Feds approve Donlin mine plan in unique joint decision
One of the world’s largest gold prospects is one big step closer to becoming one of the world’s largest gold mines after federal agencies issued a first-of-its-kind decision Aug. 13 in Anchorage.
U.S. Army Corps of Engineers Alaska District Commander Col. Michael Brooks and Assistant Interior Secretary Joe Balash signed a joint record of decision to finish the environmental impact statement for Donlin Gold’s proposed open-pit mine and approve a right-of-way across federal land for a natural gas pipeline that will fuel the mine’s large power plant.
The record of decision generally approved Donlin Gold’s preferred construction plan for the gold mine near Crooked Creek in the upper Kuskokwim River drainage. More specifically, it approved the project’s Clean Water Act Section 404 wetlands fill permit application — applications the Corps adjudicates for the Environmental Protection Agency. Donlin’s permit allows for the disturbance of roughly 3,500 acres of wetlands, according to the EIS documents.
Donlin General Manager Andy Cole said the record of decision is the result of more than 20 years of thorough planning.
“I think it clearly demonstrates that the project has a track record of engineering excellence and a strong culture of safety, environmental stewardship and community engagement, all values that will remain constant,” Cole said. “We believe that Donlin Gold can be a model of responsible mine development with the potential to generate meaningful benefits for our Native corporation partners and communities throughout Alaska for many decades to come.”
The EIS was initiated in December 2012.
Donlin spokesman Kurt Parkan noted that nearly 400 meetings were held on the company’s proposal, with about 350 of those led by the company and another 50 or so by the Corps of Engineers.
However, the world-scale mine that would extract upwards of 33 million ounces of gold over an initial 27-year life is only part of the overall project. Substantial support infrastructure for the mine would also be built, including a 312-mile, 14-inch natural gas pipeline from near Beluga on the west side of Cook Inlet to the mine site to provide a fuel supply for the 227-megawatt power plant at the mine site. Donlin’s plan also calls for a 30-mile access road from the Kuskokwim to the mine as well as expanding the Bethel barge dock and constructing additional fuel terminals in Dutch Harbor.
Donlin Gold leaders acknowledge the project is more sensitive to gold prices than even other Alaska prospects simply because of its associated infrastructure costs.
Gold was trading for nearly $1,200 per ounce on Aug. 14.
“It’s safe to say that the price of gold currently is too low,” Parkan wrote in an email.
Donlin Gold estimates the mine and associated infrastructure that includes a natural gas pipeline from west Cook Inlet and fuel storage all the way in Dutch Harbor, will cost $6.7 billion based on its plan from a 2011 feasibility study.
Donlin Gold is owned by Canadian-based Novagold Resources Inc. and Barrick Gold Corp.
Brooks said at a signing ceremony held at the Corps’ Alaska headquarters on Joint Base Elmendorf-Richardson that the joint Donlin decision — the first of its kind in the nation — is the last major permit he will approve. Brooks handed over command of the Corps Alaska District Aug. 14; he said he is retiring after 25 years of service.
Corps officials emphasized that the record of decision was made into an event less for the decision rendered than for the fact that it was the product of multiple agencies reaching a single conclusion.
“I think it is something to be celebrated that different parts of the federal government are working together to streamline these processes,” Brooks said.
Corps Alaska Regulatory Chief David Hobbie said in an interview that the public will be split on whatever decision an agency makes regarding a major project such as Donlin, adding that lessons learned from this EIS can be applied to similar projects in an effort to speed up the decision-making process.
“This really wasn’t about Donlin’s good, bad or indifferent; it’s about the joint record of decisions because the federal government came together and spoke with one voice. That’s good for the taxpayer, right? Even if they don’t like the decision, at least we made a decision,” Hobbie said.
A major aspect of “streamlining” such permitting is developing a good schedule initially and making sure all stakeholders, including the applicant, stick to it, he added.
The mine would be on land owned by The Kuskowkim Corp., the area Alaska Native village corporation and Calista Corp., the regional Native corporation, owns the subsurface mineral rights.
Calista CEO Andrew Guy said in an interview that the company supports Donlin largely because its leadership has come to trust the environmental review process despite the fact that some of its shareholders — and local tribal governments — oppose the project because of concerns it could harm subsistence resources, particularly salmon in the Kuskokwim.
“We selected certain lands for development purposes but we did not get into that for a long time, primarily because of concerns to the environment and our people’s reliance on subsistence to make a living. But we saw how (the National Environmental Policy Act) affected and impacted mining operations; we saw how NEPA really worked and that’s when our board and management decided that we’ve seen enough of the positive impacts that NEPA has on the process that, yes, now it’s time for us to fulfill (the Alaska Native Claims Settlement Act’s) mandate to provide the work and jobs to our shareholders,” Guy said.
He said that Calista shareholders would benefit not only through mineral royalty revenues to the company but also through work its subsidiary companies would do at the mine.
The Yukon-Kuskokwim River Alliance and the tribal government in the city of Bethel, Orutsararmiut Native Council, said in a statement they are “outraged” by the decision. The groups said the agencies ignored voices from the region and could hurt wildlife and subsistence hunters and fishermen.
Guy additionally stressed that Donlin would lay the groundwork for lower-cost energy and technology infrastructure by bringing natural gas and fiber-optic cable to the region. Calista, in concert with the state and federal governments, could eventually expand that infrastructure to nearby villages he said.
While the EIS decision is a milestone for Donlin, the project is far from being green-lighted.
In addition to the record of decision, the company still has to secure numerous other state and federal permits, among them approvals for water discharge, waste management and a tailings dam safety permit that will eventually require additional geotechnical drilling, according to Parkan.
After the permits are secured company leaders will reevaluate the project’s economics and begin the search for financing if the project pencils out.
Editor's note: This story has been updated from the original version to include Rick Parkan's comments about the current price of gold and its impact on the project.
Elwood Brehmer can be reached at [email protected].