Mining

Donlin Gold notches wins in 2018, but still far from finish line

This has been a big year for those behind the Donlin Gold project. They received a favorable record of decision from the U.S. Army Corps of Engineers and the Bureau of Land Management Aug. 13 — a first-of-its-kind joint decision for the project’s environmental impact statement and right-of-way approval for a natural gas pipeline across federal lands. Later that month the Alaska Department of Fish and Game approved a slew of Title 16 permits for development activity in salmon habitat. Donlin Gold was also one of the primary players in the successful effort to defeat Ballot Measure 1, which would have greatly increased the state’s requirements for obtaining a Title 16 permit and would have seriously challenged development of the mine, especially under its current plan. However, there are still many unknowns surrounding the development and plenty left to do, according to Donlin Gold spokesman Kurt Parkan. A 50-50 joint venture between Canadian companies Barrick Gold Corp., the world’s largest gold producer, and NovaGold, Donlin Gold LLC has spent roughly $500 million exploring and permitting the open-pit gold project over nearly 25 years, Parkan told a gathering at the Alaska Miners Association conference Nov. 8. Still, that money is not factored into the $6.7 billion estimated construction cost calculated during a 2011 economic study of the project. Parkan said in an interview that the seven-year-old figure is what the company continues to work from; the focus now is on bringing it down. As a result, Donlin’s owners are resistant to putting a definitive timeline on the project, according to Parkan. And the price of gold plays a big role in that, too. It’s safe to say, however, that current prices of about $1,200 per ounce will not suffice. “They hesitate to really reveal what they feel is the trigger point because if we hit it that still may not be the time to pull the trigger,” he said while emphasizing the company is focused on the process of the project and letting extraneous factors settle themselves. “It’s not going anywhere. The price of gold is going to go up, it’s just a matter of when and how much,” Parkan added. “This project will be developed at some point.” As envisioned, Donlin would be one of the world’s largest open-pit gold mines, extracting about 33 million ounces of gold over an initial 27-year life.The company is open to partnerships to help build out much of its support infrastructure, which could help mitigate some of the high fixed costs the project faces, he said. “If somebody wants to finance the pipeline, we’ll buy the gas. If somebody wants to build the power plant, we’ll buy the power,” Parkan said. The 14-inch, 315-mile natural gas pipeline the company plans to build from Cook Inlet to provide feedstock for the 220-megawatt power plant at the Southwest Alaska mine site has been estimated to cost about $1 billion. Additionally, the project will require about 30 miles of new roads and two new ports. Parkan also noted that technical changes might need to be made to the current design in order to secure the remaining necessary permits, which could add cost as well. While Donlin has its federal Clean Water Act Section 404 wetlands permit, the BLM right-of-way and a special permit from the Pipeline and Hazardous Materials Safety Administration, it still needs state approvals that will take several more years to acquire. Parkan said Donlin is waiting on for rulings on its reclamation and closure plan and integrated waste management permit yet this year; the public comment periods for both are closed. In the coming years the company will look to get its pipeline right-of-way and other land authorizations from the State of Alaska as well as its water rights and dam safety permits. The tailings dam safety permit will require additional field seasons for geotechnical drilling, he said. All that work means the project is still a long ways from completion; the mine and associated infrastructure will take another three to four years to build whenever the last of the preconstruction work is wrapped up. Elwood Brehmer can be reached at [email protected]

Sullivan: deregulation will be a relief to Alaska economy

U.S. Sen. Dan Sullivan continues his push to purvey positivity to Alaskans, which he says is largely a result of federal policy changes over the past two years. He acknowledged Alaska is still facing the challenges of a lingering recession— possibly coming out of it this year — crime and substance abuse during an Election Day speech at the Alaska Miners Association convention, but stressed there are positives on the horizon for the economy. “There’s a lot of things where I think, just around the corner, if we make good choices today, to be blunt and continue the trajectory on, I think we’re looking at the possibility of a real jobs and economic boom coming to our state,” Sullivan said. He contended the corporate tax cuts Congress passed last December have helped U.S. businesses be more competitive and make job-creating investments. A point he makes regularly, Sullivan noted the second and third quarter GDP growth of 4.2 percent and 3.5 percent, respectively, which he said simply didn’t occur after the Great Recession during the Obama administration. “What really made this country great was consistent 3.5, 4 percent, 5 percent, 6 percent GDP growth, which was normal — Democrat, Republican, doesn’t matter — that’s what we used to do for 200 years,” Sullivan stressed. The job creation that has driven national unemployment as low as it’s been in 50 years, according to Sullivan, at 3.7 percent in September should be headed to Alaska, he said. To the crowd of miners he specifically discussed his efforts and those of Congress in concert with the Trump administration to roll back environmental regulations that he says were often intended to stymie resource industries. Sullivan cited the repeal of the Army Corps of Engineers 2015 wetlands jurisdiction update known as the Waters of the U.S., or WOTUS, rule. Proponents argued it simply clarified what waters the Corps of Engineers and the Environmental Protection Agency have jurisdictional authority over. Republicans and some Democrats said it would have drastically increased the scope of the agencies’ authority and would have led to Clean Water Act permits for development and agriculture in many places they are currently aren’t required. The Republican majority in Congress has used the Congressional Review Act to block or rescind primarily environmental regulations from the Obama administration 16 times in the past two years, according to Sullivan. He recalled a phone conversation he had with President Donald Trump early in his presidency in which Sullivan outlined his Regulations Endanger Democracy, or RED Tape Act, legislation that would require federal agencies to repeal an old regulation each time another is promulgated. “(Trump) said, ‘You know, one in, one out, I’m actually more interested in one in, two out,’” Sullivan said of the call. “And if you actually look at what (the administration) has done, I think they’re actually around one in, nine out.” He highlighted that the administration has also incorporated portions of his Rebuild America Now Act — legislation to reform the landmark 1969 National Environmental Policy Act that established the comprehensive environmental impact statement review for large development projects — into its executive actions. His bill, which he said he will be pushing again in the next Congress, would put one agency in charge and place a “two-year shot clock” on NEPA project reviews, according to Sullivan. Deputy Interior Secretary David Bernhardt said during a trip to Alaska in March that he handed down a directive for Interior agency staff to limit EIS reviews to one-year. Partially as a result of that, BLM is expected to hold an oil and gas lease sale for the Arctic National Wildlife Refuge coastal plain sometime in 2019, Sullivan added. “This isn’t cutting corners; this isn’t trying to pollute the environment. This is just common sense,” he said. “All of these things are completely common sense. If you look at the things other industrialized democracies — Canada, Australia — do permitting mines. These are what they do; things we need to do.” In other forums Sullivan has been questioned Canadian environmental standards related to mining. He has urged British Columbia officials review the province’s environmental requirements for mines, particularly as they relate to active or potential mines in the several large salmon-bearing rivers that flow from the province and through Southeast Alaska. An issue that is starting gain bipartisan traction in Congress, according to Sullivan, is that of China’s dominance in the rare earth metals sector, and what can be done to reverse the trend. China is the primary producer of rare earth elements used in technological devices and by the Department of Defense in advanced weapons systems. “It just makes sense” to produce such critical minerals in the U.S., he said. The 2019 National Defense Authorization Act passed last summer includes provisions discouraging the Defense Department from purchasing products or devices containing rare earths sourced from a short list of countries including China. Finally, Sullivan said before votes were tallied that he does not usually comment on state policy initiatives, but emphasized how large of a threat he feels Ballot Measure 1, the anadromous fish habitat initiative is to development in Alaska. “We have challenges, but I am so optimistic about the future, assuming that Ballot Measure 1 gets defeated today,” he said. The measure was defeated soundly by a nearly 2-1 margin. Elwood Brehmer can be reached at [email protected]

Mining exploration on the rebound at new, old prospects

A recent resurgence in oil exploration in Alaska has been a topic of much discussion for the potential revenue it could eventually generate for state coffers, but there is ample exploration activity in the state’s mining sector as well. At existing mines, Teck Resources Ltd., which operates the Red Dog zinc mine near Kotzebue in Northwest Alaska, has been exploring the Aktigiruq prospect about seven miles north of the mine facilities. Teck CEO Don Lindsay has said it could end up being “one of the best undeveloped zinc deposits in the world” if initial drilling results are proven up. Red Dog is already one of the largest zinc-producing mines on Earth. Earlier this year Kinross Gold Corp. announced it would start work on a $100 million expansion to the Fort Knox gold mine just northeast of Fairbanks that is expected to keep the mine open for another 10 years through 2030. The Gilmore project, as it is known, could yield up to another 1.5 million ounces of gold for the open-pit mine that opened in 1996, according to a feasibility study Kinross conducted on the prospect. Production from Gilmore could start in early 2020, the company estimates. Geologist Bonnie Broman told a gathering at the Alaska Miners Association in Anchorage Nov. 6 that the newly formed private Alaska exploration firm Valhalla Metals Inc. has acquired 230 mining claims covering 36,000 acres in the Ambler mining district farther north of Fairbanks and west of the Dalton Highway. Valhalla’s claims include the Sun copper and zinc prospect that the company plans to advance in the coming years. The easternmost deposit in the Ambler district, the Sun prospect was first discovered in 1974 by Sunshine Mining Co. and has changed hands frequently since. Valhalla is the 10th company to control the claims since Sunshine made the initial discovery, according to Broman. The Sun prospect was regularly drilled in the years immediately following its discovery, but the work mostly stopped in the 1980s and 1990s following the passage of the Alaska National Interest Lands Conservation Act in 1980, as did much of the mining exploration activity going on in the state at the time, Broman said. The area was most recently explored from 2007-12 by Canadian Andover Mining Corp., which went bankrupt in 2014. Overall, more than 19,100 meters of drilling has been done at Sun since it was first discovered. “This area has had quite a bit of work done to-date. There’s quite a lot of known prospectivity in the region,” Broman said. The Sun deposit sits east of the Arctic and Bornite multi-metal prospects currently being advanced by Trilogy Metals. Trilogy plans to begin permitting Arctic early next year but development of the remote Ambler prospects is dependent upon construction of the roughly 211-mile Ambler industrial access road. The Alaska Industrial Development and Export Authority is leading development of the industrial road to access the mining district. The Bureau of Land Management is in the midst of writing an environmental impact statement for the road and the first draft of that document is expected in March 2019, with a final EIS following late next year, based on the current schedule. AIDEA officials believe the access the road would provide could spark further exploration activity in the region, as well. Specifically to Sun, Broman said mineralization has been intersected over a 3.5 kilometer strike. So far it’s estimated the deposit holds 10.7 million metric tonnes of indicated and inferred resources of 4.2 percent zinc, 1.5 percent copper and 1.4 percent lead. It also has prospectivity for silver and small amounts of gold, she added. Broman said unlike the Arctic and Bornite prospects, Sun would likely be an underground mine and it’s not uncommon for mineralization in similar sulfide deposits to continue to depths of 1,000 meters. “There is potential to add resources at Sun by drilling the down dip portion,” she said, as it has not been explored at depth. Valhalla expects to continue exploration drilling at Sun in the coming years and will also be looking for new deposits elsewhere in its claims area, she said. Icy Cape progress Along Alaska’s south coast the Alaska Mental Health Trust Land Office continues to advance its unique heavy industrial minerals prospect in the beach sediments of Icy Cape. About 75 miles northwest of Yakutat, the roughly 30-mile long, 50,000-acre Mental Health Trust property is approximately half covered by sediments containing heavy industrial minerals, according to Trust Land Office Minerals and Energy Chief Karsten Eden. The Trust Land Office manages roughly 1 million acres of land across Alaska for real estate and resource development purposes, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. “It’s a totally different kind of geology and it’s a totally different kind of exploration, but it’s exciting,” Eden said during a presentation at the AMA convention Nov. 6. The eastern portion of the large property contains sediments from the glaciers of Icy Bay, while the river deposits on the coastal plain influence the area to the west. All of the sediments contain heavy minerals, according to Eden. The heavy minerals are often used in industrial applications in which hard, abrasive materials are required, such as sandpaper and sandblasting. The sediments also contain ilmenite, which is highly magnetic and is a common industrial mineral often used as white pigment feedstock in paints and plastics, he said. The Trust Land Office has been investigating the prospect for four years; drilling started in 2017 and continued last summer. During the 2018 work season the TLO spent roughly $3 million, had a crew of 24 working at the Icy Cape camp and built a 60-foot by 40-foot sample processing facility — a shed — to further evaluate the drilling samples. Eden said the office has had to use sonic drilling to bore through the sediments. “The drilling conditions are really challenging. Those are abrasive sands,” he commented. The multiple sources mean the sediments are separated into two distinct layers, which provide different mineral grain sizes, an important benefit to the project, according to Eden. “Particle size is very important because it has an impact on recovery,” he said. “Out there we have mineable and recoverable particle sizes including platinum group minerals. It’s a poly-mineralic and poly-metallic deposit. It’s very, very interesting. If developed, the Trust property would be the only source for some heavy minerals such as garnets on the West Coast, Land Office officials have said. There is currently a global shortage of garnets, another abrasive, as India, the world’s longtime primary supplier has stopped exporting mineral sands altogether in an effort to halt illegal private exports, Eden added. The Trust Land Office plans to continue exploring the area in the coming years, he said. Elwood Brehmer can be reached at [email protected]

