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Mining comes with risks, and rewards

Posted: March 15, 2012 - 11:13pm
Karen Matthias shows an example of a finished product from mined metal during her Lunch and Learn Presentation titled "Mining Works for Alaska" at the Capitol on Thursday.  Michael Penn/Juneau Empire
Michael Penn/Juneau Empire
Karen Matthias shows an example of a finished product from mined metal during her Lunch and Learn Presentation titled "Mining Works for Alaska" at the Capitol on Thursday.

Most of the benefits of mining are well known: jobs, money and the refined metals U.S. industry needs. Many of the drawbacks are also known: physical danger, financial risk and environmental degradation.

What isn’t usually discussed is how mining can affect a community beyond its economic impacts.

During her noon presentation titled “Mining Works for Alaska: International Investment = Local Benefit,” Karen Matthias described the tangible and intangible effects of mining in Alaska.

“Red Dog [Mine] is more than just a mine developing essential minerals: it is a mechanism for hope and catalyst for the northwest Alaska and statewide economy,” according to NANA Regional Corp.’s website. Matthias referenced NANA’s statement and talked about the mentor role that well-paid mine workers serve. The financial benefit of mining in rural communities even has an affect on domestic violence and other social ills, Matthias said.

The lunch-and-learn was held at the Capitol on Thursday. Matthias runs Karen Matthias Consulting. The report was commissioned by the Council of Alaska Producers.

Matthias said three-fifths of the hydroelectric power in Juneau comes from power plants developed by mines over the previous 100 years, a testament to the longevity of hydro power.

But there are the tangibles. Matthias showed a slide prepared by the Pebble Limited Partnership showing all the ways copper and molybdenum, two common minerals found in Alaska, are used in snow machines and fishing boats. The point was to bring home the importance of metals in everyday life. And there is the $500 million the six largest mines spent in Alaska last year.

Mining provided 4,500 jobs in 2011, 71 percent Alaskan. The average annual metal mining wage in the state was $100,000, according to Mattias.

“By any standard in this country, that is a very good wage,” Matthias said. “Alaskans earning a good family supporting wage all over the state.”

Juneau’s municipal coffers benefited to the tune of $2.6 million from Kensington and Greens Creek property taxes in 2011. The state of Alaska received an estimated $148 million in royalties, rents, fees and taxes. Two-thirds of Greens Creek employees are Alaskans. And 3 out of 5 of Juneau’s hydroelectric facilities were built by mines in the last 100 years.

One hundred twenty communities in Alaska house miners, half of which live in rural Alaska, Matthias said. She also said mines spent approximately $1.3 billion in Alaska last year. Potential mines Niblack and Pebble could employ over 200 and 800 operation jobs respectively.

And the risks?

Mining jobs come with a fatal risk. Thirty-nine U.S. miners died from coal and hard rock mining in 2011. In the same time period, 44 journalists died on the job, five in the United States, according to the Committee to Protect Journalists. Two Alaska miners died on the job in 2011, which ranked it as tied for the fourth-most deadly state for miners in the union.

After 30 years and $2.8 billion worth of exploration, Alaska is home to six large producing mines. There is a lot of risk involved in mining, Matthias said.

Explorers risk millions, developers risk tens of millions and volatile commodity prices can delay repayment of a project by years. Greens Creek took 14 years to develop and Kensington discovered its modern deposit 27 years ago.

Mining comes with a “high financial risk,” Matthias said.

The rewards of mining are potentially great.

The advance of renewable energy resources is dependent on minerals, Matthias said. Five tons of copper is used in a 3 megawatt wind turbine, she said. Much of the modern magic in high technology relies on the properties of a class of minerals with the misnomer rare earth elements. Rare earth elements are found copiously throughout the earth’s crust, but are found in concentration in only a few places — the isotopes are similar and difficult to separate. Bokan Mountain on Prince of Wales Island is a potential source and Molycorp Mineral’s Mountain Pass Mine. Molycorp has recently restarted production at Mountain Pass in response to the 97 percent market dominance of China.

• Contact reporter Russell Stigall at 523-2276 or at russell.stigall@juneauempire.com.

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