boards and is now reworking the plan to fit a lower gold price environment. “We’re looking at everything, the ore body, our mining procedure, water management and tailing disposal, and a one-stage as well as two-stage mill. We’re looking at how to optimize value,” Irwin said. Among two areas of focus in the new planning, Irwin said, is a possible acceleration of processing of higher-grade ore, leaving lower-grades until later, a plan also followed at Fort Knox in its initial production. Another area of scrutiny is how to manage water most efficiently and minimize its on-site storage, which would reduce capital costs as well as environmental risks. Energy is a major cost for the mine and ITH is still looking at two options, purchasing power from Golden Valley Electric Association, the Interior power cooperative, or generating power at the mine. If a North Slope natural gas pipeline is built it would pass nearby, and could possibly supply the mine with gas. Meanwhile, metallurgical testing and engineering is still underway to find an optimal mine process, Irwin said. What may emerge is a somewhat smaller, more efficient mine that could be profitable even at today’s gold prices, he said. ITH expects to release its revised mine plan in the first quarter of 2016, Irwin said. Tim Bradner can be reached at [email protected]

Miners seek bright spots on horizon

If you look around the Dena’ina Civic and Convention Center in Anchorage next week you wouldn’t believe there’s a slump in mining industry. The Alaska Miners Association holds its annual convention and trade show Nov. 1-7 and the convention’s massive trade show will be of record size, taking all of the convention center’s vast ground floor and a share of the second floor. About 1,000 people are expected at the convention, said AMA’s executive director, Deantha Crockett. That’s about the same as last year. The robust turnout belies the industry’s actual condition, which is down mainly because of low metals prices. A more somber mood will prevail compared with happier times, when gold prices were near $1,800 per ounce. They’ve been stuck at about $1,200 per ounce for an extended period. Still, people are still at work, some development-phase projects are still proceeding and the state’s seven operating mines are doing well. However even with those, capital budgets are tight and exploration budgets are very limited. If there are brighter spots on the horizon one is that fuel costs are down, and energy is a big-ticket cost item for mines. Another one, Crockett said, is that there appears to be a push-back developing on a national level against the encroachment of regulations by federal agencies like the U.S. Environmental Protection Act. There are still problems in the regulatory environment, but an order by a federal judge halting, at least temporarily, the EPA’s new “waters of the United States” rule is a sign of hope. “We’re starting to see a real examination of federal overreach, and it’s getting attention in Congress,” Crockett said. The ongoing dispute over Pebble is another example. As more information comes out about how the EPA developed its plan for a preemption of mining in the Bristol Bay region, with agency staffers working secretly with opponents to mining, the worse the agency looks, she said. At the convention itself, Crockett said the Tuesday luncheon talk on the state’s fiscal gap, by Northrim Bank president Joe Beedle and economist Mark Edwards, will be important. Lt. Gov. Byron Mallott will speak at noon Wednesday on Alaska-Canada trans-boundary issues, which affect mining projects in British Columbia that are near the Alaska border, and which can affect watersheds in Alaska. Wednesday is an all-day session on industrial safety, which is important in most industries. U.S. Sen. Dan Sullivan will address the AMA’s annual banquet on that night. On Thursday, four Alaska Native corporations, Sealaska Corp., Ahtna Inc., Doyon Ltd. and Eklutna Inc. will discuss mineral development on Native-owned lands. The full schedule is on the facing page.

