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]

Federal judge allows Pebble case against EPA to continue

Pebble Limited Partnership’s lawsuit against the Environmental Protection Agency will continue as a federal judge denied the agency’s motion to dismiss June 4. U.S. Alaska District Court Judge H. Russel Holland concluded that while the EPA may not have established the three “anti-mine” groups as described by Pebble in its complaint — the Anti-Mine Coalition, Scientists and Assessment Team — agency staff could have utilized them to draft the pending determination to block development of Pebble’s copper and gold claims near Bristol Bay. The mining organization’s attorneys argued during a May 28 hearing that the agency was in cahoots with area tribes and mine opposition groups for years prior to and during the Bristol Bay Watershed Assessment process. The exhaustive assessment, which found large-scale mining would irreparably harm the region’s robust salmon fisheries, is the basis for the EPA’s attempt to preemptively stop Pebble through its Clean Water Act Section 404(c) wetlands protection authority. Pebble’s primary argument centers on the claim that the EPA violated the Federal Advisory Committee Act, or FACA, which requires agencies to remain objective and follow strict public notice and open meetings guidelines on policy issues when taking input from interest groups. “We are convinced the EPA has pursued a biased process against our project that then drove their actions toward a predetermined outcome,” Pebble CEO Tom Collier said in a formal statement after the order. “Our fight with the EPA has been about a fair and transparent process for objectively evaluating a development plan for our project once we have presented it via the permitting process. In addition to this case, we are seeking documents to show the EPA’s lack of transparency and action under the Freedom Information Act.” He also said the group has commissioned an independent investigation into the EPA’s actions in regards to Pebble. The EPA Inspector General is in the midst of a review of the Bristol Bay Watershed Assessment that began more than a year ago. As far as the court case goes, Pebble will now seek to depose federal employees and members of third-party groups involved in drafting the assessment, Collier said. The agency claims that even if it unknowingly violated FACA, Pebble had ample opportunity to provide input during more than 30 meetings with EPA officials since 2003 — long before the assessment process officially began in 2011. The United Tribes of Bristol Bay and Trout Unlimited Alaska, two staunch opponent groups of the mine, issued statements saying Holland’s ruling doesn’t change the fact that the science behind the assessment proves Pebble would damage the region’s aquatic resources. “This case is simply another delay tactic from Pebble. The company’s complaints about the federal advisory process — a process Pebble itself participated in —in no way changes the scientific fact that this mine, in this place, will devastate our fishery, “ UTBB President Robert Heyano said in a June 4 release. “Today’s ruling was merely a preliminary step in a judicial process that isn’t over, and if further litigation is the price necessary to protect the Bristol Bay fishery and our traditional way of life, then it will be well worth it.” In November, Holland issued an injunction to halt all work on the 404(c) process until the court case is resolved. He dismissed with prejudice Pebble’s allegations that the EPA established the Anti-Mine Coalition and Anti-Mine Scientists groups in the latest order. Holland also dismissed with prejudice Pebble’s claim for injunctive relief. The EPA was also relieved from answering chunks of the amended Pebble complaint, which it claimed violated court procedure. “(Pebble’s) first amended complaint is lengthy and does contain irrelevant and redundant allegations and unnecessary factual details,” Holland wrote. “But rather than dismissing the first amended complaint, the court will excuse the defendants from answering” the sections that do not pertain to the FACA accusations. Holland called Pebble’s original, 138-page complaint, an “outrageous violation” of court procedural guidelines when issuing the November injunction. Also on May 28, a three-judge panel from the 9th Circuit Court of Appeals dismissed a previous lawsuit by Pebble — also heard and dismissed by Holland last September — that the EPA overstepped its authority by beginning the 404(c) process before a mine plan or permit applications were submitted. It was determined that case was not ripe for a ruling until the mine veto was finalized. Elwood Brehmer can be reached at [email protected]

Judge allows Pebble case against EPA to continue

Pebble Limited Partnership’s lawsuit against the Environmental Protection Agency will continue as a federal judge Thursday morning denied the agency’s motion to dismiss. U.S. Alaska District Court Judge H. Russel Holland concluded that while the EPA may not have established the three “anti-mine” groups as described by Pebble in its complaint — the Anti-Mine Coalition, Scientists and Assessment Team — agency staff could have utilized them to draft the pending determination to block development of Pebble’s copper and gold claims near Bristol Bay. The mining organization’s attorneys argued during a May 28 hearing that the agency was in cahoots with area tribes and mine opposition groups for years prior to and during the Bristol Bay Watershed Assessment process. The exhaustive assessment, which found large-scale mining would irreparably harm the region’s robust salmon fisheries, is the basis for the EPA’s attempt to preemptively stop Pebble through its Clean Water Act Section 404(c) wetlands protection authority. Pebble’s primary argument centers on the claim that the EPA violated the Federal Advisory Committee Act, or FACA, which requires agencies to remain objective and follow strict public notice and open meetings guidelines on policy issues when taking input from interest groups. The agency claims that even if it unknowingly violated FACA, Pebble had ample opportunity to provide input during more than 30 meetings with EPA officials since 2003 — long before the assessment process officially began in 2011. In November, Holland issued an injunction to prevent the EPA from finalizing the 404(c) process until the court case is resolved. He dismissed with prejudice Pebble’s allegations that the EPA established the Anti-Mine Coalition and Anti-Mine Scientists groups in the latest order. Holland also dismissed with prejudice Pebble’s claim for injunctive relief. The EPA was also relieved from answering chunks of the amended Pebble complaint, which it claimed violated court procedure. “(Pebble’s) first amended complaint is lengthy and does contain irrelevant and redundant allegations and unnecessary factual details,” Holland wrote. “But rather than dismissing the first amended complaint, the court will excuse the defendants from answering” the sections that do not pertain to the FACA accusations. Holland called Pebble’s original, 138-page complaint, an “outrageous violation” of court procedural guidelines when issuing the November injunction. Also on May 28, the federal a three-judge panel from the 9th Circuit Court of Appeals dismissed a previous lawsuit by Pebble — also heard and dismissed by Holland last September — that the EPA overstepped its authority by beginning the 404(c) process before a mine plan or permit applications were submitted. It was determined that case was not ripe for a ruling until the mine veto was finalized. Elwood Brehmer can be reached at [email protected]

