Elements of Mining
Operating and potential projects by region
When people in the Lower 48—and even plenty of those here in the Last Frontier—think about mining in Alaska, they think gold. With the state producing 14 percent of the nation’s gold in 2014, they think gold for a good reason. From the Southeast to the Interior, mining operations and continued exploration efforts, both large and small, reveal glimmering prospects for those hunting the precious metal.
However, the vast geological diversity in the state provides numerous mineral opportunities beyond gold, many of which are either already being tapped by active mines or in exploration stages. Perhaps the most strategic mining developments revolve around rare earth elements (REEs), which can be found in everything from TVs and camera lenses to cancer treatment drugs and the technology that makes it possible to harvest energy from renewable sources.
“Nationally, identification of areas with critical-mineral potential is important for ensuring secure domestic supplies of REEs and other elements critical for technological and industrial uses,” says Melanie Werdon, chief of the Mineral Resources Section of the Division of Geological & Geophysical Surveys, Alaska Department of Natural Resources. “For Alaska, development of REEs would provide jobs, economic-development opportunities, and increased revenue to state and local governments, and, depending on land status, to Native corporations as well.”
In addition to REE exploration, 2017 saw continued mining of coal, zinc, lead, silver, and gold at established mines—while millions of dollars were poured into various regions of the state as companies looked to extend the lives of their mines as well as develop new areas with significant economic potential.
In Alaska there are twenty active mineral exploration projects, six large-scale mines, and hundreds of smaller placer gold operations in every region of the state except for the North Slope.
Fort Knox, operated by Toronto-based Kinross Gold, produced 285,933 ounces of gold by the third quarter of 2017, hitting a milestone as it poured its 1 millionth ounce from the Walter Creek Arctic Heap Leach on January 24. The mine is the largest and longest-running (operating for more than twenty years) of the two hardrock operations in the state.
“This is a great milestone for Fort Knox and has been an instrumental part of extending the life of the property. I see our Arctic Heap Leach as a testament to our commitment to innovation as a company. My thanks goes out to the many folks, throughout the entire company, that have helped achieve this milestone,” says Eric Hill, vice president and general manager of Fort Knox.
Part of Kinross’ commitment to the mine and the community, which depends on Fort Knox jobs, is continued exploration. In December, Kinross gained the mineral rights to a 709-acre parcel of land known as Gilmore, located immediately west of the Fort Knox mine. Kinross expects to initiate the permitting process for mining at Gilmore by year end.
“As a result, Kinross added 2.1 million gold ounces in estimated measured and indicated resources and 300 gold ounces in estimated inferred resources at Fort Knox,” says Anna Atchison, a Fort Knox spokeswoman. “We also converted approximately 260 gold ounces of mineral resources, which was mainly from the East wall of the Fort Knox pit, to proven and probable reserves. The conversion offset some of the reserve depletion in 2017 and resulted in an increase to Fort Knox’s estimated mine life by approximately one year.”
On pace to pour its 4 millionth ounce of gold in 2019, Sumitomo Metal Mining’s underground Pogo Mine, which passed its ten-year milestone in 2016, produced about 271,000 ounces of gold last year.
The company has been investing more than $10 million a year on exploration and struck gold—literally—with some of its most recent results.
“So we just turned the rig, drilling a shallower hole coming across,” Pogo Exploration Superintendent Gabe Graf told a crowd at the Alaska Miners Association Biennial Conference held in Fairbanks in March. “And this hole, we hit 17.5 feet of 1.739 ounces per ton. Very good—very excited about that.”
If the test hole drilled in Delta Junction near the current mine is a fair sample, ore extracted from that area would produce 1.7 ounces of gold per ton—well above the amount needed to turn a healthy profit.
“The early information that we’re getting back from exploration between last year and of course some information this year shows that there’s a lot of potential north of the property,” Pogo General Manager Chris Kennedy told UAF-operated KUAC in a March interview. “The Fun Zone shows a lot of potential. The West Goodpaster shows a huge amount of potential.”
This year, Sumitomo plans to spend $21 million on exploration to gain a better grasp of the potential of Fun Zone, Goodpaster, and other prospects closer to the mine.
However, it’s not all gold driving the mining industry in the Interior. The region is also home to the family-owned, all-Alaskan Usibelli coal mine established in 1943 by Emil Usibelli.
Coal from the mine is transported to six Interior Alaska electrical power plants, where it produces 29 percent of the power for the region.
“The mine produces approximately 1.4 million tons of coal per year—a huge jump from the 10,000 tons produced in 1943,” Usibelli Coal Mine stated in a news release last year. This year, the mine prepares to celebrate its 75th anniversary.
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Southcentral, Southeast Operations
Hecla’s Greens Creek mine gushed with silver last year as it produced 8.4 million ounces of the precious metal and 50,854 ounces of gold, according to the company.
“Our mines are performing well due to the strength of our operating teams and consistent and disciplined capital programs that have improved these long-lived mines,” Phillips S. Baker Jr., Hecla’s president and CEO, said in a news release. “Greens Creek continues growing throughput, primarily due to increased efficiency at shift change as we utilize new technologies like remote monitoring systems and automated use of the LHD.”
The company, which operates the mine on Admiralty Island, had a strong first quarter this year with 1.9 million ounces of silver, though gold production, at 13,118 ounces, was down.
“Lower gold production, when compared to the first quarter of 2017, was due to lower ore grades as a result of mine sequencing, partially offset by higher mill throughput,” the company explains.
Also producing in Southeast is Coeur Mining Inc., which announced year-end production results from its Kensington Mine: 115,094 ounces of gold. The results demonstrate a significant year-over-year decrease due primarily to lower than expected grades during the first nine months of the year. However, fourth quarter production increased by 27 percent, resulting in the highest fourth quarter since 2013.