Permitting to start on Ambler copper prospect early next year

More than 60 years after it was initially prospected, Trilogy Metals is almost ready to apply for the major environmental permits it will need for the first project in one of Alaska’s premier areas with mining potential. Trilogy Metals Inc. CEO Rick Van Nieuwenhuyse said Oct. 4 that the company has started pre-permitting work with the U.S. Army Corps of Engineers for its Arctic copper, zinc and precious metals prospect in advance of an environmental impact statement that should be initiated in the first half of 2019. The Clean Water Act Section 404 wetlands fill permit from the Corps — large enough to trigger an EIS — is likely the only federal permit the mine will need, Van Nieuwenhuyse said, noting the Environmental Protection Agency has oversight of the water and air quality permits issued by the State of Alaska. The Arctic prospect is roughly in the middle of the extensive Ambler mining district. Stretching for about 75 miles along the southern flank of the Brooks Range, there are more than 30 known metal deposits in the district, but its remoteness has precluded significant development. The Alaska Industrial Development and Export Authority is leading development of a 211-mile industrial road to access the mining district. The Bureau of Land Management is writing a separate EIS for the road and the first draft of that document is expected in March 2019, with a final EIS following late next year, based on the current schedule. “This project is in the middle of nowhere and this road has been studied, discussed, many, many, many times,” Van Nieuwenhuyse said. The road project, which is separate from Trilogy’s mine work, has drawn stiff opposition from residents of the area and environmental groups who are worried the project will disrupt caribou migrations, which Van Nieuwenhuyse acknowledges is the most significant subsistence food source in the region. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage. The National Park Service is also preparing an environmental and economic analysis that is also expected to be finished next spring. AIDEA estimates constructing the most basic single-lane gravel road would cost between $305 and $346 million. It would be financed by the authority with bonds that would be paid back through tolls paid by Trilogy Metals and any other companies that would develop one of the other prospects in the Ambler mining district. The plan is very similar to the Red Dog mine-DeLong Mountain Transportation System — also an AIDEA-owned and financed mine access road —in far Northwest Alaska that development proponents have cited as a model for other isolated resource prospects in the road-scarce state. At its core, the Arctic prospect is about as good as undeveloped metal deposits come these days, according to Van Nieuwenhuyse. With just more than 43 million metric tons of probable reserves averaging 2.3 percent copper, 3.2 percent zinc and smaller amounts of lead, gold and silver, it’s “about 10 times the average grade being mined in open pit copper mines today,” he said. “It’s not a huge mine, but it produces metal above its weight class because of the grade — 160 million pounds of copper annually, 200 million pounds of zinc, 33 million pounds of lead, over 3 million ounces of silver and 30,000 ounces of gold.” Those numbers are based on a short, 12-year mine life. According a pre-feasibility study released in February, Arctic would generate costs of $911 million to build and operate over that time but with roughly $450 million in annual free cash flow would have just a 2-year payback. “We don’t need higher metal prices to make this thing work,” Van Nieuwenhuyse said. “We just need a road.” The mill and other facilities at Arctic could also be used for Trilogy’s other, larger but less explored Bornite copper and cobalt prospect about 20 miles to the southwest or other undeveloped prospects in the area, he added. The company currently estimates Bornite contains upwards of 6 billion pounds of copper, a figure that could grow this coming winter when the results from this year’s drilling campaign. The last two years of exploration at Bornite have been funded by $10 million annual payments from the Australian mining company South 32, which, after a third payment, will have the option of investing another $150 million in the project and forming a 50-50 joint venture with Trilogy, according to Van Nieuwenhuyse. Trilogy has spent $122 million exploring its Alaska prospects overall. The company also has a partnership with NANA Regional Corp., the Northwest Alaska Native regional corporation, which owns land at Bornite. NANA can receive up to a 2.5 percent royalty on the ore concentrates produced from Trilogy’s mines under the partnership, according to a company presentation. Another open-pit prospect, Bornite holds about 125 million metric tons of reserves with about 1 percent copper, but there is potential for an underground mine with 58 million tons of 3 percent copper, he noted. Bornite was also discovered in the 1950s by a prospector well known in mining circles named Riney Berg, according to Van Nieuwenhuyse, who offered a brief anecdote about his work. “He was out there looking for uranium; he had worked at the Kennecott mine so he knew what copper minerals looked like, found some on the surface, did some trenching and got the Kennecott guys all excited. They eventually wrote him a check for $6 million,” he said, noting the value of that much money roughly 60 years ago. “Riney, being a good prospector, spent it all on prospecting. There’s probably a dozen different prospects in Northern Alaska that have his name on it.” Trilogy is also finishing up an study to see if ore sorting systems used by recycling companies can be applied in mining Arctic. The process uses sensors similar to magnetic resonance technology that “recognize what rocks have copper, silver, lead and what rocks don’t,” Van Nieuwenhuyse said. “If we could just mine the stuff we want we could get 3 percent copper, not 2 percent,” he said. The sorting process is proven to work, it’s just not proven to be economic yet, he added. Elwood Brehmer can be reached at [email protected]

Pebble permit scoping report first step toward EIS

The summary released Aug. 31 by the U.S. Army Corps of Engineers of the topics the public wants studied in the lead up to a permitting decision for the proposed Pebble mine was met with criticism from groups who feel the mine review is being fast-tracked. The comments that make up the scoping report are, as the name implies, intended to guide the scope of analysis in the environmental impact statement, or EIS, the Corps is in the midst of drafting for the large mine project. Not meant to be a referendum on the controversial mine plan, the Corps received 174,889 comments during the 90-day scoping period that ran until June 29, according to the report. The Corps extended the original 30-day comment period shortly after it opened April 1 following requests to do so from Sen. Lisa Murkowski and Gov. Bill Walker’s administration, who suggested the month-long comment period could be insufficient given the scale and complexity of the project. Public meetings were also held in nine communities during scoping, but mine opponents contended more should have been held in the numerous remote villages and small towns across the Bristol Bay region that have the potential to be impacted by the project. Much more than a large surface mine, the Pebble project would stretch over 187 miles from the start of a natural gas pipeline near Anchor Point on the Kenai Peninsula, across Cook Inlet to a new port that would be built near Amakdedori on the west side of the Inlet. From there, the transportation corridor would include 53 miles of new road plus a ferry across massive Iliamna Lake that would lead to the mine itself. “The input we received is insightful and helpful, informing our analysis and potential alternatives to be included in the draft EIS,” Corps Project Manager Shane McCoy said in a prepared statement. Though the Corps received nearly 175,000 submissions during scoping, just 3,653 were considered individual comments, with the remaining roughly 171,000 being various form letters, according to the report. More than one-third of the non-form comments focused on the potential socioeconomic impacts of the project; the rest were split roughly evenly between suggestions and concerns regarding the National Environmental Policy Act process, the proposed tailings dam facility and prospective project impacts to fish and wildlife. More than half of the form letters focused on the NEPA process. Groups opposing the project were critical of the 37-page scoping report, alleging it glosses over many important issues that need review in the EIS. United Tribes of Bristol Bay, Commercial Fishermen For Bristol Bay and Trout Unlimited Alaska all called for state and federal leaders, particularly Murkowski, to pressure the Corps to slow or stop the EIS until a more thorough review of the project’s potential impacts is done. Trout Unlimited Alaska stated in a press release responding to the publication of the report that more than 400,000 comments were submitted that raise concerns about Pebble’s permit application. Pebble Limited Partnership spokesman Mike Heatwole said simply via email that the company will continue to work closely with the Corps to help the complete the draft EIS in a timely manner. The totality of the Corps’ review is unclear at this point given the draft EIS has not yet been published, but the aggressive schedule set for the Pebble EIS has also been a point of contention. Pebble Limited Partnership submitted its project plan to the Corps for review in late December 2017 and Corps officials plan to have a draft EIS finished in January 2019, or between six and seven months after the scoping period closed. Comparatively, it took the agency nearly three years to draft the first version of the EIS for the Donlin Gold mine permit application, a large surface mine proposal with extensive support infrastructure similar to Pebble. Corps regulatory officials insist they are applying best practices learned during the Donlin review to the Pebble EIS, allowing them to speed up the process while performing the same level of analysis. Aside from expected comments highlighting the economic opportunities the project could provide to a region with few year-round jobs and the potential harm a tailings dam failure could have on salmon habitat downstream of the mine, many commenters stressed the need to study possible impacts to subsistence activities not only in the Bristol Bay area but also near the gas pipeline origin on the Kenai Peninsula. Some noted the mine could reduce out-migration from the region, helping to maintain enrollment in small schools in the area, while others contended the mine — with a 20-year initial life — would simply create a greater boom-and-bust economic cycle that would end with lost jobs when the mine closed. Suggestions were made to require an economic assessment of the project be conducted to determine if Pebble Limited Partnership’s plan is financially viable. Pebble CEO Tom Collier said in an April interview with the Journal that the company plans to release a preliminary economic assessment of its latest project plan by the end of the year. Heatwole said in a Sept. 4 email that he had no further information to provide about the status of the economic report. Elwood Brehmer can be reached at [email protected]