Dismissal arguments heard in Pebble-EPA case

Pebble Limited Partnership and the Environmental Protection Agency argued in court May 28 whether the agency violated federal law in developing the Bristol Bay Watershed Assessment, which is the basis for its effort to block Pebble mine. The oral arguments on the EPA’s motion to dismiss Pebble’s lawsuit were heard in Alaska U.S. District Court by Judge H. Russel Holland. Justice Department attorney for the EPA Brad Rosenberg said the agency did not violate the Federal Advisory Committee Act as Pebble contends, because the EPA had the same type of contact with Pebble as it did with the groups and individuals Pebble claims it conspired with to stop mine development. The Federal Advisory Committee Act, or FACA, was enacted in 1972 to set guidelines for federal agencies and ensure committees they form are objective and open to the public. Pebble claims it was shut out of the assessment process, but it had regular contact with EPA staff at all levels beginning in 2003, Rosenberg argued. “Pebble had a role in creating the Bristol Bay Watershed Assessment,” he said. “If anything, Pebble had unprecedented access to the EPA.” Rosenberg said the EPA officials all they way up to the administrator met with Pebble about 30 times from 2003 to 2013. The mine developers simply disagree with the science in the assessment, according to Rosenberg. He said the FACA requirements are narrow and do not apply in this instance. In February 2014, shortly after releasing the final version of the 1,000-plus page Bristol Bay Watershed Assessment, the EPA announced it would begin the process to block development of Pebble’s gold and copper claims with its authority under Section 404(c) of the Clean Water Act. Coincidentally on May 28, a three-judge 9th Circuit Court of Appeals panel dismissed another Pebble lawsuit against the EPA claiming harm from the 404(c) mine veto. Holland initially dismissed that case last September because the agency hadn’t issued its final action, thus making Pebble’s argument not ripe for consideration, at least for the time being. The assessment concluded that large-scale surface mining in the Bristol Bay region would significantly impact the robust salmon and resident fisheries in the area. Pebble filed suit the suit argued May 28 before Holland in September 2014, alleging the assessment to be biased. Holland issued an injunction halting the 404(c) veto process in November to prevent the agency’s action from becoming final during the lawsuit. Pebble attorney Roger Yoerges argued that the EPA set up “de-facto” advisory committees based on contact the agency had with anti-mine groups, which is evidenced in the documents obtained from Freedom of Information Act requests Pebble has submitted to the EPA. “The government is saying a federal committee cannot exist unless they say it exists,” Yoerges said. In its complaint, Pebble attorneys claim the agency set up three informal advisory committees the mining company dubbed the “anti-mine coalition,” the “anti-mine scientists” and the “anti-mine assessment team.” Rosenberg countered that an agency can’t inadvertently set up an advisory committee. A formal advisory committee must be made up of a balanced panel of members and publish actions in the Federal Register. He also said the 2010 emails between anti-mine activists and then-EPA ecologist Phillip North that Pebble has touted as prime examples of the bias within the agency were to a “low-level” agency scientist and had little impact on the assessment, officially undertaken in 2011. Yoerges said the EPA attorneys were arguing the facts of the case appropriate for a summary judgment motion during a hearing for dismissal, and that further discovery would allow Pebble to flesh out its allegations, he said. “We suspect more discovery will show more documents in support of our view,” Yoerges said. In his rebuttal, Rosenberg called the advisory committees “nothing more than a figment of (the) plaintiff’s imagination.” He said everybody wanted the EPA to hear their respective views during and before the assessment process. Rosenberg noted that the EPA regional administrator could have initiated the 404(c) process in 2010 if the agency’s mind was made up at that time, but decided to do a detailed scientific assessment of the resource in question. He said the Bristol Bay Watershed Assessment is a final, standalone scientific document, separate from the pending 404(c) action. However, senior EPA officials have cited the assessment as the basis for starting the mine veto process. Finally, Rosenberg said Pebble would still have a chance to further voice its position on the 404(c) process if the injunction is lifted. When Holland issued the injunction halting the veto effort last November, he said the 404(c) process could result in “no action, but it isn’t headed that way.” Elwood Brehmer can be reached at [email protected]

Exploration payrolls down as producing mines add jobs

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

Groundhog Day for mining controversy in Southwest AK

Is another mining controversy stirring in Southwest Alaska? Nondalton’s tribal council is protesting the move of its village corporation, Kijik Corp., to form a joint venture with Anchorage-based Alaska Earth Sciences to explore a copper/gold deposit near the village and adjacent to the Pebble project. Pebble is near Iliamna southwest of Anchorage. Nondalton is a community near the Pebble project. The joint venture will explore on state-owned lands near where the Pebble Partnership, a subsidiary of Vancouver-based Northern Dynasty Minerals, proposes to build a large surface mine. On Jan. 6, Kijik Corp. and Alaska Earth Sciences, Inc. announced the formation of Chuchuna Minerals Co., with Alaska Earth Sciences Inc. holding a 51 percent interest and Kijik Corp. owning 49 percent interest in the company. The exploration venture will explore near Groundhog Mountain, which is on nearby on state lands. The Nondalton Tribal Council isn’t happy about that, however. In a statement released Feb. 3 the council said, “We don’t want mining in our area. We don’t want harm to come to our land and water in any way, shape or form. This is the foundation to our way of life and culture.” Despite those feelings, economic development and jobs are badly needed in the region, which is one of the more economically depressed areas of the state. Populations in small communities in the Iliamna area are dwindling, village schools are closing and local services, such as mail delivery, are being curtailed. Mining development is one potential for local development and jobs. Several geophysical surveys have been conducted on the Groundhog property over several years, Kijik and Earth Sciences said in their press release Jan 6. Multiple occurrences of porphyry-style mineralization have been found in the area including Pebble West and East, and several other significant discoveries. All of these occur along a northeast-trending mineralized system. Chuchuna Minerals Co. will be seeking an option partner to continue exploration efforts including geophysical surveys as well as drill testing identified target sites, according to the press release. A possible preemption of mining in the region by the U.S. Environmental Protection Agency is still possible, however. EPA has moved to use its authority under the Clean Water Act to preempt development and has proposed a ban on large mines in the Bristol Bay region, an area the size of many states. The action has been halted temporarily by a federal court order in an action brought by Pebble Partnership. A decision is pending from Alaska U.S. District Court Judge H. Russel Holland in Anchorage. Kijik Corp. is the ANCSA Village Corporation for the community of Nondalton, located on 6 Mile Lake between Iliamna and Lake Clark. Nondalton is the closest community to the Groundhog Project and is adjacent to the Pebble Project.  “Kijik Corporation brings local experience and resources to the project from the outset, greatly improving the development of an effective community engagement program and focused successful workforce development, the press release said. “In addition, Kijik Corporation has other strategic land holdings in the vicinity of the Groundhog Project.” Alaska Earth Sciences is a geologic and project management consulting company operating in Alaska since 1985. The company has decades of experience working in remote areas of Alaska providing geologic consulting expertise and support to the natural resource and mineral exploration industries. 

