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By Shane Lasley
Mining News 

Governor pushes to gain access to west

Parnell's FY2013 budget includes US$50M for three 'Roads to Resources,' streamlined permitting, better maps and REE assessment


Last updated 12/25/2011 at Noon

Much of Alaska's resource wealth is locked up in more than 350,000 square miles (906,000 square kilometers) west of the state's contiguous road system. Alaska Gov. Sean Parnell has included some US$50 million in his fiscal 2013 state budget proposal to support measures aimed at gaining access to much of the state's abundant oil, gas and minerals resources including three roads that would trek westward.

"Better transportation corridors will open up petroleum and mining opportunities," Parnell told the Alaska Chamber of Commerce Dec. 15. "Our Roads to Resources Initiative will be funded at US$28.5 million to access oil and gas-rich lands around Umiat - in the Foothills West; to open access to the Ambler Mining District; to open up mining lands in a route to Tanana; and to fund work on the Klondike Industrial Use Highway outside of Skagway, to name a few."

In addition to a US$28.5 million allotment to the state's Roads to Resources program, the governor's budget includes funding for streamlining the permitting process in Alaska, continued assessment of the state's rare earth element potential, a statewide digital mapping program and a geological assessment of shale oil on the North Slope.

"Funding Roads to Resources; more timely permits; a rare earths assessment; and statewide digital mapping - it's all about jobs and creating new opportunities for independent, hard-working Alaskans to move forward," Parnell said while rolling out his budget plans.

Heading west

The governor's proposed Roads to Resources funding includes US$24 million towards three road projects that, if built, would extend ground transportation westward into a resource-rich area about twice the size of California.

The two largest Roads to Resources items in the 2013 budget, at US$10 million each, are proposed roads to Tanana and Umiat.

The road to Tanana would be the first leg of a proposed 800-kilometer (500-mile) highway that would pass near mineral prospects such as Silver Predator Corp.'s Illinois Creek project, as it wends its way westward to the historical mining community of Nome.

Dowl HKM, an Anchorage-based engineering firm contracted to carry out the state-funded Western Alaska Access Planning Study, originally evaluated four routes to the Seward Peninsula mining town. Of the alternatives considered, the firm determined that the Yukon River Corridor offered the best balance of resource and community development benefits with the least adverse impact to the environment as well as land ownership and management.

The preferred route would begin at Manley Hot Springs, near the end of the Elliot Highway and head nearly due west for some 110 kilometers (70 miles) to the village of Tanana where it would cross to the north side of the Yukon River. From Tanana, the highway would roughly parallel the historical waterway for much of the route as it continues to the westernmost reaches of Alaska.

Benefits for mining were among considerations in the study. Though not specifically targeting any particular projects, the proposed Yukon Highway is expected to lower exploration, development and operations costs for mining projects throughout western Alaska.

Communities along the route are expected to be among the largest beneficiaries of the proposed road.

The Tanana Chiefs Conference, a unified group of 42 Interior Alaska Native communities, has endorsed the Yukon route. The alliance's board of directors cites the current high transportation and fuel costs as reasons it stands behind building the road.

The communities of Tanana, Ruby, Galena, Koyukuk, Koyuk and Nome would share in an expected annual savings of US$19.1 million per year in fuel, freight and mail transport costs if road transportation is used.

The road to Umiat, also known as the Foothills West Transportation Access Project, is a proposed 160-kilometer (100-mile) road running along the north slope of the Brooks Range. This transportation corridor would provide access to oil and gas fields in the foothills and the National Petroleum Reserve- Alaska.

The Umiat funding in Parnell's budget provides for continued work on an environmental impact statement; continued evaluation of routes from Umiat to existing roads on the North Slope and definition of a preferred alternative; and securing environmental permits and right of way for the Umiat project.

Copper road

For the mineral industry, the most important project may be a proposed road to the Ambler Mining District - a region of Northwest Alaska renown for a 110-kilometer- (70 miles) long belt of world-class volcanogenic massive sulfide deposits rich in copper, zinc, lead, gold and silver that sweep across its breadth.

The 2013 budget put forward by the governor includes US$4 million towards defining an optimal corridor to the Ambler Mining District; establishing a right-of-way; and beginning the environmental and permitting work to build the 320-kilometer (200 miles) transportation route to the remote copper-rich region. This adds to theUS$5.25 million approved by the Alaska Legislature over the past two budget cycles for scoping the viability of establishing a transportation link to Ambler.

Parnell said the state will explore the potential for a public-private partnership to proceed with financing and construction of the Ambler Mining District Road.

Novagold Resources Inc. and NANA Regional Corp. are the likely private partners and primary beneficiaries of a road to the Ambler region.