Former EPA biologist North’s whereabouts still unknown

Where in the world is Phillip North? The former Environmental Protection Agency biologist is scheduled to be deposed by Pebble Limited Partnership and EPA attorneys Nov. 12 in Anchorage; however his whereabouts are unknown to both sides. North is seen as a key witness in Pebble’s lawsuit against the EPA. In the lawsuit filed last year, Pebble contends the agency colluded with Alaska Native groups and other mine opponents while drafting the Bristol Bay Watershed Assessment. The assessment is the scientific basis for the EPA’s pending Clean Water Act Section 404(c) action, which would preemptively block large-scale mining in the Bristol Bay region. North, who retired from the EPA in 2013, worked extensively on drafting the 1,000-plus page assessment, which was finalized early in 2014. The EPA contends Pebble had the same access to agency officials as anyone else with interest in the Bristol Bay Assessment, and that any actions that potentially violated federal public meeting and objectivity laws were incidental. U.S. Alaska District Court Judge H. Russel Holland halted the EPA’s Section 404(c) proceedings with an injunction last November, until the suit is resolved. In his recent subpoena order, Holland ordered Pebble to offer up $2,400 to cover North’s travel expenses to Anchorage; Pebble attorneys suggested $1,500 in their motion to subpoena. He is believed to be New Zealand or Australia. Holland also wrote that he believes the EPA should be as vested as Pebble in hearing North’s testimony to resolve speculation about what went on during the assessment process. Responsive documents to Pebble’s Freedom of Information Act requests have made it clear North drafted documents on a private computer that were not forwarded to EPA systems and encrypted documents on a thumb drive that EPA has not been able to access, according to Holland. Pebble spokesman Mike Heatwole wrote in an email that the company does not know much about North’s location and as a result Pebble may seek to delay the Nov. 12 deposition. EPA Region 10 said in a formal statement that, “as with other previous EPA employees, the agency has no information or comment on his location.” In an interview with the Redoubt Reporter published July 17, 2013, North said he planned on sailing around the world with his family after his retirement. He is also quoted as supporting the EPA’s then imagined Section 404(c) action to protect Bristol Bay’s world-renowned salmon runs. Elwood Brehmer can be reached at [email protected]

