The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Mining executives give Alaska, Yukon high marks for mineral potential, but worry about operating climates in the jurisdictions
Alaska and Yukon Territory share more than a 750-mile border in the eyes of the 485 mining executives that participated in Fraser Institute's Survey of Mining Companies 2014. This group of miners, explorers and consultants ranked these northern neighbors as two of the richest mineral jurisdictions on earth but found certain mining policies in each a cause for concern.
As a result, Yukon was ninth and Alaska was 10th on the survey's investment attractiveness index, a measure that weighs miners' perceptions of the mineral endowment and mining policies of 122 jurisdictions around the globe.
Finland is considered the most attractive place on the planet for mining investment, according this year's Fraser Institute survey. Though only ranked 16th when it comes to pure mineral potential, this northern European jurisdiction was second only to Ireland in terms of perceptions of mining policy.
Yukon usurps Alaska
Each year, the Fraser Institute asks mining executives to ignore current policies that may sway investment decisions and rank the geological endowment of global jurisdictions. Referred to as the best practices mineral potential index, this portion of the survey is meant to level the playing field in terms of policy and measure each jurisdiction's pure mineral potential in the eyes of survey participants.
Alaska has been a strong contender in this category, taking the No. 1 spot in three of the last five years, including 2013.
For 2014, however, neighboring Yukon usurped Alaska's title of being considered the richest place on the planet to hunt for mineral deposits.
During a Feb. 25 presentation in Juneau, Alaska Miners Association's executive director told Alaska's House and Senate resource committees that this rich mineral endowment is the state's top asset in terms of drawing mining investment.
"It is said across different resources sectors that we work with that Alaska has really great rocks," she said.
Alaska dropped to third place on this year's mineral potential index does not mean the mining community thinks less of the state's mineral endowment. In fact, Alaska's score increased slightly; however, in a tight competition for the richest mining district in the world, miners viewed Yukon and Nevada as slightly better.
Northwest Territories, Yukon's diamond-rich neighbor to the east, is considered to have the fourth best rocks in the world, according to the survey results.
EPA's chilling impact
While everyone agrees that Alaska has great rocks, miners see room for improving mining policies in the state. Participants ranked Alaska 23rd globally on the Fraser Institute's "Policy Perception Index."
Considered a report card on the mining policies of governments, the PPI is a compilation of responses on a broad range of policy topics important to miners.
Environmental policies for Alaska are one area of particular concern. When asked about uncertainty concerning environmental regulations, the respondents ranked Alaska 97th, near the bottom of the 122 jurisdictions considered.
The U.S. Environmental Protection Agency's attempt to utilize its presumed authority under section 404(c) of the federal Clean Water Act to proactively veto or place restrictions on permits needed to develop the enormous Pebble copper-gold-molybdenum project seems to be one of the primary reasons miners are uncomfortable with the regulatory climate in Alaska.
"The EPA's efforts to stop the Pebble Mine project before the commencement of permitting has had a chilling impact on investment in Alaska," wrote one participant in the Fraser Survey.
While Pebble is the most glaring example of federal agencies putting up roadblocks to the permitting process, Council of Alaska Producers Executive Director Karen J. Matthias told state lawmakers they did not have to look any further than the Greens Creek Mine near the state capital to find another.
When Hecla Mining Co., owner of Greens Creek, needed more room to store tailings, it envisioned permitting a facility with the capacity to last the silver mine for decades. Instead of the 150-acre facility they requested, they ended up spending five years to obtain a permit that will last the mine about a decade.
"What ultimately was approved was an 18-acre expansion of an existing facility took five years for permitting," Matthias explained during the same Feb. 25 presentation with AMA's Deantha Crockett.
Mike Satre, community and government relations manager for Greens Creek, told lawmakers that the small expansion and long permitting window means that Hecla will be starting the approval process for another enlargement in the next couple of years.
While federal regulators are seen as holding back approvals, Alaska's Large Mine Permitting Team is praised for its efficiency.
"One-stop mine permitting greatly reduced regulatory duplication, confusion, and cost; it increases transparency and decreases time in the regulatory pipeline," one survey participant wrote about Alaska.
Crockett agrees.
"On the state side, I am sure there is always room for improvement but we are certainly happy with the timeliness as well as the rigor of the system and the standards that we have to meet," she told Alaska lawmakers.
Uncertainty in the Yukon
While Yukon is the most prized for its mineral endowment, the territory's policies are becoming increasingly less attractive to the mining community.
On the policy perception index Yukon ranked 26th, falling eight spots from its 2013 ranking and 18 positions from the 2012 survey.
Miners' perception of the territory's legal system was the largest factor in the policy drop this year.
In 2012, the Yukon Court of Appeal opined that the Yukon government has a duty to notify and, where appropriate, consult with and accommodate the Ross River Dena Council before allowing any mining exploration activities to take place within the Ross River area is one reason for this concern.
Following the ruling, the Yukon government halted any new mineral staking in the Ross River area, a prohibition that recently was extended to January 2017.
"The court decision relating to the Kaska (Ross River Band Council) regarding mineral tenure has caused confusion and uncertainty and has dissuaded juniors from investing," explained one survey respondent.
Regulatory duplication and administration of regulations in the Yukon are other areas that weighed heavy on the minds of survey respondents.
"A continued lack of coordination of permitting between the environmental assessment board and the water board is causing an increase in permitting time for any projects of at least an additional year," one miner commented.
Minto, the only large mine currently operating in the territory, is one example of this longer permitting timeframe.
Capstone Mining Corp., which hoped to gain the permits to begin stripping Minto North last fall, has yet to get full authorization from Yukon regulators.
While the Yukon Environmental Socio-Economic Assessment Board issued the mining license in September, Capstone is still waiting for approval from the water license needed before stripping can begin.
Capstone provided additional information requested by the Yukon Water Board in February but does not foresee being able to strip Minto North early in the second quarter of 2015, as it had planned.
The company says the economics of Minto, without the Minto North deposit, are questionable at current copper prices.
Capstone said it will not be making any commitment of capital until an acceptable permit is received.
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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