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US$700M plan for Pebble nears completion

Project owners seek to begin permitting for colossal copper project in 2013; EPA's Bristol Bay assessment moves on parallel track

With the goal of filing for permits by the end of the year, the Pebble Limited Partnership has agreed to a budget of roughly US$80 million for Pebble in 2013, which will push the total investment in the Southwest Alaska copper-gold-molybdenum deposit above US$750 million.

"By the time the Pebble Partnership triggers permitting under NEPA (National Environmental Policy Act), more than US$700 million will have been invested to ensure a robust project design from a technical, financial, environmental and social perspective. PLP (Pebble Limited Partnership) fully expects that the rigor of that work will be recognized and reflected in the outcome and efficiency of the NEPA permitting process," said Northern Dynasty President and CEO Ronald Thiessen.

The Pebble Partnership was established in 2007 as a 50-50 alliance between Vancouver B.C.-based Northern Dynasty and London-based Anglo American plc.

To earn its 50 percent stake in Pebble, Anglo American agreed to invest US$1.5 billion in the massive copper-gold-molybdenum deposit. These funds are being spent on the comprehensive exploration, engineering, environmental and socioeconomic programs toward the future development of Pebble.

By the time the 2013 budget is exhausted, the London-based global miner will have invested some US$580 million to advance engineering, environmental and socioeconomic studies at Pebble. This is on top of the roughly US$180 million Northern Dynasty spent primarily on grasping the scope of the massive copper-gold-molybdenum project prior to Anglo American coming on-board.

Pebble, considered to be the largest known undeveloped copper deposit on the planet, contains 80.6 billion pounds of copper, 107.4 million ounces of gold and 5.6 billion pounds of molybdenum. That is enough copper to supply the copper needs of every person on the planet for four years, based on 2012 consumption, and as much gold as held by Germany, which has a gold reserve second only to the United States.

The massive deposit is situated in the Bristol Bay region of Southwest Alaska, home of an equally world-class sockeye salmon fishery.

Finishing touches

While it comes in at about 25 percent less than the US$107 million spent in 2012, this year's budget should be sufficient to put the finishing touches on the highly anticipated mine plan for the Pebble, according to the Pebble partners.

"Following a very substantial pre-permitting planning program and years of comprehensive study, the Pebble Partnership is now nearing the final stages of completing its project description for the Pebble Project," said Thiessen.

The project description is expected to include details of the Pebble mine plan; a transportation corridor that stretches from the deposit some 85 miles (137 kilometers) east to Cook Inlet; a deep-water port-site at Cook Inlet; and power generation for the some 400 megawatts of electricity expected to be needed to power the mill and other facilities at the enormous copper project.

Engineering a mine and infrastructure that does justice to the massive copper deposit while protecting the integrity of the downstream waters and the fish in them has been ranked difficult to impossible, depending on who you ask.

The Pebble Partnership, which sits in the difficult camp, has invested at levels equal to the task at hand.

"To date, more than US$150 million has been invested in environmental research alone, conducting one of the most extensive scientific programs ever initiated for a mining project in Alaska. Data from environmental studies drives significant aspects of the engineering program as the partnership works toward developing a future mine plan that safely and responsibly co-exists with the fishery and surrounding ecosystem," the Pebble developer said in announcing the 2013 budget.

Before presenting the mine plan to federal and state agencies for permitting, the Pebble partnership plans to undertake a broad-based public engagement program in Southwest Alaskan. In addition to presenting a plan to develop and mine the world-class copper deposit, the partnership will talk with area residents about the economic opportunities the project could offer.

A workforce development plan, due to be released soon, will provide details about the types of jobs anticipated at Pebble, the requirements for the positions, and where people could go to seek the training required for the positions.

"This project has significant socioeconomic benefits for the people of Southwest Alaska living in a region recognized with one of the highest costs of living in the nation, considerable village outmigration, school closures and high rates of unemployment," says Pebble Partnership CEO John Shively.