In October, the mineral exploration company forged a partnership with the Inupiat-owned Alaska Native regional corporation to explore and develop 180,000 hectares (445,000 acres) of copper-rich lands at the western terminus of the proposed Ambler Road. The pact consolidates NovaGold's Ambler property, including the world-class Arctic deposit, with the copper-rich Bornite deposit and other mineral prospects on NANA lands in the upper Kobuk River area.

While studying the economics of building a mine at the Arctic deposit, SRK Consulting (U.S.), Inc. determined that a 340-kilometer (211-mile) road stretching west from the Dalton Highway to the village of Kobuk, would be the best route for linking the copper-rich deposit to Alaska's road-system.

For purposes of the study, SRK assumed that the road would be designed and constructed by the State, and NovaGold would then reimburse the State on an agreed-upon basis over the operating life of the mine. A similar arrangement exists between the State and the Red Dog Mine in Northwest Alaska for its road and port facility.

In addition to being important to mineral development, NANA and its shareholders see the infrastructure as a means to reducing skyrocketing energy costs to the residents of Northwest Alaska.

"When we first started having discussions about roads 15 to 20 years ago our region did not support roads, but 15-20 years later that has changed because of our economy, our high cost of energy and the need for more employment," NANA President and CEO Marie Greene told Mining News.

Klondike Highway upgrades

Parnell also has allotted US$2.5 million for refurbishing and strengthening the pavement and bridge structures along Alaska's 24-kilometer (15-mile) section of the historical Klondike Highway. The governor said the improvements to the industrial route are needed to accommodate the large increase in traffic from the transportation of ore from Canadian mines to the Port of Skagway for shipment to smelters around the world.

The Klondike Highway links the Alaskan coastal town of Skagway to the mining town of Dawson City in Yukon Territory and its route somewhat parallels that used by prospectors during the Klondike Gold Rush.

Today, Alaska Route 98 continues to an important link for miners seeking to unlock the Yukon Territory's vast mineral wealth. Since 2007, Capstone Mining Corp. has used the industrial route to ship copper concentrates from its Minto Mine in central Yukon to the Seward Ore Terminal - from there the copper-rich concentrates were shipped to international destinations. Last year the copper miner shipped around 47,000 metric tons of copper concentrates containing some 40,000 pounds of copper, 22,000 ounces of gold and 207,000 ounces of silver down the Klondike Highway.

Alexco Resources Corp. also utilizes the Klondike Highway to ship silver-rich zinc and lead concentrates from its recently commissioned Bellekeno Mine through Skagway to a refinery in southern British Columbia.

In May Parnell signed legislation that authorizes the Alaska Industrial Development and Export Authority to issue up to US$65 million in bonds to finance expansions and upgrades to the Skagway port, including the ore terminal.

Parnell said the US$2 million balance of his Roads to Resources funding is for smaller resource road opportunities to promote significant revenue and employment opportunities.

Permits, maps and REEs

In addition to advancing projects to establish transportation corridors toward resource-rich regions of western Alaska, Parnell intends to smooth the way for companies seeking to gain permissions to extract these resources. To that end the governor's budget includes US$3.3 million for streamlining the state's permitting process.

The governor said that between 85 percent and 90 percent of the state's general fund revenue comes from the development and use of state land and natural resources. Streamlining the permitting process would provide more timely decision making for mining, timber, public access, land sales and transfers, and other resource development applications.

"Mineral exploration expenditures are up, and with our efforts to streamline the permitting process, we are working to secure Alaska's resources for Alaskans' benefit," he explained.

Parnell also would like to see US$15.9 million - US$3.7 million in state's general funds, with the balance from federal funds - spent on a statewide digital mapping program.

"One thing often overlooked in growing an economy is the value of a good map. USGS (United States Geological Survey) topographic maps of Alaska are more than 50 years old, inaccurate, and do not meet national mapping standards," he explained. "Accurate elevation data is vital to responsible resource and economic development, aviation safety, navigational devices, modern-day emergency response, and routing for roads and pipelines."

Parnell also has included US$2.7 million for a three-year project to assess Alaska' rare earth element and critical minerals potential. During the 2012 budget cycle, the Alaska Legislature approved US$498,000 proposed by the administration to begin this statewide REE evaluation.

The governor said the area around Bokan Mountain in Southeast Alaska is potentially one of the largest REE deposits in North America, and geologists have identified more than 150 REE occurrences across the state.

"The timing is right for rare earth development," Parnell told an audience at the Strategic and Critical Minerals Summit held Sept. 30 in Fairbanks. "We're on track to assess, incentivize and develop the rare earth elements we can provide the world."


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