Pebble Partnership vs. the EPA — a yearlong conflict

The legal sparring between Pebble Limited Partnership and the Environmental Protection Agency drew headlines throughout the year. It began right away Jan. 15 when the EPA released its Bristol Bay Watershed Assessment, a 1,000-page report three years in the making, which concluded that a large surface mine in the upper reaches of the Bristol Bay watershed would cause significant harm to the region’s dynamic salmon fisheries. Pebble has maintained a stance that the assessment is a seriously flawed document based on biased science. On Feb. 28, the EPA announced it would begin the process to invoke its Clean Water Act authority that allows it to veto large development projects that it deems would have unacceptable adverse consequences to fish and wildlife under Section 404(c) of the act. It is the first time the EPA has used its Clean Water Act power so early in a project’s development; Pebble has not released a formal mine plan. Former Sen. Mark Begich came out against Pebble soon after release of the assessment. Sen. Lisa Murkowski, Rep. Don Young and Sen. Dan Sullivan, who defeated Begich in the Nov. 4 election, all said they want the state and federal permitting processes to decide the fate of the mine. Pebble proponents got a small victory in state court March 19 when the Lake and Peninsula Borough “Save Our Salmon” ordinance that required local approval of a large mine was ruled unconstitutional. In May, Pebble sued the EPA claiming the agency overstepped its authority when it began the Clean Water Act process. The EPA Inspector General also initiated a preliminary review of the process used to draft the Bristol Bay Watershed Assessment. The lawsuit was dismissed — and appealed by Pebble — in September; the IG report is pending. After a late summer round of public testimony hearings the EPA decided to move forward with its large mine veto. Pebble gained a significant victory in court Nov. 24 when a federal judge ordered the EPA to stop its 404(c) process as a second suit against the agency plays out. The mining group is alleging that the EPA was drafting plans to kill the mine years before work on the assessment even began. Alaska’s voters resoundingly passed a ballot measure in the Nov. 4 elections that would force large Bristol Bay mines such as Pebble to get legislative approval. Pebble board chair John Shively said the group did not campaign against Ballot Measure 4 because it is unconstitutional and will fail when challenged. — Elwood Brehmer Donlin gets Native corp. approval Donlin Gold LLC got a boost for its mega-gold project June 8 when it officially reached an agreement with The Kuskokwim Corp. that gives the mining company surface access to corporation land. Donlin Gold would use the land to access its claims if the $6 billion project moves forward. Located along the upper Kuskokwim River in Western Alaska, the Donlin Creek mine would be the largest gold mine in the world if it is developed. Donlin holds claim to an estimated 34 million ounces of recoverable gold. As it is currently proposed the project would stretch from the west side of Cook Inlet, where a 312-mile buried natural gas pipeline would be built to feed a large power plant at the mine. From the south and west barges up the Kuskokwim River would supply the mine with other materials. In October, Donlin project owners Barrick Gold and NovaGold said the Donlin Creek environmental impact statement is about half done and a draft is on schedule for a 2015 release. Work began on the EIS in 2012. The Alaska Department of Natural Resources held public comment meetings in fall as it reviewed Donlin’s pipeline right-of-way application. — Elwood Brehmer Pogo, Fort Knox eye expansion Gold prices aren’t where gold miners hoped they would be in 2014 but two of Alaska’s largest producing mines in Interior Alaska, the Fort Knox and Pogo mines, are still doing well. Fort Knox, a low-grade surface mine northeast of Fairbanks, was expected to produce about 390,000 ounces of gold in 2014. That’s down from 421,641 ounces in 2013, but it is enough to keep Fort Knox in the No. 1 spot among Alaska’s gold producers. Fort Knox has been producing since 1996 using a mechanical ore-crushing and processing system as well as a heap leach chemical treatment process. The company is also exploring untested new ground near the mine, searching for additional resources. The mine employs about 630, the vast majority living in Fairbanks and commuting to the mine; Fort Knox pays about $81 million in annual payroll. Pogo, about 85 miles east of Fairbanks, was expected to produce about 330,000 ounces of gold in 2014, an amount similar to 2013. Pogo is an underground mine tapping gold ore in quartz veins from two zones, the “Leise,” which has supported the bulk of the ore production to date, and “East Deep,” an adjacent deposit that began contributing to production in 2013. Additional gold resources are being found in adjacent deposits, which are still being explored. One is “North Zone,” and another is “South Zone.” Another nearby deposit, labeled the “4021 area,” has also been identified. Currently the mine has 4.97 million ounces of unproduced gold reserves, enough to operate until 2019, but the company is confident additional reserves will be added. Pogo employs about 314 with an additional 80 contactor employees, which increases to about 180 in the summer. Pogo has an annual payroll of about $38.5 million. — Tim Bradner Greens Creek receives key permit The Greens Creek Mine near Juneau had a good year in 2014, and the stage is set for Hecla Mining Co., the mine owner, to remain a major employer in the Southeast region for years to come. Greens Creek received its U.S. Army Corps of Engineers permit late in 2014 for a long-planned expansion of the waste tailings storage facility, which will allow the mine to develop more resources and extend its operating life. The Corps issued a Section 404 permit under the Clean Water Act. Greens Creek has operated for almost 25 years on a 27-square-mile land tract in the northern part of Admiralty Island, west of Juneau. The mine is within the Tongass National Forest. Greens Creek is a multi-metals mine producing an ore containing mainly silver, but also zinc and gold. It is the largest silver mine in North America. Hecla Mining Co., the owner, expects to produce between 6.5 million and 7 million ounces of silver and about 55,000 ounces of gold from the mine in 2014. As of early 2014 the mine’s proven and probable reserved were estimated at 92.5 million ounces of silver; 713,000 ounces of gold and 678,000 tons of zinc and 256,000 tons of lead. Hecla is still exploring at Greens Creek, and new mineralized areas have been found that can be tapped using the mine’s current infrastructure. The mine employs about 400, most who live in the nearby Juneau community and commute daily to the mine by boat. — Tim Bradner Ambler ambles along NovaCopper Resources and NANA Regional Corp. continued a long-range assessment of mineral resources in the Ambler Mining District and at Bornite, both in the western Brooks Range and northeast of Kotzebue. NovaCopper, a Canada-based “junior” exploration company, and NANA, the Alaska Native regional corporation based in Kotzebue, are in a joint-venture agreement to explore discoveries at Bornite, on the upper Kobuk River, and the Arctic Deposit, which is nearby and in the Ambler district. NovaCopper has been managing a drilling and exploration program at both locations. There was no drilling in 2014 but NovaCopper undertook an evaluation of core tests drilled years ago by Kennecott Exploration, the original owner at Bornite, that were never fully tested. Results of the analysis, released Oct. 28, showed significant contents of copper in five of 37 historic drill tests, with copper content ranging from 0.5 percent copper to 1.18 percent copper, with a “cutoff” grade of 0.5 percent. NovaCopper and NANA have found significant grades of copper from its earlier drilling at Bornite as well as drilling at the Arctic deposit. The Ambler and upper Kobuk River copper resources have been known and explored for decades. The first discovery at Bornite, by Kennecott, was in the 1960s. The remote location of the discoveries has so far prevented development of a mine, but the state of Alaska is now engaged in permitting a 300-mile resource development road into the area from the Dalton Highway to the east. The Alaska Industrial Development and Export Authority, the state’s development corporation, is leading the access road initiative. However, no road would actually be built by AIDEA until there is a commercial mine project, at Arctic, Bornite or at other nearby minerals discovery sites, that would pay for the road. Former Gov. Sean Parnell had $8 million in his capital budget to advance the road effort, but new Gov. Bill Walker removed that and all other capital spending that didn’t generate a federal match when he released his budget Dec. 15. — Tim Bradner