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]  

Supreme Court parses, approves salmon habitat measure for ballot

The Alaska Supreme Court approved most, but not all, of the contentious ballot initiative aimed at strengthening the state’s salmon habitat protections in a decision issued Wednesday morning, meaning the initiative will be on the November ballot sans one key provision. The five-member court unanimously ruled that language in the proposed law change requiring the Department of Fish and Game Commissioner to deny permit applications for development in salmon habitat if the activity were deemed to have a “significant adverse effect” is an unconstitutional limitation on the Legislature’s authority to appropriate the state’s resources. That’s because the language would mandate the state to value anadromous fish habitat over other resources, according to the justices — a balancing act that the Alaska Constitution specifically reserves for the Legislature. “(W)here a project like a mine or a hydroelectric dam would permanently, and perhaps irreversibly, displace fish habitat, there is no reasonable interpretation under which that habitat would not suffer ‘substantial damage’ as the initiative defines it,” the 48-page opinion states. “If the habitat has been permanently displaced, it cannot be ‘likely’ for that habitat to be restored within a ‘reasonable period,’ because it will never be restored.” On Oct. 9, 2017, Superior Court Judge Mark Rindner overturned Mallott's Sept. 12 rejection of the initiative petition, which was based on the Department of Law’s determination that it is unconstitutional. The Supreme Court decision remands the case back to Rindner, who is to direct Mallott and the Division of Elections to put the initiative on the Nov. 6 ballots. Ryan Schryver, director of the nonprofit leading the initiative effort Stand for Salmon, said in a brief interview that the group is naturally disappointed that the court struck a small but significant provision of the law change. However, Schryver stressed the group is happy that, “The heart and soul of what we’re trying to do remains intact.” He said the initiative is still fundamentally about making sure the state’s economically and culturally important salmon resources are protected while assuring industry has clear and predictable development standards. Stand for Alaska, a counter-campaign supported by the state’s oil and mining industries as well as Alaska’s Native regional corporations with the exception of Bristol Bay Native Corp., which has taken a neutral stance on the initiative, said in a prepared statement that the courts decision to strike a portion of Ballot Measure 1 “validates just how flawed and poorly crafted the measure is.” “Even with today’s changes, this measure still replaces our science-based habitat management system with untested regulations that will result in job loss and kill current and future, vital projects,” the statement reads. “Stand for Alaska remains strongly opposed to the misguided measure that threatens our jobs, communities and way of life.” Justice Daniel Winfree agreed the “significant adverse effect” language needed to be struck for the initiative to comply with the Constitution, but he partially dissented with the overall ruling because he doesn’t believe it went far enough. According to Winfree’s dissenting opinion, there is not reasonable way to interpret the habitat protections and mitigation requirements that would not effect a resource appropriation. “Where the court and I diverge is with other (initiative) provisions that, while not explicitly prohibiting the Legislature from allocating anadromous fish habitat, would have the same practical effect,” he wrote. Stand for Salmon representatives insist the initiative would mainly codify best practices Fish and Game currently uses in evaluating development permits in salmon habitat and would protect those actions from being degraded by political influence. Stand for Alaska alleges the group is attempting to severely restrict, if not altogether stop, substantive development statewide. Attorney Valerie Brown, who argued on behalf of Stand for Salmon in front of the court, emphasized that provisions detailing what constitutes healthy salmon habitat remain intact after the ruling. Those provisions deal with water quality, maintaining stream flows and require any mitigation to offset unavoidable habitat damage be done within the impacted water body. “The habitat standards are a huge improvement over current law because they are actual standards Fish and Game must apply when they’re considering permits, so it’s definitely a step in the right direction,” Brown said. Currently, Title 16, the state’s anadromous fish habitat permitting statute, directs the ADFG commissioner to issue a development permit as long as a project provides “proper protection of fish and game.” The initiative sponsors contend that is far too vague and an update is needed to just define what “proper protection” means. In early 2017, Alaska Board of Fisheries chair John Jensen sent a letter to legislative leaders urging them to update Title 16 with opportunities for public involvement in permit application reviews and enforceable development standards. Brown also noted that other parts of the proposal dealing with public process were not impacted by the court’s decision. “One of the other provisions that will definitely go forward that is a huge leap forward over current law is the provisions for public notice and public comment on large projects that could cause a lot of harm to salmon habitat. This will be first time we have a chance to participate in those.” The fact that salmon habitat permits are one of the only environmental permits the state issues without notifying the public has been a rallying point for initiative supporters. While state Department of Law attorneys originally argued the provisions of the initiative were too intertwined to sever without wholly discarding it, Attorney General Jahna Lindemuth said in a formal statement that the court confirmed Law’s understanding of the powers and limitations of a citizens’ initiative in the state Constitution. “That limitation extends to the Legislature’s power to allocate the state’s resources — including fisheries and waters — among competing uses,” Lindemuth said. She also thanked the court for its unexpectedly quick ruling on the case, which will provide the Division of Elections additional time to prepare ballot materials in advance of the November election. The state had asked the court for a ruling by early September, just ahead of a deadline for the Division of Elections to have general election information ready to distribute to voters. The Wednesday morning release of the ruling also caught folks involved in the case by surprise. The court has historically handed down its opinions on Fridays, almost without exception.   Elwood Brehmer can be reached at [email protected]

Three years after Colorado mine spill, victims awaiting payment

DENVER (AP) — Three years after the U.S. Environmental Protection Agency triggered a massive mine spill that polluted rivers in three states, the federal government still has not repaid any of the victims for the millions of dollars in economic damage they claimed. The EPA said it is making progress on reviewing about 380 claims for lost income, fallen property values and other losses from the 2015 spill at the Gold King Mine in southwestern Colorado. But the agency has not said when it might finish the review or when anyone might be paid. Some business owners say they feel misled and doubt they’ll ever be compensated. Lawmakers are impatient. “The EPA’s response to the Gold King Mine spill has been unacceptable,” New Mexico Democratic Rep. Ben Ray Lujan said Friday. “This spill had devastating consequences for Navajo Nation and northwestern New Mexico, spilling millions of gallons of toxic, contaminated wastewater.” An EPA-led contractor crew was doing excavation work at the entrance to the Gold King near Silverton, Colorado, on Aug. 5, 2015, when workers inadvertently unleashed 3 million gallons of wastewater pent up inside the mine. The water sent a yellow-orange plume of pollution into rivers in Colorado, New Mexico and Utah. The Navajo Nation and other tribal lands were also affected. The EPA estimated the water carried nearly 540 U.S. tons of metals, mostly iron and aluminum. Farmers, rafting companies, fishing guides, homeowners and others filed for about $318 million in economic losses, according to EPA documents reviewed by The Associated Press. State, tribal and local governments said their losses were higher. “We weren’t asking for the sky. We were asking for what we lost,” said John Flick, co-owner of Duranglers, a fishing guide service and store in Durango, Colorado, about 50 miles downstream from Silverton. Flick and his partner, Tom Knopick, filed a claim for about $98,000 in lost income from guiding and retail sales when authorities put the rivers off-limits for several days. “Even if we’d got half of that, we’d have been happy. We got nothing,” Flick said. The EPA paid out millions of dollars to state, tribal and local governments for the cost of responding to the spill and for water tests. But the Obama administration, which was in charge at the time of the spill, said in January 2017 it could not pay for any economic damages. The administration cited sovereign immunity, which prohibits most lawsuits against the government. That provoked a furious political backlash, and the new Trump administration said it would reconsider. One year ago, then-EPA chief Scott Pruitt visited the Gold King mine and promised to review all the claims. “As far as I can tell, that was just talk,” said Alex Mickel, co-owner of Mild to Wild Rafting, which offers float trips and four-wheel-drive tours in Durango and in Moab, Utah. Mickel filed a claim but declined say how much. He said the EPA has never acknowledged getting it. He said he feels misled by both the Obama and Trump administrations. Under Obama, the EPA promised to compensate for the damage. ”’We’re going to make people whole,’ that was their words,” Mickel said. Pruitt resigned amid a storm of ethics scandals in July, and the EPA is regrouping under acting chief Andrew Wheeler. But the review is making headway, agency spokesman James Hewitt said. The EPA sent letters in June to 54 people who filed claims, or to their attorneys, asking for clarification or more information, Hewitt said in an email to the AP Thursday. Only a few have responded, he said. John Swartout, a policy adviser to Colorado Gov. John Hickenlooper, said he has been brief by the EPA on the review and believes the agency is making progress, but “it’s slow going.” The compensation requests were submitted under the Federal Tort Claims Act, which allows people and businesses to ask the federal government to repay them for economic losses and injuries caused by negligence or wrongful action by federal employees. Separate from the tort claims, at least four lawsuits have been filed against the EPA over the spill. Utah is seeking $1.9 billion, the Navajo Nation $162 million and the state of New Mexico $130 million. About a dozen New Mexico residents also sued, seeking a combined $120 million. The lawsuits are pending in federal court in Albuquerque, N.M.

