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By Shane Lasley
Mining News 

A growing workforce

Mining's impact to the Alaska economy felt at the personal, local level


Last updated 1/27/2018 at 4:27pm

Mining's contribution to Alaska's economy starts with the hefty paychecks being issued to the some 4,350 miners that work in the state, according to recent study completed by the Alaska Miners Association and McDowell Group.

The report, "The economic benefits of Alaska's mining industry," found that the average miner working in Alaska during 2016 received a whopping US$108,000 for the year, about double the average income across all sectors in the state. That is nearly US$470 million worth of paychecks, most of which went to Alaskans.

In addition to providing good paying jobs, Alaska's mining sector helps bolster the bottom lines of the local governments, Alaska Native corporations and the state government.

"Gold is where you find it," is an adage oft cited by prospectors and miners of the yellow metal. This same axiom can be applied to all minerals being mined and explored for in Alaska and is a key to geographical diversity of the jobs and other economic benefits flowing from the state's mining sector.

Today, Alaska hosts six large-scale mines, hundreds of family-sized placer gold operations and more than 20 active mineral exploration projects. With the exception of the oil-rich North Slope, these mines and projects are found in every region of the state.

Due to this wide geographical range, many of Alaska's mining jobs are filled by residents of rural communities where there are few other economic opportunities. Alaska miners hail from more than 50 communities across the state, half of which are located off the state's road system.

Great assets in SE

Miners live in 17 communities along the Southeast Alaska Panhandle, many of which work at Hecla Mining's Greens Creek silver mine south of Juneau and Coeur Mining's Kensington gold mine north of the capital city. These mines are the top two property taxpayers and for-profit employers in the city and borough of Juneau, where they are located.

Greens Creek, which holds the No. 1 position in both categories, had 420 workers on it payroll and paid US$1.7 million in borough taxes in 2016, according to the mining benefits report.

Kensington paid US$1.4 million in property taxes last year and doled out more than US$44 million in wages and benefits to 325 employees during 2015, the most current year available. That comes to an average of more than US$135,000 per employee that year.

Palmer, a copper-zinc-gold-silver exploration project being advanced by a partnership between Constantine Metal Resources and Dowa Metals & Mining, provides a number of jobs to residents in the nearby town of Haines at the north end of the panhandle.

"Constantine Metal Resources has been a great asset to our community. They want to develop a project that protects the surrounding environment, while also providing jobs to Haines," one Haines resident wrote in support of plans to build a road for further exploration at Palmer.

Bokan Mountain and Niblack, both located on Prince of Wales Island, have the potential to bring high paying mining jobs to the southern end of the panhandle. Both projects were advanced nearly to the permitting stage by 2014, but have been largely dormant in recent years.

A 2012 preliminary economic assessment for Ucore Rare Metals' Bokan Mountain proposes a 1,500-metric-ton-per-day underground mine, a 750-tpd mill and a state-of-the-art processing facility. This operation is anticipated to produce 2,250 metric tons of rare earth oxides per year during the first five years of full production; including an annual output of 95 metric tons of dysprosium oxide, 14 metric tons of terbium oxide, and 515 metric tons of yttrium oxide.

Heatherdale Resources' Niblack project hosts a volcanogenic massive sulfide deposit rich in copper, zinc, gold and silver. A mine similar in scale to Greens Creek has been considered for this project.

In 2014, the Alaska legislature approved a bill that authorized the Alaska Industrial Development and Export Authority to issue up to US$270 million in bonds to fund infrastructure and construction to support the development of Bokan Mountain and Niblack.

Development of these projects is expected to provide an economic boost to Prince of Wales Island and the nearby town of Ketchikan, where both companies have investigated the potential to build processing facilities.

Golden Interior mines

Interior Alaska is one place prospectors and miners have had great success in finding gold and this region of the state hosts two large hardrock gold mines, more than half a dozen respectable exploration projects and numerous placer gold operations.

Kinross Gold's Fort Knox Mine, the largest and longest running of the two hardrock operation, has been a source of good paying jobs to Interior Alaska residents for more than two decades.

