Mining

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]

Cohen Group questions EPA’s Pebble process

Former Maine Senator and Defense Secretary William Cohen agrees with Pebble Limited Partnership on at least one point: the Environmental Protection Agency’s Bristol Bay Watershed Assessment is not an adequate document to replace the federal environmental permitting process. Pebble contracted Cohen to review the procedure the EPA used to develop the assessment, which is the document the agency has based its Clean Water Act Section 404(c) proposed determination on. Section 404(c) of the Clean Water Act gives the EPA authority to prohibit any development project that it deems would have an “unacceptable adverse effect” on wildlife and nearby water supplies. Cohen asserts in the opening pages of the 364-page report that the work undertaken by him and his firm The Cohen Group was conducted as an independent review of the Section 404(c) action that began last year and the preceding events. He also notes that the report is not meant to take a stance on the project, rather it is to evaluate the process the EPA used in regards to Pebble. He further stated that Pebble had no control over the conclusions he reached and was not allowed to perform any edits on the report. More than 60 people were interviewed as part of the review process, including three former EPA administrators. The EPA did not allow current agency personnel to be interviewed for the report, according to Cohen. He claims that the EPA’s use of the 404(c) authority “compounded the shortcomings” of the assessment, that it used assumptions based on economic analyses done for Pebble to draw its conclusions instead of actual permit applications. Cohen states that EPA personnel had “inappropriately close relationships with anti-mine advocates” while compiling the assessment, raising questions as to whether the agency “orchestrated the process to reach a predetermined outcome.” A key argument in Pebble’s second lawsuit against EPA is that agency personnel and mine opponents formed de-facto advisory committees, which left Pebble out of the loop while researching the Bristol Bay Assessment, and violated public processes intended to be objective. Pebble is the first time the EPA has used its 404(c) authority to attempt to block a project before Clean Water Act permit applications have been submitted to the U.S. Army Corps of Engineers, which handles the permitting process for the agency. A U.S. District Court judge has stopped the 404(c) initiative at least temporarily while Pebble’s claims are heard in court. The EPA Inspector General is also examining the agency’s actions in regards to the Bristol Bay Watershed Assessment and Cohen calls for a Congressional Oversight Committee review. “This project is too important, for all stakeholders, to pilot a new, untested decision-making process,” Cohen wrote. “The fairest approach is to use the well-established permit/(National Environmental Policy Act) process, and I can find no valid reason why that process was not used.” He bases his conclusion at least partly on the EPA’s concession in comments to peer reviewers that gaps in the 1,100-page assessment that would be addressed in the NEPA process, which Pebble has not yet attempted to initiate. Sen. Lisa Murkowski criticized Pebble in 2013 for leaving Alaskans wondering if the controversial project would ever be built and called for the then-Northern Dynasty Minerals and Anglo American consortium to release more specifics about its plan. Pebble opponent groups were quick to criticize Cohen’s report after its release. Statements from Trout Unlimited Alaska, United Tribes of Bristol Bay and Commercial Fisherman for Bristol Bay all highlighted the fact that it was paid for by Pebble Limited Partnership. “The report wants Americans to believe that Pebble is the victim of an ‘unfair’ process. Let’s be clear, EPA’s process is one that is authorized by Congress under the Clean Water Act and is intended to be used in circumstances where mine activities will do insurmountable damage to the spawning rivers and habitat of this country’s last great sustainable wild resource: salmon,” a statement from United Tribes of Bristol Bay reads. Trout Unlimited Alaska Director Nelli Williams called the report “propaganda disguised as a credible document.” Pebble CEO Tom Collier said in a release that the EPA failed to take into account the potential economic benefits of a mine to an economy reliant upon a seasonal resource or the use of mitigation and control measures to reduce a mine’s impact on the environment, points noted by Cohen. “This report clearly makes the case about the criticality of a stable, objective and transparent permitting process for evaluating resource projects such as Pebble,” Collier said. “We did not ask The Cohen Group to evaluate a mine at Pebble as our view remains that this should be handled via the permitting and NEPA review process. The report validates the established regulatory and NEPA process is the fairest and most appropriate process for evaluating a complex issue such as ours.” The report also notes that Pebble participated in the assessment process with the EPA’s assurance that the final document would not be used to make a Section 404(c) decision. Since the release of the final Bristol Bay Watershed Assessment in January 2014, the EPA has acknowledged its conclusion that large-scale mining in Bristol Bay would significantly and irreparably damage the region’s salmon fisheries was drawn from the assessment as the primary evidence for working to ban the proposed mine. The official assessment process began in February 2011.