Alaska remains potential source for critical rare earth elements

Rare earth elements really aren’t that rare; they’re just rarely mined. Many in Washington, D.C., particularly those in the Defense Department, see this as a major looming issue. That’s because the Mountain Pass mine just on the California side of the border with Nevada southwest of Las Vegas closed in 2015 when its operator went bankrupt. It was the last producing rare earths mine in the country. The nation’s supply of these 17 often hard-to-pronounce metals now comes from France, Estonia, Japan and China, according to the U.S. Geological Survey. Most troubling for some is the fact that China dominates the world’s rare earth elements supply. Sen. Lisa Murkowski remarked during a Senate Energy and Natural Resources Committee hearing she held July 17 on domestic mineral security that China has leveraged its dominance in rare earth production in the past and could do it again at a time when the country is in a tit-for-tat trade dispute with the U.S. “My concern, among many concerns, is if China ultimately responds to tariffs by restricting our supply of rare earths, or any number of other minerals, the U.S. could be in serious trouble. We’ve heard testimony in the past about the dangers of the concentration of supply from a handful of countries that control the supply chain,” said Murkowski, who chairs the Energy and Natural Resources Committee. “I’m hopeful that we aren’t about to experience those dangers firsthand and will continue to urge action to reduce this significant vulnerability.” In 2010, China placed an embargo on all rare earths the country was exporting to Japan in retaliation for actions against the crew of a Chinese trawler Japanese officials contended was fishing illegally in the country’s waters. China’s dominance in rare earth markets can make pricing and production data hard to obtain, but it is generally believed the country currently produces roughly 90 percent or more of the world’s rare earths. Murkowski also noted her state could go a long way towards alleviating the country’s dependence on imported rare earth elements, and there is still movement toward development in Ketchikan by Nova Scotia-based Ucore. In December President Donald Trump issued an executive order directing federal agencies to prioritize strategies to reduce U.S. dependence on imports of critical minerals. In May the Interior Department responded with a list of 35 minerals deemed “critical” for their economic importance which also have domestic supply vulnerabilities. The entire rare earths group made the list along with other more common metals such as aluminum, tungsten, cobalt and others. Rare earths are essential in the production of cell phones, hard drives, automobile catalytic converters and medical and military technologies. USGS Alaska Research Geologist Doug Kreiner said in an interview that rare earths are so vital to modern-day products because there are no known substitutes. Heavy rare earths — such as europium, terbium, and ytterbium with a greater atomic weight — are used in products that rely on high-temperature magnets. More common lighter rare earths are used in a plethora of applications including LED displays, according to Kreiner. And demand for them will continue to grow as the world moves towards more hybrid and electric vehicles with high-performance lithium-ion batteries that also contain rare earths, he said. Rare earths in Last Frontier As seems to be the case with most mineral commodities, Alaska holds its own rare earth resources. The most notable deposit is the Bokan Mountain prospect that Nova Scotia-based Ucore Rare Metals Inc. explored until 2015. The prospect on southern Prince of Wales Island is approximately 40 percent heavy rare earths, according to Ucore, which are the hardest to come by. Overall, it holds roughly 5 million tons of ore with rare earth concentrations of 0.65 percent, according to the company. Kreiner said rare earths occur across the state but the viability of mining them other places is largely unknown simply because they haven’t been explored. “Bokan Mountain is the only quote-unquote deposit in Alaska. So whether it’s a deposit or an occurrence is really an economic definition. Basically, it becomes a deposit when it’s concentrated to the point that it can be extracted,” he said. Ucore also holds rights to the Ruby rare earths prospect just north of the Yukon River in the Interior region along the Dalton Highway. Kreiner said concentrations of rare earths aren’t often related to deposits of other commonly mined metals, but they can at times be detected in precious metal ores. The Ruby batholith is in the Ray Mountains, which has large sheets of loose sediments up to 325 feet thick that contain rare earths. Heavy minerals are more concentrated in lower terrain between the Ray Mountains and the Fort Hamlin Hills to the east, according to Ucore. There are other potential rare earth belts extending from near Nome on the southern Seward Peninsula north and east to the southern flank of the Brooks Range as well as in the Porcupine River drainage of Northeast Alaska, Kreiner said. Another large rare earth belt runs from the upper Tanana River west and south through the Alaska Range to the Kuskokwim River basin in Western Alaska. “The hot spots that were identified in our analysis, whether or not they’re prospective we really don’t know because there just hasn’t been a lot of work done out there,” he said. “Geologically speaking I think there are a lot of areas that are prospective for rare earths in the U.S. I think it’s a matter of the geology and finding the systems that are economically exploitable.” Kreiner added that he attributes the lack of domestic rare earths production simply to the recent nature of their demand. “Rare earth elements are a relatively new focus given the applications, particularly high-end technologies and medical science, defense mechanisms and the sort,” he said. Focus shifts for Ucore A 2015 collapse in rare earth prices put Bokan Mountain exploration and development on hold, Ucore Vice President Randy MacGillivray said in an interview, but that hasn’t stopped the company’s work in Alaska. Ucore has shifted its focus to developing a rare earths separation plant that the company plans to locate in Ketchikan. “We know there’s a qualified workforce in Ketchikan and we have a lot of Alaskan support, both from the state and federally, so honestly Ketchikan is a great choice for us on multiple levels,” MacGillivray said. Ucore’s plan is to construct the metal refinement plant, estimated at $25 million, over the next couple years and get it up and running sometime in 2020. Ketchikan’s coastal location allows for easy transport of feedstock via shipping containers and further makes sense given its proximity to Bokan Mountain, according to MacGillivray. “(The plant) will be a significant step forward to being able to ultimately build the mine on Prince of Wales Island because a segment of that construction would have already been financed and constructed; so it’s an enhancement to the project for sure,” he said. In 2014 the Legislature authorized the Alaska Industrial Development and Export Authority to finance up to $145 million of the development costs at Bokan, which Ucore has pegged at about $220 million overall. MacGillivray said AIDEA could be involved in financing the plant, which the company is calling its “specialty metals complex.” Ucore also has a pilot rare earths separation facility just outside of Salt Lake City. The company initially plans to start processing 1,000 to 2,000 tons of ore concentrate per year — eventually ramping up to double the processing quantities. MacGillivray said the concentrate would likely be re-leached in Ketchikan before being subjected to molecular recognition separation technology at the facility. “We would then produce individual oxides and we are currently looking at the potential to produce individual rare earth metals at the facility, which would be a value-added product,” he said. The plant is likely to start with about 10 employees and the workforce could grow to about 25 as production grows. Ucore leaders are currently in early-stage discussions with officials at mines that have byproduct ore containing rare earths but are focused on other metals as well as looking at direct sourcing options, he said.

State officials cite costs, complications of initiative

State agency officials attempted to predict the impacts to the state of a pending fish habitat ballot measure during a July 20 Senate State Affairs Committee hearing. Ballot Measure 1, known as the “Yes for Salmon” initiative, would bolster the Department of Fish and Game’s statutory requirements for approving development activity permits in anadromous fish habitat areas as well as the department’s authority to enforce the stipulations of those permits. Championed by the Anchorage-based nonprofit Stand for Salmon, the initiative is scheduled to be on the general election ballot in November depending on the outcome of an Alaska Supreme Court ruling to determine its constitutionality. Gov. Bill Walker’s administration has argued that the measure is an unconstitutional usurpation of the Legislature’s authority to appropriate resources. The court is expected to rule on the constitutional question by early September to provide the Division of Elections time to prepare accurate materials for voters. On a high level Ballot Measure 1 would establish two tiers of permit application reviews. “Minor” habitat permits could be issued quickly and generally for projects deemed to have an insignificant impact on salmon waters. “Major” permits for larger projects such as mines, dams and anything determined to potentially have a significant impact on salmon-bearing waters would require the project sponsor to prove the project would not damage salmon habitat. Additionally, the project sponsor would have to prove that impacted waters are not salmon habitat during any stage of the fish life cycle if the waters are connected to proven salmon habitat in any way but not yet listed in the state’s Anadromous Waters Catalog. The initiative also states that mitigation measures to offset the impact at the development site may not be done by enhancing or preserving habitat on other waters, which is a practice allowed now and is what’s proposed for the Donlin mine project. On one level, Ballot Measure 1 would cost the state about $3 million per year in the near term to implement its changes, according to estimates in an Office of Management and Budget report. Not surprisingly, much of that would be in Fish and Game’s budget for developing updated regulations and guidance documents. ADFG Commissioner Sam Cotten said it would likely cost the department $1.3 million per year over five years to implement the law changes. The Department of Transportation, which is one of the most frequent applicants for fish habitat permits, would need another roughly $950,000 per year to comply with the more stringent fish habitat requirements, according to department leaders. The departments of Environmental Conservation and Law would each need up to an additional $450,000 per year to possibly broaden water quality standards currently required for discharges in fish spawning areas and enforcing new civil penalties for violating fish habitat permit terms. DOT Environmental Program Manager Ben White said the department would need to add a handful of hydrologists and hydraulic engineers to its current environmental permitting team. “We are committed to environmental stewardship as a department and really work very hard, in this particular instance, to support healthy salmon populations,” DOT Commissioner Marc Luiken said to the committee. While projecting fiscal impacts is an exercise agency staff are accustomed to — it is done for the majority of proposed legislation — the Republicans on the committee in opposition to the initiative posed increasingly speculative scenarios they are concerned about the initiative impacting while questioning administration officials. Walker, who is running for reelection, has expressed his opposition to Ballot Measure 1 as a policy while the Department of Law is challenging its constitutionality. At the same time, Civil Law Division Director Joanne Grace said the Department of Law has advised Walker’s commissioner’s to remain objective on the initiative. Emily Anderson, an attorney for Stand for Salmon, said the discussion in the hearing was premature because agency officials were asked to outline the impacts of the potential law change before the Supreme Court, which could also amend the initiative, has made its decision. Rather than wholly approving or rejecting the initiative, the Supreme Court could strike specific provisions of the proposal it feels are unconstitutional and allow the remainder of it to appear on the ballot if the general intent of the sponsors remains intact. Sen. John Coghill, R-Fairbanks, asked if language in the initiative that would extend fish habitat permit reviews into the riparian area near the shoreline of a water body could be used to preclude development in entire floodplains, such as the one his hometown is built on. Sen. Cathy Giessel, R-Anchorage, questioned whether fire departments could be prevented from filling their tanker trucks from salmon streams and if DOT would not be allowed to use rip-rap when dealing with emergency flood and erosion situations that can occur, particularly along Alaska’s large glacial rivers. Agency officials largely obliged the speculation, acknowledging there is a possibility the circumstances raised could be impacted because of the vague language of the initiative. DOT’s White said the agency could be forced to find alternatives to traditional rock rip-rap for erosion control and that temporary stream diversions — often used in culvert and bridge work — could be challenged. Habitat Division Biologist Ron Benkert said in an interview that Fish and Game already discourages the use of rock rip-rap when other bioengineered solutions such as root wads or other forms of woody vegetation can be used for erosion control, noting that in the most critical areas and emergency situations the department concedes to the use of rip-rap at the request of DOT and others. He also said large, fast rivers such as the Matanuska that regularly cause significant damage are primarily migration corridors for salmon and other species that use headwaters and tributaries for spawning and rearing, so the impact of bank stabilization efforts to critical habitat is limited most times. “Really high velocity — it’s just not a great place for fish to hang out,” Benkert said. Anderson said the initiative makes no changes to the ability for officials to respond to emergencies. She stressed in response to other concerns about the purview of the habitat permits that the initiative is limited to freshwater, as is the case today. Anderson said during an editorial board meeting with the Journal and Anchorage Daily News on July 19 that the initiative is primarily aimed at solidifying scientific best practices and guidelines Fish and Game currently uses in regulation and law to insulate the permitting process from political influence. Initiative sponsor and commercial fishermen Mike Wood has said the objective of the campaign is to fortify the state’s fish protections while the Environmental Protection Agency is scaling back its wetlands protections in the state, for example. Currently, Title 16, the state’s anadromous fish habitat permitting statute, directs the ADFG commissioner to issue a development permit as long as a project provides “proper protection of fish and game.” The initiative sponsors contend that is far too vague and an update is needed to just define what “proper protection” means. In early 2017, Alaska Board of Fisheries chair John Jensen sent a letter to legislative leaders urging them to update Title 16 with opportunities for public involvement in permit application reviews and enforceable development standards. The law now does not allow for public comment nor does it require Fish and Game to issue a public notice indicating the Habitat Division is adjudicating a permit application. The Kenai Peninsula Borough Assembly also unanimously passed a resolution in 2016 supporting an update to Title 16 to further protect fish habitat. DNR Project Management Associate Director Kyle Moselle said in response to questions that the vast majority of the permits DNR and DEC issue for large development projects already require public notice and comment periods, which would be a fundamental addition to the anadromous fish habitat permit process under the proposal. Giessel said in an email that the public should be included in matters involving public resources and that is why the comment periods and notices are required for other land and water use and quality permits. “If the issue surrounding this initiative is one of requiring an opportunity for Alaskans to comment and be involved on fish habitat permits, that is one matter. But proposing an up or down, take it or leave it, wholesale rewrite of our fish laws in November is another thing altogether,” Giessel said. It was also unclear from the hearing when existing developments with fish habitat permits already in hand would be subject to the new permitting system. Benkert said in an interview that while the department feels this is a “gray area” in the law, generally an existing operation would be grandfathered in until additional authorizations are needed for expansion plans or a fish habitat permit renewal. Most fish habitat permits are valid for two- to five-year periods before they need to be renewed. “It’s kind of a check so we can just come back and see if what we had permitted five years ago is still actually being done,” Benkert described. Stand for Salmon’s Anderson said worries about renewing permits for existing facilities “have been blown out of proportion” and re-upping authorizations should not be more difficult under the initiative. “There’s a whole class of facilities that never had a fish habitat permit and won’t require one; (they) are not only not affected by this but never will be affected by this,” she said. “Then there’s a whole class of facilities that did require a fish habitat permit but that habitat is no longer in existence, therefore you don’t need a new fish habitat permit and it never will be contemplated because there is no fish habitat left to get a new permit for.” White also said DOT is concerned the initiative could lead to more National Environmental Policy Act reviews for work now deemed to have a de minimis environmental impact because it prohibits Fish and Game from allowing activities that have a “significant adverse effect” on fish habitat. DOT regularly conducts work that has some impact on fish habitat, according to White. He said in an email that the concern specifically relates to many of the projects the department executes that are at least partially funded with federal money. Anderson and other initiative supporters insist it is not intended to prohibit unavoidable small or temporary impacts as many fear, which is why it calls for “minimizing” impacts if avoiding them is not practical. She also strongly contended that White “is just wrong” in his characterization of how it could lead to more projects being subject to NEPA and DOT is conflating the state and federal permitting systems. “NEPA is triggered by a federal action that would have significant adverse effects. It is not triggered by state laws,” Anderson said. Elwood Brehmer can be reached at [email protected]