This open-pit mine about 20 miles north of the Golden Heart City surpassed two major milestones in 2016, the seven-millionth-ounce of gold poured and the 20 years of operation.

The addition of the Walter Creek heap leach facility, an efficient means of extracting gold from low-grade ore, has been a key factor to the longevity of Fort Knox.

This heap leach facility, which began operations in 2009, demands a larger crew and in 2016 the mine had 660 employees on its payroll.

In addition to being a major employer for Interior Alaska residents, the economic report says the Fort Knox paid US$8.3 million in property taxes during 2016, making it the largest taxpayer in the Fairbanks North Star Borough.

In order to continue to be a major cog in the Fairbanks economy, however, this operation will need to boost its reserves of gold-bearing ore.

According to a 2015 technical report, the mill portion of the operation would be phased out this year and the last new ore would be stacked on the heap leach pad in 2019. Indications, however, are that a couple of years have been added to the life of the mine since that assessment.

Fort Knox General Manager Eric Hill indicated that the mine still has a future ahead of it.

"It is our honor to now have a second generation of employees joining us, and it is our hope to continue employing families for many years to come," he told Mining News.

Sumitomo Metal Mining's Pogo Mine also hit a major milestone in 2016, 10 years of operation for this underground gold operation about 60 miles southeast of Fairbanks.

While Pogo only needs about half as many miners as Fort Knox, it still paid some US$57 million in wages and benefits during 2016.

With the goal of reaching more decadal milestones, Sumitomo Metal Mining's Pogo has been investing more than US$10 million a year on exploration.

This effort has met this goal and more, identifying and expanding several zones of high-grade gold mineralization adjacent to the current underground workings at the high-grade mine.

"So, we are going to be there for a while," said Pogo General Manager Chris Kennedy.

Usibelli, the oldest of the large mines in Interior Alaska, helps to keep power costs low for its fellow mines and residents by supplying the coal that fuels 29 percent of the power in the region.

Providing coal to Interior Alaska power plant since 1943, Usibelli Coal Mines is a fourth generation, family-owned, all-Alaska business that prides itself in the relationships it has built with the some 110 employees who work at its Interior Alaska mine.

"The big thing at our mine is the people; they make us who we are," Usibelli Vice President of Engineering Fred Wallis said during a 2014 presentation in Fairbanks.

At the time, Wallis boasted that second, third and fourth generation miners make up some 30 percent of the work force at Usibelli's Healy operation.

Red Dog drives NW economy

Red Dog, Alaska's largest mine in terms of the value of the metals it produces, is the main driving force for the economy of Northwest Alaska.

In its 27th year of operation, Red Dog produced 583,000 metric tons (1.29 billion lbs) of zinc in 2016, accounting for roughly 5 percent of the world's supply of the galvanizing metal.

Teck is the operator at Red Dog, and NANA, the Alaska Native regional corporation that owns the land where the zinc-rich mine is located, is 30 percent owner of the operation. NANA's ownership increases by 5 percent every five years and is set to climb again this year.

It is this relationship between a mining company and an Alaska Native corporation that has been a key to the local economic benefits derived from Red Dog.

So far, NANA has received US$1.3 billion in royalties from its involvement in Red Dog.

Due to provisions of the Alaska Native Claims Settlement Act, NANA shares these profits with the other Alaska Native corporations, resulting in the redistribution of more than US$860 million across the state.

Additionally, Red Dog is the sole taxpayer to the Northwest Arctic Borough, an enormous area that encompasses the entire NANA region in Northwest Alaska. Actually a payment in lieu of taxes, the mine's 2016 contribution to the borough was US$8.8 million, plus US$2 million paid directly to the Northwest Arctic Borough School District.

Of the 600 direct and contracted employees at Red Dog, about 58 percent are filled by NANA shareholders.

NANA shareholders also made up about 44 percent of the workforce at the Upper Kobuk Minerals project, another mining venture the Native corporation is involved with.

