The mining newspaper for Alaska and Canada's North

Alaska Mining Day – a historic crossroad

Miners efforts for over a century have built much of the West, now is the time to look at what mining will do for the future North of 60 Mining News – May 6, 2022

May 10, 2022, celebrates the ninth annual Alaska Mining Day. Established in 2013, Alaska Mining Day was created through legislation sponsored by Sen. Cathy Giessel, R-Anchorage, "to recognize and honor the intrepid individuals and industry that played an enormous role in settling and developing the territory and the state that continue to contribute to the economy of the state."

Why May 10? On this day in 1872, the General Mining Act of the United States was approved – which governed mineral development on federal lands.

While the law has been amended more than 50 times over the past 150 years, its essential principles remain in place:

"If a citizen explores federal public land not otherwise designated as a park, refuge or other protected status, and with their own energy, intellect, finances and hard work finds a valuable mineral deposit, that citizen, after obtaining the required environmental and operating permits, has the right to develop that deposit."

Alaska has a rich mining history, with its roots in the mining of copper, jade, and gold by Alaska Natives long before the famed gold rushes that brought outside miners, adventurers, merchants, and their families to the Far North to follow their dreams.

It was these intrepid men and women and their interest and pursuit of minerals that ultimately built towns, roads, ports, and railroads in what was then the territory of Alaska.

Today, mining is the second-largest economic driver for Alaska. Its six large mines, 192 active placer mines, and dozens of exploration projects provide roughly 4,700 jobs with an average annual wage of $115,300, more than twice the state average for all sectors of the economy.

These jobs employ residents in more than 70 communities throughout Alaska, more than half of which are rural areas with few other job opportunities. Minerals are Alaska's second-largest export commodity, which accounts for 38% of the state's export total in 2019, with a value of over $1.9 billion.

Mining industry payments to local government during 2020 totaled $48.7 million, and royalties and other fees paid to the state of Alaska were estimated at $116.5 million. Additionally, Alaska's mining industry provided $173.5 million in payments to Alaska Native corporations, benefitting all regional and village corporations through the 7(i) and 7(j) royalty sharing provisions under the Alaska Native Claims Settlement Act.

While mining has been a mainstay in the state for over a century, miners often found themselves in a legal vacuum due to disputes over claims caused by the California Gold Rush of 1849, leading to the eventual formation of the General Mining Act.

Mining legislation in the Wild West

During the California Gold Rush, miners and prospectors often found themselves in contention over land rights. Although the federal government had laws governing the leasing of mineral land, the United States had only recently acquired California by the Treaty of Guadalupe Hidalgo and had little presence in the newly acquired territory.

Hence, miners formed their own governments in each new mining camp and adopted the Mexican mining laws then existing in California that gave the discoverer right to explore and mine gold and silver on public land.

Miners would then move from one camp to the next and made the rules of all camps more or less the same, usually differing only in specifics such as in the maximum size of claims and the frequency with which a claim had to be worked to avoid being forfeit and subject to being claimed by another.

California miners spread the concept all over the west with each new mining rush, and the practices spread to all the states and territories west of the Great Plains.

Although the practices of open mining on public land were more or less universal in the West and generally supported by state and territorial legislation, they were still illegal under existing federal law.

At the end of the American Civil War, some eastern congressmen regarded western miners as squatters who were robbing the public patrimony and proposed seizure of the western mines to pay the huge war debt.

In June 1865, representative George Washington Julian of Indiana introduced a bill for the government to take the western mines from their discoverers and sell them at public auction.

Representative Fernando Wood of New York proposed that the government send an army to California, Colorado, and Arizona to expel the miners "by armed force if necessary to protect the rights of the Government in the mineral lands."

He advocated that the federal government itself work the mines for the benefit of the treasury.

Regardless, western representatives successfully argued that western miners and prospectors were performing valuable services by promoting commerce and settling new territory.

Thus, in 1864, Congress passed a law that instructed the courts deciding questions of contested mining rights to ignore federal ownership and defer to the miners in actual possession of the ground.

The following year, Congressional supporters of western miners tackled legislation, legalizing lode mining on public land known as the Chaffee laws.