BC, Alaska to draft MOU for mine processes

JUNEAU — The province of British Columbia and the State of Alaska will draft a memorandum of understanding regarding mines proposed for and located in transboundary watersheds in British Columbia, BC Minister of Energy and Mines William “Bill” Bennett and Lt. Gov. Byron Mallot announced Wednesday at a press conference. Through the MOU, the State of Alaska and British Columbia hope to create a structured way for tribes, stakeholders, environmental groups, sport and commercial fishermen, tourism operators, and other concerned Southeast Alaskans to get information and share concerns about each stage of a mine in a transboundary watershed, including assessment, permitting, operation, closure and reclamation. Bennett said he doesn’t have a guarantee from Alaska that the two will get to a point where the state will sign an MOU, but that’s what BC is hoping for. “Our goal is to, obviously, ensure the environmental integrity, the pristine water quality of those river systems for all time,” Mallott said. “And we will vigorously act in Alaska’s interest to make sure that happens…. We hope that we will be able to expand that process of openness, transparency and meaningful involvement throughout our long-term engagement.” They also aim to involve tribes, first nations and industry in monitoring water quality in the watersheds affected, both for baseline and ongoing datasets. Bennett said he would like to have the memorandum in place within 30 to 60 days. “Such a document would not be engraved in stone,” Mallott said. “It would be living, based upon the needs and the changing circumstances as they may occur over time.” An MOU and International Joint Commission or federal involvement are not mutually exclusive, Bennett said. Concerned Southeast Alaskans have been calling for the involvement of the IJC under the Boundary Waters Treaty of 1909. The IJC resolves disputes about transboundary waters. “Signing a memorandum of understanding or a memorandum of agreement between a state and the province is a way for us to strengthen the relationship, and to create some structures around that relationship, so we have some direction going forward in how we’re going to do business. And for the life of me, I can’t see how it could be construed as a negative thing,” Bennett said. “It doesn’t preclude anything else.” Alaska will continue to engage the federal government, Mallott said; he hopes to speak with Secretary of State John Kerry about transboundary mining when Kerry is in Alaska to “impress upon him the importance of this issue to both of our nations,” to let him know about state and provincial efforts to work together, and to make sure State Department officials keep updated on the issue. For his part, Bennett said he welcomes federal Canadian government help if it is necessary.  One way the government may get involved, he said, is the issue of compensation to Alaskans “should the unthinkable happen.” That’s something some concerned Southeast Alaskans brought up to him over his time here so far, he said. Talks between the two countries were spurred forward following a tailings dam brach at the Mount Polley Mine in August 2014 that sent billions of gallons of toxic tailings into the Quesnel Lake watershed. “It’s a very difficult issue, because it’s an issue that all neighboring countries, I think, wrestle with from time to time,” Mallott said. “Canada and the US have wrestled with this probably for 100 years… I think the federal governments need to be involved in that part of the discussion.” Just the same, he said he thinks most issues can be resolved through provincial and state communication and cooperation. “We are working to have that engagement with all of those interests who have a passionate, direct involvement with these systems,” Mallott said. “Others who have a more public policy orientation — all of those views, all of those perspectives are hugely important. And creating the opportunity for those views to be shared across the border from both directions, I think, will be hugely important and helpful going forward.” It was the first time in more than 20 years for these kinds of international meetings, a release from Mallott’s office said. Bennett and a team from British Columbia were in Juneau for the first part of the week meeting with elected officials, tribes, miners, environmental organizations, fishermen and other stakeholders, as well as touring the Taku River. Today, Bennett and Mallott are in Ketchikan; other BC officials are touring Hecla Mining Company’s Greens Creek Mine on Admiralty Island. Contact outdoors writer Mary Catharine Martin at [email protected]

