Alaska Standard for mining energy metals
North of 60 Mining News - November 3, 2023
Last updated 12/1/2023 at 11:34am
State's inaugural sustainability report details the ESG advantages of looking North to Alaska for energy transition metals.
The global energy transition has steered Alaska to a critical minerals crossroad that will shape the economic future of America's Last Frontier.
On the one hand, the push for low-carbon energy is expected to put a dent in the demand for petroleum, which has been Alaska's economic lifeblood for more than five decades. On the other, Alaska happens to be extremely rich in the copper, graphite, gallium, germanium, silver, zinc, and other minerals and metals critical to America's clean energy and high-tech sectors.
This critical mineral endowment offers the 49th State an ideal segue to transition its economy in step with a petroleum-fueled global economy that is shifting toward electric vehicles powered by low-carbon energy sources such as solar, wind, hydro, and nuclear.
"Like it has for the past 50 years, continuing to build our state for the next 50 years will depend on our ability to sustainably develop the resources owned by our people," Alaska Gov. Mike Dunleavy penned in the Alaska Standard, an inaugural sustainability report published for the state earlier this year.
The report details Alaska's unique position to supply America with the minerals and metals needed to make the transition to lower carbon sources of energy under a one-of-a-kind regulatory, constitutional, and congressionally mandated framework that elevates the environmental, social, and governance credentials of all natural resources mined from the nation's Last Frontier state.
"Our Alaskan principles that long predate the current ESG movement will continue to guide every decision we make," Dunleavy wrote.
Alaska's time arises, again
Alaska's potential to deliver minerals and metals critical to the U.S. is not something that was just recently recognized when the U.S. Geological Survey compiled the first official critical minerals list in 2018.
Going back to the gold rush days at the turn of the 20th century, prospectors were finding and often mining rich stores of antimony, graphite, tin, tungsten, and other minerals now considered critical.
Many of the critical mineral deposits discovered by gold rush pioneers became strategic sources of metals during the World Wars. In the decades to follow, however, these war-era mines faded with the strategic demand for these minor metals.
Today, these same mined commodities and many others that had little to no commercial applications until the last four decades are in high demand due to their uses in a growing number of clean energy and high-tech applications.
In an updated list compiled last year, the USGS named 50 minerals critical to America's security and economic wellbeing, 49 of which are found in Alaska.
If you count the 14 rare earth elements individually (which is how they are presented on the USGS critical minerals list), America depends on other countries for more than 95% of its needs for 26 minerals – 20 of which are primarily sourced from China.
This heavy reliance on imports for critical minerals grabbed the national spotlight when China announced earlier this year that it is restricting exports of gallium and germanium, minerals critical to computer chip manufacturing, and more recently, graphite, which is the single largest ingredient in the lithium-ion batteries powering EVs and storing renewable energy.
Considering that China singlehandedly supplies 98% of the world's gallium and roughly 90% of the lithium battery anode material made from graphite, the criticality of finding alternative sources of these minerals critical to America's economic wellbeing, national security, and clean energy ambitions is now much higher.
Dunleavy contends that America not only can but should look North to Alaska as it looks for secure and sustainable supplies of these and other minerals and metals.
"We want the world to know that if you care about environmental and social justice, protecting the public interest, and enriching people over dictators and other bad actors, there is no better place than Alaska to help achieve these goals," the governor wrote. "On the other hand, preventing Alaskans from developing our resources doesn't just hurt the people I serve and rob them of the opportunities available to their fellow Americans."
A state founded on resources
So, what makes Alaska a more sustainable source of precious, base, and critical metals than the rest of the United States, or the world?
Aside from being regulated under the strict environmental laws of the U.S., which puts Alaska on par with the other 49 states, America's Last Frontier has a unique constitution that mandates resource development for the betterment of its people and what many consider the most successful aboriginal land claims settlement on Earth.
"In Alaska, our resources collectively belong to the people in an arrangement unlike any other state, and as Governor, I am required under our constitution to ensure these resources are developed for the maximum benefit of our people," Dunleavy declared.
Congress' acceptance of Alaska as the 49th state in 1959 was predicated on the very idea that the state's vast natural resources would be developed. At the time, many Washington lawmakers were concerned that such a substantial frontier state with a small population and limited infrastructure would be a burden on American taxpayers. To alleviate these concerns, framers of the Alaska Statehood Act and the state's constitution determined that Alaska would be required to sustainably develop its resources to achieve economic independence rather than reliance on the federal government.
