Northwest Arctic Borough & Red Dog Consider New Payment Agreement
Kotzebue, AK - Today, the Northwest Arctic Borough (NAB) and the operator of the Red Dog Mine, Teck Alaska, announced that a proposed new 10-year Payment in Lieu of Taxes (PILT) Agreement has been negotiated by the parties and will be considered later this month for final approval.
The agreement, if approved, would provide an increase in annual payments to NAB, facilitate enhanced benefits for the region, provide funding aimed at socioeconomic investment in the 11 Borough villages, and create greater certainty for the Red Dog Mine.
NAB Mayor Clement Richards stated, “I am happy to share that the Assembly took its first step towards approval of the PILT Agreement by approving introduction of Ordinance 17-03. This Administration has worked hard to negotiate an agreement that meets needs of our Borough, which has remained of the utmost importance to us.”
“We are very pleased to have reached this new agreement through discussion and cooperation between Red Dog and the Northwest Arctic Borough,” said Henri Letient, General Manager, Red Dog Operations. “This agreement will provide more resources for the people and communities of the region, while also supporting Red Dog’s ability to stay competitive and continue generating jobs and economic activity.”
The new agreement has a total estimated value in the range of $20 – $26 million per year over 10 years, comprised of two major components:
- An annual payment to NAB based on a percentage of Red Dog’s fixed asset value, with an estimated average value in the range of approximately $14 - $18 million per year.
- Creation of a new Village Improvement Fund (VIF) with an initial investment of $11 million in year one, and funding in subsequent years of between $4 - $8 million, based on a percentage of Red Dog’s gross profit. The VIF will be administered by NAB, with input from the 11 villages, and go towards community programs, services and infrastructure. Further details on administration of the VIF will be determined in the months following final approval of the agreement.
An ordinance to approve the new agreement was introduced and approved for first reading on Tuesday, April 11, by the NAB Assembly. The NAB Assembly scheduled the second reading and public hearing for approval by enactment of the ordinance for April 25, concurrent with final approval of the agreement by Teck Alaska. If the agreement is approved and signed by both parties, it would exempt Teck Alaska from payment of NAB’s severance tax for the Red Dog Mine for the 10-year agreement term.
About the Northwest Arctic Borough
The Northwest Arctic Borough is the home rule, regional government for Northwest Alaska. The Borough covers an area the size of Indiana, and is home to 11 villages.
About Teck Alaska
Teck Alaska operates the Red Dog Mine, which has been in operation in Northwest Alaska since 1989. Red Dog directly employs approximately 500 people, 50% of which are shareholders of NANA Regional Corporation, Inc. (NANA). NANA, an Alaska Native Corporation, owns the land Red Dog Mine is located on.