Making the Ambler District connection
AIDEA, Ambler Metals invest $30.8M to advance Ambler Road North of 60 Mining News – February 11, 2022
Last updated 2/24/2022 at 2:53pm
The Alaska Industrial Development and Export Authority and Ambler Metals LLC have agreed to equally fund $30.8 million for a 2022 field program to advance the Ambler Access Project, a proposed 211-mile road that serves as an Alaskan epitome of connecting the aspirations of a low-carbon future with the large volumes of minerals and metals required to build the electric vehicles and renewable energy infrastructure that will make the green energy future a reality.
The World Bank Group estimates that more than 3 billion tons (6 trillion pounds) of newly mined minerals and metals will be required to meet the 2-degree Celsius temperature increase above the pre-industrial levels limit outlined in the 2015 Paris Agreement.
The global leaders that gathered for the U.N. Climate Change Conference (COP26) in Glasgow, Scotland last fall, however, determined that the Paris Agreement's global warming limits do not go far enough and set a new objective of holding the temperature rise below 1.5 C.
Wood Mackenzie, a highly regarded global natural resources analyst, estimates that mining companies, financiers, and governments will need to invest approximately $2 trillion into mines and supply chains over the next 15 years to have a chance of supplying the estimated 70.55 billion lb of base metals per year required to achieve the lofty COP26 objectives.
"Ironically, a once-in-a-lifetime opportunity for metals is also a headache, since the supply chain is unlikely to be able to scale fast enough to meet demand," said Wood Mackenzie Senior Vice President of Metals and Mining Julian Kettle.
The Ambler Mining District in Northwest Alaska hosts high-grade deposits that could help meet this demand by delivering billions of pounds of the copper, zinc, silver, cobalt, and other metals needed to achieve the COP26 climate goals.
However, this rich source of base, precious, and critical metals lies roughly 200 miles west of Alaska's road system.
This creates a conundrum for a coalition of national and Alaska environmental non-government organizations that do not want the Ambler Road built but back the climate goals that need the metals the access would provide.
As these groups pursue litigation that could circumvent federal permits issued for the proposed road in 2020, AIDEA and Ambler Metals continue to carry out the geotechnical investigations, right-of-way surveys, environmental studies, road and bridge engineering, and cultural resources studies that will be needed before a final decision to build the proposed Ambler Road.
"The upcoming field season will build on last year's field studies, permitting, and data collection as well as incorporate robust project controls to inform project schedule and cost and develop project execution strategies like CMGC (construction manager/general contractor)," said AIDEA Chair Dana Pruhs.
Building Ambler partnerhips
Since copper was discovered in the Ambler District in the 1940s, exploration has unveiled rich metal lodes in deposits and occurrences extending for at least 70 miles in this region lying on the southern slopes of the Brooks Range.
While this world-class mining district has been explored for the better part of seven decades, it was not until the junior mining company Trilogy Metals Inc. entered into a partnership with NANA Corp., Alaska Native Claims Settlement Act (ANCSA) for Northwest Alaska, in 2011 to consolidate public lands held by Trilogy with private lands owned by NANA.
This 448,217-acre land package known as Upper Kobuk Mineral Projects, or UKMP, brings together Bornite and several other copper- and cobalt-rich prospects on NANA-owned lands with the world-class Arctic deposit and dozens of similar volcanogenic massive sulfide prospects located on state, federal and patented mining claims in the Ambler Mining District.
"It has been over 10 years since Trilogy formed its partnership with NANA Regional Corporation, Inc. This partnership has been a very productive and fulfilling experience for all sides," said Trilogy Metals President and CEO Tony Giardini.
Much of this investment has been made into Arctic and Bornite, the two most advanced UKMP projects.
Located only about 15 miles apart, Arctic and Bornite host roughly 8.9 billion lb of copper, 3.6 billion lb of zinc, 626 million lb of lead, 88 million lb of cobalt, 770,000 ounces of gold, and 58.3 million oz of silver in the indicated and inferred resource categories.
Arctic is the most advanced UKMP project and is slated to be the first mine in the Ambler District.
According to a 2020 feasibility study, a mine at the Arctic deposit would produce 1.9 billion lb of copper, 2.3 billion lb of zinc, 388 million lb of lead, 386,000 ounces of gold, and 40.6 million oz of silver over an initial 12-year mine life.
Ambler Metals, a joint venture equally owned by Trilogy and a subsidiary of South32 Ltd. to advance mine development in the Ambler District, budgeted $28.5 million toward this goal in 2022.
