Pebble touts economics as EPA moves to reinstate mine ‘veto’

The Pebble Limited Partnership continues to press ahead on pre-development work for its highly contentious mine, despite major roadblocks set by federal agencies under both the Trump and Biden administrations.

The mining venture’s parent company, Vancouver-based Northern Dynasty Minerals, earlier this month released a summary of the preliminary economic assessment for its latest mine plan, which until recently was long demanded by the project’s opponents.

According to Northern Dynasty, the 20-year mine plan Pebble submitted to the U.S. Army Corps of Engineers in late 2017 would generate an internal rate of return of nearly 16 percent and represents a 7 percent discounted net present value of approximately $2.3 billion, based on long-term metal price assumptions. At current prices for the prospect’s copper, gold and silver, the 20-year Pebble plan would generate returns of nearly 24 percent and holds a discounted net present value of $4.8 billion, the PEA states.

The full report will be made public by late October, according to Northern Dynasty.

Pebble last issued a formal evaluation of its project’s economics in 2011, which led opponents in recent years to demand updated economic estimates for its newer, scaled-back mine plan. They claimed the company avoided making its internal figures public because the smaller mine is not economically feasible on its own and would simply be a precursor to significant expansion.

Northern Dynasty CEO Ron Thiessen said the report outlines the “robust economics” of Pebble in a statement accompanying the PEA.

“It is a project that can be designed, built and operated with industry-leading environmental safeguards while generating significant financial returns over multiple decades,” Thiessen said.

The 20-year economic forecast for the project is based on processing approximately 180,000 tons of ore per day from the open-pit mine and cumulative production of roughly 6.4 billion pounds of copper, 7.3 million ounces of gold and 37 million ounces of silver, along with ancillary production of other metals.

An expanded mine capable of processing up to 270,000 tons of ore per day over 90-plus years would increase the project’s internal return to roughly 20 percent at forecasted metal prices and 25-30 percent at current prices, according to the PEA figures.

The expansion economics are based on producing up to 60 billion pounds of copper and 50 million ounces of gold. For comparison, the proposed Donlin gold mine in the Kuskokwim region is forecasted to produce upwards of 33 million ounces of gold, which would make it one of the largest gold operations on Earth.

At the same time Pebble and Northern Dynasty leaders were touting the moneymaking ability of their project, attorneys for the Environmental Protection Agency were indicating the Biden administration’s plan to resurrect a regulatory “veto” of Pebble in federal court filings.

EPA attorneys filed a scheduling motion in U.S. District Court of Alaska on Sept. 9 outlining their intent to reverse the Trump administration’s 2019 withdrawal of a proposed determination to prohibit a large mine in the Pebble area through the agency’s Clean Water Act Section 404(c) authority.

The withdrawal was partly rejected by the 9th Circuit Court of Appeals in June as part of a separate lawsuit filed against the EPA in 2019 by numerous Tribes and environmental groups opposed to the mine. The Appeals Court panel partly overturned a District Court ruling, finding that EPA regulations allow for a 404(c) withdrawal “only when an ‘unacceptable adverse effect’ on specified resources was not ‘likely,’” the June 17 order states.

According to the order, the EPA under the Trump administration did not sufficiently justify its rationale for reversing the proposed determination, as required by the agency’s regulations.

The EPA began the years-long veto process in 2014 under former President Barack Obama. But the settlement to a subsequent lawsuit by Pebble against the EPA was resolved by EPA leaders in the Trump administration, which allowed Pebble to move ahead with permitting its project.

In a surprising move last November, the U.S. Army Corps of Engineers rejected the mine plan at the end of a nearly three-year environmental impact statement process, which resulted in a final EIS that broadly concluded the mine could co-exist with the area’s other resources and would cause “no measurable change” in the numbers of salmon returning to the Nushagak and Kvichak rivers, or in the long-term health of the commercial fisheries in the region.

Pebble’s appeal of the Army Corps of Engineers Alaska District’s record of decision for the project EIS is primarily based on the perceived inconsistencies between the EIS and the agency’s final decision.

Pebble spokesman Mike Heatwole wrote in an emailed response to questions that the company maintains its position that the withdrawal of the 404(c) veto by the EPA under the Trump administration “was sound and appropriate.”

Heatwole emphasized that the EIS published last year concluded the project could be built without harm to the region’s fisheries or water resources and further represents a “tremendous economic opportunity” for nearby communities.

“Our focus remains on working through the formal appeals process via the (Army Corps). As the Biden administration seeks lower carbon emissions for energy production, they should recognize that such change will require significantly more mineral production — notably copper,” he wrote. “The Pebble project remains an important domestic source for the minerals necessary for the administration to reach its green energy goals.”

Pebble’s appeal of the record of decision to Army Corps Pacific Division leaders is ongoing.

Elwood Brehmer can be reached at [email protected].

09/29/2021 - 9:55am