NANA makes gold strike; work continues amid price slump

Things aren’t great for Alaska’s miners right now, but despite the extended downturn in metals prices some explorers are pressing ahead. NANA Regional Corp., which conducted its own exploration, announced what it termed a “significant” new gold discovery on state lands on the eastern Seward Peninsula. However, the overall number of new “grassroots” exploration projects is sharply down this year compared with previous years, and the suppliers and contractors who support explorers are feeling the effects. There was some good news for NANA, however. The corporation conducted a small program of six holes drilled totaling 3,100 feet. There were good results in the mineralization tested. One hole showed grades of 20.5 grams per ton, or gpt, of gold; 92 gpt of silver; 1.79 percent zinc and 2.63 percent lead. There was also thin, high-grade interval of 175 gpt gold and 470 gpt silver. Lance Miller, NANA’s vice president for natural resources, said the mineral values are encouraging. “With this summer’s drilling we have identified the lode source for the placer gold found in the northern Seward Peninsula area,” he said. Information from the drilling combined with geologic and soil sampling by NANA over several previous seasons have identified a belt of mineralization along a 40-mile trend, he said. The Kotzebue-based Alaska Native regional corporation is also involved in another exploration project, this one in the Ambler Mining District in the upper Kobuk River area in an alliance with NovaCopper Resources, an exploration company. NovaCopper has made significant high-value copper discoveries at the Arctic deposit in the area, where it holds mining claims. NANA owns lands in the region including at Bornite, another known copper discovery. The two companies are working together on exploration on both prospects, which NANA having an option to buy into Arctic and NovaCopper an option to buy into Bornite. In 2015, NovaCopper drilled 14 test holes at Arctic, extracting 3,056 meters of core in a $5.5 million program. The objective was to test the continuity of high-grade ore zones identified at Arctic, the company said in a press release. To date, NovaCopper and its predecessor company, NovaGold, have drilled 43 core holes in addition to 92 holes drilled by the previous owner, Kennecott. Indicated resources (measured by drilling) are estimated at 23.8 million tonnes and an additional 3.4 million tonnes of inferred, or estimated, resources. In the indicated resource category the metal values were measured at 3.26 percent copper; 0.71 gpt of gold; 53.2 gpt of silver; 0.76 percent lead and 4.45 percent zinc. NovaCopper also announced in July that it was beginning work on the pre-feasibility study of the Arctic deposit, an important step in the development program. Work on that is expected to take two to three years. Other mines progressing Exploration aside, there are a number of projects where discoveries have been made that are gradually working their way through the web of regulatory approvals. The big Donlin Gold mine in the mid-Kuskokwim River region, for example, may publish its long-awaited draft environmental impact statement by the end of 2015. Assuming regulatory hurdles are cleared, Barrick Gold and NovaGold Resources, the developers, must still make a decision to develop the mine. That is of real interest to Calista Corp., the Alaska Native regional corporation that owns mineral rights, and The Kuskokwim Corp., owned by local village corporations, which holds the surface lands. It was exploration by Calista’s geologists that led to the gold discovery although there had long been placer mining in the area. Another project in an advanced stage of development planning is International Tower Hills’ Livengood gold project north of Fairbanks. The gold resource is large and well-defined, but a construction decision will likely require an upturn in gold prices. The company is meanwhile working on ways to reduce costs. Early cost studies showed the project, as designed, would not be viable at current gold prices. “We’re still in the optimization stage, working to bring capital and operating costs down to where the project would be viable at lower prices,” said ITH spokesman Rick Soley. Meanwhile, environmental baseline monitoring and some other work continues at the mine site as well as metallurgical analyses at other locations, he said. If it is developed, Livengood would be a surface mine mining low-grade ore similar to Fort Knox, a producing mine also near Fairbanks, but larger. It would likely employ over 400 in operation, Soley said. Two Southeast mines in advanced stages of exploration and development planning include Bokan Mountain, a rare earths project, and Niblack, a multi-metals discovery. More ore reserves were discovered at Bokan Mountain this year and Niblack continues to work on a plan to process is ore in nearby Ketchikan, which would be an important economic boost for that community. Heatherdale Resources Ltd. is developing Niblack. Bokan is being developed by Ucore Rare Metals Inc. In 2014 the company added 1.04 million tons of ore to its resource base through deeper exploration drilling at the prospect. The company previously reported 4.88 million tons of resources. The large Pebble project near Iliamna is in a holding pattern. The company, Pebble Partnership, is in litigation against the U.S. Environmental Protection Agency over the agency’s attempt to preempt large mines in the Bristol Bay region. Improper procedures by EPA are being contested. If the lawsuit is won, or if a settlement is reached, Pebble may be allowed to apply to state and regulatory agencies for its permits. That would allow for a mine development plan to be made available to the public. Operating mines Meanwhile, the state’s operating mines are doing well. Near Juneau, the Greens Creek Mine, operated by Hecla Mining Co., is projected to produce 7.3 million ounces of silver, down somewhat from 7.8 million ounces in 2014. The mine holds substantial silver, gold and lead reserves and resources. An aggressive, three-rig drilling program was conducted in 2015, budgeted at $5.8 million. Over the last 11 years drilling efforts have replaced or added to resources at the mine. North of Juneau, at Berner’s Bay, the Kensington Mine continues at a steady production rate. Ore production totaled 165,198 tons in the third quarter of 2015 with 28,688 ounces of gold produced, compared with 145,097 tons of ore mine in third quarter 2014 and 30,773 ounces of gold produced. Kensington is operated by Coeur Alaska Inc. At the large Fort Knox surface mine near Fairbanks, Kinross Gold Corp. is on target to produce about the same amount of gold as in 2014, which was 379,064 ounces. The company is adding equipment, commissioning four new 793F haul trucks and completing a booster pump station in the mine process facilities. Coal production will be down in 2015 at the Usibelli mine at Healy, the state’s only producing coalmine, because of reductions in exports. Usibelli Mine Inc. will produce about 1.2 million tons of coal this year, down from almost two million tons per year a few years ago when export markets were stronger. Demand from Usibelli’s core Alaska markets, six Interior Alaska coal-fueled power plants, will hold steady or even increase somewhat when Golden Valley Electric Assoc.’s new Healy 2 power plant becomes fully operational in 2016.