Walker asks Corps to suspend Pebble permitting

JUNEAU (AP) — Alaska Gov. Bill Walker has asked the U.S. Army Corps of Engineers to suspend its environmental review of a proposed copper-and-gold mine near a major salmon fishery, saying he questions whether the project is ready to move forward. Walker's letter to the corps, also signed by Lt. Gov. Byron Mallott, said the group seeking to develop the mine, the Pebble Limited Partnership, has yet to show that it has proposed a "feasible and realistic project." Tom Collier, CEO of the Pebble partnership, called the request a stall tactic that he would expect from anti-development groups but not from the governor. Walker fails to make a compelling case for halting the current process, he said. "It is this type of behavior that makes many in the global investment community reluctant to invest in Alaska," Collier said in a statement. The project, located in Alaska's Bristol Bay region, has been the subject of heated debate for years. Bristol Bay produces about half of the world's sockeye salmon. The Pebble partnership in December applied for a permit with the corps. The corps recently concluded a comment period that allowed people to share their views, cite any concerns and offer suggestions on the scope of the review. The Alaska Department of Natural Resources submitted comments Friday, which is also when Walker and Mallott submitted their letter. Critics have complained about the corps' process; Chip Treinen, with Commercial Fishermen for Bristol Bay, said in a recent statement that the corps is fast-tracking Pebble's permit application and worried the process was tilted in Pebble's favor. The corps had not yet responded to Walker's request. Mike Heatwole, a Pebble spokesman, said Pebble believes its project is technically, environmentally and economically feasible. Review processes like the corps' will look at whether Pebble's assumptions, particularly on technical and environmental issues, are correct, he said Monday. Canada-based Northern Dynasty Minerals Ltd., which owns the Pebble partnership, has been looking for a partner since Anglo American PLC announced it was pulling out in 2013. Canada-based First Quantum Minerals Ltd., courted as a potential investor, backed away from the project in May, though offered no public comment at the time as to why. Heatwole said there has been "active interest" as Pebble seeks a new partner. "And when we have something to share I certainly look forward to doing that," he said.  

Pruitt calls for curbs on Clean Water Act vetoes

Environmental Protection Agency Administrator Scott Pruitt issued a memo June 26 directing staff to write regulations aimed at limiting the agency’s ability to block development projects that impact wetlands. Pruitt’s goal is to stop the agency from using its historically broad authority to overrule U.S. Army Corps of Engineers decisions regarding Clean Water Act Section 404 wetlands fill permits before a permit application is filed or after a permit is issued and a project is underway. The Corps of Engineers reviews wetlands fill permit applications on behalf of the EPA, but the Clean Water Act gives the EPA the power to overrule a Corps decision if agency officials determine a project would have unacceptable impacts on wetlands areas or other water bodies, which Pruitt cited in the document. The decision has nationwide consequences, but Pruitt noted in the memo that the move largely stems from the EPA’s actions under the Obama administration’s attempt in 2014 to block the hotly contested Pebble mine project in the Bristol Bay region before the Pebble Partnership had applied for its Section 404 permit. Pebble submitted its 404 application to the Corps last December, which triggered an environmental impact statement review given the large scope of the proposed mine and ancillary facilities. “Today’s memo refocuses EPA on its core mission of protecting public health and the environment in a way that is fair and consistent with due process. We must ensure that EPA exercises its authority under the Clean Water Act in a careful, predictable, and prudent manner,” Pruitt said in an EPA release. The four-page edict, specifically directed at the agency’s Office of Water, further requires regional administrators to ask EPA headquarters officials for permission to initiate an action to restrict a development at the end of the environmental review process. Subsection 404(c) of the Clean Water Act outlines the EPA’s authority to issue such project “vetoes.” Pruitt wrote that he wants the regulations drafted within six months. The EPA has not often invoked its Section 404(c) authority — using it 13 times since the Clean Water Act was passed in 1972. However, Pruitt notes in the memo that regulations guiding how the agency implements its 404(c) power haven’t been updated since 1979 and a “long-overdue” update will provide certainty to landowners, businesses and investors hoping to advance development projects. “I am concerned that the mere potential of the EPA’s use of its Section 404(c) authority before or after the permitting process could influence investment decisions and chill economic growth by short-circuiting the permitting process,” he wrote. The possibility of EPA using its 404(c) veto authority was behind a 2010 decision by the Corps to initially deny ConocoPhillips a permit to build a bridge over the Colville River to reach its CD-5 development; the EPA favored an underground pipeline and no bridge. ConocoPhillips appealed that Corps decision and it was reversed to allow construction of the bridge to begin in 2013, which prompted a lawsuit by environmental groups and a few villagers from nearby Nuiqsut. The Corps decision to allow the bridge was ultimately upheld and CD-5 has been producing since 2015. Pebble sued the EPA twice in 2014, first contending the agency overstepped its authority by moving towards, but not finishing, a Section 404(c) veto before the company had applied for its permits. That suit was thrown out by federal Alaska District Court Judge H. Russel Holland because the action had not been finalized and therefore the issue was not ripe for adjudication. Another suit argued the agency had colluded with anti-mine activists in reaching what Pebble claims was a predetermined conclusion that the mine would be an irresponsible development amongst salmon habitat. Holland issued an injunction in that case, halting the EPA from further steps to preemptively stop Pebble, and that suit was ultimately settled out of court in May 2017. The settlement allowed Pebble to apply for its 404 permit with parameters on when the EPA could revisit a Pebble veto in the future. Pruitt’s push to end preemptive and retroactive 404(c) actions is seemingly at odds with his January decision to stop short of withdrawing the Obama-era proposed restrictions on Pebble. The aforementioned EPA-Pebble settlement called for the agency to start the process of withdrawing the proposed mining restriction, but did not require it to be finalized. An agency statement at the time said the EPA has “serious concerns” about the impacts of mining activity in the Bristol Bay watershed and public comments in stakeholder meetings stressed the importance of the world’s largest wild salmon fishery. Additionally, Pruitt said his decision would not derail Pebble’s ongoing permit review. However, he wrote in the June 26 memo that the Corps can process permit applications and conduct an EIS while a 404(c) action is ongoing, but the Corps cannot issue a permit with an outstanding 404(c) proposal. A spokeswoman for the EPA’s headquarters office did not respond to emailed questions in time for this story. Conservation and Bristol Bay-area fishing and Native groups commended Pruitt in January but hammered his latest memo. “Earlier this year Administrator Pruitt made a very strong statement regarding his concerns about the large, adverse impacts of the Pebble mine,” Trout Unlimited Government Affairs Vice President Steve Moyer said in a prepared statement June 27. “His concerns make our point. Some projects are so destructive of irreplaceable resources that they should be nipped in the bud. We urge Administrator Pruitt and the EPA to reconsider the position stated in the memo and instead, look for ways to protect aquatic treasures and fulfill the promises of the Clean Water Act.” On May 3, 18 members of the Republican-heavy Congressional Western Caucus and resource development advocates sent a letter to Pruitt urging him to lift the proposed restrictions on Pebble. The letter noted Pruitt’s history as an advocate for economic and resource development, but asked “that the proposed (veto) determination be withdrawn, as was originally planned.” It also contends that the decision is at odds with the administration’s position of making mineral development a top priority. Rep. Don Young, a member of the Western Caucus leadership group and a critic of the EPA’s attempt to stop Pebble before the permits were applied for, did not sign the letter. Elwood Brehmer can be reached at [email protected]

