Legislature(1995 - 1996)
02/22/1995 08:04 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
February 22, 1995
8:04 a.m.
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative Bill Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative Alan Austerman
Representative Ramona Barnes
Representative John Davies
Representative Pete Kott
Representative Irene Nicholia
Representative Eileen MacLean
MEMBERS ABSENT
None
OTHER LEGISLATORS PRESENT
Representative Kim Elton
COMMITTEE CALENDAR
Presentation on the Alaska Juneau Mine by Echo Bay
Presentation by the Alaska Minerals Commission
CSSJR 6: Relating to federally held property in those states,
including Alaska, admitted to the Union since 1802.
PASSED CSSJR 6(RES) OUT OF COMMITTEE
WITNESS REGISTER
DAVID STONE, Manager Public Affairs
Echo Bay
3100 Channel Drive
Juneau, AK 99801
Phone: 463-5704
POSITION STATEMENT: Gave presentation on Alaska Juneau Mine
EARL BEISTLINE, Chairman
Alaska Minerals Commission
P.O. Box 80148
Fairbanks, AK 99708
Phone: 479-6240
POSITION STATEMENT: Gave presentation on AK Minerals Commission
and answered questions
HAROLD NOYES, Member
Alaska Minerals Commission
201 1st Avenue
Fairbanks, AK 99701
Phone: 452-4755
POSITION STATEMENT: Answered questions
ERIC MACKINNON, Member
Alaska Minerals Commission
1114 Glacier Highway
Juneau, AK 99801
Phone: 586-1254
POSITION STATEMENT: Answered questions
AL CLOUGH, Development Specialist
Mining and Minerals
Division of Economic Development
P.O. Box 110804
Juneau, AK 99811-0804
Phone: 465-5463
POSITION STATEMENT: Answered questions
DON STEVENS, Member
Alaska Minerals Commission
1048 W. International Airport Road
Anchorage, AK 99517
Phone: 561-1797
POSITION STATEMENT: Answered questions
JOE AMBROSE, Aide
Senator Robin Taylor
State Capitol, Room 30
Juneau, AK 99801
Phone: 465-3873
POSITION STATEMENT: Prime Sponsor SJR 6
PREVIOUS ACTION
BILL: SJR 6
SHORT TITLE: TRANSFER FED. LAND TO POST-1802 STATES
SPONSOR(S): SENATOR(S) TAYLOR, Halford, Kelly, Sharp, Frank, Green,
Pearce
JRN-DATE JRN-PG ACTION
01/16/95 11 (S) READ THE FIRST TIME - REFERRAL(S)
01/16/95 11 (S) RESOURCES
02/01/95 (S) RES AT 03:30 PM BUTROVICH ROOM 205
02/01/95 (S) MINUTE(RES)
02/03/95 159 (S) RES RPT CS 5DP NEW TITLE
02/03/95 159 (S) ZERO FISCAL NOTE (S.RES)
02/03/95 (S) RLS AT 12:10 PM BELTZ ROOM 211
02/03/95 (S) MINUTE(RLS)
02/06/95 181 (S) RULES TO CALENDAR 2/6/95
02/06/95 183 (S) READ THE SECOND TIME
02/06/95 183 (S) RES CS ADOPTED UNAN CONSENT
02/06/95 183 (S) ADVANCED TO THIRD READING UNAN
CONSENT
02/06/95 183 (S) READ THE THIRD TIME CSSJR 6(RES)
02/06/95 183 (S) COSPONSOR(S): FRANK, GREEN, PEARCE
02/06/95 184 (S) PASSED Y15 N- E4 A1
02/06/95 185 (S) TRANSMITTED TO (H)
02/08/95 263 (H) READ THE FIRST TIME - REFERRAL(S)
02/08/95 263 (H) RESOURCES
02/20/95 (H) RES AT 08:00 AM CAPITOL 124
02/20/95 (H) MINUTE(RES)
ACTION NARRATIVE
TAPE 95-22, SIDE A
Number 000
The House Resources Committee was called to order by Co-Chairman
Green at 8:04 a.m. Members present at the call to order were
Representatives Green, Ogan, Austerman, and Kott. Members absent
were Representatives Williams, Barnes, Davies, MacLean, and
Nicholia.
