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From Frozen Ground to Far-Off Markets

How Alaska’s natural resources are dug up, drilled, and shipped out

Usibelli Coal Mine exports coal from this terminal in Seward.

Usibelli Coal Mine exports coal from this terminal in Seward.

© Chris Arend/AlaskaStock.com

Alaska abounds with natural resources. The trick, of course, is how to get money for them. It seems crass, but Alaska’s industry IS its natural resources, whether they’re cut down, mined out, snatched up in nets, meticulously preserved to show off to the participants of Alaska’s tourism industry, or an integral part of a subsistence lifestyle. Alaska works endlessly to make sure that all of its natural resources can make money in harmony; a productive and respectful balance can be achieved. Of course, some items need to leave the state to realize their best value, in particular, the natural resources Alaska has locked deep underground. In Alaska, the transportation process often begins with a drill or an explosive charge.

 

The destinations of Red Dog Mine concentrates reach around the globe.

Image courtesy of NANA Development Corporation

Red Dog Mine

Red Dog Mine is a joint venture between NANA Regional Corporation, Inc., one of the thirteen Alaska Native Regional corporations, and Teck Alaska Incorporated, a subsidiary of Teck Resources Limited, a diversified mining company headquartered in Vancouver, Canada. Red Dog is located in Northwest Alaska, approximately eighty-two miles north of Kotzebue and forty-six miles inland from the coast of the Chukchi Sea. The Alaska Department of Natural Resources, Mining, Land & Water website describes the location as “remote and undeveloped,” an excellent example of understated accuracy.

The land is owned by NANA, and the mine is operated by Teck. Red Dog Mine has more than five hundred employees, many of which are NANA shareholders.

Red Dog is the largest zinc mine in the United States and represents 79 percent of US zinc production and is the second largest lead producing mine, representing 33 percent.

The zinc and lead which are obtained through conventional open-pit mining (which includes drill and blast mining methods), milling, and flotation technologies. These techniques produce zinc and lead concentrates. Concentrates are intermediate products—the ore dug from the ground, which is now “the consistency of talcum powder” according to Shelly Wozniak, corporate communications manager for NANA, has been somewhat refined, but is not yet in a state that can be immediately used for commercial purposes.

Wozniak says, “After processing, mineral concentrates from Red Dog Mine begin a long journey out of Northwest Alaska. This journey begins with the DeLong Mountain Transportation System [DMTS].”

The DMTS is a transportation system that comprises a fifty-two-mile, thirty-foot-wide, all weather industrial haul road; a shallow water dock located on the Chukchi Sea approximately twelve miles south of Kivalina; offshore conveyers concentrate loading facility; and fuel distribution and storage systems, according to the Alaska Industrial Development and Export Authority website, the organization that owns DMTS. Initial construction on the system was completed in 1990 and a port expansion was completed in 2000.

“At the end of the port are the two largest buildings in Alaska,” says Wozniak. “They were built to store the concentrate until the ice goes out. Once the ice goes out, the 1.2 million tons of concentrate are put on lightering barges and then put on the bigger ships that go to markets around the world.”

Due to weather conditions, the concentrate is stored at a storage facility and is typically shipped to customers between July and October every year. “There’s a one hundred day shipping window in the summer when all the concentrate goes out on barges,” Wozniak says. The concentrate’s destinations include Australia, Europe, Korea, Japan, and Teck’s metallurgical facility in British Columbia, Canada, with the largest amount, 37 percent, going to Europe.

 

Pogo Mine

Pogo Mine is operated by Sumitomo Metal Mining Co., LTD, headquartered in Tokyo, Japan, and owned by Sumitomo Metal Mining and Sumitomo Corporation. The mine is located approximately thirty-eight miles northeast of Delta Junction. The land on which the mine sits is owned by the State of Alaska.

The mine has approximately three hundred employees and operates twenty-four hours a day year-long.

Pogo produced approximately 315,000 troy ounces of gold in 2012.

The mine is accessed by Shaw Creek Road, a forty-nine mile, all-season road from the Richardson highway built to service Pogo that Sumitomo maintains.