Interior gold mine gets new life, $100M expansion

It appears one of Alaska’s largest mines is going to get a little bigger and stay open a little longer. Kinross Gold Corp. announced June 12 that it has decided to move forward with a $100 million expansion to the Fort Knox gold mine about 25 miles northeast of Fairbanks. Fort Knox is on land owned by the state Alaska Mental Health Trust Authority; the expansion, known as the Gilmore project, is on a recently acquired 709-acre parcel of state land just to the west of the existing mine pit that was previously held by the federal National Oceanic and Atmospheric Administration. A feasibility the Toronto-based Kinross conducted on the prospect indicates the Gilmore project could yield 1.5 million ounces of gold and initially extend operations at Fort Knox to 2030. Milling at the mine is expected to stop in late 2020 without it, according to Kinross. Now, mining is expected to continue into 2027 with ore processing running to 2030. The mine opened in 1996. The prospect also increased the proven and probable gold reserves at Fort Knox by 2.1 million ounces to 3.4 million ounces overall, Kinross notes further. CEO J. Paul Robinson said the company will likely be able to fund the $100 million expansion with Fort Knox’s existing cash flow, which will help Kinross maintain financial flexibility. “With additional upside potential at Gilmore and beyond, Fort Knox is a significant asset in our portfolio located in an excellent mining jurisdiction,” Robinson said in a Kinross release. “The Gilmore project and the addition of estimated mineral resources improves value and is expected to be a key contributor to the future growth of our company.” Kinross operates eight mines across North and South America, West Africa and Russia. Gov. Bill Walker and Fairbanks-area legislators rejoiced at the news that Fort Knox, which currently employs about 630 people, will probably stay open longer. The mine is also the largest property tax payer in the Fairbanks North Star Borough, according to the governor’s office. “We are excited to see the Fort Knox mine plan, an extension onto newly state-owned land, potentially extending the life of the mine to 2030,” Walker said in a formal statement. “This is a significant development for Alaska’s economy, and was made possible by our administration, federal agencies and our congressional delegation cooperating to transfer these lands from federal ownership to State of Alaska ownership.” Kinross estimates the Gilmore project will generate a 17 percent internal rate of return with a net present value of $130 million and cash flow of $240 million, assuming an average gold price of $1,200 per ounce. At prices averaging $1,300 per ounce, those projections jump to a 26 percent return and a net present value of $239 million. Spot prices for gold are currently about $1,280 per ounce. The company has pegged the all-in operating cost of Gilmore at $950 per ounce. Combined with current operations, Fort Knox’s overall production cost from 2018-2030 is expected to be $1,005 per ounce with annual production averaging 205,000 ounces of gold. Early construction is expected to start in the third quarter of this year, with mining work starting next year and gold production from Gilmore being realized in early 2020.   Elwood Brehmer can be reached at [email protected]

Pebble files revisions to mining plan

Pebble Limited Partnership has made changes to its mine plan that would slow its mining rate but increase its ore processing while potentially lessening the project’s environmental impact, according to a document filed with the Corps of Engineers May 11. The Corps published the five-page overview of the plan changes on the project EIS website May 21. The revisions would cut the peak mining rate from 90 million tons of ore per year to 75 million tons; at the same time the milling rate would grow from 160,000 tons per day in the original plan submitted to the Corps to 180,000 tons per day. Pebble had planned to stockpile up to 330 million tons of low-grade ore mined during the first 14 years for processing in the latter years of the initial 20-year mine. The mining-milling adjustments mean the project would now mine roughly 1.5 billion tons of material — with about 200 million tons of that being waste rock — up from the original plan of 1.2 billion tons. From that, annual production should increase by about 10 percent to 660,000 tons of copper-gold concentrate and 16,500 tons of molybdenum concentrate. Mining more material means the pit dimensions “will increase slightly” from the 6,500 feet long; 5,500 feet wide and up to 1,750 feet deep mine contemplated in the plan submitted in December, according to the five-page summary of the changes. The specific changes to the pit dimensions are not detailed. The onsite power plant will also need to grow from 230 megawatts to 270 megawatts of capacity to accommodate the increased mill throughput, according to Pebble. By not storing the potential acid-generating low-grade ore Pebble will not have to treat runoff water from the stockpile, the document notes. Further changes are also being made to the tailings storage facility. Originally, Pebble designed a single storage facility with two segments, one for bulk tailings and another to hold pyritic tailings. The updated plan includes separating the bulk and pyritic storage areas and moving the bulk tailings storage about 2,000 feet south to incorporate more of the existing terrain into the tailings dam construction, according to Pebble. Oxidization of pyritic tailings can lead to acid rock drainage depending on the amount of sulphur in the tailings. A new, lined pyritic tailings storage facility located closer to the pit will also house potentially acid-generating mine waste during operations. That waste will then be moved into the pit when the mine is closed, allowing the harmful waste to be permanently stored under water and below ground level. The tailings storage changes also eliminates the need for perpetual water treatment of the pyritic tailings and storing the material below-ground also removes all risk of downstream impacts related to a pyritic tailings storage facility failure, Pebble notes. The original plan for two water management ponds has also been changed to a single, much larger lined pond built using rock fill similar to how the tailings storage dams will be built. Pebble spokesman Mike Heatwole wrote via email that the changes were made to enhance the overall project and make environmental improvements to the plan. Milling the low-grade ore throughout the project versus waiting until the end makes for a more efficient mining process, while the other adjustments will help during mine closure, according to Heatwole. He said Pebble couldn’t discuss how the changes impact the project’s economics until the company publishes its preliminary economic assessment, which is expected later this year. Heatwole added that the project’s wetlands impact — pegged at 3,190 acres in the original submittal — has not been fully quantified but Pebble doesn’t expect it to change significantly. Corps of Engineers Project Manager Shane McCoy said as of May 24 Pebble had not submitted engineering designs of the proposed changes, but agency officials expected to get more detailed documents on the new plans soon. “Everything that they have proposed to date is a reduction in the proposed impacts to aquatic resources or navigable waters, so the Corps does not believe these are major changes other than the fact that it’s a reduction in scope,” McCoy said. Finally, Pebble has concluded after further study of its shipping plan that it no longer needs a deepwater port. The company is now proposing to shuttle concentrate containers with barges from the Amakdedori port site to bulk freighter vessels that could moor at two locations 12 and 18 miles offshore from west Cook Inlet port. Consumable materials and fuel would go directly to the port on barges without being lightered, according to Pebble. Cargo is lightered to reduce a vessel’s draft, making the individual portions of the overall bulk shipment lighter to allow for travel in shallower water. Keeping the bulk freighters offshore will end the need for channel dredging and storing up to 20 million cubic yards of dredged material at the port. Pebble is also evaluating the possibility of a “high-tide only” access port to further reduce dredging requirements, according to the outline document. Elwood Brehmer can be reached at [email protected]

Pebble owner loses potential major investor

The company spearheading the Pebble mine is again long on mineral prospects but short on cash after another major potential funder turned away from the project, according to a release from Northern Dynasty Minerals Ltd. Vancouver-based Northern Dynasty Minerals, the sole parent company to Pebble Limited Partnership, issued a statement early May 25 acknowledging that its framework investment agreement with First Quantum Minerals has been terminated. In December, the two Canadian mining firms announced they had reached an option agreement under which First Quantum made an initial $37.5 million payment to Northern Dynasty with plans to make three more similar payments totaling $150 million over four years. At the end of that period First Quantum would’ve had the option to buy a 50 percent stake in Pebble Limited Partnership for $1.35 billion. First Quantum operates six primarily copper, gold and zinc mines worldwide. The pre-development Pebble prospect is Northern Dynasty’s sole project. The initial $150 million was intended to fund the permitting process for Pebble, while the subsequent major investment would have helped develop the mine and its extensive support infrastructure. First Quantum was originally supposed to decide whether or not it would invest in Pebble beyond the $37.5 million payment by April 6, according to the framework agreement. The companies first pushed that deadline back to April 30 and later to May 31. Groups opposing Pebble quickly began pressuring funds with investments in First Quantum to divest their interests in the company if it were to get involved in the Pebble project long-term. Those same groups were able to spend Memorial Day weekend celebrating Northern Dynasty’s announcement. “Today is a victory for Bristol Bay’s tribes,” United Tribes of Bristol Bay President Robert Heyano said in a prepared statement. “Our voices are being heard everywhere from our villages to the boardroom at First Quantum. Quyana (thank you) to First Quantum for listening to reason and divesting from this toxic project. No project is worth more than a culture or a way of life. It’s fitting that this announcement comes right on the cusp of fishing season, where Bristol Bay will once again harvest millions of salmon for the world.” Pebble Partnership leaders have long acknowledged they need to secure another major investor partner before the mine can be built, so what the revelation means for the future of Pebble and Northern Dynasty is unclear. Pebble CEO Tom Collier downplayed the significance of failing to reach an agreement with First Quantum in a formal statement following the Northern Dynasty announcement. Collier said he is continuing on with “business as usual” because he is confident the junior mining company will secure the funding it needs to complete the project’s environmental impact statement. “Pebble remains one of the nation’s most important undeveloped mineral resources. It is on state land and is an important economic asset for Alaska,” he said. “Our project is well defined and we are going to continue communicating with Alaskans about why we believe in the opportunity it represents.” A spokesperson for First Quantum could not be reached for comment. Northern Dynasty held $27.9 million Canadian, or roughly $21 million U.S., in cash on March 31, according to its first quarter financial report issued May 15. At the same time, it had also accrued $13.5 million Canadian in near-term liabilities and total liabilities of $68.7 million Canadian. Northern Dynasty stock closed trading May 25 on domestic markets at 47 cents per share, down 33 percent from its prior closing price of 70 cents per share. The company is also traded on the Toronto Stock Exchange. London-based mining major Anglo American withdrew from Pebble in 2013 after spending more than $540 million exploring the copper and gold deposit. In 2014, fellow British mining firm Rio Tinto donated its 19 percent ownership in Northern Dynasty to the Alaska Community Foundation and the Bristol Bay Native Corp. Education Foundation. Bristol Bay Native Corp. has helped lead the fight against Pebble. BBNC President Jason Metrokin said First Quantum “ultimately came to the right conclusion about the Pebble project”. “I commend First Quantum for exiting the Pebble project,” Metrokin added. “As we have said repeatedly since formally opposing the proposed mine nine years ago, Pebble mine is the wrong mine in the wrong place. The people of Bristol bay and the majority of Alaskans will not trade salmon for gold.” In early April, a group of 50 conservation and outdoor recreation companies and organizations sent a joint letter to First Quantum leaders imploring them to stay out of the Pebble project. Further, a group of Alaska Native leaders from the Bristol Bay-area traveled to First Quantum’s May 3 shareholder meeting in Toronto to deliver a similar message. California Treasurer John Chiang, a trustee to the state’s $360 billion-plus Public Employees’ and Teachers’ Retirement systems, sent a letter to First Quantum leaders Jan. 29 urging them to stay out of the Pebble project because CalPERS officials believe sustainable business practices are fundamental to long-term value growth for shareholders. According to Chiang, the Pebble project would risk the sustainability of fisheries in the Bristol Bay region as well as the fund’s investment in First Quantum. At the time, CalPERS held 4.3 million shares of First Quantum amounting to 0.62 percent of outstanding stock in the company as well as bonds in First Quantum with a maturity value of $2.3 million. Additionally, Environmental Protection Agency Administrator Scott Pruitt, generally seen as a bane to conservation advocates, issued a surprising statement Jan. 26 expressing his “serious concerns” about the impacts of mining activity in the Bristol Bay watershed. As a result, Pruitt said the EPA would not finalize its proposed withdrawal of the 2014 proposed determination to prohibit a large mine in the Bristol Bay region through its Clean Water Act Section 404(c) authority. Pruitt stressed that his decision would not impact Pebble’s environmental review under the National Environmental Policy Act, or NEPA, but it kept a cloud of uncertainty over the project that Pruitt was expected to remove. Pebble Limited Partnership filed its wetlands fill permit application with the U.S. Army Corps of Engineers Dec. 22. The initial application outlined plans to fill 3,190 acres of wetlands at the mine site. While not specific to any mine plan — a point Pebble and parent company Northern Dynasty minerals have stressed — the Bristol Bay Watershed assessment published by EPA in 2014 concluded a mine that would fill more than about 1,100 acres would be too damaging to fish habitat to allow. ^ Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Alaskans deserve process, not knee-jerk opposition, to Ambler Road

