Teck Cominco, NANA hurt by Red Dog losses

Posted: Thursday, May 16, 2002

ANCHORAGE - The company that runs the Red Dog mine in northwest Alaska expects the operation to lose $40 million to $50 million this year.

"It's very significant," said Charlotte MacCay, Teck Cominco's senior environmental officer for Red Dog. "We're losing a lot of money."

MacCay said no layoffs are planned and Teck Cominco Alaska Inc. will continue operating the world's largest zinc mine about 90 miles north of Kotzebue.

"We'll weather this. We're a strong enough company to continue until the market turns around," probably in the next year or two, she said.

Red Dog lost $25.3 million in 2001, MacCay said. Since then, the outlook dimmed even more.

Zinc prices have plummeted to 35 cents a pound, the lowest in 17 years, said Helvi Sandvik, president of NANA Development Corp. Adjusting for inflation, the real value of zinc is the lowest it has been since the Depression, MacCay said.

"That's a scary thought. There are about 400 jobs in the region that are created by Red Dog," she said.

NANA Regional Corp., a Kotzebue-based Native corporation, owns the land where Red Dog lies. NANA Development is a subsidiary. The parent company gets a 4.5-percent cut from zinc production at Red Dog, which also produces lead and silver.

With zinc prices down, NANA is feeling the squeeze. The company suffered $8.7 million in losses last year, its first loss since 1993, according to NANA's annual report. Revenue totaled $173 million, down slightly from the prior year.

Depressed zinc prices, stock market losses and subsidiaries that lost money account for NANA's difficult year, according to the company. Red Dog royalties were about $1.5 million lower than the prior year, said Sandvik.

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