Alaska's mines keep plugging

Prospects seek investors

Alaska’s miners are doing okay, at least those with producing mines. That trend seems likely to continue into the new year.

 

But developers of new mines seem to be stuck, bogged down by a poor global investment climate in mining, and that seems likely to continue as well.

It’s an irony, because the experience at the Red Dog Mine north of Kotzebue, Greens Creek mine near Juneau, and the Fort Knox and Pogo gold mines in the Interior show that developers of metals mines can be profitable and overcome challenges of high costs, remoteness and regulatory hurdles.

For example, Red Dog had a good year in 2014, shipping more than 1 million tons of zinc concentrates and 205,000 tonnes of lead concentrates, volumes slightly greater than in 2013. Costs were about the same as in 2013 and zinc prices are improving, Red Dog’s owner, Teck, has reported.

In Southeast Alaska, gold production at the Kensington Mine near Juneau was up, reaching 30,773 ounces in the third quarter compared with 28,322 ounces for third-quarter 2013. Coeur Mining, Kensington’s owner, reported new high-grade gold ore being found.

There’s also Alaska’s legacy Usibelli coal mine near Healy, which is continuing to hang in there with coal exports despite a slumping export market while also supplying Interior Alaska coal-fired power plants.

Usibelli is producing about 1.6 million tons of coal annually, with about 500,000 tons being shipped to buyers overseas. Though export sales are down, they are stable with Usibelli’s power plant customers in the Interior.

The lineup of mine prospects is disappointing, however.

With much of the developed world stuck in slow-growth mode and China’s growth down along with its voracious appetite for minerals, the world’s mining industry is in a funk.

That means developers of new mines find it hard to raise money. In Alaska, across Cook Inlet from Anchorage, the developer of the Chuitna coal project, PacRim Coal, is plugging away in an extended permitting program, which began in 2006.

Meanwhile the company is dealing with the slump in export coal markets, where PacRim hopes to market the bulk of the mine’s expected 12 million tons of annual coal production.

Near Ketchikan, Heatherdale Resources is looking for partners and investment for the very promising Niblack multi-metals mine on southern Prince of Wales Island, despite the promise of this underground project to be a mine similar to Hecla Mining Co.’s Greens Creek Mine on northern Admiralty Island, which is very successful.

Similarly, International Tower Hills’ big Livengood gold project north of Fairbanks, now well-explored and with a gold resource of about 20 million ounces, awaits a partner with investment capital.

That’s despite the successful track record of Kinross Gold’s Fort Knox gold mine northeast of Fairbanks, another large surface mine on the road system. Livengood would be very similar, and possibly bigger, if it were developed.

In the western Brooks Range, NovaCopper Resources has significant copper discoveries in the Ambler Mining District and at Bornite, on the upper Kobuk River.

NovaCopper has aligned itself well in the region, entering a partnership with NANA Regional Corp. of Kotzebue, which is the landowner at Bornite, and with the state’s Alaska Industrial Development and Export Authority, which is now working on permits for a road into the remote region.

Despite those advantages NovaCopper is finding it difficult to raise capital for ongoing exploration and possible development of the discoveries. The proposed Ambler road has become controversial and new Gov. Bill Walker has stripped funding for it from his proposed fiscal year 2016 state capital budget.

Two mega-projects also in the queue include the large Donlin Creek gold project near Crooked Creek village in the mid-Kuskokwim River region and Pebble, a very large copper and gold project near Iliamna, southwest of Anchorage.

Pebble is controversial with the salmon fishing industry and communities in Bristol Bay who depend on salmon (the fear is contamination of salmon-rearing streams by the mine) and the project is now basically on hold without a major investment partner following Anglo-American’s divestiture in late 2013.

However, mining opponents suffered a setback when a U.S. Alaska District Court judge in Anchorage enjoined the U.S. Environmental Protection Agency from proceeding with a preemptive move to veto a large mine in the Bristol Bay watershed until a lawsuit brought by Pebble Partnership is resolved.

The fact that Judge H. Russel Holland ordered the injunction against EPA is an indication that Pebble Partnership has a chance of prevailing in its lawsuit and that the company may eventually be allowed to proceed with the filing of permits.

At Donlin Creek, the mine developer, Donlin Gold, is at mid-stage in a multi-year environmental impact statement process for the mine, which is now well-explored and has about 30 million ounces of known gold resources.

The critical decisions for its owners, a joint-venture of Barrick Gold and NovaGold Resources, a Canada-based “junior” exploration company, lie two to three years in the future, when a go or no-go decision must be made. The Donlin Creek mine would require an approximately $6 billion capital investment and would be one of the largest gold mines in the world, if it proceeds.

Both Donlin Creek and Pebble have huge implications for the economic sustainability of communities in rural regions near the mines.

The surface lands at Donlin Creek are owned by The Kuskokwim Corp., a consortium of Native village corporations in the mid-Kuskokwim region, and the subsurface mineral rights are held by Calista Corp., the Native regional corporation for the Yukon-Kuskokwim region.

The Y-K region is today one of the state’ most economically depressed areas, and Donlin Gold could become a significant employer and source of economic stimulus if its mine is developed.

• Tim Bradner can be reached at tim.bradner@alaskajournal.com.

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