Alaska editorial: Mining returns to prominence

Posted: Friday, November 14, 2008

Petroleum gets most of the attention when Americans, and even Alaskans, think about valuable materials pulled from our state's ground, but last year Alaska entered the big leagues on another important production front.

Among the states, Alaska is now the fifth-largest producer, measured in dollars, of nonfuel minerals. Alaska's miners produced $3.37 billion worth of minerals, mostly metals, in 2007. It was an all-time record.

This is not just good news for mining companies. As the state noted in its annual mineral industry report, those companies provided more than 3,500 jobs that paid an average of $1,578 per week. The state and its municipalities collected $142.4 million in royalties and taxes. The report didn't total the federal government's taxes on the industry, but it no doubt resulted in a healthy amount for Washington, D.C., as well.

In his introduction to the report, Natural Resources Commissioner Tom Irwin noted mining's importance given the economic slowdown. "Mining holds great promise for alleviating many of the economic problems in rural Alaska," he said. "Large mines have the potential to lower energy costs for nearby communities. Also, high-paying mining jobs can give residents the economic means to better afford fuel and electricity, and to support their families."

The state set a new record for two primary reasons - high prices for zinc produced at the Red Dog Mine in Northwest Alaska and greater gold production at the Pogo Mine north of Delta Junction.

Zinc is by far the biggest contributor to the value of the state's mineral production, and Alaska zinc was worth more than $2 billion in 2007. Production hasn't risen much in recent years - it was 684,000 tons in 2005 and 696,000 in 2007. But Alaska's zinc production in 2005 was worth only $862 million.

Gold provides about a quarter of zinc's value, but its worth has grown just as dramatically. With the increase in production at Pogo and higher prices, the state's gold production rose from $190 million in 2005 to $511 million in 2007.

As the costs of minerals rise, they drive an exploration boom across the state. The annual report provides a dizzying overview of dozens upon dozens of active prospects. Spending on exploration in Alaska grew to $329 million in 2007, up from $178 million the year before. "At least 33 projects had exploration expenditures of $1 million or more, and 85 projects had exploration expenditures in excess of $100,000," the report states.

The mining industry is returning to the sort of prominence in Alaska that it once held. Gold production figures in the report illustrate that climb: In the first decade of the 20th century, annual gold production peaked at about 1 million ounces. After declining to near zero in the 1970s, it rose last year to 727,000 ounces, three-quarters of its all-time high.

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