The Idaho-based mining company backing Juneau's proposed Kensington Gold Mine is facing criticism from Juneau environmentalists over its financial record.
Coeur d'Alene Mining Corp.'s lackluster financial performance - it has posted no profits in five years - is being targeted by the Southeast Alaska Conservation Council. The group filed an appeal last Monday to block the U.S. Forest Service's decision to approve the Kensington mine, 45 miles northwest of downtown Juneau.
The environmental group claims "weak finances" at Coeur d'Alene Mining Corp., in addition to its subsidiary Coeur Alaska's mining activities near Berners Bay, could cause future problems for Juneau.
But Coeur d'Alene Mining Corp., based in Coeur d'Alene, Idaho, says its finances are stable - the company carries no debt and $330 million in cash, cash equivalents and short-term investments.
"We have the money to build Kensington now," said Coeur d'Alene spokeswoman Heather Turner in a written statement provided last week.
John Dobra, a Nevada economist familiar with Coeur d'Alene Corp.'s financial position in the metals industry, said the company has not performed well in its sector in the past 10 years due to depressed prices for silver, its primary product. But he said Coeur's performance appears to be improving.
According to financial reports, Coeur d'Alene performed well below its competitors in the mining industry in 2004 - in both profit margins and returns on assets and investments.
But Dobra said it is simplistic to say Coeur's venture in Juneau poses a risk to the community.
"It's current performance that matters, not past. Coeur is not one of the leaders in the sector, but currently they are very capable of servicing (a) bond," he said.
The company's reclamation bond will serve as an insurance policy providing clean closure of the mine in case Coeur goes bankrupt or pulls up stakes. The bond calculation for the Kensington Mine has not been finalized. It will be reviewed by state and federal officials once Coeur Alaska submits its proposed plan of operations for the mine to the U.S. Forest Service.
"The Forest Service and the public don't want to be left holding the bag," said Jeff DeFreest, minerals program geologist for the Forest Service. "What we are most worried about is making sure we have sufficient dollars ... in the bond."
"Historically in the last century, there were some messes left by mining companies, including some Superfund sites. We don't want that to happen here," DeFreest added.
DeFreest said he was unaware of any concerns in the Forest Service about Coeur's finances or its ability to post a bond.
But local critics said Coeur's assurances aren't convincing.
"Careful financial investigation shows that Coeur hasn't done well when it gets into the mining phase and nothing in their financials indicates that will change," said Kat Hall, mining coordinator for the Southeast Alaska Conservation Council.
Coeur's Turner said that the environmental group's assertions are "inaccurate and misleading."
Hall pointed out that, in its corporate Securities Exchange Commission filings, Coeur has noted "significant investment risks and operational costs" associated with the Kensington and its San Bartolome project in South America.
Hall said Juneau residents should get a good look at the company's financial records "before we invest in a mine in Berners Bay."
Also bearing scrutiny, Hall said, is Coeur's future bonding for the project.
The Bozeman, Mont.-based Center for Science in Public Participation conducted a financial assurance review of the Kensington Mine in November as part of a larger review of the status of reclamation bonding for Alaska mines.
Though a final figure hasn't been given for the mine's reclamation, Coeur appears to have low-balled its cost estimate so far, said Chambers, who provides professional engineering analysis to environmental groups.
Coeur's preliminary figure of $3.15 million - cited in the U.S. Forest Service's final supplemental environmental impact statement for the Kensington - appears to be at least $6 million short, Chambers said.
The reason for the $6 million difference is that significant costs for the project - such as a reverse-osmosis water treatment system, as well as government costs for assuming cleanup responsibilities - were not included in Coeur's estimate, according to Chamber's financial assurance review.
Dobra, a professor at the University of Nevada, Reno's Natural Resource Industry Institute, said the level of funding and level of work for reclamation bonding is "a controversy that reasonable people can disagree about."
"I won't say that the environmentalists are right or wrong, or the companies, either," Dobra said.
The crux of the controversy over reclamation bonding, Dobra said, is whether the reclamation work required by the government is sufficient. In some cases, the controversy has ended up in the courtroom.
"It's not a foolproof process," he said.
Elizabeth Bluemink can be reached at email@example.com.
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