Judge blocks Obama administration regulation on waterways

BISMARCK, N.D. (AP) — A federal judge in North Dakota on Thursday blocked a new Obama administration rule that would give the federal government jurisdiction over some smaller waterways just hours before it was set to go into effect. U.S. District Judge Ralph Erickson in Fargo issued a temporary injunction against a the rule that would have given the U.S. Environmental Protection Agency and Army Corps of Engineers authority over some streams, tributaries and wetlands under the Clean Water Act. The rule was scheduled to take effect Friday. "The risk of irreparable harm to the states is both imminent and likely," Erickson said in granting the request of 13 states to temporarily stop the rule from taking effect. The judge said that among other things, the rule would require "jurisdictional studies" of every proposed natural gas, oil or water pipeline project in North Dakota, which is at the center of an energy exploration boom. The 13 states led by North Dakota asked Erickson to suspend guidelines that they say are unnecessary and infringe on state sovereignty. The federal government says the new rule clarifies ambiguity in the law and actually makes it easier for the states to manage some waterways. It wasn't immediately clear if the injunction applied to states other than the 13 that requested the injunction. North Dakota Attorney General Wayne Stenehjem, who filed the request, said he was pleased by the ruling. "This is a victory in the first skirmish, but it is only the first," Stenehjem said in a statement. "There is much more to do to prevent this widely unpopular rule from ever taking effect." Stenehjem said his reading of the ruling was that it applied to all 50 states, not just the 13 that sued. The EPA didn't immediately comment. The agriculture industry has been particularly concerned about the regulation, saying that it could apply to drainage ditches on farmland. The EPA and Army Corps said the only ditches that would be covered under the rule are those that look, act and function like tributaries and carry pollution downstream. A tributary would be regulated if it shows evidence of flowing water such as a bank or high water mark, the EPA says. The other states involved in the lawsuit are Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, New Mexico, Nevada, South Dakota and Wyoming. Erickson cited Wyoming in his ruling, saying the state would have to bear the cost of things such as issuing permits and has no way of avoiding the increased expenses under the regulation. State officials in North Dakota said the new rule will cost the state millions of dollars and take away from more important programs. State Agriculture Commissioner Doug Goehring said there's "confusion and anxiety" among farmers and other landowners over the initiative. At the very least, state officials argued, more time was needed to study the rule, which was finalized on May 27. Stenehjem — along with attorneys general and officials from 30 other states — wrote last month to the EPA and the Army Corps asking that the law be postponed at least nine months. Lawyers for the states said they heard nothing back from the government, so they filed a request for the preliminary injunction. The federal government said the request for an injunction was better suited to be heard by the 6th U.S. Circuit Court of Appeals rather than a federal judge, but Erickson rejected that notion.  

BC, Alaska to draft MOU for mine processes

JUNEAU — The province of British Columbia and the State of Alaska will draft a memorandum of understanding regarding mines proposed for and located in transboundary watersheds in British Columbia, BC Minister of Energy and Mines William “Bill” Bennett and Lt. Gov. Byron Mallot announced Wednesday at a press conference. Through the MOU, the State of Alaska and British Columbia hope to create a structured way for tribes, stakeholders, environmental groups, sport and commercial fishermen, tourism operators, and other concerned Southeast Alaskans to get information and share concerns about each stage of a mine in a transboundary watershed, including assessment, permitting, operation, closure and reclamation. Bennett said he doesn’t have a guarantee from Alaska that the two will get to a point where the state will sign an MOU, but that’s what BC is hoping for. “Our goal is to, obviously, ensure the environmental integrity, the pristine water quality of those river systems for all time,” Mallott said. “And we will vigorously act in Alaska’s interest to make sure that happens…. We hope that we will be able to expand that process of openness, transparency and meaningful involvement throughout our long-term engagement.” They also aim to involve tribes, first nations and industry in monitoring water quality in the watersheds affected, both for baseline and ongoing datasets. Bennett said he would like to have the memorandum in place within 30 to 60 days. “Such a document would not be engraved in stone,” Mallott said. “It would be living, based upon the needs and the changing circumstances as they may occur over time.” An MOU and International Joint Commission or federal involvement are not mutually exclusive, Bennett said. Concerned Southeast Alaskans have been calling for the involvement of the IJC under the Boundary Waters Treaty of 1909. The IJC resolves disputes about transboundary waters. “Signing a memorandum of understanding or a memorandum of agreement between a state and the province is a way for us to strengthen the relationship, and to create some structures around that relationship, so we have some direction going forward in how we’re going to do business. And for the life of me, I can’t see how it could be construed as a negative thing,” Bennett said. “It doesn’t preclude anything else.” Alaska will continue to engage the federal government, Mallott said; he hopes to speak with Secretary of State John Kerry about transboundary mining when Kerry is in Alaska to “impress upon him the importance of this issue to both of our nations,” to let him know about state and provincial efforts to work together, and to make sure State Department officials keep updated on the issue. For his part, Bennett said he welcomes federal Canadian government help if it is necessary.   One way the government may get involved, he said, is the issue of compensation to Alaskans “should the unthinkable happen.” That’s something some concerned Southeast Alaskans brought up to him over his time here so far, he said. Talks between the two countries were spurred forward following a tailings dam brach at the Mount Polley Mine in August 2014 that sent billions of gallons of toxic tailings into the Quesnel Lake watershed. “It’s a very difficult issue, because it’s an issue that all neighboring countries, I think, wrestle with from time to time,” Mallott said. “Canada and the US have wrestled with this probably for 100 years… I think the federal governments need to be involved in that part of the discussion.” Just the same, he said he thinks most issues can be resolved through provincial and state communication and cooperation. “We are working to have that engagement with all of those interests who have a passionate, direct involvement with these systems,” Mallott said. “Others who have a more public policy orientation — all of those views, all of those perspectives are hugely important. And creating the opportunity for those views to be shared across the border from both directions, I think, will be hugely important and helpful going forward.” It was the first time in more than 20 years for these kinds of international meetings, a release from Mallott’s office said. Bennett and a team from British Columbia were in Juneau for the first part of the week meeting with elected officials, tribes, miners, environmental organizations, fishermen and other stakeholders, as well as touring the Taku River. Today, Bennett and Mallott are in Ketchikan; other BC officials are touring Hecla Mining Company’s Greens Creek Mine on Admiralty Island.

