Alaska Mining Industry Update
Benefits touch every corner of the state
Map courtesy of Alaska Miners Assocation
Alaska is a great place to live, work, and play; thanks in large part to the responsible development of our abundant natural resources. It was our resources that provided a compelling argument for us to become part of the United States, and today, Alaska has one of the healthiest economies in the country.
Being this is my article, I’m going delve into the resource industry nearest and dearest to my heart: mining!
Without question, every one of us depends on minerals each day. A multitude of minerals make up the things we depend on to make our lives easier: phones, computers, tools, and vehicles. Minerals also make up the things I hope you never have to use, such as gold in the airbag of your car and the zinc used to galvanize highway guardrails. The amenities and necessities in our lives will ensure the demand for minerals remains constant, so no doubt mining activity will continue for years to come. So, why mine in Alaska?
Mining provides Alaskans with good jobs, contributes to local and state government revenues, and benefits Alaska Native Corporations. What’s more, recent research shows that the mining industry buys goods and services from hundreds of Alaska businesses.
Large Part of the Economy
Mining is a large part of Alaska’s economy, thanks to the exploration and development of our large deposits of coal, copper, gold, lead, molybdenum, platinum, silver, and zinc, as well as sand, gravel, and quarry rock. Currently, Alaska has six large operating mines.
Fort Knox: Alaska’s largest surface (open-pit) gold mine, located near Fairbanks, is operated by Kinross. Fort Knox employs nearly six hundred people, all of whom live in the area and go home at the end of each shift.
Greens Creek: Located on Admiralty Island National Monument near Juneau, Greens Creek is operated by Hecla Mining Company. This underground mine produces silver, zinc, lead, and gold, and is one of the top ten silver mines in the world.
Kensington: An underground gold mine near Juneau, Kensington is operated by Coeur Mining. The mine is the largest property taxpayer to the City and Borough of Juneau and the second largest private employer in Southeast Alaska.
Pogo: Alaska’s largest gold producer, Pogo is an underground gold mine near Delta Junction and is operated by Sumitomo Metal Mining Company. One of Alaska’s newest mines, Pogo produces about 340,000 ounces of gold annually.
Red Dog: One of the world’s largest zinc producers, the Red Dog mine is operated under a partnership of Teck and NANA Regional Corporation, the landowner. Located just north of Kotzebue, Red Dog produces zinc, lead, and silver, and is the only taxpayer in the Northwest Arctic Borough.
Usibelli: Usibelli is Alaska’s only operating coal mine. Located in Healy, Usibelli was founded in 1943 and is still operated by the family-owned Usibelli Coal Mine, Inc. Usibelli fuels 40 percent of Interior Alaska’s electricity and in its record year, exported two million tons of coal.
Benefits Stretch Far
Mineral production in Alaska’s large and placer mines accounts for about $3 billion in gross value annually. However, the benefits of mining that stay right here in Alaska stretch far wider than you might think.
Surely you have seen it printed somewhere: Mining Works for Alaska. This couldn’t be more evident in the employment numbers the mining industry boasts: 4,800 people work directly in Alaska’s mines, and that number nearly doubles to 9,500 when you add indirect mining jobs. These are some of Alaska’s highest-paying jobs, with an average wage of $100,000—twice the state average for all economic sectors. These are stable, year-round jobs for residents of 120 Alaskan communities, half of which are found in rural areas where other economic opportunities are limited. Works for Alaska, indeed.
In addition to a $650 million annual payroll, the mining industry significantly contributes to government revenues. In 2012, mining paid $137 million to the state through taxes, royalties, rents, fees, and revenues to AIDEA, the Alaska Railroad, and the Alaska Mental Health Trust. In addition, mining provides important local government revenues, paying $21 million in taxes and payments to governments around the state.
The Red Dog Mine is the Northwest Arctic Borough’s only taxpayer, and the Fort Knox Mine is the largest taxpayer in the Fairbanks North Star Borough. The Kensington and Greens Creek Mines are the largest taxpayers to the City and Borough of Juneau. Other mines in Alaska present annual contributions to their neighboring communities, and all mines contribute to multiple charitable causes in their areas.
Mining is also an important part of revenues to Alaska’s Native Corporations.
In 2012, mining accounted for $126 million in payments to Alaska Native Corporations. Because of the Alaska Native Claims Settlement Act 7(i) and 7(j) revenue sharing provisions, these revenues are shared with each corporation, including those whose lands do not have current mining activity.
Clearly, the benefits of mining touch every corner of our state.
The Road Ahead
So, where are we going? In addition to the operating large mines and hundreds of placer mines, we have exciting exploration projects on the horizon. Should these projects complete permitting and be constructed, each stands to contribute to Alaska in the same ways as our mines already in operation.