A recent House Resources committee hearing on the Ambler Mining District Industrial Access Project served as a reminder how prevalent a role outside environmental groups play in Alaska politics, particularly when it comes to mining projects. Perhaps nowhere else in America do environmental groups spend as much time, money and effort to insert a voice into how — or even if — we manage our own resources. Knee-jerk opposition to resource development often ignores the needs and best interests of Alaskans. It also discounts that these projects, in this case a potential road leading to a mining district in Northwest Alaska, make huge regional economic contributions to fund education, healthcare, and opportunity for future generations of our state. The Red Dog Mine, one of the largest lead and zinc mines in the world, has been in operation since the 1980s. It’s the only non-government tax contributor to the Northwest Arctic Borough and plays a critical role in supporting important services, especially schools. Since mining began at Red Dog over 25 years ago, more than $140 million has been provided to the borough. During that same period, over $880 million has been provided to the state and over $695 million to the federal government. Seven hundred-fifty Northwest Arctic Borough jobs are connected to Red Dog; accounting for roughly $75 million in annual wages. In addition, over $160 million is spent annually on goods and services from Alaska-based businesses. The economic and social benefits that the Red Dog Mine has brought to the region go on and on. Roughly 150 miles to the east of Red Dog is the mineral rich Ambler Mining District. The topic of recent legislative hearings was the feasibility of an access road being pursued by the Alaska Industrial Development and Export Authority, or AIDEA. The road project is important because it would allow responsible development of mineral resources used in everything from solar panels to windmills and electric cars. The Ambler Access Project road alone would create hundreds of local jobs during the construction phase. Once built, providing industrial-only access to known mineral deposits, mining development could account for thousands of direct jobs during mine construction and operations. The benefit to the region would be a multiple of the long-term positive benefits the Red Dog Mine has brought. Despite the significant employment and economic benefit potential the project represents, the House Resources hearing included testimony from naysayers, arguing about the economics of the advanced-stage exploration project and challenging the return on investment of a proposed private toll road paid for with other people’s money. The Wilderness Society representatives, while generally stating support for the access road itself, had a lengthy presentation disagreeing with the economic model presented by AIDEA. AIDEA still has a lot of work to do, and they have detailed the rigorous process necessary to finalize a financing package for private investors interested in purchasing bonds to build the access road. Similarly, Trilogy Metals just finished a pre-feasibility-level study that demonstrates robust project economics, and as the Wilderness Society testified, more drilling work is needed at the potential mining projects. That work will continue this summer with recent news that the mining companies pursuing these opportunities have the funds in hand to do that. AIDEA and its proposed Ambler Access Project are going through the National Environmental Policy Act, or NEPA, process to complete scoping requirements for an environmental impact statement, or EIS. This includes comments from the public relative to concerns and issues that must be addressed in the permitting process. This is followed by a draft EIS; another public comment period; a final EIS; a third public comment period; and then ultimately a record of decision. Nothing can be built before then. The NEPA process is incredibly rigorous, incorporating local input into project design and decision making, and has always resulted in a better project. At the end of the day, Alaskans should support this process to ensure that — once all the facts are made available — those who stand to be most affected by the road have a say in how it’s designed and developed. Nobody is building a road or a mine at this point, and none of the numbers are final, but Alaskans, especially residents of the region, deserve this process to play out. They deserve to hear all ideas, concerns and options for the road moving forward. What they don’t deserve is to have another resource project shut down by outside special interest groups before all the facts are available and the permitting process complete. John MacKinnon is the Executive Director of AGC of Alaska, a construction trade association representing over 640 companies in Alaska. Jim St. George is the President of AGC of Alaska. He is founder of STG Incorporated, an Anchorage-based construction management and services company specializing in heavy industrial construction projects in rural Alaska.

Final environmental review released for Donlin, but without preferred alternative

The U.S. Army Corps of Engineers Alaska published a final environmental impact statement for the Donlin Gold mine Friday, but what regulators think of the complex development plan is still unclear. Donlin Gold’s proposal is for a large open-pit mine near Crooked Creek in the upper Kuskokwim River drainage. The mine would extract roughly 33 million ounces of gold over its initial 27-year life. Substantial support infrastructure for the mine would also be built, including a 315-mile 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 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. Corps of Engineers Alaska District regulatory officials wrote in an email that the agency is still working through the Clean Water Act Section 404 analyses and will identify the least environmentally damaging practicable alternative through the culmination of the EIS process. The agency is expected to select its preferred alternative plan and issue the subsequent record of decision for the Donlin Gold mine sometime this summer. The alternatives identified by the Corps for the project outline the prospect of diesel fuel pipeline that could parallel the gasline to drastically reduce the need to barge additional diesel up the Kuskokwim, thereby cutting the risk of a fuel spill related to the mine. The longer diesel pipeline would likely start at either Port MacKenzie in the Matanuska-Susitna Borough or at the Village of Tyonek on the west side of Cook Inlet and then link up with the gasline. Another option to reduce diesel shipments that is considered in the final environmental impact statement, or EIS, is to mandate Donlin employ LNG-fueled haul trucks at the mine. The EIS also contemplates a dry stack tailings facility instead of the more traditional tailings pond and dam. Using the dry stack method would avoid a potential tailings waste release from behind the dam, but also require a filter plant that would produce a partially saturated “compactable filter cake,” according to the EIS, that would trucked to the storage facility and then be spread and compacted by bulldozers. Donlin is proposing a 2,300-acre fully lined wet tailings storage facility. The mine site is on lands owned by The Kuskokwim Corp. and Calista Corp., the area village and regional Native corporations, respectively. Donlin spokesman Kurt Parkan said 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. After the permits are secured company leaders will reevaluate the project’s economics, which they acknowledge are subject to the volatility of gold prices, and begin the search for financing if the project pencils out. Donlin Gold leaders acknowledge the project is more sensitive to gold prices than even other Alaska prospects simply because of its associated infrastructure costs. Elwood Brehmer can be reached at [email protected]

Long-awaited final EIS for Donlin nears release

The U.S. Army Corps of Engineers will publish its recommendations for the large Donlin Gold mine project in Western Alaska next Friday, April 27, Alaska District officials said Thursday. The Corps of Engineers has been working on the environmental impact statement, or EIS, for the open-pit gold mine proposal in the upper Kuskowkim River drainage since December 2012. A schedule for the EIS on the agency’s website for the project states the Corps hoped to have the final version of the massive environmental review document published sometime in March. Donlin spokesman Kurt Parkan said the company has been working on the mine for 22 years since initial exploration work began. “It’s a good day. We’re happy that we’ve reached (the final EIS). That’s a big milestone,” Parkan said in a brief interview. Corps of Engineers Alaska District officials who oversaw the drafting of the Donlin EIS held a media availability and a scoping meeting in Anchorage at the Dena’ina Civic and Convention Center on Thursday to solicit comments on the EIS for the Pebble gold and copper mine. Unlike a draft EIS — Donlin’s draft was published in November 2015 — a final EIS includes the oversight agency’s recommendations on how a project can be adjusted to minimize its environmental impacts. A “no action alternative,” or a recommendation to not approve the project, can also be selected. 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. Parkan said the next steps will be getting a record of decision from the Corps later this year as well as securing numerous other permits, among them approvals for water discharge, waste management and a tailings dam safety permit that will evenually require additional geotechnical drilling. After the permits are secured company leaders will reevaluate the project’s economics, which they acknowledge are subject to the volatility of gold prices, and begin the search for financing if the project pencils out. “That is the plan and we’re working on ways to reduce the capital cost,” Parkan added. A true mega-project, Donlin Gold’s is for a conventional open-pit mine 1.5 miles across and up to 1,200 feet deep about 10 miles north of the village of Crooked Creek in the Upper Kuskokwim River drainage. A tailings facility, large power plant, workers’ camp and 5,000-foot airstrip would accompany the mine. As planned by Donlin, a joint venture between Barrick Gold Corp. and NovaGold Resources Inc., the mine would produce about 1.1 million ounces of gold per year over a 27-year mine life for a total of about 33 million ounces of the precious metal, making it one of the largest open-pit gold mines on Earth. The mine site, on lands owned by The Kuskokwim Corp. and Calista Corp., the area village and regional Native corporations, respectively, would also include a fully lined, 2,300-acre tailings facility to store the processed ore. Support infrastructure would include a 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet needed to supply fuel to the 227-megawatt capacity power plant at the mine site. The pipeline has also been viewed as a first, indirect step to getting lower cost natural gas to numerous villages in Western Alaska that currently rely on fuel oil their primary heat and electricity sources. A 30-mile road would connect the mine to a new barge port on the Kuskokwim. Further down the Kuskokwim, port cargo facilities would be expanded in Bethel, and new diesel storage tanks would be needed Dutch Harbor to supply fuel for equipment at the mine. In all, the direct supply chain in Donlin’s proposal from Cook Inlet to Dutch Harbor would cover approximately 1,050 miles. Donlin Gold leaders acknowledge the project is more sensitive to gold prices than even other Alaska prospects simply because of its associated infrastructure costs. Company officials have said the project would not be economic at gold prices of about $1,100 per ounce. Gold was selling for about $1,355 per ounce in spot trading on Thursday. Elwood Brehmer can be reached at [email protected]

