Economists forecast mining sector growth
Industry jobs estimated to increase 19 percent over the coming decade; expansion of existing operations, new mines to drive trend
Last updated 10/28/2012 at Noon
An employment forecast published by the Alaska Department of Labor and Workforce Development in October pegged the state's mining sector job growth from 2010 to 2020 at 19 percent. That is second only to health care, at 31 percent, and outpacing the 12 percent average growth across all Alaska industries.
Expansion of current operations coupled with prospects of building mines at the world-class Livengood and Donlin gold deposits were cited as drivers behind adding new miners to the Alaska work force.
According to "The Economic Benefits of Alaska's Mining Industry," an annual report prepared by the McDowell Group for the Alaska Miners Association, the Alaska mining industry accounted for 4,500 direct and 9,000 indirect jobs in 2011.
At US$100,000 per year, the average pay in the mining industry is double the statewide average across all sectors. And, these hefty paychecks are taken home by miners living in 120 communities across the state, half of which are found in rural regions where employment opportunities are sparse and the cost of living is high.
Iliamna Development Corp. CEO Lisa Reimers - an Alaska Native who has been outspoken in her support of the enormous Pebble copper-gold-molybdenum project near her hometown of Iliamna - speaks to the need for jobs off the beaten path in Alaska.
"When the long winter comes, the seasonal industries leave, and the economy of southwestern Alaska shuts down," Reimers recently wrote. "The region's per capita income is US$15,000 a year. Worse, our remote location results in sky-high living expenses - gasoline is US$8-9 a gallon and milk costs even more - so the poverty rate exceeds 20 percent."
Pebble jobs unclear
The Bristol Bay region of Southwest Alaska, where Reimers' hometown is located, is blessed with two epic resources - the world's largest run of sockeye salmon and Pebble, which is considered to be the largest undeveloped copper deposit on the planet.
The juxtaposition of these two world-class resources has fueled a heated debate, with one side worried that mining the copper-gold-molybdenum deposit may put the salmon at risk. Pebble supporters, on the other hand, say the deposit can be developed in a way that protects the fish and would create high-paying jobs for decades to come.
"Our site work program is where our local and regional opportunities are realized. This is all about putting people to work and potentially the significant socioeconomic benefits this project could bring to the region, which struggles with elevated unemployment numbers, a lack of year-round jobs and outmigration to urban areas," said Pebble CEO John Shively, upon rolling out a US$107 million budget for 2012.
The Pebble Limited Partnership - a 50-50 alliance between Vancouver B.C.-based Northern Dynasty Minerals and London-based Anglo American - hopes this work will result in a permit application it can submit to regulators in 2013.
The U.S. Environmental Protection Agency, meanwhile, is fast-tracking its Bristol Bay Watershed Assessment, a study that could seal the fate of Pebble.
Under Section 404 of the Clean Water Act, the Army Corps of Engineers is charged with issuing permits for dredge and fill discharge into navigable waters, including wetlands. The EPA was granted veto authority to prohibit, restrict, or deny a discharge that poses an unacceptable adverse impact to fisheries or other water uses.
The EPA initiated the Bristol Bay Watershed Assessment in response to concerns from Alaska Native groups, fishing organizations and others who petitioned the agency to exercise its veto authority to pre-emptively deny the Pebble Partnership discharge permits needed to build a mine at the world-class copper-gold-molybdenum deposit.
With the pushback from opposition, it is unclear whether the estimated 2,000 jobs that Pebble would offer during construction and roughly 1,000 mining jobs that would follow will be realized by 2020.
Generations of miners
Usibelli Coal Mine, situated near the town of Healy some 100 miles (160 kilometers) south of Fairbanks, is Alaska's longest running employer of Alaska miners.
Of the 130 or so employees currently working for Usibelli Coal Mine Inc., about 27 percent are second, third and fourth generation employees - a testament to the strong ties built between the family-owned coal mining business and the people that contribute to its success.