Currently, Alaska has eight mining projects considered to be in “advanced exploration,” meaning, at or near the permitting process. Projects to watch:
Bokan Mountain: Perhaps you’ve heard the term rare earth elements (REEs). REEs are in the coloring of plasma televisions and are what makes your cell phone vibrate. Currently, 97 percent of REEs needed in the world are imported from China. Alaska has a REE deposit at Bokan Mountain Dotson Ridge on Prince of Wales Island in Southeast. A drilling program began in 2007 to explore the deposit and in late 2012, a preliminary economic analysis was completed. The company pursuing the project, UCORE, estimates it will enter permitting in early 2014.
Chuitna Coal: Situated in West Cook Inlet near Tyonek, Chuitna contains sub-bituminous coal, similar to what is mined at Usibelli. Strategically located to export to Pacific Rim markets, this sulfur and mercury-free coal is significantly cleaner than coal mined is most other regions in the world. Currently in preliminary permitting stages, PacRim Coal, LP estimates to have 350 jobs at full production.
Donlin Gold: Located on Calista land in the Yukon-Kuskokwim region, Donlin stands to be one of the largest suface gold mines in the world. A partnership of Barrick and NOVAGOLD mining companies in conjunction with Calista and the Kuskokwim Corporation, Donlin entered permitting in late 2012 and estimates to employ 1,400 workers at the mine.
Livengood: On the Dalton Highway just north of Fairbanks, Livengood was first placer mined in 1914. When a lode (large-scale) gold deposit was discovered in 2007, exploration began to determine the project’s feasibility. In mid-2013 the feasibility study concluded a minimal return on investment for International Tower Hill Mines; however, the project continues to search for ways to decrease costs in the project, including energy and other infrastructure. Approximately $20 million has been invested to date at Livengood, which is expected to provide 500 jobs.
Niblack: Also on Prince of Wales Island, Niblack was historically mined from 1905-1908. The project, containing copper, gold, silver, and zinc, has had ongoing exploration for twenty-five years and Heatherdale Resources, Inc. has invested $35 million in Niblack since 2009. Niblack is estimated to provide 200 production jobs.
Pebble: Ah, you’ve heard of this one, yes? The Pebble deposit, situated in Southwest Alaska near the community of Iliamna, contains copper, gold, and molybdenum. Exploration, engineering, and environmental studies have been underway since 2002, gathering millions of dollars worth of baseline data. At the time of writing this article, project partner Anglo American announced its withdrawal from the project, and operatorship now lies solely with Northern Dynasty Mines. On State of Alaska land designated for mining, the project is estimated to provide 1,000 production jobs.
Upper Kobuk Mineral Projects: In the Ambler Mining District in Northwest Alaska, the Upper Kobuk Mineral Projects is a series of promising deposits on NANA Regional Corporation land. Much of the land is being explored by NovaCopper for deposits containing copper, gold, silver, and zinc. A prefeasibility study is underway.
Wishbone Hill: Among a historic coal mining district in the Matanuska-Susitna Valley, Wishbone Hill is a proposed coal project located near essential infrastructure like roads, rail, and energy sources. First mined in 1916, Wishbone Hill is in exploration stages by Usibelli Coal Mine, Inc. The project is awaiting a decision on exploration permits by the Office of Surface Mining, a federal agency.
In addition to these emerging projects, Alaska has over twenty exploration projects that spent under $5 million apiece in 2012. These projects range from north of Kotzebue to the Juneau area and are targeting coal, copper, gold, graphite, lead, platinum, and zinc.
Great Economic Contributor
By its nature, mineral exploration is a great contributor to Alaska’s economy. Exploration frequently requires access to deposits located in remote areas with no existing roads, power sources, or other infrastructure. This activity requires amenities from businesses like air taxis, camp services, lodges, and more, and frequently those dollars spent remain in that area and in the state. In fact, recent research conducted by the McDowell group concluded that the mining industry buys goods and services from more than six hundred Alaska businesses.
A whopping $2.3 billion has been spent on mining exploration since the early 1980s.
A number of factors impact exploration activity, including access to capital investment dollars, regulatory climate, tax regime, operating costs including energy and other infrastructure, and more, all of which can be obstacles to a robust mining industry in the state. However, Alaska’s mineral deposits are world class, and we have a great deal of mineral potential undiscovered. Worldwide demand of minerals is not expected to decrease, so if Alaska can provide a predictable, stable regulatory process, fair tax regime, and solutions to the costly Alaskan environment, we can ensure we are part of the mineral supply, and our mining industry will flourish.
With our superb safety and environmental record, combined with the economic benefits I’ve outlined above, there is no better time to mine in Alaska than now. Remember: If it can’t be grown, it must be mined!#R
Deantha Crockett is the Executive Director for the Alaska Miners Association, which advocates for and promotes responsible mineral development in the state of Alaska. She was born and raised in Alaska, and came to AMA from the Resource Development Council, where she led issues and policy for the mining and tourism industries for seven years.
Posted: November 1, 2013