Latest fish habitat bill goes too far, or not far enough

A new version of legislation to revamp Alaska’s salmon habitat permitting system is aimed at increasing public involvement and the ability of regulators to impose penalties for noncompliance. The bill’s author, Kodiak Republican Rep. Louise Stutes, said the second iteration of House Bill 199 is the result of months of talks with stakeholders and what she believes to be an effective balance of fish protections while still allowing responsible development projects to go forward. “I believe this draft is more in line with the request by the Board of Fish. It is a much-needed improvement to Title 16 that focuses on public notice, public comment and the ability for the public to affect the process, criteria for the proper protection of fish and providing the Department of Fish and Game with more enforcement tools,” Stutes said during a hearing of the House Fisheries Committee, which she chairs. She added that she’s confident the provisions in the new HB 199 will be workable for development industries and good news for fish advocates. The Alaska Board of Fisheries, which regulates the gamut of fishing activities in the state, wrote a letter to legislative leaders in January 2017 urging them to update the state’s anadromous fish habitat permitting law, known as Title 16, to include more opportunities for public involvement and enforceable standards to the current law that many feel is outdated and too vague. Current law directs the Fish and Game commissioner to issue a development permit as long as a project provides “proper protection of fish and game,” leaving the definition of what is acceptable up to interpretation. The original version of the bill released about a year ago would have set stringent requirements in law on construction in and around salmon habitat. Specifically, it required habitat degradation mitigation measures to be applied to the water impacted, eliminating the possibility of using habitat improvements to nearby waters as a reasonable offset to expected damages. According to Fish and Game Habitat Division officials, such off-site mitigation is one of the last options for a project proponent when damage to habitat cannot be avoided, but it is a fairly common practice for very large projects, such as mines, that cannot be moved or effectively scaled to avoid impacting salmon habitat. The old bill also would have presumed that all waters connected to the ocean are anadromous fish habitat and put the onus to prove otherwise on project proponents. The original HB 199 largely mirrored the Stand for Salmon ballot initiative, which has drawn the opposition of oil and gas, mining, logging and construction trade groups as well as most Alaska Native corporations for being a de-facto prohibition on new development in Alaska, they contend. Gov. Bill Walker also opposes the Stand for Salmon initiative, saying it is too restrictive and major policy changes should be thoroughly vetted through the legislative process rather than being subject to a simple up or down referendum vote with no opportunity for adjustments. The Stand for Salmon initiative was certified with 41,999 supporting signatures by the Division of Elections to appear on the 2018 ballot March 15, but it still faces a Supreme Court decision on its constitutionality. The state Supreme Court will hear the Stand for Salmon case April 26. The state is appealing a Superior Court ruling from last fall that overturned the decision of Lt. Gov. Byron Mallott that the initiative is unconstitutional. The initiative sponsors have said they too would prefer to make changes to Title 16 via the Legislature, but they continue to push the ballot measure to assure action is taken if the Legislature fails to pass the bill. Passing some version of HB 199 would likely render Stand for Salmon moot, as legislative law changes deemed similar to the intent of a voter initiative would preempt the initiative. However, given the late timing of the new bill in a Legislature wholly preoccupied with resolving the state’s ongoing multibillion-dollar budget deficits, it appears HB 199 will be challenged to move through several more House and Senate committees to be passed in the waning days of the current session. House Majority coalition leaders have said they expect the salmon habitat discussion to be a long process. The bill would have to start from scratch in the new Legislature next year, but that would not be a major change from its current status given HB 199 is still in House Fisheries, its first committee of referral. Stutes pulled those major mitigation and anadromous fish habitat presumption policy changes from HB 199, but the bill would still establish minor and major tiers for habitat permits, a primary provision of the first version. The Fish and Game commissioner would have the ability to issue blanket minor permits for common activities such as crossing streams with an ATV. General permits for such activities would be renewed every five years. Major permits would require publication of both a draft and final version of salmon habitat impact assessments. Public notice and comment periods would be required for the issuance of a minor permit and when draft and final assessments are published. There are currently no public notice requirements for anadromous fish habitat permits, which proponents contend is insufficient given salmon are a valuable and public resource. HB 199 would also require project proponents post bonds sufficient to restore habitat if permit conditions are not adhered to. The other major change from current law in HB 199 is a provision giving designated Fish and Game officials authority to issue on-the-spot citations or tickets for disturbing salmon habitat without a permit or not complying with an issued habitat permit. Currently, all salmon habitat violations are Class A misdemeanor offenses that require a court appearance and Alaska State Troopers act as Fish and Game’s enforcement arm. Habitat Division Coordinator and fisheries biologist Ron Benkert, who has testified extensively to House Fisheries on the issue, said in March interview with the Journal that the current enforcement system is good in theory, but it requires substantial time from often overworked prosecutors and busy judges must be willing to hear the cases. The process lends itself to very few salmon habitat violations being prosecuted, according to Benkert. Rep. Mark Neuman, R-Big Lake, suggested giving Department of Natural Resource officials similar enforcement authority for the many land use and resource activity-related permits DNR issues. Rounds of public testimony April 7 and April 9 on HB 199 elicited far more support than opposition, though numerous testifiers’ comments seemed to relate to the original version of the bill. Alaska Support Industry Alliance CEO Rebecca Logan said HB 199 does not achieve the stated goals of protecting salmon habitat while correspondingly allowing for development. “At a time when we have the highest unemployment in the nation and have lost thousands of the best jobs we have in the state — to insert uncertainty into the permitting process leads to delay and delay leads to no jobs and for those reasons and many more the Alliance is opposed to HB 199,” Logan said. Americans for Prosperity Alaska Director Jeremy Price called it “a regulatory nightmare,” in his testimony. “It only adds to the cost of a project.” Stand for Salmon Director Ryan Schryver thanked Stutes for her work on Title 16, but said the new HB 199 doesn’t go far enough to guard anadromous habitat, as did several other testifiers. “While we don’t support the bill in its current version, we will continue to work with legislative leaders to update the law and fix the fundamental problems with salmon habitat protections in our state,” Schryver said in a formal statement April 7. Elwood Brehmer can be reached at [email protected]

Pebble owners working to refine economics of smaller plan

Pebble Limited Partnership has filed with federal regulators for the key environmental permits for the company’s proposed mine, but whether or not the hotly contested project is economically viable remains unclear, at least publicly. Pebble CEO Tom Collier said in an April 9 interview that the junior mining company plans to change that by the end of the year, if not sooner, by publishing a preliminary economic assessment, or PEA, for its new mine plan. Collier said the company did not have a cost estimate for the project when he unveiled a smaller mine plan in early October, but emphasized he was confident in the project’s economics. Currently, Pebble Limited Partnership has an internal cost estimate but British Columbia’s finance laws prevent the company from disclosing it until the preliminary economic assessment is published, according to Collier. Pebble’s parent company Northern Dynasty Minerals Ltd. is headquartered in Vancouver. He said Pebble hopes to have the PEA done by the end of this quarter for release in the third quarter of the year or certainly by the end of 2018. Just by their nature large mines are among the most capital-intensive developments. In Alaska those development costs are often exacerbated by mineral deposits in remote locations with little or no infrastructure and Pebble is not immune to those challenges. Pebble requires greenfield development of infrastructure to support a medium-sized town just to gain surface access and power. The overall project plan includes a deepwater port on the west side of Cook Inlet, 65 miles of road and an icebreaking ferry across Iliamna Lake as well as a 188-mile natural gas pipeline from the southern Kenai Peninsula. The pipeline would feed a 230-megawatt power plant at the mine site, which would be among the largest power plants in the state. At the mine site there would be a 1.1 billion-ton capacity tailings storage facility to hold the mine waste, a large mill and other facilities all needed to support a 6,500-foot by 5,500-foot mine pit. Typically, mine proponents draft a preliminary economic assessment or a pre-feasibility study during advanced exploration once it becomes clear there is a resource worth pursuing. It is then often several years before a full-fledged assessment or feasibility study is produced, which informs the developers as to whether or not the project should be permitted and subsequently developed. Collier acknowledged Pebble’s process has been circuitous, but said that has largely been due to the actions taken by the Environmental Protection Agency in 2014 under the Obama administration to preemptively prohibit the project. “We were raising money to fight off attacks that were trying to kill the project,” Collier said, referring to the subsequent lawsuit the company filed against the EPA, which was settled out of court last May. “I don’t think there is much of a traditional mold in the way Pebble moves forward. We had to get ourselves into permitting as quick as we could,” he added. Per the settlement with the EPA, Pebble had 30 months to apply for its Clean Water Act Section 404 wetlands fill permit and 48 months to get a final EIS for the project before the EPA could revisit the proposed restrictions on large mining operations in the Bristol Bay region. Current EPA Administrator Scott Pruitt, in a surprise move, in January declined to rescind the proposed Section 404(c) restriction, meaning that while Pebble is not precluded from developing the mine for some time, the proposed regulatory action still hangs over the project. A 2011 preliminary economic assessment on a much larger, longer-lived mine — 3.8 billion tons of ore over 45 years versus the latest plan of 1.2 billion tons of material over 20 years — projected a 6.2-year payback of an initial capital investment of $4.7 billion with a 14.2 percent pre-tax internal rate of return, according to Northern Dynasty. The larger initial plan included similar transportation infrastructure as the current plan with the addition of slurry, water and diesel pipelines between the mine and the port. The Iliamna ferry replaces roughly 20 miles of road. However, a much larger mine would have provided revenue to support the related development. Opponents contend the smaller mine plan, which Pebble touts as part of its recognition of much of the public’s concern about the project, is just a precursor to efforts to expand the mine. Additionally, Collier has said Pebble will not use cyanide in its latest plan, cutting gold recovery by about 15 percent. Collier said the company doesn’t have plans at this point to conduct a more detailed economic evaluation in the future, as most sophisticated investors should be able to reach an informed decision with the information available in the preliminary assessment and all the other materials about Pebble. “I think (the PEA) is going to answer all the questions the markets will need answered,” Collier said. In December Northern Dynasty announced it had secured a $37.5 million payment from First Quantum Minerals Ltd., a large Canadian mining firm. First Quantum is exploring whether or not to enter into an option agreement with Northern Dynasty and put another $112 million into Pebble over the next several years. If First Quantum continues to support Pebble it will have an option to acquire 50 percent of the Pebble Partnership for $1.35 billion in the next three or four years, according to Collier. Pebble leaders have said they need such a large investment partner to put the project plans into action. Elwood Brehmer can be reached at [email protected]

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