Usibelli, which got its start in 1943 by supplying coal to Ladd Army Air Field (now Fort Wainwright) near Fairbanks, now produces roughly 2 million tons of coal per year. Roughly 1 million tons is delivered to six power plants in interior Alaska, the balance is shipped overseas.
Located seven miles (11 kilometers) northeast of its current operation at Two Bull Ridge, the 83-million-ton Jumbo Dome deposit is anticipated to provide Usibelli's domestic and international customers with coal for the next 30 years and potentially provide jobs for fifth- and sixth-generation miners at the Interior Alaska operation.
Wishbone Hill, a coal deposit located 10 miles (16 kilometers) northeast of the Southcentral Alaska town of Palmer, is a second operation Usibelli hopes to get into production.
With 6 million tons of bituminous coal currently in reserves, Wishbone Hill is forecast to put between 75 and 125 people to work for an initial mine-life of 12 years.
A dispute has erupted between the state of Alaska and federal regulators over the validity of the permits needed to advance Wishbone Hill. The permits in question have been attached to the operation and renewed several times since 1991. The federal Office of Surface Mining claims the permits lapsed in 1996, making any renewal invalid. Alaska officials contend that there is empirical evidence the permits are valid.
"OSM has been fully informed of the state's decisions, has inspected the mine site on several occasions, and has issued favorable reports related to the mine and the regulatory oversight of it. This is the first time in more than two decades that the underlying validity of the permits have been questioned," Brent Goodrum, director of the Alaska Division of Mining, Land and Water, wrote to the federal agency in defense of the Wishbone Hill permits.
If Usibelli gets the regulatory green light to continue with the development of Wishbone Hill, some 500,000 tons of bituminous coal is expected to be shipped overseas to Japan via the loading facility at Port MacKenzie on the west side of upper Cook inlet across from Anchorage.
Interior gold miners
While Usibelli boasts the longest running mine in Interior Alaska, the region's two hardrock gold mines lay claim to being the biggest employers of miners in the Golden Heart of the state.
Kinross Gold Corp.'s Fort Knox Mine, located some 26 miles (42 kilometers) northeast of Fairbanks, employs some 500 miners, mostly Fairbanks residents. The mine currently produces roughly 300,000 ounces of gold annually. More than 5 million ounces of the precious metal has been extracted from the open-pit operation since 1997.
In 2009, Kinross completed construction of a heap leach facility and expansion at Fort Knox. According to the company's most recent projections, there is enough ore to feed the mill until 2018 and to continue the heap leach operation through 2021. Kinross added 700,000 ounces to the gold reserves in the Fort Knox area in 2011 but has not provided an update on the expected life of the mill or heap leach operations.
The Pogo Mine, located about 60 miles (100 kilometers) southeast of Fairbanks, is a high-grade gold operation that employs about 330 miners.
Sumitomo Metal Mining Pogo LLC - a joint venture between Japanese firms Sumitomo Metal Mining Company (85 percent) and Sumitomo Corp. (15 percent) to operate Pogo - celebrated the first 2 million ounces produced at this underground operation in July.
The 2,500-metric-ton-per-day mill at Pogo churns out around 1,000 ounces of gold per day. At this rate, the 2.9 million ounces of gold reserves at Pogo will carry the underground operation through 2019.
With an additional 2.1 million ounces of gold in resources and two new gold-rich zones found within 300 meters of the ore being mined, Pogo employees need not worry about the mine closing at the end of the decade.
If Pogo or Fort Knox were to shut down at the end of the decade, International Tower Hill Mines Ltd. would be glad to pick up some experienced miners to work at Livengood, a 20-million-ounce gold project located a few miles north of Fairbanks that the company hopes to have in operation by 2018.
"About the time Fort Knox drops off in production, we are going to be able to pick up some highly-qualified employees they are no longer going to be able to have - we look forward to that," said International Tower Hill Mines President and CEO Don Ewigleben.
