Report: Mining won't pan out for state

Posted: Thursday, February 14, 2002

ANCHORAGE - A report commissioned by environmental groups in Fairbanks and Juneau says future development of the state's economy is not likely to come from mining of metals.

Thomas Power, a professor of economics at the University of Montana, was hired by the Northern Alaska Environmental Center and the Southeast Alaska Conservation Council to analyze the economics of mining at the Fort Knox gold mine outside Fairbanks and the Greens Creek mine near Juneau.

In a report released Wednesday, he said metal mining was a small part of the economy in their communities.

"The most startling thing to me was the relatively modest role that metal mining was playing in the role of the Alaska economy and the relatively modest role it will play in the future," Power said.

Mara Bacsujlaky, assistant director of the Northern Alaska Environmental Center, said the groups commissioned the report in part because most information about the benefits of mining comes from the industry. She said her group wanted something to counter boosterism that comes out during the mine permitting process.

The Alaska Miner's Association did not immediately return phone calls Wednesday.

But the state's minerals development specialist in Fairbanks said there's a reason metal mining does not contribute more to Alaska's economy.

"We could have a much bigger industry if the same groups hadn't gone out of their way to oppose development," said Dick Swainbank of the Division of Community and Business Development.

Power said metal mining is directly responsible for about one-half of 1 percent of Alaska jobs and personal income. He said that modest role is often obscured by mining's assumed benefits. Such "folk economics" can be a disadvantage to formulation of public policy, Power said.

He said he also was surprised to learn of the small amount of royalties and taxes the metal mines contribute to the state, given the wealth Alaska earns from the oil industry.

"That attitude doesn't seem to be prevalent when it comes to metal mining," he said.

Power said most mine earnings flow outside the state.

He also questioned whether Alaska requires enough to guarantee reclamation. If a mine goes bankrupt and upfront recovery costs are not sufficient, the state is left with the choice of paying to repair environmental damage or not fixing it.

Swainbank said there's a reason mine earnings go to Outside interests.

"There's no money in Alaska for investment," Swainbank said. "You have to have money from Outside. That's a given."

Swainbank said the benefits from mining at Fort Knox and Greens Creek appear in the form of good jobs and benefits to local government.

Power's report notes that the Fort Knox mine cost $373 million to construct and was assessed at $243 million in 2001, adding 6 percent to the assessed value of property in the Fairbanks North Star Borough.

Fort Knox, Greens Creek and Red Dog mine in northwest Alaska and Usibelli Coal near Healy together employ 1,320 people with $77 million in wages. The average salary, not including benefits, is between $50,000 and $60,000.



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