"The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and water, for the maximum benefit of its people." –Article 8, Section 2 of the Alaska Constitution.
The hopes of Congress and the mandates of Alaska's constitution began to pay off with the discovery of oil at Prudhoe Bay in 1968.
Since that fateful discovery, Alaska's North Slope has produced more than 18 billion barrels of oil and has contributed more than $155 billion to state revenue.
Alaska's oil industry now accounts for roughly 78,000 direct and indirect jobs, which is nearly one-quarter of the state's population, and $4.8 billion in Alaska wages.
While the transition to EVs charged with low-carbon energy will likely take decades, Alaska needs to consider what economic opportunities are available to sustain its government and people as the demand for the state's economic lifeblood dwindles. At least part of the solution could lie in supplying the enormous quantities of minerals and metals needed to build the envisioned clean energy future.
"Alaska is a vast, diverse, and young state with a population smaller than many counties. We have made tremendous progress over the past several decades in building infrastructure, improving health and quality of life outcomes, and creating good-paying jobs for our people," Dunleavy said. "This progress has happened in no small part thanks to the development of our resources, but we still have much work to do."
Landmark lands settlement
The 18 billion barrels of oil delivered so far would likely remain isolated on Alaska's North Slope if it were not for visionary Alaska Natives who pushed for an act of Congress that settled aboriginal title and allowed for a corridor to build the Trans Alaska Pipeline System for delivering the rich reserves of petroleum to market.
"It is impossible to discuss the evolution of resource development in Alaska without speaking to the critical voice Alaska Native people play in this story," according to the Alaska Standard.
Signed into law in 1971, the Alaska Native Claims Settlement Act, commonly referred to as ANCSA, involved a unique plan to organize Alaska Natives into 12 regional corporations, with each having its own geographical regions based largely on heritage and shared interests.
More than 200 village corporations were also established under ANCSA.
With the passage of this landmark settlement, 44 million acres of land, an area roughly the size of Oklahoma, was returned to the Alaska Native people. Additionally, the newly formed Alaska Native corporations were compensated a total of $962.5 million, which comes to around $7.3 billion in today's dollars, for land not returned in the settlement agreement.
The Alaska Native regional and village corporations have made their land selections based on cultural and subsistence significance, infrastructure needs, and natural resources.
As a result of this land selection process, ANCSA corporations were able to gain ownership of highly prospective mineral lands across the state.
Red Dog, which accounts for roughly 4% of the global zinc mine production and is a significant source of germanium, for example, is located on lands owned by NANA Regional Corp., the ANCSA regional corporation for Northwest Arctic.
Under a unique partnership forged with Teck Resources Ltd., which is the mining company that operates Red Dog, NANA receives a substantial net proceed royalty from the production at Red Dog.
Thanks in large part to revenues from Red Dog, NANA ranked No. 3 on Alaska Business Magazine's 2023 Top 49ers, an annual list of Alaska's largest companies.
No. 2 on the 2023 Top 49er list was Bristol Bay Native Corp. in Southwest Alaska, and No. 1 was Arctic Slope Regional Corp. In fact, out of the 49 companies that grace the list, 25 are Alaska Native businesses, a testament to the success of ANCSA.
Anthony Drabek, a director of Koniag Inc., the regional corporation for the Kodiak Archipelago, contends that beyond becoming economic powerhouses, Alaska Native corporations are the state's original socially conscious businesses and have raised the bar when it comes to ESG.
"Who better to steward lands for the future than those who have subsisted off them for centuries?" he penned in a 2021 column published in the Anchorage Daily News. "Today, ANCs use our lands, as our ancestors did, but also to sustain our people in a Western economy, delivering billions of dollars in economic impact and thousands of jobs to Alaska."
Tradition of sharing
The economic benefits from responsible and socially conscious development of resources on Alaska Native-owned lands flow to every corner of the state, thanks in large part to ANCSA Section 7(i), which requires regional corporations to distribute 70% of net revenues from resource development on ANCSA lands among all 12 regional corporations. In turn, Section 7(j) requires that half of the Section 7(i) payments be distributed to the respective village corporations within each of the ANCSA regions.