According to a preliminary economic assessment completed in 2011, a 91,000-metric-ton-per-day mill at Livengood would churn out 12.9 million ounces of gold over 23 years. A feasibility study expected to be completed early in 2013 is investigating the appropriate size operation for Livengood.
Ewigleben said the 560,000-ounce-per-year operation anticipated in the PEA is at the low end of various scenarios being contemplated.
With permitting slated to begin in 2013, Tower Hill is targeting 2016 to begin building a mine at Livengood and hopes to begin commercial gold production by 2018. Once in operation, this upcoming Interior Alaska mine is expected to put at least 500 miners to work, dependent on the scope of the operation that the company settles on.
NANA works in Northwest
The Red Dog zinc-lead mine in Northwest Alaska - situated about as far off the beaten path as one can get - has become a case study for the employment opportunities mines can provide to rural regions.
Nearly 58 percent of the 550 full-time jobs at Red Dog are filled by the shareholders of NANA - the Alaska Native corporation that represent the Inupiat who have called Northwest Alaska home for eons; many of whom have worked their way up to high-level positions at the mine.
Red Dog, which has been in operation for more than two decades, has enough high-grade zinc ore in its Aqqaluk deposit to carry the operation through 2031. As the local work force matures, it is expected that more and higher level Red Dog jobs will go to this primarily Alaska Native population.
Building on its success at Red Dog, NANA is on the hunt for mineral deposits that will sustain the economic well-being of its 12,500 shareholders beyond the life of the Red Dog Mine.
"We know that one day we will be done mining at Red Dog, and it is our hope that we will keep finding deposits around the area," NANA Regional Corp. President and CEO Marie Greene told Mining News. "We have always known there are minerals in the upper Kobuk area. The question has always been: How much is there?"
To answer this question, NANA has forged a new partnership with NovaCopper Inc. This alliance - known as the Upper Kobuk Mineral Project - has pulled together a 331,000-acre (134,000 hectares) swath of highly prospective copper hunting ground.
The NANA-NovaCopper partnership already boasts two deposits with some 3.6 billion pounds of high-grade copper plus appreciable quantities of gold, silver, lead and zinc.
About 2.6 billion pounds of this copper is found at the Arctic VMS deposit. The remaining 1 billion pounds is contained in the Ruby zone at Bornite - a carbonate replacement style deposit situated about 17 miles (27 kilometers) southwest of Arctic.
NovaCopper envisions these deposits supporting two long-lived mines in the Upper Kobuk region and a host of other prospects have the potential to provide mining jobs through the end of the 21st Century.
The state of Alaska has invested some US$9.25 million toward studying the potential of building a road that links this copper-rich region to the highway system some 200 miles (320 kilometers) to the east.
"Getting a road into a district like Ambler will unlock a lot of value and create a lot of jobs for multi-generations," said NovaCopper President and CEO Rick Van Nieuwenhuyse.
Local miners at Donlin
Companies under Van Nieuwenhuyse' leadership have established a track-record of putting local people to work. NovaGold Resources' 40-million-ounce Donlin Gold deposit is a glowing example.
According to the McDowell jobs report, some 87 percent of the people working on site at the gold project are shareholders of Calista Corp., the Alaska Native regional corporation for the Yukon-Kuskokwim Region of Southwest Alaska.
On Aug. 7, Donlin Gold LLC - owned equally by NovaGold and Barrick Gold Corp. - submitted permit applications for development of the Donlin deposit. It is expected to take about four years to gain the permits needed to develop the project and, if the partners decide to move ahead with development, construction will take about as long.
It is anticipated that upwards of 3,000 workers will be needed to build the Donlin gold mine and associated infrastructure. Once in operation, a milestone NovaGold would like to see achieved by 2020, Donlin Gold would employ some 1,000 miners for an initial 27 years, a mine-life that is expected to be extended by decades as additional ore is added to the deposit.
SE Alaska mines
Southeast Alaska currently hosts two operating mines and two advanced exploration projects on the panhandle hope to reach that status by the end of the decade.