Federal judge orders EPA to halt pending Pebble action

The Environmental Protection Agency’s proposal to block Pebble mine is on hold after a Nov. 24 federal court ruling. U.S. Alaska District Court Judge H. Russel Holland ordered a preliminary injunction be put in place on the EPA’s Clean Water Act Section 404(c) process in the Bristol Bay region. The ruling came immediately after oral arguments on a motion for the injunction filed by Pebble Limited Partnership in its lawsuit against the EPA. Pebble claims the 1,000-plus page Bristol Bay Watershed Assessment, the document on which the EPA based the need to take action against mine development, is biased and flawed. Pebble CEO Tom Collier said in a formal statement the ruling is important because it prevents the EPA from continuing its process to ban the mine. If a final agency determination were reached prior to a final ruling in the case, the court could not repeal the agency’s action. “The court today granted our preliminary injunction blocking EPA from taking any further steps in the 404(c) regulator process it has initiated at Pebble before Judge Holland is able to issue a final decision on the merits of our case,” Collier said Nov. 24. “We expect this case may take several months to complete. This means that for the first time EPA’s march to preemptively veto Pebble has been halted.” The EPA has the authority under Section 404(c) of the Clean Water Act to ban specific development projects it deems would cause a significant adverse impact on fish and wildlife because of fill placement. Trout Unlimited Alaska Director Tim Bristol said in a formal statement the ruling does not prevent the EPA from eventually using the science in the assessment. Trout Unlimited has been a lead organization in the fight against Pebble. “This decision is far from damning, but it does nonetheless represent an unfortunate example of Pebble throwing up legal and procedural road blocks against scientific fact and the will of Alaskans, which has consistently spoken out against Pebble mine,” Bristol said. “Moving forward, we hope the legal process is quickly and fully resolved so the people of Bristol Bay can get back to living their lives, running their businesses and making investments with an eye on a fish-filled and mine-free future.” It is the second suit Pebble has brought against the agency heard by Holland. He dismissed a prior case Sept. 26 on several of Pebble’s claims because the EPA has not made a final decision. The State of Alaska intervened on Pebble’s behalf in that case. The agency announced its intent to begin the 404(c) process in late February, about a month after the final Bristol Bay Watershed Assessment was released. It typically takes about a year to complete. EPA Region 10 officials are quick to note the authority has only been used 13 times since the Clean Water Act was enacted in 1972. While the law does not specify when the agency can use its authority, the copper-gold Pebble project would be the first instance in which it was used prior to a formal project plan being released. Pebble’s first lawsuit challenged the EPA’s authority to block a project prior to a wetlands permit application being submitted to the U.S. Army Corps of Engineers, which evaluates such applications. The EPA has ultimate say, however, and can veto a project even if the Corps approves the application. Holland ruled that Pebble attorneys raised “serious questions” as to whether working groups that contributed to the watershed assessment document were subject to the Federal Advisory Committee Act, which attempts to ensure the advice agencies receive from such groups is objective and the process is public. Pebble contends emails sent as the assessment was formed from 2011-2014 between EPA Region 10 staff and mine opposition groups including Trout Unlimited Alaska and the United Tribes of Bristol Bay prove the agency had a predetermined agenda to block the mine. The EPA Inspector General’s Office initiated a review of the Bristol Bay Watershed Assessment earlier this year. That review is ongoing. Pebble attorney Roger Yoerges argued anti-mine groups and the agency worked together to form the assessment. “The EPA specifically reached out to groups who it knew what their opinion was,” Yoerges said. The agency was seeking advice to advance a common agenda, he said. Department of Justice civil division attorney Brad Rosenberg for the EPA said the agency had an “open door” policy to groups on both sides of the issue and did not shun Pebble while it developed the assessment, as the mine developers claim. “The fact that EPA was receptive to the belief of multiple environmental groups should not be a surprise to anyone,” Rosenberg said. Pebble’s Collier said after the ruling that the company’s accusation that the EPA colluded with environmental groups is based on documents disclosed in Freedom of Information Act requests. “The documents we have been able to review thus far disclose more than 500 contacts between EPA and activists,” he said. “We fully expect that once we have access to all documents that there may be many times that number.” Holland also said Pebble is likely to suffer irreparable harm if it is not allowed to litigate the case because, “The 404(c) action underway now could result in ‘no action,’ but it isn’t headed that way,” Holland said in preparation to issue his ruling. He ruled against Pebble’s claims that it faced economic hardship as a result of the EPA’s actions. The preliminary injunction would only lead to a temporary delay in the agency’s actions at this point, he said, as public testimony on the Pebble 404(c) process has closed. After issuing his ruling, Holland ordered Pebble to file an amended complaint. He called its original 138-page complaint an “outrageous violation” of court procedure guidelines. Whether the EPA would suspend its motion to dismiss and file a second dismissal motion based on a revised complaint, Holland asked the parties to meet and agree on a procedural path forward by Dec. 2. Elwood Brehmer can be reached at [email protected]

Record crowd expected at miners convention

The annual Alaska Miners Association convention will set another attendance record this year with about 1,000 signed up to attend so far, AMA Executive Director Deantha Crockett said. It is also marks the 75th anniversary of the AMA, making it one of the state’s oldest trade and professional organizations. The AMA was organized in 1939 to give the mining industry, then one of the territory’s two industries (the other being fishing) a way to present a united front in dealing with new land policies being formed in Washington, D.C. Not much has changed, Crockett said. The Alaska statehood movement, which even then was gaining strength, was also an issue the mining industry wanted to be involved in. This year, however, the convention has also moved to a new venue and larger spaces at the Dena’ina Civic and Convention Center in Anchorage, having outgrown the capacity of the downtown Sheraton, its location in previous years. The event will take place from Nov. 3 to Nov. 9. Attendance has been steadily climbing at AMA’s annual gatherings. There were 700 last year, setting a record then, and 500 to 600 in previous years, Crockett said. These aren’t the best times for the minerals industry worldwide but there’s continued interest in Alaska because of the state’s huge natural resource endowment, and a heavy turnout at the AMA convention signals that. It also indicates concerns over forces adversely affecting mining, such as government policy changes and environmental initiatives, and the miners’ annual conference is seen as a good way to hear directly from top agency officials, Crockett said. This year, she said, mining industry leaders from Nevada and Colorado will make presentations on policy problems in their state. Similar issues may crop up in Alaska. One session that will be no doubt well-attended will be luncheon sponsored by the miners and other business groups on Nov. 5, in which Ralph Samuels, a former legislator and House majority leader, will give his analysis of state election results following the general election Nov. 4, with the victorious statewide candidates invited to attend. Phillip Baker, CEO of Hecla Mining Co., will speak at the Thursday luncheon. Hecla is owner and operator of the Greens Creek Mine near Juneau. Crockett said there will be keen interest in learning about problems with mine tailings dam elsewhere as these will influence Alaska regulators’ responses to proposals for tailings facilities on new projects here. On that topic, British Columbia’s Minister of Energy and Mines, Bill Bennett, will give a presentation on his government’s response to the Mount Polley tailings facility failure. That is scheduled for Nov. 5 at 3 p.m. Crockett said Bennett will discuss the investigation now underway on the failure, why it was ordered and what is being studied. “People here are interested in what we can learn from this. There are a lot of lessons,” she said. Earlier on Nov. 5, AMA will also have a special panel session on tailings dam safety, moderated by Bob Loeffler, a veteran minerals consultant. That is scheduled for 8 a.m. Nov. 5. There will be a panel on national issues affecting mining, a hot topic with the pending preemption effort of mining in the Bristol Bay region by the U.S. Environmental Protection Agency. Hal Quinn, CEO of the National Mining Association, will give an update on EPA issues including the pending rules on power plant emissions, an issue of keen concern to the coal industry. Tom Collier, CEO of Pebble Partnership, will give the latest on EPA’s efforts on a Clean Water Act Section 404c preemption at Pebble as well as his company’s litigation against the agency on the issue. Crockett said a panel on ballot initiatives, from the Alaska perspective as well as experience in others states, will be of keen interest given the recent ballot propositions here, including Ballot Measure 4 that intends to require legislative approval for any large-scale mining in the Bristol Bay area. Tim Crowley, executive director of the Nevada Mining Association, will discuss a ballot measure in Nevada dealing with state mineral taxation. The proposal is to clear away existing Nevada statutes on minerals taxes as a preliminary step toward enacting a new tax code, which the mining industry fears will be more onerous. Stuart Sanderson, executive director of the Colorado Mining Association, will discuss the state’s implementation of its new marijuana measure (a similar law could be approved for Alaska under Ballot Measure 2) and the anti-“fracking” initiative in that state. Although this deals with oil and gas and the practice of hydraulic fracturing, the ripple effects could eventually be felt by the mining industry. This panel is set for Thursday, Nov. 6, at 10 a.m. Thursday afternoon, Nov. 6, there will be discussions of new technologies, including new transportation concepts such as dirigibles and unmanned aerial vehicles. Robert Boyd, of Lockheed Martin, will discuss his company’s work on dirigibles, which are of interest to the mining industry as a possible vehicle for heavy-lift to and from remote, roadless sites. This is set for 3 p.m. A review of AMA’s 75-year history, which is really the story of the mining industry, is scheduled for Friday morning, Nov. 7. People who were active in important events in recent years, like the Alaska Native Claims Settlement Act of 1971 and the Alaska National Interest Lands and Conservation Act of 1980, will reflect on those events, which are still affecting the industry today. Chuck Hawley and Paul Glavinovich, two veteran geologists who were active in those issues, will talk, along with J.P. Tangen on federal law changes; Tom Bundtzen of Fairbanks; former AMA director Steve Borell, and Duane Gibson, a Washington D.C. lobbyist who represents mining interests including the AMA.