DNR hears arguments for Chuitna tributary water rights

A small creek is causing big trouble for Chuitna mine developers and the Alaska Department of Natural Resources. The Alaska Department of Natural Resources, or DNR, heard arguments Aug. 21 from Chuitna Citizens Coalition, Cook Inletkeeper, the Alaska Center for the Environment, and PacRim Coal in the latest installment of a lengthy and contentious permitting process for a proposed coalmine in the Chuitna River drainage. The hearing centered not as much around the well-established pro-mining and pro-salmon arguments as a regulatory question. Representatives presented arguments for whether DNR should grant water rights to Chuitna Citizens Coalition, with which the Chuitna organization could potentially halt PacRim’s ongoing regulatory permitting process. Both PacRim and the mine opponents have filed applications for water reservations, and DNR must decide whose application will prevail. “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. “We think that answer should clearly be no.” 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 20 square miles of salmon spawning grounds to dig a strip mine for low sulfur coal. Chuitna Citizens Coalition, Cook Inletkeeper, and the Alaska Center for the Environment have filed for in-stream flow reservations, or IFRs, which would grant a measure of regulatory authority for one of the Chuitna River tributaries, Middle Creek. PacRim cannot build the mine without draining this stream. PacRim objects roundly to Chuitna Citizens Coalition’s IFR. 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. PacRim and others argued that the unintended consequences of awarding IFRs to private citizens set a dangerous precedent for investment and development in Alaska. “There is no need (for privatizing IFRs) when you have the kind of permitting process you have here,” Fjelstad said. “The resources that you have here will be squarely addressed by the permitting process. This is the big issue. It’s the reason trade groups are here. They care about the integrity of the process.” Indeed, several representatives from oil, gas, and mining industries with no vested interest in the Chuitna Coal Project, including the Alaska Oil and Gas Association and the Alaska Miners Association, also voiced fear that granting Chuitna Citizens Coalition an IFR would have negative impacts on the industry. “It makes very little sense for water flow decisions to be made outside the regulatory framework of the permitting process,” said Alaska Miners Association Executive Director Deantha Crockett. “Alaskans rely on the permitting process. Chuitna is no exception.” The permitting process itself, mine proponents said, already takes into account the best public interest and conservation issues that concern Chuitna Citizens Coalition and others. DNR will always have those factors to consider, and snagging the process won’t help, they said. “There’s no upside to Alaska making this decision now,” said Josh Kindred, counsel for the Alaska Oil and Gas Association. “If you want to make a decision (to halt permitting) later, fine. Wait until you have all the information after the tried and true permitting process.” The Alaska Mental Health Trust Authority, the landowner for the bulk of the proposed mine, is entitled to a percentage of the mineral rights through a state trust, and argued against DNR granting IFRs because it would hinder the public interest. “The Alaska trust is the predominant land owner in the Chuitna River drainage,” said John Morrison from the Alaska Mental Health Trust. “The revenue anticipated from this project alone with effectively double our historic revenue from trust lands. The granting of an IFR would be the end of this project. The state has a fiduciary duty to trust land.” Brown of Trustees for Alaska argued that the IFRs would be in harmony with the Water Use Act, that the three private organizations have followed each requirement for filing, and that the fears of the mining industry are overblown. “This doesn’t turn (Chuitna Citizens Coalition) into some jackbooted regulator,” said Brown. “You have limited ability to do much. This does not prevent the administrative process. It won’t change the proceedings. We have a right to the adjudication.” Bob Shavelson, executive director of Cook Inletkeeper, disagreed that DNR’s choice amounted to a regulatory procedure, and that the matter at hand is, and can only be, about the health of the salmon. “This isn’t about the regulatory issue,” Shavelson said. “It’s about the fish… I’ve heard time and again that fish and mining can coexist. I’m sure there was a lot of money behind that at PacRim’s office. You can’t have it both ways. You’re either going to mine, or you’re going to fish, you can’t have both.” DNR has a tentative date of Oct. 9 scheduled for the IFR decision. DJ Summers can be reached at [email protected]

