North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Coming off of a record year of zinc production, Red Dog partners Teck Resources Ltd. and NANA Regional Corp. are facing the possibility that operations at the zinc-lead mine will be shut down in October.

Nearing the end of 20 years of production at the mine's main pit, Teck said it would need access to the neighboring Aqqaluk pit by May in order to continue uninterrupted operations at Red Dog. But state and federal appeals of a permit needed to continue operations could prevent access to the new ore source.

Speaking at the Whistler Institutional Investors Conference on Jan. 21, Teck President and CEO Don Lindsay addressed the triumphs and travails at the Northwest Alaska mine.

"Red Dog had a record year this year; we are very, very pleased with how it has been going. It does have the challenge of the Aqqaluk permit. We were awarded the permit by the EPA a week or more ago and then it has been appealed. There is a 30-day appeal process associated with the permitting so we will have to see how that goes," Lindsay said.

The Teck leader got his answer Feb. 16, the day the appeals process was to expire.

Two appeals

Two environmental law firms, Trustees for Alaska and Center on Race, Poverty and the Environment, joined local tribal and environmental organizations to appeal the NPDES permit issued to the mine by the U.S. Environmental Protection Agency.

The environmental groups first appealed the State of Alaska's Dec. 15 certification of the NPDES in mid-January and then appealed the EPA's issuance of the permit on the Feb. 16 appeals deadline.

Representing a handful of residents from the villages of Kivalina and Point Hope, the environmental law firms argue that certain provisions of the NPDES, which is the primary water discharge permit for the huge zinc-lead mine, do not comply with the Clean Water Act.

Red Dog operator, Teck Resources Ltd., was encouraged that the appellants did not ask for the permit to be stayed when contesting the state certification, allowing the certification to remain in effect during adjudication of the appeal.

The appeal on the federal level, though, could prevent the company from doing the preparatory work needed to begin mining Aqqaluk before economic-grade ore is mined out in the Main Pit.

"Until EPA issues a notice clarifying which provisions of the permit are subject to appeal and consequently stayed, the entire new permit is stayed," Teck explained in a Feb. 17 statement.

The company said EPA usually issues notices within 30 days of an appeal and any of the permit provisions that are not stayed by the appeal would come into effect 30 days after the notice. According to this timeline, the Red Dog partners should know whether they will be able to access Aqqaluk by mid-March and be issued the uncontested portions of the permits by mid-April.

Aqqaluk ore by October

Teck estimates that the remaining ore in the Main Pit will provide enough economic feedstock for the plant to last until October; if the company does not have additional ore by that time, it will need to shut down operations.

"The current mine plan calls for a blending of higher grade material from Aqqaluk with lower grade material in the Main Pit as we move towards exhausting that pit in the fall of this year. If we're unable to pre‐strip and access Aqqaluk, then the operation could shut down as early as October of this year," Teck Senior Vice President Leonard Manuel explained to investors Feb. 9.

In order to have Aqqaluk ore ready to feed the mill before the Main Pit is exhausted, the Red Dog operator said it would need the permits by May.

When asked if the operation could run at a reduced capacity if Aqqaluk access is delayed, Manuel said, "No, the low-grade material in the current pit, absent some opportunity to blend it with higher grade material, would not be economic and we would move to complete curtailment of operations."

Once the mine is powered down and put on care-and-maintenance, the company estimates it would take at least 18 months to bring the facilities back on-line and begin processing ore again.

Extensive reevaluation

Anticipating the need for the Aqqaluk ore well in advance, Teck applied for the modifications of the NPDES permit in May 2007.

The modified plan, now under appeal, is to fill in the pit currently being mined with waste rock from Aqqaluk, a deposit immediately adjacent to the currently mined Main Pit. The Aqqaluk ore is to be mined and processed using the same techniques and facilities used during the past 20 years.

The request to update the NPDES permit triggered a National Environmental Policy Act review of the project. The EPA, which is the lead agency in the NEPA process, determined that a Supplemental Environmental Impact Statement needed to be completed to assess the environmental impacts of the proposed mining plan.

The SEIS was an extensive reevaluation of environmental impacts of the Red Dog Mine that took nearly two years to complete.

"The state and federal agencies have just completed a very thorough review of water quality issues associated with Red Dog," said Jim Kulas, manager of environmental and public affairs for Teck. "Based on years of data documenting a healthy downstream environment, in the agencies' judgment, the permit will be fully protective of human health and the environment. Teck believes that the regulatory process has been robust and appropriate."

Mine water improves creek

Though the environmental and tribal groups appealing the permit claim that water discharges as permitted under the NPDES would degrade the water flowing away from Red Dog, 20 years of operations at the mine suggest otherwise.

A study completed by the Alaska Department of Environmental Conservation concluded that the treated water discharged from the Red Dog Mine has improved the water quality of the main stem of Red Dog Creek, the stream the treated water from the mine is discharged into.

DEC said the area contains natural ore bodies with naturally high concentrations of cadmium, lead, zinc, aluminum and other metals. Pre-mining surveys done in this area in the 1980s found zero fish and other aquatic life present because of toxic concentrations of these minerals as well as naturally low pH.

"Ten years of aquatic surveys have demonstrated that aquatic productivity in the main stem (of Red Dog Creek) has increased from pre-mining conditions due to effective water management practices and treatment," DEC researchers said.

Treated water discharged from the mine has diluted the naturally occurring acidic and metal-laden water to a degree that the main stem of Red Dog Creek is now habitable.

"There is no environmental benefit to this appeal," said Rosie Barr, NANA resources manager. "NANA has worked closely with Teck for more than 20 years to protect Red Dog's downstream environment and the data proves that. However, this appeal is a direct threat to the social, cultural, environmental and economic benefits our shareholders receive from the mine and that is very troubling to us."

Economic driver in NW Alaska

The reason the Inupiat shareholders of NANA are troubled is that Red Dog is the economic driver for Northwest Alaska, their traditional home.

For many of the shareholders, the biggest benefit is a good paying job that allows them to stay close to home. NANA said the mine currently employs more than 300 of its shareholders, with total wages this year exceeding US$50 million.

One important benefit to the Inupiat who work at Red Dog is that the rotating work schedule at the mine allows many of the employees to participate in traditional subsistence activities while holding down a well-paying job.

Red Dog is also the sole contributor to the Northwest Arctic Borough, which covers about 38,000-square-miles, or 98,420-square-kilometers, of the traditional homeland of some 7,500 shareholders who live in the region. Since 2006, mine payments to the borough have exceeded US$34 million. The money has been used to support and build schools in the region as well other essential local government services.

NANA receives royalties and payments from ownership of the land at Red Dog and partnership with Teck in the mine.

According to Teck's annual report, the sales of metals from the Red Dog Mine resulted in US$144 million in royalties paid to NANA and the State of Alaska in 2009.

The mine produced a record 582,500 tons of zinc and 131,500 tons of lead for the year and shipped 1.02 million metric tons of zinc concentrate and 220,000 metric tons of lead concentrate during the 2009 shipping season.

According to Lindsay, supply restrictions due to permitting challenges could help bolster metal prices.

Speaking to the challenges of gaining Aqqaluk permits, Lindsay said, "That is an example of the challenges of maintaining production, which in the long-term probably bodes well for price."

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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