In 2011, NANA forged a landmark partnership with Trilogy Metals (formerly NovaCopper) that unites copper-rich land it owns with more copper-rich state and federal lands owned by Trilogy.

The alliance allows the Inupiat-owned Alaska Native corporation to be involved in the exploration and development of Trilogy's Ambler property, including the world-class Arctic deposit. In return, Trilogy is investigating the potential of the copper-rich Bornite deposit and other mineral prospects on NANA lands in the Upper Kobuk region.

Today, the Arctic and Bornite deposits together host roughly 8.4 billion pounds copper; 2.6 billion lbs of zinc; 610,000 oz gold; 45.3 million oz silver; as well as significant quantities of lead and cobalt.

Arctic, a high-grade volcanogenic massive sulfide copper-zinc-lead-gold-silver deposit, is slated to be developed into a mine first.

Trilogy sees the potential for synergies for staged development of Arctic and Bornite, which are located about 16 miles apart, and is studying the economics of various scenarios for developing these neighboring world-class deposits.

If developed, this would be another source of mining revenue for NANA and Northwest Alaska.

Golden opportunity in SW

While Alaska's mineral exploration projects typically provide jobs and other spending into the regions where they are being carried out, the real economic impact is realized when the project is developed into a mine – and the next one up is exceptional.

We are talking about Donlin Gold, a world-class gold project that is set to become a major economic engine for the Yukon-Kuskokwim region of Southwest Alaska where it is located.

The Donlin Gold Mine being considered in an environmental impact statement, currently being finalized by the U.S. Army Corps of Engineers, includes a 53,500-metric-ton-per-day mill that is expected to produce an average of 1.1 million ounces of gold annually over the first 27 years.

Many of the residents of the Kuskokwim region were part of the team that advanced Donlin Gold to the permitting stage and many more are looking forward to taking part in the development and operation of the world-class gold mine.

"(Donlin Gold) has the potential to create jobs and financial benefits for TKC (The Kuskokwim Corporation) and the people in the region, allowing them to continue living off this land for generations to come," said TKC President and CEO Maver Carey.

TKC is an Alaska Native village corporation that owns the surface rights at the Donlin deposit and has secured a number of benefits for its shareholders in exchange for granting Donlin Gold long-term use of the land to develop the mine and supporting infrastructure.

Novagold Resources and Barrick Gold, equal owners of Donlin Gold, have not yet committed to developing the nearly 40-million-ounce gold mine but are expected to make that decision by the time the EIS is finalized, currently slated for early in 2018.

When Donlin Gold eventually does go into production, the economic impacts and opportunities it provides will ripple out from the Kuskokwim region.

Calista Corp., the Alaska Native regional corporation that owns the subsurface (mineral) rights at Donlin, sees development of the 39-million-ounce gold deposit as a turning point for its 13,000 shareholders.

Donlin Gold anticipates an annual payroll of US$375 million to pay the roughly 3,000 workers during the three- to four-year construction phase. Once in production, the company expects a payroll of more than US$100 million per year for the minimum of 800 workers that would be needed at the mine currently being considered. In addition to this direct employment, Donlin Gold is expected to spur about another US$60 million a year worth of jobs.

While not all of these jobs will be filled by residents of the region, history indicates that many will. Over the past 20 years, the companies involved with exploring Donlin have built a reputation for local hire. By 2008, nearly 90 percent of the more than 200 workers at the advanced exploration project were Calista shareholders, or their descendants.

While Donlin Gold has built a reputation for local hire, this commitment was enshrined in a surface-land-use agreement with TKC.

In addition to job preference, the agreement, which was updated in 2014, provides direct compensation to TKC through payments; commits to a coordinated and consultative approach regarding annual project planning, reclamation and preparation of a subsistence harvest plan for affected surface lands; and gives preference to TKC for contracts.

"Donlin Gold's continued presence in the region over the past two decades and the partnership which we have developed through the updated surface-use agreement, represent tremendous opportunities for the shareholders of our 10 villages and the broader Yukon-Kuskokwim community," said Carey.

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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