Pebble sues EPA over attempt to veto mine

The Pebble Limited Partnership took the Environmental Protection Agency to court May 21 and claimed the agency is illegally overstepping its bounds by attempting to block a mine before the permitting process begins. In a statement released in conjunction with Pebble’s complaint filed in U.S. Alaska District Court, company CEO Tom Collier said the plea to the court to stop EPA’s actions is not an attempt to strip the agency of its regulatory authority under the Clean Water Act. Rather, he said, it is an attempt to ensure guidelines set by Congress are followed. “Simply put, EPA has repeatedly ignored detailed comments that we, the State of Alaska, and others have made about this massive federal overreach and continues to advance an unprecedented pre-emptive regulatory action against the Pebble project that vastly exceeds its Clean Water Act authority,” Collier said. “If EPA ultimately vetoes Pebble before a development plan is proposed or evaluated through the comprehensive federal and state permitting processes, the precedent established will have significant, long-term effects on business investment in this state and throughout the country. Litigation is necessary in order to get the agency’s attention and bring some rational perspective back to the U.S. permitting process.” In February, the EPA said it would initiate a seldom-used Clean Water Act process to block large-scale surface mining in the Bristol Bay region to protect the region’s robust salmon fishery. EPA Administrator Gina McCarthy referenced the 1,000-plus page Bristol Bay watershed assessment released a month before as reason to block Pebble, stating a large, open-pit mine in the region would cause “irreversible negative impacts on the Bristol Bay watershed and its abundant salmon fisheries.” If developed, an Iliamna-area Pebble copper and gold mine would likely be one of the largest of its kind in the world. All of the company’s mineral claims are on state land. While the EPA has vetoed wetlands permit applications 13 times since the inception of the Clean Water Act in 1972, it has never used the power to deny a permit before an application was submitted, as is the case currently with Pebble. The regional Army Corps of Engineers handles wetlands permit applications under Section 404 of the Clean Water Act for all projects, public or private, that could impact wetlands. Subsection 404(c) states that the EPA can prohibit the use “of any defined area as a (material) disposal site” when the agency administrator deems the placement of fill material “into such an area will have an unacceptable adverse effect” on fish, wildlife or water supplies. Pebble’s complaint states that Congress limited the EPA’s authority in the permitting process to reviewing applications after they have been evaluated by the Corps of Engineers. Additionally, Pebble claims the mine’s impact on such areas cannot be judged because it has not released a formal mine plan or applied for wetlands permits. “If the EPA veto proceeding is allowed to upend the permitting process, the entire administrative process will be eviscerated,” the complaint states. “There will be no concrete proposal, no specification of ‘such materials’ or ‘such area,’ no consideration of alternatives, no conditions imposed by a permitting agency, and no mitigation requirement. Neither the Corps nor the state will be able to bring their expertise to bear.” By working to prevent development on state land in the region, Pebble also argues the EPA is also violating the intent of the Cook Inlet Land Exchange, a 1976 agreement between Cook Inlet Region Inc., and the state and federal governments. Under the acreage swap, the State of Alaska was awarded ownership of federal lands with high mineral potential — the same lands where Pebble’s copper and gold claims exist today. According to Pebble, the mineral value of the land was “one of the driving factors in the state’s selection.” In return, the state turned over property that was ultimately be conveyed to CIRI through the federal government. CIRI subsequently gave up its Lake Clark-area holdings north of Iliamna to complete the federal Lake Clark National Park and Preserve. “Both the Statehood Act and the Cook Inlet (Land) Exchange legislation explicitly provide Alaska with the right to manage its lands for economic development purposes,” the complaint states. Mine opponents have countered Pebble’s claims that a mine would ignite Bristol Bay’s economy by contending it would put thousands of fishing jobs in the region in jeopardy. The annual ex-vessel value of Bristol Bay salmon has been between $140 million and $185 million since 2009. The EPA Inspector General’s office notified the agency May 2 that it would review the information gathering and science behind the watershed assessment at the request of Pebble, the State of Alaska, and members of Congress. Pebble has claimed intra-EPA communications prove the three-year assessment process was biased against mine development from the get-go. Region 10 EPA spokeswoman Hanady Kader has said the agency followed all prescribed public involvement guidelines in forming the assessment and that the 404(c) process, which usually takes about a year, will continue during the Inspector General’s review. Trout Unlimited responded to Pebble’s litigation May 22 by demanding the group release a complete mine plan. The national coldwater fisheries nonprofit has been at the forefront of the fight against Bristol Bay mine development for years. “Clearly, this is a last ditch effort from a company which now has no major mining experience on its team and has lost at every step of the way. It’s ridiculous that PLP is using resources to file a lawsuit but continues to refuse to apply for official permits after promising to do so for nearly a decade,” TU Alaska Executive Director Tim Bristol said in a formal statement. “The fact is, (Pebble Limited Partnership) can apply for a permit today, but they refuse to do so because they will have to reveal to the public once again that they will build a colossal open pit mine, impact wetlands and waterways, destroy salmon habitat and threaten thousands of jobs and unique way of life.” Elwood Brehmer can be reached at [email protected]

Pebble cites EPA emails were biased

Pebble mine developers claim they have proof Environmental Protection Agency officials acted with bias and a pre-determined mindset when examining the potential risks a mine could pose to Bristol Bay fisheries. Documents and email chain records from as far back as 2010, obtained by Pebble Limited Partnership through the Freedom of Information Act, show EPA Region 10 staff in lengthy communications about the prospect of preemptively banning large mines in the Bristol Bay watershed. These communications occurred between staff within the EPA and with agency staff and conservation group members. In an email dated Sept. 14, 2010, EPA Aquatic Ecologist for Bristol Bay Phil North wrote to current EPA Region 10 Office of Ecology, Tribal and Public Affairs Manager Michael Szerlog and program manager Richard Parkin that the land in the Nushagak and Kvichak drainages — where Pebble’s copper and gold claims are located — is owned almost entirely by the State of Alaska and private parties, making it susceptible for development, and because of that, action should be taken to prioritize its protection. The email predates by months the EPA’s Feb. 7, 2011, announcement it would undertake a yearlong risk assessment of the impacts of mining in the Bristol Bay watershed. Most other Bristol Bay land is federally protected as wildlife refuge or national park land. “A big project like Pebble would be a big blow by itself (not to mention seven more Pebbles), but it is the accumulation of mines and highways and all the associated residential and commercial development enabled by the larger scale developments, that will ultimately cause the demise of the (salmon) resources we are targeting,” North wrote. EPA Administrator Gina McCarthy said Feb. 28 that the agency would move forward with the early stages of a process to use authority granted it under subsection 404(c) of the Clean Water Act to block the large mineral project from getting a required U.S. Army Corps of Engineers wetlands dredge and fill permit. The regional U.S. Army Corps of Engineers handles Section 404 permit applications for all projects, public or private, that could impact wetlands. McCarthy said at the time the decision was based on the agency’s final assessment, released in January, of potential impacts a mine could have on salmon stocks in the Bristol Bay region. More than half of the Bristol Bay region is considered wetlands under the Clean Water Act. If developed, the Iliamna-area mine would likely be one of the largest surface copper and gold mines in the world in the middle of the region that returns roughly half of the world’s sockeye salmon every year. While the EPA has vetoed wetlands permit applications 13 times since 1972, it has never used the power to deny a permit before an application was submitted, as is the case currently with Pebble. North continued in the September 2010 email: “So a 404(c) that targets the primary habitat of the resource we are trying to protect, salmon, is a logical approach. First at the specific habitat level by prohibiting discharge in stream channels and the riparian (or adjacent) wetlands that most directly support them. Second by initially addressing Bristol Bay as a whole then narrowing to those watersheds that are at risk.” Subsection 404(c) of the Clean Water Act states that the EPA can prohibit the use “of any defined area as a (material) disposal site” when the agency administrator deems the placement of fill material “into such an area will have an unacceptable adverse effect” on fish, wildlife or water supplies. The question remains whether that language gives the agency the authority to veto an activity such as mining across a broad area, rather than just in a specific location. On May 2, the Office of Inspector General for the EPA announced it would review the agency’s actions in developing the Bristol Bay watershed assessment at the request of Pebble, the State of Alaska and several members of Congress. EPA Region 10 spokeswoman Hanady Kader wrote in an email to the Journal that the agency received requests from nine Tribal governments in 2010 to use the Clean Water Act authority to protect the watershed and fisheries from a proposed Pebble Mine. “EPA made transparency and public engagement a priority from day one of the Bristol Bay Watershed assessment. It is a strong scientific document based on hundreds of peer-reviewed studies. The agency considered thousands of comments and scientific data submitted during two separate public comment periods and eight public meetings. EPA met with many stakeholders over the course of its assessment, including multiple meetings Pebble Limited Partnership,” she wrote May 13. A memo from consulting Anchorage attorney Geoffrey Parker to EPA’s Parkin dated Feb. 14, 2012, suggested the agency change its course of action at the time to speed up the Pebble veto. “This recommends that EPA shift from a ‘linear’ to an ‘overlapping’ schedule for its watershed assessment and 404(c) process. Doing so can maintain and improve quality, and should result in a more legally defensible final decision,” Parker wrote. Pebble claims additionally that the peer reviews of drafts of the watershed assessment call its scientific validity into question. “Not only does EPA not have the statutory authority to undertake pre-emptive action at Pebble, they are threatening to do so based on a flawed study that is now the subject of an investigation by their own agency,” said Ron Thiessen, president and CEO of Northern Dynasty Minerals Ltd., which owns the Pebble project, in a formal statement May 6. Pebble has said the EPA could still veto its project after a wetlands permit application is submitted to the Corps of Engineers if it does not meet regulatory standards. While Pebble says the mine would generate up to 1,000 full-time jobs over 25 years, Kader said the economic value of the commercial salmon fishery in Bristol Bay has been overlooked in recent media reports covering the controversy. An April 2013 study from the University of Alaska Anchorage’s Institute of Social and Economic Research commissioned by the Bristol Bay Regional Seafood Development Association found that the 2010 Bristol Bay commercial sockeye harvest generated $1.5 billion of final sales value across the U.S. The ex-vessel value of the 29 million sockeyes harvest from the region that year was $165 million, 31 percent of the total Alaska salmon harvest value, and helped support 12,000 seasonal fishing and processing jobs nationwide, according to the report. Elwood Brehmer can be reached at [email protected]