"Our participation in the Ambler Metals joint venture, which is studying the potential development of the UKMP, is fully aligned with South32's aim of reshaping our portfolio by increasing our exposure to the base metals that are important in a low-carbon future," said South32 Chief Development Officer Simon Collins. "In line with our company's purpose and values, we are committed to progressing the UKMP in a way that minimizes social and environmental impact and is based on positive stakeholder relationships and the creation of opportunities for local communities."
Toward this overarching goal, the 2022 program at UKMP is slated to include drilling, engineering studies, and the initiation of federal permitting for the development of a mine at Arctic.
"We are looking forward to a busy and productive 2022 field season," said Ambler Metals CEO Ramzi Fawaz. "Ambler Metals will be recruiting for over 60 direct hire positions, ranging from geologists to heavy equipment operators. Additionally, there will be approximately 50 positions hired through contractors working for us."
Typically, roughly 70% of the workforce at UKMP is made up of NANA shareholders, many of whom come from villages surrounding the projects.
Looking to continue its strong Alaska Native hire tradition into the mine development and production phases at Arctic, Ambler Metals is kicking off several vocational training programs in the NANA and Doyon Ltd. regions.
"This [is] in addition to the very successful scholarship program that Ambler has in place for deserving NANA shareholders studying for future careers in the natural resources sector," said Fawaz.
The long road to Ambler
Because mines like those being considered for Arctic, Bornite, and other future UKMP project produce metal concentrates that need to be shipped, road access is essential for these operations.
UKMP, however, is 200 miles west of Alaska's road and rail system. This is the reason why the Ambler Access Project is necessary to enable the delivery of copper, zinc, cobalt, silver, and gold mined from the Ambler District to global markets that will require massive new sources of these metals.
AIDEA – a quasi-state-owned development authority established in 1967 to develop and advance the prosperity and economic welfare of Alaskans – permitted and plans to build the long road to the Ambler District.
Arctic and other mines developed in the Ambler District will pay tolls that will reimburse AIDEA for its investment.
A similar arrangement has proven to be a success at the Red Dog Mine, where AIDEA has recouped the US$267 million it invested in building and maintaining a 52-mile road and port facilities constructed to deliver zinc concentrates produced at the Red Dog to world markets and pays dividends to state coffers from the profits it gets from ongoing tolls.
The $446 million AIDEA has paid in dividends to Alaska's general fund since 1997, however, is considered a bonus. The development authority measures its success on its primary mission to "promote, develop, and advance economic growth and diversification in Alaska by providing various means of financing and investment."
And supporting the world-class zinc mine on NANA land in Northwest Alaska has fulfilled this mission.
"The Red Dog Mine has now provided three generations of good paying jobs for families across western Alaska," said AIDEA Executive Director Alan Weitzner. "Access to the Ambler Mining District has the potential to create four or more Red Dog-level mines."
With road access, these mines are forecast to create more than 3,900 direct, indirect, and induced jobs; generate more than $300 million in annual wages; and provide significant new revenues for both local and state governments.
With this potential on the horizon, the AIDEA board authorized up to $15.4 million for field season activities on the Ambler Access Project.
"The goal is to stay on schedule and on budget for a final investment decision in 2024," said Pruhs.
Ambler Metals is contributing another $15.4 million to the road project, which is above the $28.5 million it is investing into the 2022 program at UKMP.
In addition to the traditional NANA shareholder workforce at UKMP, the Ambler Road project will generate 50 local jobs such as tribal liaisons, bear guards, surveyors and environmental scientists. AIDEA also expects to require more than 42 Alaska subcontractors for the 2022 fieldwork and is utilizing a minority business enterprise program to encourage minority Alaskan-owned companies to bid.
Realizing the economic opportunities that the road and the mines the Ambler District will enable hinges on federal agencies prevailing in the lawsuits brought by conservationists that do not believe producing metals under robust U.S. environmental laws is a good tradeoff for building a road further into resource-rich but infrastructure-poor Alaska.
UKMP proponents, however, believe that the strong partnerships forged in the Ambler District will ensure the road continues to move forward.
NANA, AIDEA, Ambler Metals and the State of Alaska were granted intervenor status in the litigation. In addition, the Northwest Arctic Borough, which is the municipality for the NANA region where UKMP is located, has passed a resolution in support of the Ambler Access Project.
"We have always taken extreme pride on our commitment to our native partners and have always worked hard to earn their trust," said Giardini. "We believe our unparalleled track record and strong relationships with our local partners will ultimately prove to be successful in the development of the AAP and the development of the UKMP."