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

  • Donlin Gold General Manager Stan Foo presents a check to Kuskokwim Corp. CEO Maver Carey to fund a scholarship program for area residents in 2014. The Kuskokwim Corp. owns the surface rights at the proposed Donlin Gold mine while Calista Corp. owns the subsurface rights. Photo/Courtesy/The Kuskokwim Corp.

Donlin Gold reached a milestone Nov. 30 when the first draft of an environmental impact statement for the giant Western Alaska gold project was released by the U.S. Army Corps of Engineers.

The draft EIS was 20 years in the making, as early resource definition work began at the Donlin claims in the Upper Kuskokwim River valley in 1995, according to Donlin Gold.

A true mega-project, Donlin Gold’s $6.7 billion plan calls for a conventional open-pit mine 1.5 miles across and up to 1,200 feet deep about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. A tailings facility, large power plant, workers’ camp and 5,000-foot airstrip would accompany the mine.

Also supporting the mine operation would be 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet that is needed to fuel the 227-megawatt capacity power plant.

The mine itself would produce more than 33 million ounces of gold from about 500 million tons of ore over an initial 27-year operating life, or more than 1 million ounces per year. It would process 59,000 tons of ore per day, according to the draft EIS.

However, Donlin General Manager Stan Foo said shortly after the release of the EIS that gold prices would have to rise above current levels — less than $1,100 per ounce — to make the project feasible.

Donlin Gold submitted its EIS application to the Corps in July 2012. A final EIS and subsequent record of decision are expected in mid- to late 2017.

Foo estimated the draft EIS at over 7,000 pages, a compilation of information rarely matched for any resource development project, he said.

During three to four years of construction, the mine would employ about 3,000 workers; once in operation the workforce would average about 800 employees.

Calista Corp., the regional Alaska Native corporation, holds subsurface mineral rights for the mine. The Kuskokwim Corp., the area village corporation, holds surface rights.

The draft EIS examines five project alternatives beyond Donlin Gold’s preferred alternative and the requisite no-action alternative. Of those, three would change the project in an effort to reduce barge traffic — specifically diesel barges — on the Kuskokwim River, which area residents rely heavily on for travel and subsistence salmon harvests.

—Elwood Brehmer

2. DNR issues unprecedented water rights decision

As PacRim Coal’s proposed Chuitna Mine is still early in the permitting process, the company, the state and stakeholders are haggling over who’s allowed to be involved.

In October, the Alaska Mental Health Trust Authority appealed a Department of Natural Resources decision to grant certain water reservation rights to a non-state entity for the first time ever. Chuitna Citizens Coalition received an instream flow reservation, or IFR, for the lower portion of Middle Creek, a salmon spawning stream in the proposed mine’s area.

Only Chuitna Citizen’s Coalition’s IFR for the lower section was granted by DNR. The coalition had also filed IFR requests for the middle and upper reaches.

The coalition characterized DNR’s decision as a “dodge,” and a concession to the coal industry at the expense of Alaska salmon.

The trust, which is overseen by the Department of Natural Resources and has large land allotments from which revenues are to support mental health needs, called the DNR decision “arbitrary” in its October appeal, and a dangerous precedent for allowing private parties to derail resource development. The Chuitna Citizens Coalition IFR is the first granted to a private group, rather than state organizations.

PacRim is also filing an appeal of the DNR’s decision.

—DJ Summers

3. Usibelli halts exports

Usibelli Mine Inc., Alaska’s sole producing coal mine, has seen a long run of coal exports come to an end, at least until the end of 2015.

For years the company routinely exported 600,000 tons to 800,000 tons of coal, although there were periodic dips in Pacific coal markets.

In 2014 and 2015 coal prices dropped again in line with prices for other commodities, and competition for the available Pacific coal market stiffened.

What has also complicated matters is a new tax in imported coal levied in South Korea, a prime customer for Usibelli.

Adverse swings in currency values, with the U.S. dollar now at high levels compared to those of other nations, make imports from the U.S. including coal very expensive.

Usibelli has also shipped to Japan, which it did in 2015, as well as to China and Chile.

Coal has been mined by Usibelli at Healy and shipped by rail to Seward, a south Alaska coastal port city. A loading facility there loaded to coal on ships bound for overseas ports.

The company’s exports dropped to about 200,000 tons in 2015 and so far there are no sales planned fro 2016, the company said.

However, the core market in Alaska for the company remains firm at about one million tons of coal yearly and this will increase a bit in 2016 as the Healy Unit No. 2 coal-fired power plant at Healy becomes fully operational. The plant can produce 50 megawatts.

The plant is owned and operated by Golden Valley Electric Association, the Interior power utility. Golden Valley also owns the smaller Healy Unit No. 1, a 25-megawatt plant.

Usibelli supplies coal to both plants along with power plants in Fairbanks and at Interior Alaska military installations. Export prospects for Usibelli may improve if coal prices turn up, however.

Usibelli’s long-term prospects remain positive, however. Coal is abundant in Alaska and it is the least-expensive source of energy for power generation, and the special quality of Alaska’s coals, with an ultra-low content of sulfur, ease any environmental problems caused by emissions.

In addition the Healy 2 plant has new-technology emissions control equipment.

Usibelli’s coal resources are also ample. At the present rate of production the company has about 1,000-year supply.

— Tim Bradner



12/16/2015 - 1:55pm