The mining newspaper for Alaska and Canada's North

For Alaska, the only constant is change

A downward swing in the price of gold should not prevent us from proudly sharing Alaska Mining Day on May 10 with our neighbors

About 2,500 years ago, Heraclitus of Ephesus observed that the only constant is change. Looking out the window on a snowy Alaska April morning brings this observation home once again. It is amusing to reflect on the acrimony associated with "global warming," which was renamed "climate change" when it became apparent that the last decade has not proven to be as warm as the preceding decade. As one observer put it, "global temperatures are warmer than about 75 percent of anything we've seen over the last 11,000 years or so." In other words, 25 percent of the time since the last ice age, it's been warmer than now.

Likewise, the price of gold has been in slump for the six or seven months, dipping from a high of US$1,790 per ounce last September to a low of US$1,352/oz last week. We were not dismayed but delighted when in the summer of 2010, gold passed through US$1,350/oz headed north. A part of my glee in musing about change and recent history, I suppose, is related to the much-touted promise in 2008 of "Hope and Change," or as our favorite distaff Alaskan wag put it, "that hopey and changey stuff." The "changey stuff" does keep coming.

In any case, Alaska is a mining state. Let me repeat that: Alaska is a mining state. The Alaska Miners Association has just published its annual descriptor of the industry with the news that there are lots of dollars being spent in Alaska by miners and for mining activities and that there are many more opportunities pending for the short- and long-term future. In the overview, it is disclosed that in 2012, there were 4,800 people directly employed in the mining industry in Alaska and another 4,700 indirect jobs. This translates into a US$650 million payroll. The average annual mine worker wage is estimated to be US$100,000 per year.

After the oil and gas industry, mining is Alaska's second-largest economic producer, and it is on a steady, inclined trajectory, with seven major mines in production in the state and at least that many progressing toward permitting and ultimate production. This does not count the 85,000/oz gold produced last year by the 300 or so placer miners ranged around the state.

We know that the price of gold, as well as those for other commodities, will fluctuate, sometimes wildly. A 25 percent dip in the price of gold, therefore, should not necessarily be a cause for dismay. Of course, the microeconomics of the industry is such that there are going to be local impacts especially among the overextended. On the other hand, because mining is typically front-loaded, if and when payback is achieved, mining can be profitable despite temporary swings in the price. Every change will affect individuals differently.

And so that brings us to star-gazing and climate change once again. Where will the price of gold go, and when? Who knows? My recommendation for investors and planners alike is to tap into the model embraced by the acolytes of Al Gore who promised us that virtually all reputable weather scientists knew that if we didn't start reducing global warming, the world was going to come to a catastrophic end, without the concomitant assurance that if we did slow down global warming, a glorious future awaited us. The Gore paradigm enabled is to see into the near and distant future distinctly, and I for one cannot see why it cannot be adapted to foreseeing the price of gold with equal clarity.

In the meantime, let us rejoice in the fact that we, in Alaska, have a marvelous resource base being evaluated and tapped by a healthy, safe and environmentally sound industry dedicated to bettering the lives of its employees, the communities where operations are being conducted, the state as a whole and the nation.

May 10 has been once again declared Alaska Mining Day.

We who are associated with the industry have just cause to celebrate this historical anniversary of the Mining Law of 1872, but I urge everyone who is associated with the mining industry in Alaska in any way to take advantage of this opportunity to share our notable and noble mining history with all our friends and neighbors, openly, visibly and with great joy.

Let's work together to raise the profile of this great industry and the exemplary people who work in it.


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