Chaffee laws and placer law

On July 26, 1866, the first effective American mining legislation was passed by Congress. Known as the "Chaffee laws," this legislation basically made what the miners were already doing legal.

Named after Colorado territorial representative Jerome Chaffee, the legislation legalized lode (hardrock) mining on public land.

A few years later, Congress would extend similar rules to placer mining claims in the "Placer law," which was signed on July 9, 1870.

The Chaffee Law of 1869 and the Placer Law of 1871 were then subsequently combined into the General Mining Act of 1872, essentially granting discoverers rights to stake mining claims on federal lands to extract gold, silver, cinnabar, and copper.

Additionally, the 1872 Act also granted extralateral rights to lode claims and fixed the maximum size of those claims as 1,500 feet long and 600 feet wide. This gave the owner of the surface outcrop of a vein the right to follow and mine the vein wherever it led, even if its subsurface extension continued beneath other mining claims. This provision is also known as the Law of the Apex.

Many amendments have occurred throughout the decades to further clarify and leave no room for dispute. Today, due to concerns regarding the environment and the generally negative image that came from slipshod mining practices, mining has fought to remain an important part of the American economy.

Hardrock Mining and Reclamation Act

So far in the 21st century, the 150-year-old General Mining Law of 1872 has become a point of contention between U.S. policymakers that feel the law governing mining on federal lands is antiquated and those that contend the dozens of other federal laws passed over the decades strictly govern the industry.

Former mining advocates on Capitol Hil such as Rep. Steve Pearce (R-New Mexico) and the late Rep. Don Young (R-Alaska) argued that further restrictions on the industry or imposing royalties would force even more of the domestic mining industry out of the country.

As commented by former Congressman Pearce, "Why would we as a nation want to send our metals and uranium mining offshore, then wind up reliant on foreign countries for the raw materials we need for our industries and new power plants. We need to learn from past mistakes such as our reliance on the middle east for our petroleum products."

Objectively speaking, with America's reliance on China and other foreign countries for nearly all of the critical minerals and metals needed today, it seems those words fell unto deaf ears and nearly two decades later, a scramble to reclaim domestic supply is happening.

On Nov. 1, the U.S. House passed the Hardrock Mining and Reclamation Act of 2007 by a vote of 244-116.

The bill would have permanently ended new patents for mining claims, imposed a royalty of 4% of gross revenues on existing mining extracting from unpatented mining claims, and placed an 8% royalty on new mining operations.

Mining of private mineral rights (including patented mining claims) would not have been affected, and 70% of the royalty money would have gone to a cleanup fund for past abandoned mining operations, with the remaining 30% to affected communities.

The National Mining Association maintained that in combination with existing federal, state, and local taxes, the royalty imposed by the bill would have burdened US mining with the highest effective tax rate in the world.

However, the bill was not acted upon by the Senate and died at the end of the 110th Congress in January 2009.

Nevertheless, it would not stop there, with revisits to the bill occurring in 2009, 2014, 2015, and finally, 2017.

Regardless, each attempt to ratify the bill would not pass through Congress but attempts to regulate mining in the United States would see different approaches through the Clean Water Act, National Environmental Policy Act, Resource Conservation and Recovery Act and so on.

It is irrefutable that America has some of, if not the most, stringent regulations that come into play regarding mining while still enabling the act of mining.

While many countries seem to shoot themselves in the foot regarding resource development, American miners have fought to protect their ability to effectively mine while still adhering to the necessary precautions.

Of course, history is speckled with incidents of negligence and indifference, yet consequence exists for them, and for those mining companies that do adhere to the rules, well, often nothing is ever said when nothing goes wrong.

New American mining, laws

To address concerns about outdated, inadequate laws, the current White House has asked Washington D.C. lawmakers to establish a new mining regulatory framework with strong environmental standards throughout the entire mine life, from development to reclamation.

"We recommend Congress develop legislation to replace outdated mining laws including the General Mining Law (GML) of 1872 governing locatable minerals (including nickel) on federal lands, the Materials Disposal Act of 1947 to dispose of minerals found on federal lands, and the Mineral Land Leasing Act of 1920 among others," the Biden administration wrote. "These should be updated to have stronger environmental standards, up-to-date fiscal reforms, better enforcement, inspection and bonding requirements, and clear reclamation planning requirements."