Located roughly 45 miles northwest of Juneau, Coeur d'Alene Mines Corp.'s Kensington gold mine employs some 250 miners.
During 2011, the first full year of production at Kensington, the underground operation produced 88,420 ounces of gold at cash operating costs of US$1,088 per ounce.
Late in 2011, Coeur cut processing rates in half to provide an opportunity to undertake several key initiatives aimed at improving the mine's production profile and the overall safety of the operation.
The Southeast Alaska mine returned to full-scale production of about 1,500 tons per day in the second quarter. Coeur anticipates full year 2012 gold production at Kensington to be around 85,000 ounces.
Based on current reserves, Kensington is expected to provide mining jobs for the next decade, an open-ended timeline that is expected to grow as Coeur finds more gold-rich ore.
Hecla Mining Co.'s Greens Creek silver mine near Juneau has been employing Southeast Alaska miners for more than 20 years. Today, the operation boasts some 300 employees.
Hecla spent roughly US$90 million on upgrades at Greens Creek in 2012, the largest investment in the history of the Southeast Alaska mine.
Going into 2012, Greens Creek had about 98 million ounces of silver in reserves - enough to keep the Southeast Alaska mine in production for about another 10 years - and Hecla sees plenty of potential to continue replenishing these stores of silver in the foreseeable future.
Prince of Wales neighbors
Niblack and Bokan Mountain, two advanced exploration projects located on Prince of Wales Island southwest of Ketchikan, are vying to become the next operating mine in Southeast Alaska.
Targeting the completion of a pre-feasibility study for Niblack by mid-2013, Heatherdale Resources Ltd. has engineers designing a mine and mill to process the gold-copper-zinc-silver ore at the volcanogenic massive sulfide project. Heatherdale anticipates building a mine at Niblack of similar scale to Greens Creek.
With the slopes of Lookout Mountain plunging steeply into the Niblack Anchorage, there is little room for a mill at Niblack. Instead of attempting to master this challenging topography, Heatherdale is considering barging ore to an offsite location.
Gravina Island, an industrial site near the community of Ketchikan and about 40 miles (65 kilometers) northeast of Niblack, has been identified as an ideal location for a mill and tailings storage facility.
Ketchikan, a logging town of some 8,000 people, has been seeking a new source of employment since the demise of the timber industry in the region.
Located across a narrow passage from Ketchikan, regular ferry service could transport mill workers from the Southeast Alaska town to the proposed Gravina Island mill site.
Since becoming involved with Niblack, Heatherdale has built strong bonds with the residents of Prince of Wales Island and surrounding communities.
A partnership with the Prince of Wales Tribal Enterprise Consortium - owned by the Craig Tribal Association and the Organized Village of Kasaan - is putting local residents to work and supplying Niblack with its manpower needs.
"From the outset, Heatherdale has made it clear that it wants its mineral development activities on Prince of Wales Island to benefit local people and communities through local hire and contracting," said Powtec CEO Bill Cole.
Dependent on a positive feasibility study, Heatherdale anticipates filing for permits to develop Niblack in 2013. Projecting three years for permitting and two years for construction, the Prince of Wales Island project could be in operation in 2018.
Ucore Rare Metals Inc. is projecting a similar timeline for developing its Bokan Mountain rare earth element project roughly 15 miles (25 kilometers) south of Niblack.
To gain a foothold on Bokan Mountain, the U.S. Department of Defense has signed contract with Ucore to advance the Prince of Wales Island project.
Several of the REEs found at Bokan Mountain are critical ingredients to the U.S. military's advanced weapon systems and other high-tech gadgets.
The agreement penned with the Pentagon will help fund Ucore's pioneering work to free the critical REEs from the ore.
Hoping to get the strategic elements stored at Bokan Mountain to market as soon as possible, Ucore expects to publish a preliminary economic assessment by the end of 2012 and hopes to begin construction at the Southeast Alaska REE deposit by 2015.