The US Army Corps of Engineers Alaska District extended the public scoping period for Pebble Mine, located in the Bristol Bay region, from April 30 to June 29 to allow for further stakeholder comments.
The mineral exploration project by Northern Dynasty, which is investigating a world-class porphyry copper, gold, and molybdenum deposit, has seen major swings in support from the Environmental Protection Agency. First when EPA Administrator Scott Pruitt moved to withdraw the Obama administration’s proposal to block the mine under the Clean Water Act and then when Pruitt later reversed his decision to allow for further public comment.
Though further stakeholder comments are being sought, the wheels are still rolling forward with the Pebble project.
“We’ve filed our application; it’s been accepted as complete by the [US Army Corps of Engineers],” Tom Collier, CEO of the Pebble Limited Partnership, has said. “That process is moving along, and it’s moving along efficiently and effectively.”
Though Pebble Mine has caught headlines around the world, the race to secure REEs makes Ucore’s Bokan Mountain exploration on Prince of Wales Island increasingly important. The project was advanced nearly to the permitting stage by 2014 but has been largely dormant in recent years.
A total of fifteen rare earth elements are present at Bokan, with the top dogs being dysprosium, terbium, and yttrium.
A Sourdough Express truck pulls a bulker trailer on the Dalton Highway.
The company stated earlier this year that AIDEA received authority from the Alaska Legislature for a $145 million finance package for the future development of the Bokan Mine and processing facilities, a portion of which is intended to develop a proximal REE separation facility. Ucore selected Ketchikan, which is thirty-two miles northeast of Bokan and allows for marine transportation of the mined materials, as an ideal site for this cutting-edge Strategic Metals Complex.
The race to develop both REE mines and processing facilities, which have to wrestle with the tightly interlocked elements, comes as the United States maintains staggering dependence on the Chinese REE market.
“China’s dominant position as the producer of over 95 percent of the world output of rare-earth minerals and rapid increases in the consumption of rare earths owing to the emergence of new clean-energy and defenserelated technologies, combined with China’s decisions to restrict exports of rare earths, have resulted in heightened concerns about the future availability of rare earths. As a result, industrial countries such as Japan, the United States, and countries of the European Union face tighter supplies and higher prices for rare earths,” Pui-Kwan Tse wrote in the abstract of a 2011 USGS report titled “China’s Rare-Earth Industry.”
As of January 2018, the US net import reliance for REE increased to 100 percent, with the major import source being China, followed by Estonia, France, and Japan.
Though the Ucore project at Bokan Mountain is perhaps the closest REE mine to come to fruition in Alaska, USGS has identified large swaths of Alaska with various levels of potential for the ever-increasingly important minerals.
The ball continues to roll for the Donlin Gold Mine as the US Army Corps of Engineers has completed and published the final Donlin Gold EIS. The world-class gold project is expected to mill 53,500 tonnes per day, producing an average of 1.1 million ounces of gold every year for the first twenty-seven years.
The project, equally owned by Barrick Gold Corporation and NOVAGOLD Resources, spent $8 million on a drill program last year, drilling twenty-four holes for project-economics optimization. According to the Alaska Department of Natural Resources, the proven and probable reserve sits at 34 million ounces of gold. NOVAGOLD Resources and Barrick Gold have not yet committed to developing the site but are now waiting on a Record of Decision as to whether or not the project will be issued a wetlands permit. Other major state and federal permits are also required.
The combined silver production from Greens Creek mine and Red Dog Mine, near Kotzebue, account for more than half of all the silver mined in the United States. However, Red Dog Mine (operated by Teck Alaska) is primarily a zinc mine—one of the largest in the world.
“We are pleased with the significant improvements in recovery at our Red Dog operations in the last few months, and consequently production will now exceed previous guidance for the year by approximately 50,000 tonnes,” Don Lindsay, Teck president and CEO, said in a news release. “As well, our exploration results at our nearby Aktigiruq deposit show its potential to be one of the best undeveloped zinc deposits in the world.”
The project, a partnership between NANA and Teck Alaska, estimates that production of contained metal in 2018 will be in the range of 525,000 to 545,000 tonnes of zinc and 95,000 to 100,000 tonnes of lead.
According to a February release, “From 2019 to 2021, Red Dog’s production of contained metal is expected to be in the range of 475,000 to 525,000 tonnes of zinc and 85,000 to 100,000 tonnes of lead.”
Mineral Resources Offer Economic Boost
With the vast geological diversity and growing need for the United States to wean itself off foreign supplies of essential mineral resources, from REEs to copper, mining potential in Alaska cannot be underestimated.
“Alaska is comparable in size to much of the western USA. Alaska has significant potential for hosting many mineral-deposit types due to its diverse geology and large area of under-explored land. Alaska has many REE geochemical anomalies and occurrences, and the Bokan Mountain REE deposit, but much more exploration work needs to be conducted in order to know Alaska’s true REE potential,” Werdon says.
With mining companies spending millions in local communities through exploration projects, mineral separation research and development, and extraction, the industry continues to bolster Alaska’s economy.
Isaac Stone Simonelli is a freelance journalist and former managing editor for the Phuket Gazette.
In This Issue
Mining in 2019: The Year in Review
Following a year when metal prices were both up and down—sometimes dramatically; when international trade squabbles spooked investors to both enter and exit the metals markets; and when mining companies started the year cautiously bullish but ended it cautious bearish, those involved in Alaska mineral exploration, development, and production are once again asking themselves: “Where did we succeed, where did we fail, and where do we go from here?”