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By Sarah Hurst
Mining News Editor 

Big guns come out to defend Kensington

If mediation fails, Alaska hopes court will accept application to intervene in environmentalists' lawsuit against Juneau gold project


October 30, 2005

Coeur d'Alene's Kensington gold mine near Juneau will generate $1.9 million in mining license taxes, $3.4 million in corporate income taxes and $6.3 million in local property taxes over its 10-year life, the State of Alaska estimates in its motion to intervene in federal litigation over one of the project's permits. The Southeast Alaska Conservation Council, the Sierra Club and Lynn Canal Conservation filed the lawsuit against the U.S. Army Corps of Engineers and the U.S. Forest Service.

The environmentalists object to Coeur Alaska's plan to dump mine tailings into Lower Slate Lake, approved by the Corps of Engineers in their lake discharge permit. They contend that the permit violates the Clean Water Act. Juneau Mayor Bruce Botelho has invited former Alaska Attorney General Av Gross to assist in mediation with the environmental groups, which was due to begin Oct. 20.

"As a result of the diligent and exhaustive work done by the Corps of Engineers and Forest Service, as well as other federal and state agencies, we believe the Kensington project is a model of sound environmental mining practices," Kensington General Manager Tim Arnold wrote in a public message. "The project has gone through an extensive and thorough environmental review and the agencies have complied with all laws and regulations in issuing their permits."

Coeur welcomes intervention by State of Alaska

Arnold welcomed Gov. Frank Murkowski's decision that the state should intervene in the lawsuit. Idaho-based Coeur d'Alene has also asked to intervene, the company's vice president for environmental services, Luke Russell, told Mining News. "We want to make sure all the facts are brought before the court," Russell said. "We're very disappointed with the lawsuit after all the effort that the agencies and the company had made. At the moment we're continuing to construct the project on our schedule, but the lawsuit is diverting resources that would be better spent on the project."

Construction of the Kensington Mine began this summer; it is due to go into production in January 2007. The lawsuit is a threat to other mining projects, too, Ed Fogels, large mine projects permitting manager at the state's Department of Natural Resources, told Mining News. Mining waste should not be treated differently than other fills, he said: regulators look at the chemistry and figure out the environmental impacts. "I don't think you can make a blanket statement that you can never put anything into a lake. You have to take it case by case," Fogels said. "The Kensington tailings are about as clean as mine tailings can get."

Fogels: environmentalists looking for national precedent

The environmental organizations are hoping to set a national precedent, Fogels believes. If the lawsuit were to succeed, it would lead to a slippery slope where the definition of a lake would also be questioned, and prohibitions might also extend to wetlands. "We're hopeful that common sense will prevail," Fogels added.

Neil MacKinnon of Hyak Mining Co. in Juneau, which owns the Jualin mine adjacent to Kensington and has leased it to Coeur Alaska, was less restrained in his opinion of the environmentalists. "They are doing jihad against the mine," he said. "The chemical signature of the tailings that we're putting in there (Slate Lake) is better than the water that exists. I'm concerned about the perversion of Alaska politics by nongovernmental and environmental organizations that are financed by outside foundations."

Marquez: injunction would affect mine permitting

"If an injunction were to issue in this case, it would have direct, adverse effects on the state's ability to permit not only the Kensington Mine, but other mine projects in the state," Attorney General David Marquez argues in the state's motion to intervene, filed Oct. 12.

"Such injunction would result in significant economic losses to not only the public purse, but to the socio-economic well-being of communities and citizens affected by the mine projects.

Further, an injunction would likely adversely affect and interfere with the state's statutory and regulatory duties in responsibly managing development of the state's natural resources in a way that meets applicable environmental requirements."

The Kensington project would probably be shut down before producing any gold in the event of an injunction, jeopardizing the state's economic interest in the form of taxes, jobs and more diversified local economies, Marquez continues. The interests of the federal agencies - the Corps of Engineers and the Forest Service - are not identical to those of the state, so the state should be allowed to represent its own interests, he added. "No other party could bring to this lawsuit the perspective of the state seeking to establish and preserve a stable permitting framework within which mining can proceed in Alaska," the motion says.

Juneau would also be affected

The motion was accompanied by supporting declarations from state employees Rich Hughes, Bob Loeffler and Dan Easton. Hughes, a development specialist with the Office of Mineral Development in the Department of Commerce, Community and Economic Development, gave details of the taxes and other revenues that the mining industry contributes to the State of Alaska, as well as those that the Kensington project is expected to contribute. He points out Coeur Alaska will purchase supplies within the municipality of Juneau and pay a 5 percent sales tax on the purchases, although the volume and value of supplies cannot be assessed accurately at present.

"In my experience and professional opinion, the permitting of any large mine in Alaska requires both close coordination, and a common understanding of the legal requirements, between all federal and state agencies with jurisdiction over the proposed operations," Bob Loeffler, director of DNR's Division of Mining, Land and Water, wrote in his declaration. "Without this, evaluating the environmental issues associated with these large mines and deciding on permitting issues would be at best inefficient, and at worst impossible."

Dan Easton, deputy commissioner of the Department of Environmental Conservation, reiterated the same point. "In accordance with Section 401(a) of the federal Clean Water Act and Alaska law, DEC had primary responsibility for reviewing and certifying that the Corps' proposed Section 404 dredge and fill permit for the project's tailings storage facility (TSF) complied with applicable state requirements," he wrote. "DEC also had primary responsibility for reviewing and certifying that the U.S. Environmental Protection Agency's Section 402 permit for discharges from the TSF to East Fork Slate Creek complied with applicable state requirements."

Support, opposition from residents

Some residents of southeast Alaska have expressed their opposition to the Kensington project, but it also has support from the local community. The Chilkoot Indian Association of Haines is keen for the mine to be developed, according to a letter from Bill Thomas in the Juneau Empire. "Upon detailed review of the environmental impact statement, the tribe is fully satisfied that the mine's construction and operator are in accord with the spirit of stewardship of the land," Thomas wrote. "On the other hand, SEACC and co-plaintiffs seem to be intent on halting any form of significant economic vitality in the region."

More than 50 percent of the adult members of the Chilkoot Tribe are unemployed, Thomas added. "We cherish the thought of good jobs in our area," he wrote. "In fact, it was our area long before SEACC came to be. We as a tribe, who are part of and one with the land, do not object to the Kensington mine." Rep. Bruce Weyhrauch, R-Juneau, also supports the state's intervention in the lawsuit. "This is not a trade-off between good jobs and/or negative environmental impacts," he said in a release Oct. 4. "This mine can be developed in an environmentally responsible manner and at the same time greatly contribute to our communities."

Coeur Alaska has reported three minor spills to the state since construction of the mine began. In August two to three ounces of kerosene spilled at Comet Beach, in September about two gallons of diesel spilled into Slate Creek Cove, and in October a core drill fell onto the beach from a forklift and spilled 2.5-3 gallons of hydraulic fluid at Slate Creek Cove. None of the spills were serious enough to trigger penalties.

The state's commitment to the Kensington project was further reinforced by the announcement in late September that the Department of Transportation and Public Facilities would pay for a 4.9-mile access road for the mine from Slate Creek Cove to the mill site on the west side of Berners Bay. DOT hopes the road will cost no more than $1.1 million. The state also paid almost $1 million for a 2.5-mile road to transport Kensington workers from the current north end of the Juneau road system to a ferry terminal at Cascade Point.


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