A national economic impact study, which is also due to be published in the near term, will outline how these economic benefits are anticipated to ripple out from Pebble.

"The Pebble Partnership will soon release a national economic impact study of the Pebble Project, which together with the workforce development plan and project planning updates will form the basis for an enhanced public engagement initiative this year," Thiessen said. "The Pebble Partnership will continue to meet and consult with people and communities throughout Southwest Alaska about the many aspects of this project, while listening to their issues and questions and describing how the Pebble project will be built and operated to co-exist with clean water and healthy fisheries, and provide significant benefits to the region and country."

Final assessment

As the Pebble Partnership enters the final stretch to permitting, the U.S. Environmental Protection Agency is putting the finish touches on 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 discharge into wetlands. Some 130 million acres of Alaska, about the combined area of California and Kentucky, are considered wetlands. Much of this vast expanse, including the Pebble property, is treeless areas of moist and wet tundra underlain by a permanently frozen layer that prohibits water drainage.

Although the Corps has been relegated the authority over the discharge permits on these wetlands, the EPA was granted the power to prohibit, restrict, or deny CWA Section 404 permits that pose an unacceptable adverse impact to fisheries or other water uses.

A group opposed to the development of Pebble petitioned the EPA to use this veto power to pre-emptively deny the Pebble partnership discharge permits that would be needed to build a mine at the world-class copper-gold-molybdenum deposit. Responding to the request, the environmental agency initiated the Bristol Bay Watershed Assessment to see if this unprecedented stretch of its authority is justified.

A draft Bristol Bay Watershed Assessment released in May 2012 was applauded by Pebble opponents because the hypothetical scenario used by EPA seems to demonstrate that a large mine in Bristol Bay would damage the fisheries there.

Pebble supporters argue that the watershed assessment is fatally flawed from the concept.

"A pre-design assessment will always use incorrect mine design features (because the design has not been done); it will always lack important environmental features of the site (because most or all of the facility sites have not been identified); and it will omit prevention and mitigation measures (because they have not been identified by the company or the government). For these reasons, the pre-design ecological risk assessment is an unsupportable methodology that cannot produce reliable conclusions," Bob Loefler, a visiting professor at the University of Alaska Anchorage Institute of Social and Economic Research, wrote.

Or, as Pebble CEO Shively put it, "They developed a mine that could not be permitted and then went on to show people that since it could not be permitted, it would kill fish."

A 12-person peer review panel charged by the EPA to scrutinize the watershed assessment found multiple shortcomings in the report.

Based on the critiques made by the 12-person panel and the some 230,000 comments on the assessment, EPA said it is taking the following steps to shore up the draft assessment:

•Clarifying the overall purpose and objective of the assessment;

•Clarifying the development and use of a realistic mining scenario;

•Expanding the use of the conceptual models to better illustrate how mining activities could potentially affect Bristol Bay's fishery resources; and,

•Enhancing the review of modern mining practices to consider additional strategies for mitigation of potential adverse impacts of mining.

To determine if the adjustments to the draft assessment reflect the peer reviewers' feedback, the EPA has asked the 12 original panel members to take a look at the updated report.

The reworked assessment is due out in the coming days, at which point the peer reviewers and public will be afforded the opportunity to provide input.

The EPA said the Bristol Bay Watershed Assessment will be finalized in 2013. While it is unclear what the EPA intends to do with the finished report, it is certain that if the environmental agency tries to pre-emptively block Pebble partnership from applying for permits there will be a major pushback from Alaska and Washington D.C.

"If EPA should decide to deny the Pebble partnership the benefit of due process, ladies and gentlemen, I'm afraid it may just be the first of many times that we may see that abuse of process; so we simply can't allow it to happen," said Sen. Lisa Murkowski, R-Alaska.

Author Bio

Shane Lasley, Publisher

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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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