Mining industry heats up

Posted: Friday, February 24, 2006

Alaska is a state steeped in mining history, and tales of a gold mining past figure prominently into the state’s cultural awareness. However, the mining industry is poised to become an even larger player in Alaska’s economic future, said Bob Hoekzema, the Alaska Miners Association’s research assistant.

While the Beluga coal fields and Pebble Mine project are the focus of much interest because of the size and scope of possible operations, there are a wide variety of projects throughout the state that impact the economy, especially in rural areas.

Current operations include the Usibelli coal mine and the Fort Knox gold mine in the Interior, the Greens Creek silver and zinc mine in the Southeast and the Red Dog zinc mine in the Northern region. This month, the Interior’s $347 million Pogo mine came online, pouring its first gold earlier this month. Seventy-six percent of its 175 employees came from Alaska, despite the often-difficult task of finding qualified miners and engineers in-state, Hoekzema said.

There is one figure that will prove even more significant, too.

“It’s anticipated that this will almost double gold production in Alaska,” Hoekzema said at the Kenai Alliance luncheon Tuesday.

Double, without considering Pebble. That mine, still in the feasibility study phase of development, is estimated to hold the largest known gold reserves in North America and the second largest copper reserves. That means more than 20 million ounces of gold and 22.6 billion pounds of copper, along with 1.4 billion pounds of molybdenum. Fort Knox, currently the state’s largest gold mine, produces about 1,000 ounces per day.

Northern Dynasty Minerals Ltd., the Vancouver corporation working to develop Pebble, already has spent $68 million researching the project and plans to spend $30 million more this year. Of the 609 employees who worked on exploration last year, 457 were Alaskans and 112 were from Bristol Bay, traditionally considered a fishing hot spot.

“That really does offer an alternative to the fishing industry in that area,” Hoekzema said.

Pebble has the potential to change the economic face of the Bristol Bay area, but many worry about the face of the natural landscape. The mine would only be 19 miles from the village of Iliamna, and there are four drainage areas for Cook Inlet and Bristol Bay in the neighborhood. Hoekzema, for his part, said the development process should move forward to sort out financial and environmental concerns.

“With all the salmon associated with that, there is certainly a lot of concern about what might happen with a large mine,” he said. “All I would argue is, let the process work. If it’s a mine, number one it has to be economic, and it may not be, the study isn’t done yet. The next step is to file an application for permits, and that opens up the public process.”

He noted that Pogo’s three-year application process was quite fast.

All told, he said, the mining industry is a long-term winner for Alaska workers, with more than 5,100 direct and indirect jobs, most of which pay nearly double the average Alaska wage. With the tourism industry merely holding steady and the timber industry barely viable compared to 20 years ago, the mining industry’s expansion could keep the economic wheels turning.

“It’s still nothing like the oil industry, and it probably never will be,” Hoekzema said, “but the numbers are significant.”

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