Why does Coeur Alaska need bonds?

Letter to the editor

Posted: Thursday, May 06, 2004

If it wasn't crystal clear before, here is more proof that Coeur Alaska is trying to cut corners wherever possible on the proposed mine in Berners Bay. This Idaho-based, multinational mining company claims that it is on firm fiscal footing and can pay for the operations of the Kensington gold mine. If that's true, why is the company asking the state for help in floating $20 million in bonds to pay for docks, one near Echo Cove and the other across the bay in Slate Creek Cove? Coeur is looking to Alaska Industrial Development and Export Authority, a state agency that arranges financing for industrial development projects. AIDEA will act as a conduit for the bonds because state agencies can get access to tax-exempt bonds, which are attractive to investors and cheaper money for Coeur. The bills to make this happen are barreling through the Legislature as this is being read.

A couple of questions about this bond idea: What makes AIDEA so sure that this mining company is a good investment for Alaskans? Just two years ago, Coeur Alaska was on the verge of bankruptcy. If the company goes under, the bond holder bears the loss, but does AIDEA get a black-eye in the process?

The accounting behind this bonding plan appears to be fairly vague. AIDEA wants authorization to issue $20 million of bonds on Coeur's behalf, but the two docks together only cost about $7.5 million. What else is being financed and to what benefit to the public?

And what about public use? To obtain tax-exempt status on the bonds, AIDEA has to convince the IRS that the project will be used by the public. Will Coeur let us scramble around on their ore dock and hike their roads while the mine is in operation? Does the construction of this dock equate to the first step in the construction of the road voters "voted" against? While the east side of Lynn Canal may prove to be unrealistic, what about the west side? Does a private ferry terminal equate to public access?

AIDEA gets requests for support from all kinds of businesses in Alaska, but most of these businesses don't get special, fast-track treatment from AIDEA and the Legislature. If Coeur gets these bonds without even explaining what it plans to do with $20 million and how it will benefit the Juneau public, it will be an injustice to Alaskans and Alaskan businesses.

I realize that there are many organizations throughout the state that receive "special interest" attention and financing, but just what is Juneau receiving for its support in this endeavor?

Brock Tabor


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