HRES - 02/22/95
PRESENTATION ON ALASKA JUNEAU MINE BY ECHO BAY
DAVID STONE, MANAGER, PUBLIC AFFAIRS, ECHO BAY MINES, stated he
would give a brief background on Echo Bay, a brief history on the
Alaska Juneau (AJ) mine project and talk about the economic impacts
of the project using a slide presentation.
MR. STONE stated Echo Bay mines is a publicly traded company listed
on the American, Toronto and Swiss exchanges. Echo Bay mines got
its start 30 years ago in the Northwest Territories of Canada,
reopening the Port Radium mine. He said Port Radium was
originally, during World War II, the sole source of uranium for the
Manhattan Project. Echo Bay Mines did not open Port Radium for
uranium but opened it for a satellite silver deposit and began to
develop that deposit in 1964. He explained Echo Bay Mines was
originally a subsidiary of an American corporation called IU
International out of Philadelphia.
MR. STONE stated Echo Bay Mines began production in the mid-1960s
of the high grade silver deposit at Port Radium. Echo Bay Mines
flew in materials from Yellowknife. He said by a fluke, Echo Bay
became a large player in the gold mining industry because of the
Hunt Brothers trying to corner the silver market in the late 1970s.
At that time, Echo Bay forward sold every ounce of silver left in
the mine and made about $50 million profit in one day, selling at
an average price of $50 an ounce.
MR. STONE said in 1979 the Port Radium mine began to go out of
business and noted the deposit had been mined out. Echo Bay took
the cash made in profits and invested it in a property further to
the north and east called Lupin, also in the Northwest Territories.
He showed a slide of Port Radium as it looked in 1978 and a slide
of it as it looked in 1980. Since then, Echo Bay has reseeded and
capped all of the roads around the tailing sites. He noted the
only thing left at the site is a monument which says there was a
mine there and a small cabin the Canadian Mounted Police had
established as an outpost prior to the mine ever being built.
Number 115
MR. STONE reiterated that Echo Bay invested the monies made on Port
Radium into Lupin. Lupin is 450 miles northeast of Yellowknife and
everything shown on the slide was flown in on a C130 Hercules. He
noted Echo Bay set a world record on the number of flights and the
amount of material hauled. The project began production in 1981.
Echo Bay had 1 million ounces of reserves, to date has produced 2
million ounces of gold and still has 1 million ounces in reserves.
He stated Echo Bay has 420 employees working on the project. He
said a number of employees live in the U.S. as well as Canada and
fly on a 727 to the project. He noted there is a great deal of
wildlife, particularly in the summer months, migrating through the
area.
MR. STONE stated after Echo Bay began production at Lupin, they
pioneered the use of ice roads over lakes to supply fuel and other
materials to the project. Once a year all of the nonperishable
supplies are brought into the project site over a series of ice
roads which are about 450 miles in length. Currently, there are
major exploration activities, close to Lupin, where there are
diamond deposits. That project is also supplying all of its
activities through Echo Bay's ice roads. He noted these roads
disappear in the summer (melts), so there is minimal environmental
impact.
Number 158
MR. STONE explained in 1985, Echo Bay became the operating partner
and purchased 50 percent interest in Round Mountain. Echo Bay's
other partner is Case Pomeroy and Homestake Mining. Round Mountain
has the distinction of being the largest heap leach open pit gold
mine in the world in terms of size. Round Mountain is based in
Nevada in the Smokey Valley, has operated for a number of years,
and has extensive reserves. Echo Bay has approximately 600
employees at that site. He said an interesting feature about Round
Mountain is that Echo Bay operates the largest day care in the
state of Nevada. The site has a number of husband and wife
employees so they are able to bring their children to the day care
facility. He noted they also have the option of taking a two week
vacation every year and the day care facility will watch their kids
for two weeks, 24 hours a day.