State trust appeals DNR decision on Chuitna water reservation

It seems nobody likes the Alaska Department of Natural Resources’ most recent Chuitna mine decision, including a state authority it oversees. The Alaska Department of Law filed an appeal on behalf of the Alaska Mental Health Trust Authority against the Department of Natural Resource’s Oct. 8 decision to grant an in-stream flow reservation, or IFR, to Chuitna Citizens Coalition for the lower section of Middle Creek. PacRim itself also filed an appeal of DNR’s decision, along with several industry and private groups. Chuitna Citizens Coalition has not filed an appeal, though members were unhappy with the Oct. 8 decision as well for not granting its two other in-stream reservation requests. The period for appeals is now closed. Middle Creek is part of the watershed for a proposed coal mine, and an integral part of the drainage process necessary to complete the mine. The bulk of the proposed mine’s land is owned by the trust. The Alaska Mental Health Trust Authority was established in 1956 and placed under the Department of Natural Resources’ authority after statehood in 1959. The U.S. Congress gifted it one million acres of land to be used for developing resources for Alaskans with mental health issues. The trust currently has roughly 80,000 such beneficiaries. John Morrison, the acting executive director for the trust’s land management office, said the trust is effectively a third party in the dispute with only a ceremonial connection to DNR, though it may not appear that way to an outsider. “It’s really kind of a relic of the settlement that we’re here,” said Morrison. “In that light, we use the attorney general’s office. Our only interaction with the process is the same as any other third party. We act like a private land owner.” Potentially, an administrative hearing between the trust and DNR would have to be settled with both parties being represented by the Alaska Department of Law. Because the trust typically uses DNR’s attorney, it has had to switch to Assistant Attorney General Dario Borghesan within the Department of Law,. Few parties appear satisfied with DNR. The coalition characterized DNR’s decision as a “dodge,” and a concession to the coal industry at the expense of Alaska salmon, as it only granted the lower reach IFR.  “This decision doesn’t do enough to protect fish in the Chuitna River because it doesn’t keep water flowing in the salmon-spawning areas of Middle Creek,” said Ron Burnett, a Beluga homeowner and founding member of the Chuitna Citizens Coalition, in a statement. The trust, which is overseen by the Department of Natural Resources, calls the DNR decision “arbitrary” in its appeal and a dangerous precedent for allowing private parties to derail resource development. The Chuitna Citizens Coalition IFR is the first granted to a private group, rather than state organizations. “(In-stream flow reservations) can also be misused to thwart or discourage responsible resource development in a state whose socio-economic well-being depends on it,” the appeal reads. “And overly expansive interpretation of AS.46.15.145 could jeopardize development across Alaska and, with it, the trust’s ability to provide for its beneficiaries.” The trust argues the Chuitna Citizens Coalition IFR could prevent the mine and thus the $300 million of projected royalties PacRim would owe the trust over the course of the mine’s lifespan. The stream in question is located on land the trust has been endowed. Morrison said DNR’s decision ignores the trust’s freedom to manage its own land in accordance with the best public interest. Trust land, he argues, is not managed as state land and should not be subject to state management decision that contradicts the trust’s plans for best use. “The entire length of their IFR is located on trust land,” said Morrison. “I don’t know there’s been any consideration of how someone would manage or monitor this, if they need permission from us to do so. If this were Native corporation land, how would people react?” Furthermore, the trust believes DNR contradicts itself, allowing an IFR where it previously stated none are needed. “Even though the Division (of Land and Water) conceded that applicable regulation and permitting requirements processes ‘can adequately protect the water resources in Middle Creek,’” the appeal reads, it nonetheless found that there is a need for a reservation of water in the Lower Reach. Lastly, the trust argues DNR left unanswered questions about how the reservation will be administered. The trust does not know whether what measurement of IFR Chuitna Citizens Coalition will use, or how it will monitor the flows. The mine’s opponents boil the argument down being against the IFR is being against salmon habitats. “It’s surprising to see these corporations wanting to fight Alaskans who just want to keep water in the salmon stream,” said Bob Shavelson, executive director of Cook Inletkeeper. DJ Summers can be reached at [email protected]