BC minister talks transboundary mine issues

JUNEAU — British Columbia Minister of Energy and Mines William “Bill” Bennett, on a four-day trip to Southeast Alaska, said after visiting the Tulsequah Chief Mine on Aug. 24 that the pollution the defunct mine has been draining into the Taku River watershed for decades should be fixed. Bennett and several other British Columbian representatives were in Southeast Alaska Aug. 23 through Aug. 27, meeting with tribes, stakeholders, government officials, environmental groups, elected officials and fishermen, as well as touring the Taku River, going to see Greens Creek Mine and other activities. On Aug. 24, Bennett and Lt. Gov. Byron Mallott visited the Tulsequah Chief mine. The Tulsequah Chief has been leaching acid mine drainage into the Tulsequah River since it closed in 1957, and Alaska has been asking British Columbia to clean up the mine site for years. British Columbia and Environment Canada have also been trying to get the companies that own it (they’ve changed over the years) to clean it up. Chieftain Metals Corp. is the current owner. Tulsequah Chief drainage “is not something that I’m proud of, as a British Columbian,” Bennett said. “It’s something that needs to be addressed.” A December 2014 report found that the drainage poses a low risk to fish in the Tulsequah River and is not affecting fish in the Taku River, into which the Tulsequah flows. Bennett mentioned those findings, but added that “it (the drainage) is still something that needs to be rectified. I think that BC is going to have to find a way to rectify it sooner rather than later, and I think it is a most legitimate criticism of us by those folks in Alaska that don’t like it.” The trip up the Taku, Mallott said, was “just a … further ratification” of the reasons to strengthen the working relationship between Alaska and the British Columbia government. “The bottom line for us is that Alaska’s interests are clearly, in a timely manner, in an appropriate manner, and in a very responsible manner, protected, and we will use every opportunity, we will use every tool that is available to us in order to achieve that,” Mallott said. IJC Bennett said those tools shouldn’t yet involve the International Joint Commission, which many Southeast Alaskans concerned about transboundary mining have been working towards involving under the Boundary Waters Treaty of 1909. “It’s very much premature to start rushing towards, you know, one big solution that’s going to make everybody feel better,” Bennett said of IJC involvement. First, he said, everyone needs to agree on the facts. “One of the things we need to do is get the facts straight in terms of what exactly is going on in Northwestern British Columbia,” Bennett said. Bennett said there’s a perception in Alaska that many of the transboundary mines the province is working toward approving are already in operation. The Red Chris, in the Stikine River watershed, began operating this year, and the Brucejack, in the Unuk River watershed, recently received federal environmental approval. “There is time to get this right,” he said of other proposed mines, like Kerr Sulphurets Mitchell, in the Unuk River watershed. He also said there’s a perception that the independent panel report on Mount Polley Mine’s August 2014 tailings dam failure, released earlier this year, said dry stack tailings is the only real option. “They in fact do not say that dry stack tailings is the only way to achieve best available technology,” Bennett said of the report. “If you have potentially acid-generating rock, you probably will want to put that underwater because it neutralizes the generation of acid. ... All the experts in mining are well aware of that. There’s a variety of ways you can achieve best available technology. ... Some folks have fastened onto the idea that the panel has said dry stack tailings is the only way to go, when in fact, they