Group says mines' reclamation bonds fall short

Center for Science in Public Participation analysis indicates a $2 million gap for the Kensington Mine

Posted: Tuesday, October 11, 2005

An independent scientist based in Bozeman, Mont., analyzed six Alaska mines and said Monday that none of them have adequate financial assurances - including the Kensington and Greens Creek mines near Juneau.

The analysis released Monday by the Center for Science in Public Participation shows a potential $145 million gap in funding for mine reclamation in Alaska - most of which is attributed to the Red Dog Mine near Nome.

State officials agree that the Red Dog Mine doesn't have adequate financial assurances now but said that that problem will be fixed within a year. The projected full cost of the reclamation bond for mine is about $100 million. The existing bond is $11 million.

The analysis by the Center for Science in Public Participation also indicated a $2 million gap for the Kensington Mine under development near Berners Bay and an approximate $10 million shortfall for the Greens Creek Mine on Admiralty Island.

David Chambers, the Bozeman scientist, said Monday that hardrock mines have a financial incentive to "go cheaper" with their bond calculations.

Environmental officials with the Kensington and Greens Creek mines disputed the finding that their financial assurances were lacking.

"Our bond is more than adequate," said Luke Russell, director of environmental affairs for Coeur d'Alene Mines Corp., the Idaho-based company that owns the Kensington Mine.

The company originally assessed the cost of reclamation for the Kensington Mine at $3 million but the final approved bond is now about $7.3 million.

The Greens Creek Mine reviews the costs of its treatment and monitoring programs every year and feels comfortable with its $26 million reclamation bond, said Bill Oelklaus, the mine's environmental manager.

Chambers' analysis said the bond should be about $35 million.

Oelklaus said Greens Creek has set aside the money necessary to monitor water quality for a 30-year period after closing the mine. "We feel in one to two years (after closure), the water won't need treatment anymore," he said.

The central question is how much risk the public should have to assume if a mine abandons operations or goes bankrupt, as the Illinois Creek Mine in west-central Alaska did in 1999, Chambers said.

The state of Alaska was lucky that it was able to fund the closure of the Illinois Creek Mine by finding a contractor who continued to operate it, he said.

State mine permit manager Ed Fogels said Monday that he appreciates Chambers' work but finds it overly conservative.

Fogels said the state often reviews a mining company's estimate and an estimate provided by Chambers, and then ends up with a bond that is somewhere in the middle of the two numbers.

"We have to look at the data and figure out something that's realistic. Something that we can require monitoring for," said Fogels, with the Alaska Department of Natural Resources.



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