MR. STONE stated Echo Bay also operates the McCoy Cove mine which
was purchased in 1987. The McCoy Cove mine is the largest silver
producer in North America. Last year the mine produced in excess
of 10 million ounces of silver. He noted, however, that the mine
is really a gold mine. The McCoy Cove mine produced in excess of
300,000 ounces of gold and it is Echo Bay's biggest producer of the
four mines it has.
MR. STONE said located in northeastern Washington, near Spokane,
Echo Bay's smallest mine is called Kettle River. The Kettle River
mine is the largest employer in the county and employs the largest
number of natives from the Colville Indian Reservation. Kettle
River operates as a mill which is fed ore from a series of
satellite deposits and Echo Bay mines and then trucks the material
to the mill. He stated the mill produces 70,000-100,000 ounces a
year. The Kettle River mine is a very modern mill and is very
quiet, clean and a well-run operation.
Number 212
MR. STONE told committee members that Echo Bay has two projects in
Alaska in the development stage--the Kensington joint venture which
is about 45 miles north of Juneau and the AJ project in Juneau.
Going back in time, he said the Juneau gold belt is to Alaska in
terms of hardrock gold mining what the North Slope is to Alaska in
oil. The Juneau gold belt is the primary source of lode gold
deposits developed historically in Alaska. There were 46 producing
hard rock deposits throughout the gold belt and in the center of
the gold belt is Juneau and Douglas Island.
MR. STONE explained gold was discovered in 1880 by Joe Juneau and
Richard Harris in Silverbow basin. The gold was originally placer
mined and then the lode deposits were developed in the late 1880s
and extensively by the turn of the century. He said the first
deposits developed on a large scale were actually on Douglas Island
at the Treadwell mines, which consisted of four mines: the
Treadwell, the Mexican, the 700 Foot, and the Ready Bullion. By
the late 1880s, the Treadwell mines were the world's largest gold
mining operations, mining 5,000 tons of ore a day, roughly taking
10 tons of ore to get an ounce of gold and 42 percent of the gold
produced was paid out in dividends. He noted the mines were the
largest, single industrial operation in Alaska and were very
responsible for the development of the territory, particularly in
Southeast but also in the Interior.
MR. STONE said the Treadwell mines grubstaked prospectors. Many of
the prospectors who were at the site of the discovery of the
Klondike had worked at Treadwell the prior year. The Treadwell
mines also had the distinction of building the largest single stamp
mill ever built in the history. He explained the stamp mill was
the premier milling device used at that time. There were 960
stamps on the property. He noted the hammers were 1,280 pounds a
piece and would raise and drop on the rock, pulverizing it into
sand. Simple gravity concentration was then used and the gold was
recovered through amalgamation using mercury, as well as through
cyanidation. He showed a slide showing a typical gold bar. He
noted each gold bar typically weighed 100 pounds. The Treadwell
could produce up to 200,000 ounces in one year.
Number 264
MR. STONE pointed out the Treadwell mines met their demise, not
through the exhaustion of ore reserves but through the allowance of
salt water into the mines through a cave-in which occurred in 1917.
At the same time, there were a number of properties being developed
with two specifically being developed on the other side of the
channel, the Alaska Juneau mine and the Alaska Gastineau or
Perseverance mine. He said the Alaska Gastineau mine started in
the 1880s and by 1912 a 100 stamp mill was operating only
seasonally because of its high elevation and a lack of access to
tide water and seasonal water power which ran the mill. The
company decided the key to developing the property was on a very
large scale which meant tide water access and a very large mill.
MR. STONE showed a slide containing lines which indicated tunnels.
The lower line was a tunnel which began in 1912, was completed in
1914 and was the Sheep Creek adit. The Sheep Creek adit gave
access to Sheep Creek Valley which then gave access to tide water.
He noted the Sheep Creek adit was 10,497 feet long and was driven
at the fastest rate of any tunnel ever driven in the world. Via
Sheep Creek Valley, the ore could be hauled to the mill at tide
water. He said the mill was a revolutionary mine--instead of using
stamps, pebbles were used as a grinding medium. The mill was
capable of grinding 12,000 tons of ore a day and would
revolutionize the mining industry. Today, when one looks at a
modern mill, they see the evolution of this mill.