didn’t say that.” The report read: “Improving technology to ensure against failures requires eliminating water both on and in the tailings: water on the surface, and water contained in the interparticle voids. Only this can provide the kind of failsafe redundancy that prevents releases no matter what…. Simply put, dam failures are reduced by reducing the number of dams that can fail.” It added that, “... Mount Polley has shown the intrinsic hazards associated with dual-purpose impoundments storing both water and tailings.” It acknowledges the importance of the chemical stability Bennett mentioned, as well as the fact that water covers are a convenient way to arrest chemical reactions, but added that “chemical stability requires above all else that the tailings stay in one place” and recommends that “where applicable, alternatives to water covers should be aggressively pursued.” The Red Chris, which was approved just a few business days after the report came out, uses a watered tailings facility. Bennett says that BC will adopt and implement all seven of the panel’s recommendations and that he has a letter from one of the report’s authors attesting that dry stack tailings are not the only way. “Anybody that says the Red Chris was permitted in contravention of the report just simply hasn’t read the report,” he said. “There are many, many things that have been said that are not correct.” Trip goals Over the course of the four days he’s in Southeast Alaska, Bennett said he aims to build trust between Alaska and BC, to listen “to people that have interests in salmon” as well as state officials, fishermen and those in tourism and “to see what we can do to provide some comfort about BC’s mining processes.” “We don’t have any illusions about coming here for four days and suddenly, you know, having everybody jumping up and down saying, ‘Well, isn’t it great that BC’s potentially going to build a mine upstream from us?’” he said. “What we hope for is an opportunity to have some respectful dialogue with people who have been expressing concerns.” Bennett sought to find common ground with the concerned groups with whom he’s speaking, saying that he shares the same values as people here who are concerned. He added that he hunts and fishes himself. He and Mallott went fishing Aug. 25. “I understand why people feel so strongly about protecting what they have. ... There’s a way of life here that has tremendous value, and the people who live here don’t want to lose that. I get that. I understand that,” he said. BC also plans to offer Alaska additional access to the mine approval process and to “make it easier” to get information, which Bennett said he hopes will set environmental organizations and tribes at ease. “Folks in Alaska, because they’re downstream of these proposed projects, have every right to know how we’re doing our work in BC, and what evidence we’re basing our decisions on,” Bennett said. Bennett arrived in Alaska Aug. 23 with Cynthia Petrie, Chief of Staff; Wes Shoemaker, Deputy Minister for the Ministry of Environment; Dave Morel, Assistant Deputy Minister for the Ministry of Energy and Mines; Doug Hill, Mining Section Head of the Ministry of Environment’s Environmental Protection Division; Chris Hamilton, Senior Executive Lead Executive Project Director for the Ministry of Environment’s Environmental Assessment Office, and Tania Demchuk, Senior Environmental Geoscientist for the Ministry of Energy and Mines. Bennett’s Juneau-based schedule ran through Aug. 26; he spent Aug. 27 in Ketchikan. On Aug. 27, Bennett, Mallott, Hamilton, Morel, Petrie and Blake flew to Ketchikan to meet with the Ketchikan Indian Community representatives, have lunch with the Chamber of Commerce, and meet with the Alaska Miners Association. Other representatives will tour Greens Creek mine on Admiralty Island. Contact Juneau Empire outdoors writer Mary Catharine Martin at [email protected]

