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Industry: Mining increases economic clout

Posted: Tuesday, May 10, 2011

Mines operating in Alaska are injecting hundreds of millions of dollars into the state's economy, particularly benefiting the state's larger communities where support companies are based.

Increasingly, employees of mining companies operating in remote areas are living in the state's larger communities, although Alaska's operating mines employ workers from about 120 communities statewide.

This, according to Ron Planz, public affairs manager for Hecla Mining at the Hecla/Greens Creek Mine near Juneau.

Planz led a group of mining industry officials from the Council of Alaska Producers, an industry group, appearing May 2 at an Anchorage Chamber of Commerce luncheon.

The large Red Dog lead and zinc mine north of Kotzebue illustrates the profound economic effects one mine can have across much of the state and in Southcentral Alaska in particular, according to Wayne Hall, public affairs manager for Teck Alaska, the mine operator.

For example, more than half of the workers at the Red Dog mine in Northwest Alaska live in Anchorage or the Matanuska-Susitna Borough, Hall said. About 230 of Red Dog's total full-time workforce of about 450 reside in Southcentral, Hall said.

Most of the remaining workers live in communities nearer the mine in Northwest Alaska. Red Dog also purchases equipment and supplies from 242 companies statewide, including 179 in Anchorage, Hall said.

The economic effects are wider yet, however. NANA Regional Corp., which is the landowner at the mine, paid out $82 million in shared mineral royalty revenues in 2010 to other Alaska Native corporations under a formula set out by the 1971 Alaska Native Claims Settlement Act, according to Lance Miller, NANA's vice president of resources.

Royalty payments to NANA itself, which have totaled nearly $500 million since production started in 1989, also have financed NANA's growth and diversification into a variety of Alaska businesses, from hotels to engineering services.

"There are 1,700 jobs in the Anchorage area 'created' by Red Dog," Miller said. "They are in the diversified businesses that NANA has built with the earnings from the mine. The figure reaches 5,000 jobs statewide."

Planz said his company, the Hecla Mining, and Coeur Alaska Inc., which operates the new Kensington gold mine, are the top two private-sector employers in Juneau, and most workers from the two mines live in Juneau and commute to work by crew boat.

Greens Creek, a multi-metal underground mine, is on Admiralty Island about 18 miles west of Juneau and employs about 340 workers. Kensington, also an underground mine, is at Berner's Bay north of the capital, and employs 300.

Lorna Shaw, public affairs manager for Kinross Gold in Fairbanks, said her company's Fort Knox gold mine near Fairbanks, employs more than 500. Kinross employees live in Fairbanks and can drive to work every day, she said. Fort Knox is a large surface mine.

A prospective new gold mine near Livengood north of Fairbanks, now in the exploration and development phase, could be similar to Fort Knox if it is developed. International Tower Hills, which is developing the mine, already employs about 100 in its exploration operations, Planz said.

The Livengood project has good road access via the Elliot Highway, and will be served by electrical transmission lines built out from the Interior city.

Fort Knox is connected to the local power grid now and Shaw said its large purchases of electricity reduce the cost of power for residential and business customers of Golden Valley Electric Association. A new mine at Livengood will similarly be a large industrial customer for Golden Valley.

Two large mine projects in remote areas that are also in advanced stages of development planning include the Donlin Creek gold project near the Kuskokwim River west of Anchorage and the Pebble project near Illiamna, southwest of Anchorage.

Donlin Creek, near Crooked Creek on the Kuskokwim River upstream from McGrath and Bethel, is at an advanced stage of exploration development, said Stan Foo, president and general manager of Donlin Creek LLC, the joint venture company developing the mine.

Two companies working in the joint venture are Barrack Gold Co. and Novagold Resources. Foo said Donlin Creek LLC plans to complete the latest feasibility study on the project this fall and to apply for development permits in late winter or in early spring 2012.

The new feasibility study will include a possible 312-mile, 12-inch natural gas pipeline from the mine to the Cook Inlet region, Foo said. The company is confident it will be able to purchase gas for the pipeline, despite concerns over an impending gas supply problem for Southcentral Alaska.

One way or another, the gas supply problems facing Southcentral will be solved, Foo said, either through new gas being discovered, delivered from the North Slope or imported as liquefied natural gas.

"Donlin Creek will be an important industrial customer. We will enhance the customer base," for suppliers of natural gas, Foo said.

If Donlin Creek is constructed, it will employ 3,000 in construction. In operation, the mine will require about 1,000 workers.

At Pebble, the two companies in the Pebble Partnership joint venture, Anglo American and Northern Dynasty, are spending about $91 million this year in continued engineering, geotechnical work and environmental studies, said Mike Heatwole, spokesman for the Pebble Partnership.

The company plans to have an environmental baseline report completed this summer for release to state and federal agencies, and to begin permitting for the mine in 2012, Heatwole said.

Pebble is a large copper-gold mine that will probably be a combined underground and surface mine. Like Donlin Creek, it will be a large employer in a region that is now economically depressed. Heatwole said Pebble would employ about 1,000 in production operations, if it is built.

In total, mining companies employed 3,500 in Alaska in 2010, spent $225 million on exploration and $250 million in mine development work including in construction, according to figures compiled by the Alaska Miners Association.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.



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