These provisions that honor the millennia-long Alaska Native tradition of sharing harvests were placed into the landmark aboriginal land claims settlement to help balance any inequities from a disparity in natural resource wealth between differing regions.
The "leveling effect" of 7(i) and 7(j) creates economic activity that otherwise would not occur in recipient regions and provides village corporations with vital funding.
When it comes to 7(i) proceeds from mining, NANA has been by far the largest contributor.
Of the approximately $2.4 billion in proceeds NANA received from Red Dog through 2020, the Northwest Alaska Native corporation paid roughly $1.5 billion in 7(i) payments to the other ANCSA corporations.
Calista Corp., which aspires to be another major 7(i) contributor from the proceeds of mining the world-class Donlin Gold deposit on its lands in the Yukon-Kuskokwim region of Southwest Alaska, appreciates the shared bounty from Red Dog and other natural resource projects across Alaska.
"Royalty sharing has historically kept many Alaska Native corporations from going bankrupt," said Calista President and CEO Andrew Guy. "To this day, Red Dog payments are a significant source of income for regional and village corporations."
Calista hopes that mining the 39-million-ounce Donlin Gold deposit will provide jobs and economic benefits that will ensure prosperity for its shareholders while also sharing the wealth with the other ANCSA regions.
Alaska's critical energy role
Just as they paved the way for an Alaska economy fueled by petroleum for the last five decades, the Alaska constitution and ANCSA now lay the groundwork for America's Last Frontier to play a critical role in the transition to cleaner and greener energy over the coming decades.
One of the major ways Alaska is poised to benefit from the energy transition is from the abundance of copper, cobalt, gallium, germanium, graphite, nickel, platinum group metals, rare earth elements, silver, zinc, and other energy metals found across the 49th State.
While Alaska is home to potentially economic quantities of 49 critical minerals, only two are currently being recovered from mines in the state – germanium and zinc at Red Dog.
NANA, however, hopes that copper, cobalt, and gallium will someday be produced from the Bornite deposit on its landholding in the Ambler Mining District, and Bering Straits Native Corp. has invested in the world-class Graphite Creek deposit in its region of western Alaska.
It is not just the state and Alaska Native corporations that are interested in Alaska's critical minerals potential. Federal agencies such as the USGS, Department of Defense, and Department of Energy are all looking North to Alaska for minerals critical to the nation's economy, security, and clean energy future.
Graphite Creek has, in particular, piqued Washington's interest.
Earlier this year, the Pentagon awarded Graphite One Inc. $37.5 million to accelerate the completion of a feasibility study for a graphite supply chain that will begin at the Graphite Creek project about 35 miles north of Nome, Alaska.
This was followed by an initial US$2 million investment and option to invest an additional US$8.4 million in Graphite One by Bering Straits Native Corp., the Alaska Native Claims Settlement Act (ANCSA) regional corporation for far western Alaska.
"The impressive work of the Graphite One team, which includes local BSNC shareholders, reinforces our decision to support the project," said Bering Straits Native Corp. Director of External Affairs and Public Relations Marleanna Hall. "As a BSNC shareholder originally from Nome myself, I am thrilled by what this project can do for our region."
From antimony and nickel in Alaska's Interior to chromium and platinum group metals in Southcentral, copper and rhenium in Southwest, and rare earths in Southeast, there are critical mineral projects across the breadth of the state with the potential to bolster local and state economies while also offering the nation and world a sustainable source of these key building blocks of the high-tech and clean energy future.
"Our nation has an overwhelming need and Alaska has the location and resource to meet that need," University of Alaska President Pat Pitney said during her opening address at the Critical Minerals in the Arctic: Forging the Path Forward summit convened in the nation's capital during July. "The nation's defense, its economic independence, and its ability to meet clean energy and climate goals are dependent on expanding the responsible mining that Alaska has demonstrated for decades."
Dunleavy also sees Alaska's rich resource endowment as an opportunity to pioneer technologies that will enable the decades-long energy transition toward a cleaner and greener economy.
"Alaska stands ready to lead the energy transition," he penned in the Alaska Standard.
*CORRECTION: This article has been updated to more accurately state the expected dent in oil demand due to the transition to low-carbon energy.