North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Strong zinc output, prices boost Red Dog; PILT settlement pending


Last updated 1/18/2018 at 8:01pm

Teck Resources Ltd. Feb. 15 reported a strong finish to the year at Red Dog, resulting in the Northwest Alaska mine producing 583,000 metric tons (1.29 billion pounds) of zinc and 122,300 metric tons (269.6 million lbs) of lead in 2016.

Production of both metals exceeded the company's guidance for the year.

Teck is forecasting Red Dog to produce 545,000 to 565,000 metric tons of zinc and 110,000 to 115,000 metric tons of lead.

The mine was also bolstered by significantly higher zinc prices.

During the fourth quarter, zinc prices averaged US$1.14/lb, a 56 percent increase over the final three months of 2015. Over the full year of 2016, zinc prices averaged US95 cents/lb, a 9 percent increase over 2015.

Zinc prices are currently around US$1.30/lb. Teck also said it has reached an agreement to settle a payment in lieu of taxes dispute with Northwest Arctic Borough, a regional municipality that covers 40,750 square miles of Northwest Alaska, including Red Dog.

The previous PILT agreement between Teck and the borough expired at the end of 2015. Prior to its expiry, the borough enacted a new tax ordinance, imposing a severance tax that would have significantly increased local taxes paid by Teck.

With the hopes of negotiating a new contract with borough, Teck filed a legal complaint challenging the legality of the severance tax.

Early this year, the two sides agreed to the terms of a new 10-year PILT that would result in a roughly 30 percent increase in the payment Teck will pay to the borough.

Additionally, Teck has agreed to make annual payments based on mine profitability to a separate fund aimed at social investment in villages in the region.

This agreement will go into effect upon final approvals by both parties.



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