Greens Creek, Kensington mines expanding production

Minerals prices are still low but Alaska’s producing mines are doing well, for the most part. Two underground mines near Juneau, the Greens Creek Mine on northern Admiralty Island and the Kensington Mine at Berner’s Bay north of the capital city, both showed increases in production and improved efficiency. Hecla Mining Co., which owns Greens Creek, said production of silver at the mine was up 10 percent in the second quarter of 2015 compared with the same period of 2014. Gold production dropped at the mine but silver is the more important metal in the ore being mined. Greens Creek also produces zinc and lead. A key element in the higher silver output was improved recovery of the metal in the Greens Creek process mill, the company said. “Higher grades and recoveries at Greens Creek during the quarter continued to improve the mine’s already strong performance,” said Hecla President and CEO Philips Baker Jr. in a statement issued with the quarterly report. Mike Sarte, Hecla’s manager of Alaska external relations, said the improved recovery is a “game changer” for Greens Creek. “This is very significant. Historically most mines produce higher grades first and then the grade trends lower,” as lower-quality ore zones are tapped, he said. “In this case, while we can’t control the grade of the ore we can control how we process it. Changes in the mill process have increased silver recovery.” In another development at Greens Creek, Hecla has started work on the long-planned expansion of its tailings storage facility. All permits are now in hand for the expansion and SeCon, a Southeast Alaska construction company, has been contracted to do the work and removal of surface overburden is now underway. The $44 million expansion, which will cover 18 acres, will take three years to complete. The larger tailings facility will be sufficient to support Greens Creek until 2027 to 2028, and Hecla has already started discussions on another expansion after that, which would further extend the life of the mine. Greens Creek now employs about 413 workers, most who live in Juneau, with a $62 million annual payroll. At the Kensington Mine, which produces gold, the volume of ore mined averaged 170,649 tons in the second quarter of 2015, up from 163,749 tons in second quarter 2014, and gold production increased to 29,845 ounces compared with 28,089 ounces in second quarter 2014. The average gold grade was the same in both periods, at 0.18 ounce per ton, but the gold recovery rate, in the process mill at the mine, improved slightly to 94.9 percent in second quarter this year from 94.5 percent in the same period of 2015. The big news for Kensington is that the mine is expanding into the nearby Jualin deposit, with work on access the deposit beginning in July. When mining from Jualin is fully ramped up in 2018 the total Kensington gold production is expected to reach 149,000 ounces annually, up 26 percent. Operations at the underground Pogo gold mine near Delta, in Interior Alaska, are proceeding normally this year except for challenges with forest fires this summer, which blanketed much of the Interior with smoke. “In some weeks we had smoke at the mine no matter which way the wind was blowing,” said Lorna Shaw, spokeswoman for Sumitomo Metal Mining, the owner and operator of Pogo. One fire broke out five miles from the mine and grew to 1,000 acres until being controlled by state Department of Natural Resources crews with the assistance of Pogo staff. The fire did not threaten mine operations, however. Pogo is approaching two important milestones. The mine will reach the 3-million ounce production threshold late this summer, and is also close to operating for two years without a lost-time accident, Shaw said. “This achievement will be a first for Pogo and it takes dedication and hard work from every single employee to make sure we achieve it,” she said. The mine employs about 315 workers directly as well as another 150-plus contractor employees, Shaw said. At the Fort Knox gold mine near Fairbanks, Kinross Gold, the owner and operator, is on track for 2015 production at about the same level as 2014, according to spokeswoman Anna Atchison. The mine currently employs about 660, she said. Milestones for this year include the company’s purchase of two new 793F haul trucks in the first quarter of the year. Fort Knox is also investing in improvements of its ore process streams to include construction of a new process solution booster pump station, she said. “As part of our overall drive for further efficiencies and cost reductions in a tight gold price environment, we recently increased haul truck payloads by 7 percent and cut shift change times by an impressive 23 percent in the first quarter alone,” Atchison said. “At the Usibelli coal mine near Healy, production is down this year because of slipping export sales of coal, but sales of coal within Alaska, the bulk of it for power generation, remain strong. Total coal production for 2015 is expected be approximately 1.4 million tons for but it could still be a bit higher, Usibelli Coal Mine, Inc. spokeswoman Lorali Simon said. “We’re still working to do more export sales.” The domestic Alaska coal market appears stable at about 1 million tons per year but exports in 2015 may slip from about 600,000 tons in 2014 to 400,000 tons this year, she said. The strong U.S. dollar makes Alaska exports expensive and is hurting export sales, she said. Other factors include the opening of a new coal mine in Chile that is cutting in that market for Alaska and South Korea’s imposition of an import tax on coal for utilities in that nation. South Korea has been a traditional customer for Usibelli. The company employs about 115 full-time workers at its mine near Healy, Simon said. In a new development, a state administrative appeals officer has sided with the Department of Natural Resources in awarding Usibelli renewals on coal mining leases at the Wishbone Hill coal deposit near Palmer, which the company hopes to develop. Opponents of the mine may file a lawsuit, however. If Wishbone Hill is developed it would produce about 500,000 tons per year and employ 75 to 125 people.

What will exploration permit ruling mean for industry?

