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You Should Care about Mining in Alaska

Alaska mining promotes safety, environmental stewardship, and healthy economies


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As a life-long Alaskan, I’m proud to call this state home and I’m equally proud to represent Alaska’s mining industry. As our state copes with a serious fiscal crisis, mining is one of the few industries with great potential for growth, which would mean more good jobs, more state revenue, and more diversity for Alaska’s economy.

Here’s why you should care about mining Alaska, why you’ll find it’s an activity you can support, why you should be concerned about challenges the industry faces, and on a brighter note, why you should be optimistic about the future of mining in Alaska.

We Alaskans certainly appreciated our sunscreen (and the need for it!) this summer. We can thank the mineral zinc, which, chances are, was mined from one of the world’s largest zinc mines at the Red Dog Mine near Kotzebue. Driving to and from our favorite camping and fishing spots, we were kept safe by highway guardrails, galvanized by the same valuable zinc. Emergency rooms around our state use silver sulfadiazine to treat burns. Alaska is home to one of the world’s Top 10 silver producers, the Greens Creek Mine near Juneau. You may be reading this column on your cell phone which, among other metals, contains gold and silver which are mined at five large-scale mines; and gold is also mined at nearly three hundred small-scale mines throughout Alaska.

There is no question that each and every human being on Earth has a strong dependence on minerals. Unfortunately, there’s a disconnect in today’s society between some people’s negative perception of mining and their daily use of the products of mining. Our dependence on mining products is higher than ever and going nowhere anytime soon. The demand for mined products will continue, and they have to come from somewhere. Why not Alaska?

 

Phenomenal Accomplishments

Alaska’s mining industry can boast many phenomenal accomplishments in terms of safety, environmental protection, and benefits to the Alaska economy. Mining in Alaska brings exceptional economic benefits to communities, the state, and the nation while safeguarding workers and not only protecting the environment, but enhancing it.

Let’s start with safety, as everything in our industry starts with safety. I’d like to take this opportunity to highlight the importance of safety in the mining industry. In 2016, our six large mining operations achieved significant safety milestones: 1.6 million hours without a lost time incident, International Society of Mine Safety Professionals Award, two years no lost time incident, and more. Safety at Alaska’s mines isn’t just regulation, it is a culture that managers and crews alike take seriously. It is our top priority that every person goes home safe and healthy every day, and that culture is apparent in these milestones.

Alaska is, in my born-and-raised humble opinion, one of the most beautiful places on Earth. So why would I advocate to mine in Alaska? Because I know that in Alaska, mining is done right.

The planning and environmental review, testing, and approval process to permit a large mine in Alaska takes many years and likely billions of dollars on behalf of the developer, from start to finish. The process involves a lengthy and consistent stream of public process and gathering input. A permitted mine means the project will have in hand dozens of local, state, and federal government agency permits.

One of the most important things to understand about this process is that it does not guarantee approval. Every mine is different and requires a tailor-made plan for environmental mitigation. And I am proud to tell you that in many cases, Alaska’s mines go beyond their permit requirements. The Usibelli Coal Mine adjacent to Denali National Park performed reclamation long before it was required by law. The Fort Knox Mine near Fairbanks undertook reclamation on neighboring property. No agency required them to do this, and they had no liability for the property. They did it because it was simply the right thing to do. Today, one of the best Grayling fisheries in Alaska thrives in the rehabilitated and enhanced fish habitat performed by the mining industry.

Safety and the environment are cornerstones of Alaska’s mining industry. The hat trick for us is to also significantly contribute to the economy on a local, state, and national level. Alaska’s large and small scale mines employ nearly five thousand people per year, in more than fifty Alaska communities, paying an average wage of $108,000 per year. These are stable, year-round jobs with double the amount of the state’s average annual wage and in many cases exist in communities with few other economic opportunities. The mines also provide significant local government revenue in property taxes and other payments to the City and Borough of Juneau, Fairbanks North Star Borough, Northwest Arctic Borough, Denali Borough, City of Nome, and more. Finally, the industry contributes significant revenue to the State of Alaska through Alaska Mining License Tax, Alaska Corporate Income Tax, royalties on State of Alaska land, rental claim fees and taxes, and more. In fact, the net benefit is considerable. The state receives far more revenue from mining than it costs the state to manage the industry. This is partly because the state’s permitting and monitoring costs are billed to the companies. As a result, most of the revenue from mining taxes and fees helps pay for valuable state services like schools, public safety, and state roads.

 

Significant Challenges

With these compelling contributions, it is important to be aware of the significant challenges that pose a threat to our industry. One of the biggest obstacles in Alaska is the expanding regulatory blanket being posed by the federal administration. Coupled with this is the vast amount of lands controlled by the federal government and potentially closed to transportation and development. This is especially onerous in Alaska and can have a profound negative impact. Examples like significant permitting and regulatory delays; increasing numbers and reach of new unreasonable regulations that do not correct existing problems or further enhance the environment yet do burden the mining industry; and Executive Orders insisting on regulatory control without authority brought by statutory action by Congress.

Federal challenges alone are enough to negatively impact the industry. Combine them with a multi-year trend of low commodity prices impacting existing operations and exploration in further and new projects, and the industry faces barriers that require a great deal of capital, and even more patience, to bring new mines online.

Despite the factors that reduce the industry’s ability to flourish economically, the State of Alaska has decided now is a good time to increase the total government contributions mining pays in Alaska. Please don’t get me wrong: Alaska is experiencing a serious budget crisis that requires meaningful, long-term solutions to restore the State’s financial well-being. It is the position of AMA that the State cannot and should not return to existing revenue sources, i.e., the resource and economic development industries that currently pay specific industry taxes to the State. Alaska’s solutions must come from broad-based efforts that, regardless of industry conditions and external factors, are equitable and shared by all those who rely on government services. Also, the State of Alaska should keep its eye on the prize: just one more mine coming into operation would increase the industry’s government contributions by millions. We all know diversifying the economic portfolio is important, and we should remain focused on making that a reality.

In addition to the State’s taxation regime being closely examined, local governments too are reviewing the ability to impose special taxes on industry. Severance taxes, which are entirely separate from the local borough or municipality’s assessment of property taxes, levy a tax on a mining operation that while within a local government boundary, is actually taxing resources that the local government does not own. This is an inappropriate taxation regime that poses dangerous threats on an operation’s ability to operate and expand mine life, and is just one more challenge our already stressed industry is fighting.

 

Resilient, Innovative, and Proud

Despite these challenges, Alaska’s mining industry is resilient, innovative, and proud. Our six large operating mines, dozens of development projects, sand and gravel operations, and hundreds of small placer mines—as well as the support industry that services the mines—are all willing to continue working hard to ensure our industry remains safe, environmentally responsible, and a good economic partner to Alaskans.

In 2016 we will celebrate some big birthdays in the mining industry. The Pogo Mine near Delta Junction celebrated its 10th Anniversary of operation; the Fort Knox Mine in Fairbanks celebrated its 20th Anniversary, and Hecla Mining Company, owner of the Hecla Greens Creek Mine in Juneau, celebrates its company’s 125th Anniversary. These mark extensive timelines of hugely successful Alaska mining operations, all containing hundreds of Alaskans working safely and responsibly each day. At AMA’s Annual Convention November 6-12, we will celebrate these milestones with a look at each operation’s past, present, and future. This is truly a thing to celebrate, and we look forward to sharing more accomplishments with you readers in the years to come.

 

 

This article first appeared in the November 2016 print edition of Alaska Business Monthly.

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