Pebble mine could bolster Alaska economy
Could help re-energize state in wake of COVID-19 pandemic North of 60 Mining News – May 15, 2020
Last updated 9/26/2020 at 2:26pm
Northern Dynasty Minerals Ltd. said its Pebble project could provide another source of jobs and revenue to an Alaska economy challenged by an interrelated combination of COVID-19 and low oil prices.
Though fewer than 400 cases of COVID-19 have been diagnosed in Alaska, placing it among the lowest states in the country on an absolute and per capita basis, the economic impact of the global pandemic on the largest of the United States is both severe and ongoing.
As a result of COVID-19 and an unprecedented worldwide collapse of oil prices, nearly 20% of Alaska's workforce – some 62,000 people in a state of less than 750,000 – have active or pending unemployment claims. Some economists forecast 50,000 Alaska job losses this year, as nearly every industry in the state has been impacted by lockdowns related to coronavirus.
Meanwhile, the average price for a barrel of North Slope oil has been languishing in the low $20 range through April and May – less than a third of the price required to balance the state budget. This comes at a time when Alaska is entering its sixth consecutive year of deficit spending. The state has virtually depleted the substantial budget reserves it built up over decades of high oil prices, and is now faced with generating new sources of revenue, introduction of personal income or other taxes, and vastly reducing future capital and operating expenditures.
"Certainly, many expect North America's oil and gas sector will be challenged to generate significant investment in new production in the years ahead, and Alaska's tourism sector has also been severely impacted by COVID-19," said Northern Dynasty Minerals President and CEO Ron Thiessen. "The minerals sector, on the other hand, has a much stronger outlook – with prices for gold and precious metals surging in the near-term, and the medium-term view for copper and base metals suggesting an extended runway for investment and growth."
Thiessen said Alaska is well positioned to benefit from the anticipated resurgence of mineral commodity prices, and a corresponding increase in investment in mineral exploration and development. He noted Alaska recently rose to the No. 4 position among 76 global mineral jurisdictions ranked in the Fraser Institute's Annual Survey of Mining Companies 2019 for overall investment attractiveness.
More information on the results of the Fraser survey can be read at: https://www.miningnewsnorth.com/story/2020/03/01/news/fraser-survey-alaska-shines-canada-slips/6186.html
In addition to Northern Dynasty's Pebble copper-gold-molybdenum project, which is slated to receive a Final Environmental Impact Statement (EIS) and Record of Decision (ROD) from the U.S. Army Corps of Engineers around mid-year, Alaska has several mining projects poised for development in the coming years. This includes Donlin Gold, a 39-million-ounce project in Southwest Alaska, being advanced under a 50-50 joint venture between Novagold Resources Inc. and Barrick Gold Corp., which has received federal permits for mine development and is currently advancing through state permitting; and Ambler Metals' Upper Kobuk Mineral Projects, which includes the Arctic, Bornite and numerous prospects in Alaska's Ambler Mining District that would be served by a proposed road being permitted by the Alaska Industrial Development & Export Authority (AIDEA).
"As these and other development projects advance and come on line, the billions of dollars in capital and operating expenditures they generate and thousands of high-paying Alaska jobs they support will make mining an even larger contributor to the state's economy than it is today," Thiessen said, noting Alaska already benefits from five hardrock mines and one coal mining operation.
"Alaska truly has one of the world's greatest mineral endowments," he added. "When you combine that with a skilled workforce, strong and experienced regulatory agencies, and a political leadership and citizenry that understands and values the important contributions that responsible resource development can make to a modern society, I believe Alaska has a unique opportunity to emerge in the next decade as one of the world's premier destinations for mining and mineral development."
The Northern Dynasty CEO said all of Alaska's hardrock mines are modern, long-life operations with exemplary records of environmental, societal, and financial performance, including high-levels of in-state employment and procurement. He cited the Red Dog mine, in particular – the largest zinc producing mine in the world, operated by Teck Resources on NANA Regional Corporation lands – as a project that generates hundreds of millions of dollars each year for distribution to the state's Native corporations, while drawing more than 55% of its workers from NANA's shareholder base.
A mine developed at the world-class Pebble project is expected to support as many as 1,000 full-time, direct jobs during mine operations, with average annual wages and benefits topping $100,000. In addition, a Pebble mine would generate more than $400 million in in-state expenditures and support up to 2,000 indirect jobs in the broader Alaska economy. Because it is located on Alaska mining claims, an operating Pebble mine is also expected to contribute some $66 million annually to state government coffers – including contributions to Alaska's Permanent Fund.
During mine operations, Pebble would also contribute an estimated $21 million each year in tax revenues to the Lake & Peninsula Borough, the regional jurisdiction in which the project resides. These funds, totaling some $420 million over 20 years of mining, would increase the borough's existing tax base and budget by up to 300% and provide an opportunity for local government to vastly expand the health, education and other public services it provides in 17 rural villages in southwest Alaska.
Recognizing the importance of mining to the state in the wake of COVID-19 and in a low oil price environment, Alaska Department of Natural Resources (DNR) Commissioner Corri Feige is urging the Army Corps of Engineers to keep the final stages of federal permitting for Pebble on schedule.
"We strongly encourage you to adhere to your defined NEPA (National Environmental Policy Act) schedule. With economic impacts felt at the federal, state, and local levels from COVID-19 and the current oil prices, we should be doing everything in our authority and ability to keep projects of statewide importance moving forward," Feige penned in an April letter to Army Corps of Engineers Alaska District Engineer Colonel Phillip Borders.
"When we make it through this pandemic, we will need to be prepared to reenergize our economy, job force, and revenue streams. Keeping the Pebble mine project on time will be a huge step in that direction, benefitting our statewide economy. As a cooperating agency assisting the USACE with the FEIS, we look forward to continuing to work with you towards a timely completion," she added.
More information on the mining's potential role in diversifying Alaska's economy can be read at Alaskas economy tipping toward mining in the May 1 edition of North of 60 Mining News.