Coeur report: Mine a boon for Juneau

McDowell Group data states Kensington will provide $14 million annual payroll

Posted: Friday, July 13, 2007

Construction of the Kensington Mine near Berners Bay has been a bonanza for hundreds of Alaska residents, according to a McDowell Group report released Thursday at a Juneau Chamber of Commerce luncheon.

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As of April, 387 workers have been employed in construction of the mine, including 119 from Juneau, said Jim Calvin of the Juneau-based consulting firm.

More than $206 million has been spent so far on mine development and construction, $80 million of which has been spent with businesses in Southeast Alaska, he said.

Seventy-three Juneau businesses have provided goods and services to the project, Calvin said.

"It's clear that the project has had a pretty significant impact on the Juneau economy," he said.

According to research done in April and May by the McDowell Group for mine operator Coeur Alaska, the Kensington Mine, about 45 miles northwest of downtown, is providing a much needed boost to the community during a difficult economic period.

Last year alone, Juneau lost more than 500 residents, a 2 percent reduction of the overall population, Calvin said.

Preliminary numbers presented Thursday indicate that the mine, when opened, would provide 200 direct jobs with a $14 million annual payroll. The number increases to 360 when including indirect jobs, bringing the total estimated payroll from the mine to $21 million annually, Calvin said.

"So 200 jobs that are on the slate for the mine could be particularly important for us as we start working through this really sluggish period in our economy," he said. "Juneau's economy, in terms of population, really hasn't grown in the last six or seven years."

Kensington impact

Construction workers: 387 workers as of April 2007.

Construction spending: More than $206 million so far.

Annual construction labor income: $11 million for Juneau residents.

Construction losses in the event of a premature shutdown: $1.3 million per month for Juneau residents.

Annual city tax revenues when mine is operating: $2 million.

SOURCE: McDowell Group

When the mine would become operational is still up in the air. The 9th U.S. Circuit Court of Appeals recently overturned an Alaska court's decision and prohibited Kensington from dumping mine tailings into Lower Slate Lake. Southeast Alaska Conservation Council, one of three plaintiffs, and Coeur have yet to reach a solution on the tailings issue.

"The chances of sitting down and resolving this issue we think are as good as the environmentalists want to make it," Rick Richins of Coeur told the chamber on Thursday. "We're ready, willing and able to sit down one more time to see if we can work through this."

"The larger point for us is that Coeur can have its mine at Kensington if it does it legally," said SEACC Executive Director Russell Heath, who attended the luncheon as a chamber member. "Just do it right. We encourage the good people of Juneau to ask Coeur to design a legal mine."

Heath said SEACC follows the mine very closely so he was not surprised by the economic figures presented Thursday. Not all potential economic effects were brought up Thursday, he said.

"It's a dilemma that we have, in that the economic value for something like clean water never shows up on someone's ledger sheet," he said. "It's never very clear what's the economic cost when a water body is degraded or polluted."

Berners Bay is an important spawning area for herring, which are a main staple of food for salmon, Heath said. If the herring population was put in jeopardy then the impact to local fishermen could have a ripple effect in the local economy.

Environmentalists also want a vibrant economy, but they have different visions of how to achieve that, Heath said.

Calvin said mining has given a strong boost to Alaska's economy in recent years, which had a $2.7 billion production value in the state in 2006. That is nearly double the 2005 figures, he said.

"It's definitely a boom time in the mining industry for the state," Calvin said.

The average wage in metal mining also has increased in recent years, he said. The average wage is $71,000, or double the economy-wide average, Calvin said.

The flow of money from the construction of Kensington will continue. The mill is presently 90 to 95 percent completed, Richins said.

It is anticipated that $238 million will have been spent on mine development and construction by the time the project is complete, Calvin said.

• Eric Morrison can be reached at 523-2269 or

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