Pogo is an underground cut-and-fill operation that utilizes gravity, flotation, and cyanide leaching to recover gold during an on-site milling process. The milling process takes place at the Liese Creek Valley facility, which comprises two main buildings, one houses the grinding and leaching process and the other processes tailings and other waste products.

Milling produces the final product that’s sent out of Alaska. “We pour gold doré—that means mixture,” explains Lorna Shaw, external affairs manager. “It is not the 99.99 percent pure gold that you would buy on the market, but it’s as refined as it gets here in Alaska.” After this last in-state step, it takes about a week for the gold to be “shipped to Johnson Matthey in Salt Lake City, Utah, where it’s melted down with gold from all over the world,” Shaw says, “and it’s no longer identified as Pogo gold.”

 

Fort Knox

Fort Knox Mine is one of the largest gold producing mines in Alaska and is 100 percent owned by Kinross Gold Corporation, headquartered in Canada. The land is owned by the State of Alaska and some private lands within the Fairbanks North Star Borough. Fort Knox is located approximately twenty-six miles northeast of Fairbanks in the Fairbanks mining district. It currently employs 630 employees.

The mine’s 2012 gold equivalent production was 359,948 ounces.

It’s an open pit mine that uses a carbon-in-pulp mill, heap leach, and gravity processing techniques. “We do have a refinery in-state,” says Anna Atchison, community and government relations manager. “We pour our own gold bars, which are then sent to Utah for further refinement.” Atchison declined to comment specifically on the transportation of the gold bars, saying that for security reasons the information could not be disclosed.

There is access to Fort Knox, which operates all day and year-round, through a road off the Richardson Highway.

 

A haul truck entering Kensington Mine through Jualin Portal.

Photo courtesy of Coeur Alaska Inc.

Mucker removing ore in drift after blast at the Kensington Mine.

Photo courtesy of Coeur Alaska Inc.

Kensington Mine

Kensington Mine is also a gold mine; it is wholly owned and operated by Coeur Alaska, a wholly owned subsidiary of Coeur Mining, Inc., headquartered in Coeur d’Alene, Idaho. It is located forty-five miles north-northwest of Juneau in the Berners Bay Mining district. Kensington has three hundred employees. In 2012, the mine produced 82,125 ounces of gold.

Kensington is an underground mine. Director of Corporate Communications Donna Mirandola says the mine uses “mechanized longhole traverse and longitudinal mining methods to extract ore from the Kensington Vein.” Kensington also uses overhand cut-and-fill to extract “small, low angle parts of the Kensington Vein,” Mirandola says. Ore is delivered to the mill by means of thirty- and forty-five-ton haul trucks.

At the mill, which is 980 feet above sea level, the ore is crushed and finely ground by a crusher and then a conventional ball mill, says Mirandola. It is then refined through a flotation leaching process. “This process produces a concentrate that contains 95 percent of the gold removed from the ore, it then goes through a press to remove excess moisture. The concentrate ranges from six to twelve ounces of gold per ton,” Mirandola says.

The concentrate now “is in the form of a moist dirt.” Once in this form, Mirandola says, “Our concentrate is put into two-ton super sacks which are placed in shipping containers and shipped by barge.”

“Currently,” Mirandola says, “Kensington concentrates are shipped to China and Japan.” Kensington ships year round, regardless of season.

 

Greens Creek

Greens Creek Mine, 100 percent owned and operated by Hecla Mining Company, headquartered in Coeur d’Alene, Idaho, is one of the largest and lowest-cost silver mines in the world, though it also produces zinc, lead, and gold. It is located in the Admiralty mining district in the Tongass National Forest approximately eighteen miles south of Juneau. The land has a combined ownership of the US Forest Service and private patents within the City and Borough of Juneau. The mine employs approximately 390 to 400 people.

According to Hecla’s 2012 Annual Report, “Greens Creek has so far produced more than 175 million ounces of silver, 1.3 million ounces of gold, and 3.3 billion pounds of zinc and lead.” In 2012 alone it produced 6.4 million ounces of silver, with an expectation of producing more than 6 million ounces in 2013.

There is access to the mine by sea and a thirteen-mile access road.

It’s an underground mine which produces approximately 2,100 to 2,300 ounces of ore per day, primarily through methods of cut-and-fill and longhole stoping.

