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By Shane Lasley
Mining News 

Falling from favor

Lower opinion of Alaska's mineral potential weighed on Fraser survey ranking

 

Last updated 1/18/2018 at 7:36pm



Alaska fell from favor with the 350 mining executives who responded to the Fraser Institute’s Survey of Mining Companies 2016, published on Feb. 28. This group of miners, explorers and consultants ranked the Far North State as the 14th best jurisdiction on Earth to seek and develop a mine.

To gather information for its report, the Fraser Institute asks mining executives to rank the mineral potential and mining policies of mining jurisdictions around the globe. The Canada-based think-tank compiles this data into the Investment Attractiveness Index, a measure that weighs miners’ perceptions of both the mineral endowment and mining policies of 104 mining jurisdictions.

Though this survey is subjective, it provides valuable insight into the views of global mining executives and what parts of the world they see as good places to get a healthy return on their investments.

“A richness of mineral reserves, coupled with competitive tax regimes, efficient permitting procedures and certainty surrounding environmental regulations can still attract significant investment—even with slumping commodity prices,” explained Kenneth Green, senior director of the Fraser Institute’s energy and natural resource studies and co-author of the mining survey.

Alaska drops from 6th to 14th place

Considered the second richest mineral district on the planet with decent mining policies, Alaska ranked a respectable sixth place on the 2015 Investment Attractiveness Index. In the latest edition, however, mining executives consider 13 of the state’s mining competitors as better places to spend mining dollars.

Where did these miners consider the most attractive place to invest mining dollars? That honor went to the Canadian province of Saskatchewan, followed by its eastern neighbor, Manitoba. Western Australia, Nevada, Finland, Quebec, Arizona, Sweden and Republic of Ireland rounded out the top ten mining jurisdictions on the 2016 Investment Attractiveness Index.

Efficient and open permitting is one area in particular that set Saskatchewan apart in the minds of mining executives.

“In Saskatchewan, the policy of staged and set time periods for getting permits is the one that the entire country should adopt,” said the president of and mineral exploration company.

Lower mineral potential?

Interestingly, it was a lower opinion of Alaska’s mineral potential that pulled the Far North State down six places on the 2016 Investment Attractiveness Index.

Each year, the Fraser Institute asks mining executives to ignore current policies that may sway investment decisions and rank global jurisdictions strictly on their geological endowment. 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.

While it would take a literal earth trembling event to change the actual mineral potential of any, or all, of the jurisdictions on Earth over the course of a year, more subtle forces can sway the perceptions of those who are seeking them.

The mining executives that responded to the 2016 Fraser survey ranked Alaska as the 15th richest minerals jurisdiction on the planet, down 13 spots from a year earlier and the lowest such perception of state’s mineral potential since 2007.

Neighboring Yukon Territory experienced a similar fall in the opinion of its mineral potential, dropping from fourth for 2015 to 16th on the latest survey. Similarly, Nunavut dropped from eighth to 18th. Northwest Territories bucked this trend, climbing ten spots to 11th on the mineral potential index.

The ten jurisdictions viewed to have the highest mineral potential on Earth are Western Australia, Manitoba, Saskatchewan, Queensland, Quebec, Arizona, Democratic Republic of Congo, Nevada, Ivory Coast and Philippines.

Steady mining policy

While miners’ views on Alaska’s mineral potential dimmed over the past year, their perceptions of the Far North State’s mining policies held firm.

Considered a report card on the mining policies of governments, the “Policy Perception Index” section of the Fraser survey is a compilation of responses on a broad range of policy topics important to miners.

At 23rd on this index, Alaska falls among a group of mining jurisdictions that are found primarily in Europe, Canada, United States and Australia.

For the fourth year running, participants of the Fraser Survey ranked the mining policies of Ireland as the best in the world, giving that country perfect marks in this category.

“The Republic of Ireland is a pragmatic and pro-exploration jurisdiction staffed by individuals with a keen interest in promoting and developing exploration and mining in the country,” a manager of an exploration company said.

Saskatchewan, Sweden, Finland, Nevada, Manitoba, Wyoming, New Brunswick, Western Australia and Northern Ireland rounded out the top 10 on the Policy Perception Index.

Infrastructure weighs heavy

Miners’ views of Alaska’s infrastructure, more precisely the lack thereof, are a heavy weight on the policy perception side of the equation for Alaska.

Known as the Last Frontier for good reason, Alaska hosts several undeveloped world-class mining camps – Pebble, Donlin Gold and the Ambler Mining District, to name a few – that have yet to be tapped due partially to their remote locations.

When asked about the quality and availability of power and roads, mining executives ranked Alaska 76th out of the 104 mining jurisdictions considered.