The mining industry is waiting for the Department of Natural Resources to chart a path forward after an Alaska Supreme Court ruling that could change permitting procedures and require public notice for exploration work. Two months after the ruling in the case over Pebble Limited Partnership exploration permits went against the State of Alaska, it is still unclear exactly what the state will do to respond. Alaska Miners Association Executive Director Deantha Crockett she’s hopeful some members of the industry will be able to assist DNR in moving from “temporary permits for temporary activity to permanent permits for temporary activity.” However, the detailed work has not yet taken place. The case focused on whether or not temporary state land-use permits for exploration of Pebble’s claims were truly functionally revocable at any time, as the state claimed. DNR typically issues five-year Miscellaneous Land Use Permits, or MLUPs, and Temporary Water Use Permits, or TWUPs, for mining exploration done on state land, as in the case of Pebble. The plaintiffs listed, the anti-Pebble group Nunamta Aulukestai, Ricky Delkittie, Sr., the late Violet Willson, Vic Fischer and Bella Hammond claimed DNR should allow for public comment prior to issuing these permits, because among other things, permanent damage is could be done to state land. Exploration impacts that constitute a permanent “disposal” of land are something Alaska residents should be able to weigh in on under the state constitution, they argued. Exploration drill, or bore, holes are usually filled with concrete or other impermeable cement-like mixtures to prevent movement of groundwater between layers of bedrock and subsequent possible contamination. Robert Retherford, president of the exploration and geology consulting firm Alaska Earth Sciences, said steel drill casing is sometimes left in the hole when it becomes stuck or is needed to prevent collapse. In those instances, cement is forced down the casing until it pushes up around the outside of the casing, sealing and entrapping it in a safe concrete environment. The Supreme Court found these “concrete pillars,” as it referred to them in its May 29 ruling, to be permanent structures, which in part made the exploration permits irrevocable. DNR argued that the common practice of filling boreholes is environmentally benign. It’s a long-time common practice in the mining industry. Retherford said defining old bore holes as permanent structures “creates a lot of fog and haze” around the permitting process. Executive director for the environmental advocacy law firm Trustees for Alaska Vicki Clark said in a release after the ruling that the state has “issued permits behind closed doors without even looking at the harm to public resources,” and the Supreme Court ruling will put an end to that practice. “This decision means that all Alaskans, especially those whose rights and livelihoods are jeopardized by intensive exploration activities like those at Pebble, have the constitutional right to participate in the decisions affecting them,” Clark said. The court also found the permits to be irrevocable for large exploration projects such as Pebble’s, which totaled more than $300 million, because DNR staff could be swayed to issue or protect permits when such large sums of money are at stake. The court did not determine a monetary threshold where that becomes the case. Retherford said the issue off permanent structures simply doesn’t make sense. “We’re concluding that the people making the regulations, in this case the Supreme Court, that they’ve had enough coaching or enough time to really understand how (the exploration process) works. It doesn’t seem like that in this case, so we’ll see,” Retherford said. When a borehole penetrates no aquifers, as is often the case in mountain drilling, putting the drill cuttings back would be an acceptable way to meet the new requirements if sealing a hole is unfeasible, he said. Changing current regulations to meet the Supreme Court’s view could make some exploration cost prohibitive, according to Retherford. He said he uses a ballpark figure of $150 per foot for exploration drilling when discussing cost with potential clients. “It’s not uncommon to see a million bucks go into a hole if you’re drilling say 3,000, 4,000, 5,000 feet” when preparatory work is included, he said. The Supreme Court decision overturned a Superior Court ruling that shot down the plaintiffs’ six claims for relief. Alaska Miners Association attorney Larry Albert noted that the court did not find evidence of actual environmental harm from the filled holes, but rather used potential harm as the basis for its ruling. He also said the Supreme Court did an “end run” on the Superior Court ruling and did not rule on the merits of the case. Rather, it determined the case to be moot because Pebble’s permits had expired and exploration had ceased, but decided to rule based on the need for a resolution that had implications in an associated case dealing with attorneys’ fees. Albert said that is a legitimate course of action; however, the court ended up ruling on what happened in Pebble’s case and not on what would likely happen in future cases, thus issuing a contradictory ruling. Crockett said the ruling should concern individuals on either side of the development debate — for or against — because it clouds a permitting process that should be built on science alone. “We need to have a permitting process that’s clear, that’s predictable, that we understand and that we have confidence in,” she said. Without a defined regulatory framework using the best available science, the confidence of the public and potential project investors is damaged, Crockett said. Rick Van Nieuwenhuyse, CEO of NovaCopper, which is exploring copper deposits in the Ambler Mining District along the Brooks Range, said his company has always found Alaska to be a good permitting environment to conduct work. NovaCopper’s $5 million summer season exploration and data gathering plan is one of the few significant mine exploration projects going on in the state this year. Van Nieuwenhuyse commended the work DNR and the Department of Environmental Conservation have done in the past and said he expects state regulations “to reflect what’s reasonable.” “What we do currently and what we’ll continue to do is meet the regulations,” Van Nieuwenhuyse said. Elwood Brehmer can be reached at [email protected]

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