“We mill our ores on site,” says Mike Satre, Hecla community and government relations manager. “We have three types of concentrate at Greens Creek—zinc, lead, and bulk concentrates,” as well as gold doré. The “bulk” concentrate generally does not have a high enough concentration of zinc, lead, or other metal to be classified specifically, but “it’s still a high grade product that we can sell to smelters,” Satre says.

The final on-site process removes excess water from the concentrates, resulting in “a fine, bulk, dust material,” Satre says. “That is transported from our mill facility in covered trailers down to our port facility in Hawk Inlet where it’s stored in a concentrate shed.

“We ship anywhere from twelve to fifteen thousand tons a month, if not more,” Satre says.

He continues, “They are shipped in Handymax bulk class freighters. Some go to the Trail smelter in British Columbia, Canada, but then we have a significant amount of our material sent to Japan, Korea, and China and occasionally Mexico.”

The gold doré must be further refined for commercial or monetary use, but is generally sold to banks.

 

Usibelli Coal Mine

Usibelli is the only coal mine in Alaska and employs 130 people. Unlike lead, zinc, gold, and silver, coal requires little milling and preparation to be ready for market, making the process somewhat different.

Usibelli is an above-surface mine. It is currently processing three different seams, numbers 6, 4, and 3.

Once overburden (rocks, dirt, etc. that block access to the coal) is removed, the coal is excavated and then placed in large trucks referred to as “yellow iron.” The haul trucks are each capable of a 150-ton load and have been modified to suit the Alaska environment—the exhaust runs through the bed to keep the metal surface from freezing, preventing cargo from freezing to the bed.

The coal is then crushed to two inches, but no washing is performed. Now ready for market, it is transported by train on the Alaska Railroad. The coal is taken to the Seward Coal Terminal, owned by the Alaska Railroad, at the Port of Seward.

The coal is then delivered to six Interior electrical generation power plant locations: Fort Wainwright, Eielson Air Force Base, Clear Air Force Station, Golden Valley Electric Association, Aurora Energy, and the University of Alaska Fairbanks. Coal is also transported from the port to South Korea and Chile. Usibelli Coal mine has also provided smaller “test” shipments to Russia, Taiwan, Japan, and China.

 

The Trans-Alaska Pipeline System terminal at Valdez.

© Chris Arend/AlaskaStock.com

TAPS

Oil flows from the North Slope through TAPS, the Trans-Alaska Pipeline System, also known as the Alyeska Pipeline and the trans-Alaska oil pipeline. None of the oil that flows through TAPS is actually owned by the Alyeska Pipeline Service Company. The oil belongs to any one of Alaska’s oil drilling companies at all times, with Alyeska “taking custody” of the oil while it travels eight hundred miles from the North Slope to Valdez.

The oil is moved through the pipeline by means of a series of pump stations. There are a total of eleven pump stations, though only four are currently being used to pump oil through TAPS: 1, 3, 4 and 9. The other pump stations are used as relief stations or response bases.

Currently, the oil takes approximately nineteen days to travel from Prudhoe Bay to Valdez. That time fluctuates, however, depending on the amount of oil running in the pipeline, which is generally a lower amount in the summer than in the winter, according to a representative of the Alyeska Pipeline Service Company—when there is more oil in the pipeline, it moves more quickly.

The line ends at the Valdez Marine Terminal, which lies on more than one thousand acres of land. It was built to both store and load crude oil so that fluctuations in the marine transportation system would not impact oil coming down TAPS. The facility includes eighteen storage tanks, fourteen of which are currently in service, facilities that measure incoming oil, two functioning loading berths, and a power plant.

Once the oil is measured and stored, it is then loaded on to tankers, which have tied into berth and been hooked into loading arms, and then sent to market. The average time it takes for the tankers to berth, offload ballast, load the crude oil, and deberth is twenty-two hours and twenty minutes.

The tankers are not owned by the Alyeska Pipeline Service Company, but are owned by shipping companies which contract with the oil companies to transport oil. The largest tankers carry approximately 2 million barrels of oil.

The tankers then transport the oil to various US West Coast locations.

Tasha Anderson is the Editorial Assistant at Alaska Business Monthly.

This first appeared in the November 2013 print edition of Alaska Business Monthly magazine.

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