Exploration off 38%, producing mines strong

JUNEAU — Mining is good for Alaska’s economy, but while the state’s six producing mines are holding up well, and some even expanding, a sharp 38 percent drop in exploration spending last year is having ripple effects. Overall, mining employed 4,600 Alaskans directly last year and the overall employment impact totaled 9,100 including indirect jobs created by the spending. Direct payrolls of mining companies totaled $630 million in 2013. The 2013 total employment and payroll numbers are down a bit from employment in 2012, however, which is likely due to the falloff in exploration. Minerals companies spent about $180 million in exploration in 2013 compared with $275 million in 2012. The data was gathered by McDowell Group, a Juneau-based consulting firm, for the Alaska Miners Association and the Council of Alaska Producers, two minerals industry trade associations. The information was presented to the House and Senate Resources committees in Juneau Feb. 5, by Karen Matthias, director of the producers’ council, and Deantha Crockett, executive director of the Alaska Miners Association. McDowell Group’s 2013 figures were released that day. On an upbeat note, one of Alaska’s producing mines, the Fort Knox Mine near Fairbanks, achieved another milestone in December 2013, when the mine produced its six millionth ounce of gold, Matthias said. Fort Knox is a large surface mine northwest of Fairbanks that began production in 1996. In another development, the Greens Creek Mine in Southeast Alaska secured federal approval for an expansion of the mine tailings storage facility, Matthias said. It will be in construction this year and, when completed, will give the mine the capacity to store tailings if new resources are added to the mine, she said. Greens Creek is an underground silver mine on Admiralty Island near Juneau. Some more sobering news for the industry, however, was the decision by Anglo American, a large mining company, to withdraw as a partner in the large Pebble copper/gold project near Iliamna, southwest of Anchorage. Pebble’s owner, Northern Dynasty Minerals, is now looking for another partner to develop the mine. As for exploration, lower gold prices explain most of the drop, Matthias said. Prices for that metal have dropped from almost $1,800 per ounce in September 2012 to about $1,200 a year later, she said, and haven’t changed much since. Silver has also declined. Base metals like copper, zinc and lead have been more stable, at least in recent months, but it is gold that drives much of the Alaska exploration. Alaska isn’t alone in experiencing the drop in exploration. The trend is global, Matthias said, with world exploration spending at $15.2 billion in 2013 compared with $21.5 billion in 2012, a 29 percent decline. While metals prices are weak, costs for mining and mining equipment continue to climb. Crockett cited some examples: A 40-ton underground haul truck, of the type used in Alaska underground mines, climbed in cost from $560,000 in 2003 to $1.3 million in 2013, she said. The price for a 6-yard underground loader went from $570,000 in 2003 to $1.1 million in 2013. Labor costs are climbing also. In 2003, the average Alaska mining wage was $70,750 per year. In 2013 it was $100,000 per year, Crockett said. Fuel and other energy prices are high. Fort Knox spent about $4 million per month to purchase electricity from Golden Valley Electric Association, the Interior regional utility, and about an equal amount on fuel for equipment used in the mine, Matthias said. The Red Dog Mine, in northwest Alaska, has a hefty fuel bill, too. Teck Alaska, the mine operator, uses about 20 million gallons of fuel per year that must all be shipped in by barge during the summer and then trucked inland to the mine. The Kensington gold mine near Juneau is powered by diesel also, and has a huge fuel bill. Greens Creek has the benefit of being able to tap into Juneau’s electric grid with its inexpensive hydro power, but the mine must switch to diesel during periods when the hydro projects have low water and produce less power. Meanwhile, mines continue to be good taxpayers for local governments. In 2013, producing mines paid $16.8 million to municipal governments in Fairbanks, Juneau, Nome, the Northwest Arctic Borough and the Denali Borough, according to the McDowell Group data. About $100.2 million was paid to the state of Alaska in mining royalties, taxes, fees and rents, according to data from the consulting firm. This includes $21.1 million paid to the Alaska Industrial Development and Export Authority, the state development corporation, in fees for use of the Red Dog Mine road and port and the Skagway Ore Terminal, facilities which are owned by AIDEA. About $23.8 million was also paid to the state-owned Alaska Railroad for the movement of coal, sand and gravel. On final note, Mathias and Crockett noted the royalties paid by the Red Dog Mine continues to NANA Regional Corp., the landowner, which are shared with other Alaska Native regional and village corporations under terms of the 1971 Alaska Native Claims Settlement Act. From 1989, when its production started, through 2013, Red Dog has paid a total of $1.04 billion in royalties to NANA. About $609 million of this was shared with other Alaska Native corporations. Also, 56 percent of the employees at Red Dog are shareholders of NANA, and other NANA shareholders work for joint-venture companies that provide support and services to the mine. Tim Bradner can be reached at [email protected]