This low opinion of infrastructure is something that extends to the Canadian territories, Alaska’s neighbors to the east.

Mining executives ranked Yukon’s infrastructure at 63rd; Northwest Territories at 81st; and Nunavut’s at 89th.

While all of these Arctic mining regions are renowned for their mineral riches, the lack of infrastructure increases the costs of realizing this potential.

“The inability of the government of Northwest Territories to … agree on major infrastructure such as connecting to the southern power grid or building a road into the Slave Geological Region, either of which would greatly reduce the costs of exploration, deters investment in the territory. Power would also reduce the cost of living and attract employees,” explained the vice president of an exploration company.

Uncertain environmental policies

Environmental policies continue to weigh on the minds of executives considering whether they should invest in Alaska’s rich mineral potential.

When asked about uncertainty concerning environmental regulations, the respondents ranked Alaska 61st, which falls between China and Nicaragua in this category.

In recent years, miners have cited the U.S. Environmental Protection Agency’s attempt to veto or place cumbersome restrictions on Pebble before owners of the Southwest Alaska copper-gold-molybdenum project could even file for permits as a reason for being skeptical of the regulatory climate in Alaska.

In fact, the uncertainty over environmental regulations in Alaska was so bad that executives ranked the state 97th in this category on the 2014 survey. Out of the 25 jurisdictions that were ranked worse that year, seven – Michigan, New Mexico, Colorado, Minnesota, Montana, Washington and California – were U.S. states.

While global mining leadership continues to have some anxieties about mining regulations in Alaska this year, they have a much higher regard for state regulators to fairly administer the rules that are on the books.

On the topic of administration, interpretation and enforcement of existing regulations, the miners responding to the Fraser survey ranked Alaska 28th overall and third among U.S. states.

This seems to be largely the result of the Alaska Large Mine Permitting Team, a process enshrined in state law, to help companies hoping to develop a large mine in Alaska coordinate the numerous permits needed to do so.

“Availability of the Large Mine Permitting Team to provide guidance helps attract investment to Alaska,” the manager of an exploration company explained.

Lifting Pebble restrictions, Donlin key

Though Alaska slipped a few spot as an attractive place to invest in mining and mineral exploration, a number of events could see the state regain favor in the eyes of mining executives.

One such event that would assuage many of the environmental policy anxieties is the lifting of EPA’s restrictions on Pebble, allowing the enormous copper project to enter permitting.

Pebble Partnership, the company formed to develop Pebble, and EPA are nearing an out of court settlement on this matter. It now falls on the Trump Administration to decide whether to pursue the settlement, lift the limitations proposed by the previous administration, or see the court case to its end.

The issuance of permits to develop a mine at the world-class Donlin Gold deposit could also allay a number of concerns about Alaska.

The U.S. Army Corps of Engineers is in the final stage of considering an environmental impact statement for a mine at Donlin Gold that is expected to average of 1.1 million ounces of gold annually over an initial 27-year mine life.

Novagold Resources and Barrick Gold, equal owners of Donlin Gold, have not yet committed to developing this 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.

About as far off the grid as you can get in Alaska, the success in permitting Donlin and the decision to develop this world-class gold deposit would address both environmental and infrastructure concerns.

Alaska’s support for the Ambler Mining District Industrial Access Road, a proposed 211-mile transportation corridor that would provide surface access to the copper-rich Ambler Mining District in Northwest Alaska, could bolster confidence in the willingness and ability to develop needed infrastructure in the state.

The state began studies on the potential of building the Ambler Road in 2009 and the Alaska Industrial Development and Export Authority took over the project in 2013.

AIDEA, which is well-suited to arrange public-private partnerships, has an agreement with Trilogy Metals that paves the way for the quasi-state-owned authority to investigate various ways to fund the construction and maintenance of the Ambler Road and create the framework by which Trilogy would repay the investment from mines developed at the road’s terminus.

AIDEA initiated the permitting process in 2014 and the U.S. Bureau of Land Management is currently moving ahead with an environmental impact statement for the mining road.

“Having the BLM initiate the permitting process is a major accomplishment and milestone for developing the Ambler Mining District,” Trilogy Metals President and CEO Rick Van Nieuwenhuyse said on March 6.

According to the latest resource calculations, the Arctic and Bornite deposits on Trilogy-held lands in the Ambler District host roughly 8.4 billion pounds of copper; 2.6 billion lbs of zinc; 610,000 oz of gold; 45.3 million oz of silver; as well as significant quantities of lead and cobalt.

Author Bio

Shane Lasley, Publisher

Over his more than 11 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.

Email: publisher@miningnewsnorth.com
Phone: (907) 726-1095
https://www.facebook.com/miningnewsnorth

 

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