DNR rules on Chuitna water rights petitions

Alaska salmon scored a partial victory on Oct. 6, but PacRim’s coal mine could still happen. The Alaska Department of Natural Resources granted an instream flow reservation, or IFR, to Chuitna Citizen’s Coalition for the for the lower section of Middle Creek. Middle Creek is part of the watershed for a proposed coal mine, and an integral part of the drainage process necessary to complete the mine. Only Chuitna Citizen’s Coalition’s IFR for the lower section was granted by DNR. The coalition had also filed IFR requests for the middle and upper reaches. The coalition characterizes DNR’s decision as a “dodge,” and a concession to the coal industry at the expense of Alaska salmon. “Make no mistake, DNR is saying that a potential coal strip mine is more valuable to the public than protecting wild salmon habitat,” said Ron Burnett, a Beluga homeowner and founding member of the Chuitna Citizens Coalition, in a statement. “This decision doesn’t do enough to protect fish in the Chuitna River because it doesn’t keep water flowing in the salmon-spawning areas of Middle Creek.” Indeed, the decision has little direct effect on PacRim’s operations. The mine will still go through the permitting process over the next several years. DNR’s Water Resources Section Chief David Schade said the decision can be easily misunderstood, and cautions that Chuitna Citizen’s Coalition’s IFR does not grant the organization direct control of Middle Creek’s lower reach, nor does it forbid the mine from operating. The coalition will not be able to simply exercise any litigation against PacRim, or refuse to let PacRim operate simply on principle. Rather, it gives an entry point for bringing complaints to DNR. Chuitna Citizen’s Coalition will be able to bring issues to DNR for adjudication if it has evidence that the completed mine will affect Middle Creek’s lower reach flow quality. “This is not at all an operational decision for the mine,” Schade said, “It is a limited decision for instream flow. This is not a traditional water right. It’s different with the reservation certificate. It gives Chuitna Citizen’s Coalition the right to request that DNR look into any activity of upstream users if there’s some evidence upstream activity is affecting the downstream flow. They don’t have administrative rights.” Schade does believe the decision will help protect the stream. “We will protect the stream through the permitting process,” Schade said. “Before there will be any kind of activity at a mine site, we will have gotten a bigger picture of the water rights.” This marks the first time DNR has granted an IFR to a private party. IFRs are typically reserved for state and local governments, rather than private citizens or coalitions, though certain isolated cases exist giving IFRs to non-governmental organizations, according to Trustees for Alaska legal director Valerie Brown. Both PacRim and the mine opponents had filed applications for water reservations. PacRim representatives objected to Chuitna Citizen’s Coalition’s IFR, arguing that opening IFRs to private entities will open a Pandora’s box of complications in the future. “The big issue for us is the policy issue, whether DNR should allow private citizens to take part in the permitting process,” said Eric Fjelstad, an attorney representing PacRim, during an August DNR hearing. “We think that answer should clearly be no.” Schade said he doesn’t agree with PacRim’s argument, and thinks water rights are inherently public and subject to DNR’s discretion. “Water is a public resource, and clearly delegated to DNR,” Schade said. “The rights of the holder of an (IFR) boils down to two things: the rights to be a party to any future reviews, and also have a right to ask DNR to adjudicate.” PacRim’s proposal has seen intense criticism from Alaskans, who have collectively sent more than 7,500 letters of public comment to the Department of Natural Resources opposing the mine and supporting the establishment of water rights aimed at salmon habitat preservation. The mine would require PacRim to dewater salmon habitat to dig a strip mine for low sulfur coal. DJ Summers can be reached at [email protected]

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