Rio Tinto gifts stake in Northern Dynasty to state charities
Rio Tinto, the London-based international mining company, will gift its 19.1 percent ownership in Northern Dynasty Minerals Ltd, owner of the Pebble mine prospect, to two Alaskan charitable foundations.
The April 7 decision follows the review announced last year of Rio Tinto’s interest in Northern Dynasty, which concluded the Pebble project does not fit its strategy, according to the company.
Rio Tinto’s decision is a disappointment for supporters of a mine at Pebble but the gifting of a major share of Northern Dynasty to the charities gives does give Alaskans a major stake in the project.
Rio Tinto follows Anglo American in pulling out of the project. Anglo was a 50 percent owner in the Pebble Partnership with Northern Dynasty until last year, when it decided to withdraw after spending more than $540 million in exploration and planning work.
Prior to the gift, Rio Tinto, through Rio Tinto Fer et Titane Inc., an indirect wholly-owned subsidiary of Rio Tinto plc, owned 18.1 million common shares of Northern Dynasty, about 19 percent of the outstanding shares.
As of April 8, those shares were worth just less than $16 million at the price of 88 cents per share. In September, before Anglo American pulled out of the partnership, the share price was about $2.22.
The day after the Anglo announcement, more than 4.1 million shares were sold, plunging the price to $1.50 and it has steadily decreased since then. Prior to the Anglo announcement, Rio Tinto’s shares were worth about $40 million.
Pebble is a large deposit of copper, gold and molybdenum about 18 miles north of Iliamna Lake. The mine has become controversial because of concerns over potential impacts on salmon-rearing streams that feed into Bristol Bay.
Under Rio Tinto’s plan for gifting, the company’s shares in Northern Dynasty will be divided equally between the Alaska Community Foundation to fund educational and vocational training and the Bristol Bay Native Corporation Education Foundation, which supports educational and cultural programs in the region where the mine is located.
Rio Tinto Copper CEO Jean-Sebastien Jacques said, “Rio Tinto has long and historic ties to Alaska and we continue to see Alaska as an attractive location for potential future investment. By giving our shares to two respected Alaskan charities, we are ensuring that Alaskans will have a say in Pebble’s future development and that any economic benefit supports Alaska’s ability to attract investment that creates jobs.”
The Alaska Community Foundation is a statewide philanthropy organization established in 1995 that is focused on strengthening Alaska’s communities. The foundation will use the gift of shares to create a new Vocational Fund for Alaska’s Future which will support programs that provide vocational training and skills development needed in the mining and extractive industries.
The Bristol Bay Native Corp. Education Foundation, established in 1986, is a Native Alaskan charitable organization that supports education and cultural programs for Bristol Bay native youth.
Both organizations have independent boards of directors and mandates to manage assets for the benefit of future generations.
In a related development, Northern Dynasty and The Pebble Partnership, a wholly-owned Alaska limited partnership, are preparing to submit documents April 29 to the U.S. Environmental Protection Agency in response to a possible EPA action to foreclose development of a large mine in the Bristol Bay region.
The responses are due April 29. The State of Alaska will also file a response because the Pebble deposit is located on state-owned lands.
On the pending filing with EPA, John Shively, co-chair of Pebble Partnership’s board, said, “It’s a little unclear just what we are expected to respond to. Normally, a procedure like this involves a project where a developer has applied for permits and a project is described in the permit application.”
Pebble Partnership has yet to publish a project description and to apply for permits, so there is no specific proposal to which the EPA would apply its veto authority.
The EPA is considering exercise of a seldom-used authority under the federal Clean Water Act to prohibit a large mine like Pebble, a gold, copper and molybdenum project that has been under study by the Pebble Partnership for several years.
In the few cases where EPA has used its Clean Water Act veto authority the cases have involved projects that have made actual applications. Pebble has not yet made an application, so an EPA action would be an unprecedented action in nature.
Shively said that once the Pebble Partnership and state responses are filed, the EPA would have to put forward the specifics of what it intends to do, for example whether it would be a narrowly-written prohibition, for example, of tailings disposal at or near the Pebble mine site, or whether it would be a broad prohibition of a large mine in the Bristol Bay region, which is an area the size of many U.S. states.