DNR ordered to rule on Chuitna apps

A state Superior Court judge ruled Oct. 14 that the Department of Natural Resources cannot ignore water reservation applications filed by the Chuitna Citizens Coalition. The coalition applied for three instream flow reservations on the Western Cook Inlet Chuitna River for fish and wildlife protection in 2009. After more than two years of inactivity on the applications, the Chuitna Citizens Coalition and environmental advocator group Cook Inletkeeper filed a joint lawsuit against DNR in November 2011. Third District Judge Mark Rindner wrote in his ruling that “DNR has unreasonably withheld agency action on Chuitna’s IFR (instream flow reservation) applications.” He added the court could only require DNR action on the applications if the agency has a “non-discretionary duty,” meaning it has freedom to approve or deny the applications. The coalition requested the water reservations as part of an effort to block a surface coal mine in the Chuitna River drainage proposed by PacRim Coal LLC. An Oct. 17 Coalition press release regarding the court ruling said the PacRim project would be the first mine in the state operate through a wild salmon stream. “(The Oct. 16) ruling is a victory for every Alaskan who wants to protect wild salmon and the Alaskan way of life,” Coalition founder Ron Burnett said in the release. “Time and again, the state of Alaska has put the interests of Outside mining interests ahead of the rights of Alaskan residents. This decision should help restore the balance.” The instream flow reservations protect specific water uses such as transportation, recreation and fish wildlife habitat, according to the Division of Mining, Land, and Water branch of DNR. Rindner ruled in favor of the coalition on a second count, stating that “DNR has violated Chuitna’s right to due process” under the Alaska Constitution. The state agency had argued that the coalition did not have a protected property interest in its applications and that DNR has not shown prejudice toward the coalition because its applications were receiving the same process as other, similar applications. In his explanation, Rindner wrote frankly that the coalition has been “stuck in limbo” since its applications have gone unprocessed. He gave DNR 30 days to begin adjudicating Chuitna’s claims. Chuitna paid DNR $4,500 in nonrefundable fees when it submitted its applications. The first application was filed in June 2009 along with a $1,500 payment and was rejected for being too broad and Chuitna was given 60 days to revise it, the court filing states. The original application was revised and two subsequent applications were filed for different portions of Chuitna’s namesake river in August 2009. DNR denied Chuitna’s request to cover all three applications with the one $1,500 fee, so the coalition paid another $3,000. At the time, the agency said it was not appropriately staffed to process the applications, according to the ruling. Claiming a lack of resources delayed processing of the applications would be reasonable for “weeks or months, but cannot excuse DNR’s four-year delay,” Rindner wrote. Rindner questioned why Chuitna was required to pay $4,500 in administrative fees meant to cover up to 40 hours of staff time needed to process the three applications if they were never going to be acted upon. Because the Chuitna Coalition was forced to put up the money with the applications, it has an interest in the applications that has been prejudiced, he determined. “Were DNR requiring payment once it was going to take action on the application, the circumstances might be different,” Rindner wrote. “However, DNR charged Chuitna a $4,500 nonrefundable fee as part of its application and that fee, along with Chuitna’s application, has disappeared into DNR’s files and the state’s treasury. There is no excuse for DNR’s charging an application fee and then take no action on the applications.” Any Alaskan is eligible to apply for an instream flow reservation, and hundreds have, according to Rindner’s ruling. Of the 52 applications approved, 51 were filed by the Alaska Department of Fish and Game. A determination has never been made on a private party’s application, Chuitna claims, and the inter-agency flow reservation applications take up to 15 years for DNR to process. In the time since Chuitna filed its instream flow applications, DNR has approved several temporary water use permits to PacRim Coal. The temporary use permits do not grant water rights and are good for up to five years. Fish and Game also has a flow reservation application pending with DNR for the Chuitna River that it filed in 1996. DNR has stated that it will probably process the two applications together. Simply filing an application does not give a party an appropriation priority or right to water, Rindner determined. That ruling threw out Chuitna’s first allegation that DNR’s adjudication delay violated its “first in time, first in right” claim. However, an approved application does grant priority, which furthers Chuitna’s interest in having its applications processed expeditiously, Rindner stated. Additionally, if its applications would be denied on first ruling and review, the coalition would not need to dedicate further resources to its cause. Elwood Brehmer can be reached at [email protected]

Major discovery at Bornite prospect

Minerals companies exploring the western Brooks Range say they have identified as much as 9 billion pounds of copper in high-grade ores and additional resources of zinc. The Arctic and Bornite copper deposits have been explored for decades but a new discovery at Bornite by Vancouver,B.C.-based NovaCopper Resources this summer may push the known higher-grade copper resource to up to a critical mass where development may be possible. “It’s not hard to see how a 10 billion pound copper resource could be identified in this district soon,” said Rick Van Nieuwenhuyse, CEO of NovaCopper Resources, the company most active in the region. There are also 9 billion pounds of zinc and 2.3 billion pounds of lead resources identified. Van Nieuwenhuyse briefed the Alaska Industrial Development and Export Authority’s board Oct. 30 on the exploration. AIDEA could play a role in developing a road to the mine area, much like the state development corporation did in the 1980s to aid development of the Red Dog zinc and lead mine north of Kotzebue. Copper was discovered at Bornite in 1957 and exploration by Kennecott Resources, which acquired rights to the property, continued for several years. Kennecott defined a large resource and but one that was still economic. In 1964 Kennecott built an exploration shaft down to 1,075 feet but never explored below that level, Nieuwenhuyse said. The mineshaft flooded, which caused Kennecott to turn its focus to exploring other areas nearby, resulting eventually in the Arctic discovery. Last year NovaCopper, working in a joint venture with NANA Regional Corp. of Kotzebue, which owns Bornite, decided to explore deeper. In 2012 the companies announced discovery of a new, larger and richer ore deposit at about 1,500 feet. Where the shallower deposit found by Kennecott had ore values with about one percent copper the deeper deposit has richer ore with drill test results that ranging from 2 to over 5 percent, Nieu told AIDEA’s board. NovaCopper and NANA are also exploring the Arctic deposit about 25 miles northeast of Bornite, which was discovered and also explored by Kennecott, and acquired by NovaGold Resources (now NovaCopper). In 2011 NovaCopper and NANA formed their joint-venture and merged the minerals lands owned by both. The region, known as the Ambler Mining District, has several other promising deposits. One is the Sun deposit, east of Arctic and Bornite, that is being explored by Andover Resources. Ted Leonard, AIDEA’s executive director, told the authority board that he expects Andover to soon announce positive results of its new exploration at Sun. Another deposit in the area is Smucker, to the west, which is owned by Teck Resources, which also owns and operates the Red Dog Mine. Van Nieuwenhuyse said the Arctic deposit looks attractive on its own. A preliminary economic assessment has outlined the potential for a 4,000-ton-per-day mine that could be built with a $262 million initial capital investment. Another mine developed nearby at Bornite would allow for the sharing of critical infrastructure, particularly an access road from the Dalton Highway 200 miles to the east. Over several decades several mining companies including Kennecott and firms that no longer exist as companies, like Anaconda, Noranda and Cominco, spent about $150 million in exploration in the region. NovaCopper itself, however, accounts for about half of this, or $75 million, including the amount paid to Kennecott to acquire the Arctic deposit and other properties, Van Nieuwenhuyse said. NovaCopper spent $15 million in its 2012 exploration, Van Nieuwenhuyse said. A road is key to development, however. “Without a road there will be no mine,” Van Nieuwenhuyse told the authority’s board. NovaCopper and NANA need about three years of further exploration to define an initial project. Another one to two years would be needed to complete a feasibility study and prepare the project for permitting, Van Nieuwenhuyse said. Permitting the project, which would include a federal environmental impact statement, and construction, depending on the mine developed, would require about two years. There is also the 200-mile access road built from the Dalton Highway that would likely total $300 million to $500 million. Van Nieuwenhuyse said the mines developed in the area would ultimately pay for the road similar to the way the Red Dog Mine road was paid for, although it was built by AIDEA, the state authority.