The three laws cited by the White House, however, are not related at all to the environmental regulations governing mining in the U.S.

Instead, the focus was on the immediate issue of how federal lands are prospected and staked (Mining Law of 1872); how minerals on federal lands are sold or leased (Materials Disposal Act of 1947); and royalties on mineral products on federal lands (Mineral Leasing Act of 1920).

Much of the federal regulations relating to environmental standards and permitting processes for mining projects in the U.S. are found within the Clean Water Act and National Environmental Policy Act.

The NEPA process is both renowned for its strong environmental protections as well as infamous for its near-decade time frame for a large domestic mine in the U.S. to gain permits under its process.

"It takes an average of seven to 10 years to secure a U.S. mine permit. This, compared to the two years it takes in countries with similar regulations like Canada or Australia, makes investing in American mining projects a challenge," according to National Mining Association President and CEO Rich Nolan.

The White House sees these allied countries with more efficient mine permitting processes as increasingly important and secure suppliers of minerals and metals into American supply chains.

While the NMA president agrees that importing minerals from Canada, Australia, and other allies is necessary, the U.S. also needs to emulate the effective and efficient permitting systems of the global mining powerhouses.

"By simply increasing coordination and reducing duplication between federal and state agencies, setting, and adhering to schedules for permit reviews, and transparently tracking progress to provide accountability, the U.S. can become competitive again," Nolan wrote.

President Biden has signaled that he too would like to see the process for permitting domestic mines feeding minerals and metals into U.S. supply chains streamlined.

As such, the White House has directed a second federal interagency working group that includes experts in mine permitting and environmental law to fully explore "opportunities to reduce time, cost, and risk of permitting without compromising strong environmental and consultation benchmarks."

Alaska is mining

Ultimately, mining works for Alaska and is a significant portion of the state's economic portfolio.

Today, as America faces staggering resource challenges to meet a renewable energy future, it is imperative that many take a moment to inspect how mining in Alaska and the rest of the U.S. can grow and increase the benefits realized by residents, businesses, and the government at large.

With the recent American Energy Innovations Act, the Defense Production Act, and the overall American clean energy revolution envisioned by the Biden administration, it will require a massive supply chain upgrade to build the electric vehicles and renewable energy infrastructure needed for a low-carbon future.

With the hope of the Green New Deal to bolster the domestic supply of the critical minerals and metals needed for this low-carbon future and to tackle the omnipresent threat of climate change, many words are being said, but from the view on the ground, it does not appear that much is actually happening.

Many new technologies, new mines, new operating procedures, new buzzwords and standards are being shifted around, but ultimately, day-to-day has not appeared to change much overall.

Of course, on a macro-scale, it is hard to see these minute changes, yet it is the shifting of the small that is the origination to change perceptions of mining and the efforts of these Acts and Executive Orders that are beginning to settle into the minds of most involved in the industry that something needs to happen and happen fast.

A World Bank report published in 2020 estimated that the annual demand for battery materials such as graphite, lithium and cobalt could increase by roughly 500% over the coming three decades. While this projection is generalized and considered vastly conservative by lithium-ion battery insiders, it provides some insights into the need to secure resilient battery metal supply chains.

It is a fact that America is rich in minerals and metals, and Alaska even more so, with the U.S. Geological Survey calling Alaska a "geological storehouse of minerals critical to the United States."

With much of the resources needed for a future filled with renewable clean energy, a future where it can be said that Alaska has provided for the needs of the U.S. and even the world at large, America's Last Frontier finds itself in a position where it could be the foundation of the resources for this future.

Throughout history, not often do we read about positions where such things are eminent, but when we do, it is either a great blunder of missed opportunity or the greatest triumph that led to the paradigm shift for an entire nation and generations to come.

A hundred and fifty years from now, will Alaska Mining Day celebrate Alaska's triumph during a paradigm shift in global energy or will the coming decades be remembered as an opportunity missed for the state and the nation?


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