Proposed mine could cost state billions says agency

Posted: Thursday, December 21, 2006

Morris News Service — Alaska

Just saying “no” to the proposed Pebble Mine project could cost the state billions of dollars, according to a legal opinion from Alaska’s Legislative Affairs Agency.

Reclassification of the land use in the area to make mining illegal or a regulatory or legislative action that imposed excessive requirements for necessary permits could require the state to pay the area claim holder, Northern Dynasty, just compensation, the opinion says.

That compensation, calculated by taking the future value of the minerals in the ground, minus the expenditures required to dig them out, would likely total billions of dollars — or enough to wipe out Alaskans’ permanent fund dividends, said Rep. Paul Seaton, R-Homer.

Seaton said he asked for the information from the Alaska Division of Legal and Research Services to answer questions from some of his constituents who want to stop the Pebble Mine at all cost.

“I didn’t want to give scare tactics,” he said. “People should be aware of what the potential, of the negatives of denying that use. The liability is on every Alaskan.”

The Pebble Project is an initiative of Vancouver, British Columbia’s Northern Dynasty Mines Inc. to develop, build and operate a copper, gold, silver and molybdenum mine north of Iliamna Lake in southwest Alaska.

According to its Web site, Northern Dynasty has spent more than $70 million toward the development of the project and plans to spend $15 million to $20 million more this year.

As of January, the mineral resource at the site is estimated at 24.3 billion pounds of copper, 22.1 million ounces of gold, and 1.6 billion pounds of molybdenum. All told, it is worth nearly $100 billion at today’s prices.

But many environmental groups, along with commercial, sportfishing and some Native groups, have opposed the mine, saying the proposed site would damage the local ecosystem and kill valuable fish stocks.

Numerous proposals making their way through state boards are aimed at limiting the environmental impact of the mine.

One such proposal, by George Matz of Homer, would create a fish refuge within the hydrographic boundaries of the Kvichak and Nushagak-Mulchatna river drainages in the area.

That proposal was tabled at the Alaska Board of Fisheries meeting in Dillingham on Dec. 4 for further review.

In a press release, Northern Dynasty categorized the tabling as a win for the project.

“Proposal 121 and other efforts to establish a fish refuge in Bristol Bay are a clear and unapologetic attempt by the opponents of the Pebble Mine to deny our project a fair hearing under Alaskan Law,” said Northern Dynasty’s Chief Operating Officer Bruce Jenkins in the release.

“Of course, we’re very pleased that the Board of Fisheries has not lent its good name to this effort,” he said.

But Matz, who attended the meeting, said the tabling was merely procedural and that he’s confident the idea has legs.

“I felt it was very positive,” Matz said. “Anyone who was at the meeting knows that this wasn’t delayed.”

With the potential for big money lawsuits surrounding the project, lawmakers must look at any proposal or regulations that may infringe on Northern Dynasty’s mineral rights in the Pebble area closely, Seaton said.

But that doesn’t mean residents and lawmakers shouldn’t ask for strict regulations to protect the area’s waters or land, he said.

“You need to balance development with a sustainable environment,” he said.

Tom Crafford, the acting large mine coordinator for the Alaska Department of Natural Resources, said that balance may rest with the intent of any proposed regulation change.

If the regulation or legislative action is targeted at a single project, it gives that project ammo for going to court, he said.

Matz argues that his fish refuge proposal doesn’t target Pebble specifically.

“It’s deserving on its own accord,” Matz said. “I’m not the first with this idea.”

Matz said the idea actually started with the late Gov. Jay Hammond many years before Northern Dynasty started ramping up its project at Pebble.

In fact, a draft bill that could make its way to the Legislature would name a game refuge after Hammond.

The bill’s sponsor, Sen. Gary Stevens, R-Kodiak, said it’s premature to say the bill would reach the floor during the next session.

He said it is still in the fact-finding stage, and he wants to look at any legal ramifications of such an action as well as get a better idea about what the people in the area want.

Ben Stuart can be reached at

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