Gold operations in rural areas pick up the pace

High gold prices have stimulated Alaska mining projects including several in remote areas. The small Nixon Fork underground gold and copper mine near McGrath on the upper Kuskokwim River continued operations in 2012 according to its owner, Canada-based Fire River Gold Corp. In late October the mine was producing 3,800 tons of ore daily, twice the rate from earlier in the year, and had reached a stable production rate, according to Fire River spokeswoman Kimberly Ann. What is encouraging is the performance of the ore mill at the mine, which is now achieving about 85 percent recovery of gold, she said. Nixon Fork produces both a gold concentrate and gold bars, with the copper as a byproduct. Concentrates and gold bars are flown from the remote site. Fire River began operations at Nixon Fork in mid-2011. The mine had produced previously but there was a history of operating problems. The target rate for gold production is 30,000 ounces by the end of 2012, according to information on Fire River’s website, with a projected increase to 40,000 ounces in 2013 and 50,000 ounces in 2015. The company will attempt to replace reserves that are mined with new resources added by exploration drilling, extending the life of the mine. There are now two drill rigs working on exploration drilling at the mine, on underground as well as above-ground targets, Ann said. Nixon Fork has a long history. The mine was previously owned by Nevada Goldfields Inc., from 1993 to 1999, and St. Andrew Goldfields until 2008. From 2004 through 2008 the previous owners spent over $50 million in upgrades to processing facilities, mine infrastructure, permits and bonding. In 2008 Fire River Gold purchased the project in 2009 for $3.1 million in cash and shares. The company moved to reevaluate 9,381 meters of definition drilling that had been done in 2007 and 2008, but which was never fully evaluated. The property encompasses 11,000 acres. The land, facilities and infrastructure have an approximate replacement value of $150 million, Fire River said on its website.   Terra could produce 1M ounces Another remote gold mine project in Interior Alaska is in advanced exploration. WestMountain Gold Inc. of Denver reported it has concluded its summer 2012 exploration program at the company’s Terra gold project in Alaska, with four diamond-drill holes involving 3,782 feet of core drilling. The project is about 125 miles northwest of Anchorage in the Alaska Range. “The Terra project continues to produce bonanza gold intercepts and we are confident that the resource will reach 1 million ounces. We are also enthusiastic about the positive gold intercepts and the completion of the on-site gold plant,” WestMountain CEO Greg Schifrin said in an Oct. 25 press release. The drilling has extended the known vein system 200 meters north, WestMountain said. The company also said a bulk sample mill at the site is now operational and that concentrates were produced in a one-week test run this summer. Production of bulk samples will be expanded next summer with ore from several vein systems at the deposit, Schifrin said. Bulk concentrate samples will be flown from the site from an airstrip that has been constructed. In other developments, Gustavson & Assoc., a consulting firm, will complete a third party independent technical report on the project when assay work from 2012 drilling is completed. The report will include an updated resource estimate. The Terra Gold project is being developed in a partnership with Corvus Gold, Inc. Terra Gold has the right to earn 51 percent of the project by spending $6 million on exploration and related work by December 2013.

Doyon to spend $37M on exploration

Doyon Ltd., the Interior Alaska Native regional corporation, says it will spend $37 million this year on several oil and gas projects in Interior Alaska and will drill second a test well in the prospective Nenana Basin, west of Fairbanks, this winter. Doyon will also be the first explorer to take advantage of a new Alaska exploration incentive that will have the state pay for 80 percent of the well and extend preferential state tax treatment, Doyon CEO Aaron Schutt said in a Aug. 27 briefing in Fairbanks. The new well will be Doyon’s second in the Nenana Basin. The first well, Nunivak No. 1 drilled in 2009, found evidence of hydrocarbons but was not a commercial discovery, said Jim Mery, Doyon’s vice president for natural resources. Doyon is based in Fairbanks. Permit applications for the ndew well have been made, Mery said. Its location is about 11 miles west of Nenana and about 8 miles west of the Nunivak No. 1 well drilled in 2009, Mery said. Doyon is also interested in the northern part of the basin following seismic work done there last winter, and more seismic testing is planned for this winter. Applications for permits for two potential wells are being prepared for that area but they will not be drilled this winter, Mery said. Doyon had four partners in the 2009 well including independents Rampart Energy Co. of Colorado and Minnesota-based Cedar Creek Oil and Gas Co., and two Alaskan firms, Usibelli Energy and Arctic Slope Regional Corp., another Alaska Native corporation. Those companies have an option to join in on the second well but for now Doyon is proceeding on its own, Mery said. In the Aug. 27 briefing, Schutt said Doyon’s board has approved $37 million for Interior oil and gas exploration projects this year that include the well and additional seismic in the Nenana Basin as well as seismic exploration in the Yukon Flats basin north of Fairbanks. “These projects show a lot of promise. If successful, they could provide substantial benefits not just to our shareholders, but also to all Alaskans in terms of jobs and helping alleviate the energy crisis in Interior Alaska,” Schutt said. The initial target is for natural gas that would serve Fairbanks, about 60 miles east of the exploration site, but there is oil potential as well. Flint Hills Resources operates an oil refinery near Fairbanks and the Trans Alaska Pipeline System, which is operating below its capacity, runs near the city. The Nenana Basin program is on state-owned lands but in the Yukon Flats Doyon will explore its own lands and lands belonging to nearby village corporations, Mery said. An area near Stevens Village, on the Yukon River, is of particular interest, Mery said. It is also very near the TAPS pipeline, he said. Doyon and its partners now hold a state exploration license in the Nenana Basin, which gives the corporation rights to explore across approximately 500,000 acres of state lands and to convert some of the license area acreage to leases. This year Doyon will convert 400,000 acres, most of the land now held under the exploration license, to conventional state leases with seven-year terms. Besides the Nenana Basin in the Interior the state has issued four other exploration licenses in the Copper River and Susitna River regions, but Doyon is the first to convert areas in the licenses to state oil and gas leases. Schutt credited the new state incentives with allowing Doyon to proceed with the well. A change in state tax law approved by the Legislature in 2012 extended to Alaska frontier basins special incentives enacted for Cook Inlet three years ago that has now attracted new companies to the Inlet, and that have resulted in new discoveries of natural gas. The incentives provide for the state to pay directly for 80 percent of well costs and 75 percent of seismic, Schutt said, and also to extend to frontier basins a low state production tax that applies to Cook Inlet rather than a higher tax that applies to the North Slope. That would previously would have applied in frontier basins. “The recent state legislation expanding exploration incentives and a change in the oil production tax regime in frontier basins including Interior Alaska, were essential for us to move forward with these substantial projects,” Schutt said. Senate Bill 23, approved by state lawmakers in the 2012 session, included sections creating the new frontier basin incentives. Schutt gave credit to State Rep. Steve Thompson, R-Fairbanks, and state Sen. Tom Wagoner, R-Kenai, who took the lead in extending the new incentives to the frontier areas. Thompson, who attended the Doyon briefing in Fairbanks, said, “Doyon is the Interior’s biggest player in oil and gas today and when they talk, we listen. The potential for jobs, lower energy costs and a more positive future outlook is amazing.” Besides the Nenana Basin the incentives cover the Yukon Flats, the Selawik Basin near Kotzebue where NANA Regional Corp. of Kotzebue hopes to promote exploration, the Copper River basin near Glennallen, and Emmonak, Egegik and Port Moller in southwest Alaska. Doyon owns about 11 million acres of Interior Alaska lands and its one of the nation’s largest private landowners. It has about 18,500 shareholders, mostly Interior Alaska Athabascan Indians. Doyon also owns several operating companies including Doyon Drilling, one of state’s major drilling contractors, and pipeline and utility service and operating companies. Besides conducting oil and gas exploration on its lands and state lands, the corporation also has a substantial minerals exploration program underway on lands.


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