Number 304
MR. STONE stated in order to power the mill, two state-of-the art
hydroelectric projects were built--one being Salmon Creek. Salmon
Creek was the first thin arched dam ever built in the world. The
Salmon Creek dam is 172 feet high, 648 feet across at the crest,
and contains 52,000 cubes of cement. He noted Salmon Creek still
produces power today and is the lowest cost power producer in the
state. Coincidentally, the Annex Creek project was also built on
the Taku Inlet. The Annex Creek project was the first lake tap,
where a tunnel was driven underneath a lake, tapping through the
bottom of the lake, and the water went through the tunnel into a
pipeline down into the power house. He said this power plant was
on line seven and one-half months after discovering the site in
1915. He noted a federal power permit was applied for with the
Forest Service. That permit was received two years after the
project was completed and the permit to begin production of power
was received four years after the project was completed. He said
the regional forester in Alaska had said build it and the paperwork
can be dealt with later.
MR. STONE stated the largest lode gold producer in the history of
Alaska was the AJ gold mine. The AJ gold mine was incorporated in
1897 and began production in 1891. The south ore body was open pit
mined originally and later on it was mined underground. In 1917 a
very large mill was completed which was originally designed to
handle 8,000 tons of ore a day. He noted there were a lot of
technical problems with the mill and it took years to work the
problems out. By 1924, the mill could handle 13,000 tons of ore a
day and was employing 1,000 workers.
MR. STONE said the grinding medium was steel or cast iron balls
inside of a rotating mill called a ball mill. He noted the AJ gold
mine was the first major gold deposit ever developed using this
technology. The veins in the AJ deposits are a series of veinlets.
He stated the white quartz is where the gold is contained and the
surrounding country rock is essentially barren. He stated the
veinlets could not be mined individually, so they took it all out.
The veins are fairly high grade but when mixed with the host rock,
the gold becomes low grade. He pointed out it takes about 20 tons
to get an ounce of gold out of the AJ deposit.
MR. STONE showed a hole where 55 million tons were taken out.
After running the ore through the mill, it was sorted with 55
percent going through the mill for fine grinding and recovery of
the gold and the remaining course waste was placed in Gastineau
Channel at what is now known as the AJ rock dump. He stated there
are about 35 million tons placed on the AJ rock dump.
MR. STONE explained the ore body is over a three mile strike
length. He showed areas where almost 100 million tons were mined.
He said the deposit extends from 3,000 feet above sea level to
1,000 feet below sea level. In the late 1920s, the deep deposit of
the north ore body was discovered. He showed a hoist which was
used to haul up to 6,000 tons of ore a day from the deep levels
(1,000 feet below sea level) up to the main level which is
underground at 440 feet above sea level.
Number 375
MR. STONE stated in the mid-1930s, concerns over the size of the
rock dump forced a different form of disposal of the course waste
rock. Permits from the war department were received to place the
waste rock in specific areas along Gastineau Channel and Taku
Inlet. Barges would hold 750 tons each. A tug would take the
barges out to a predesignated site, a man would get off the tug and
get on the barge, open a valve, get back on the tug and a few
minutes later the barge would flood and flip over. The bottom of
the barge was exactly like the top, the water would automatically
siphon out, and then it would go back for another load. He
explained throughout Juneau and in the downtown corridor, about 30
percent of the town is filled in with AJ mine course rock. He
showed several areas in Juneau which are tidelands filled in with
AJ mine rock.
MR. STONE reiterated the AJ mine ran from 1891 to 1944 when it shut
down due to gold being frozen at $35 an ounce, lack of manpower,
and high taxation. The mine had produced 3.5 million ounces of
gold and 2 million ounces of silver, out of almost 100 million tons
of ore, mining 13,000 tons a day. The mine employed 1,000 people
and was the largest underground gold mine in the world in its day
in terms of the amount of rock mined on a daily basis. The mine
was Alaska's largest lode gold producer. He stated the mine
provided the territory of Alaska, during the winter months, with
half of its income from taxation.
Number 416
MR. STONE said the proposed AJ mine project was to mine 22,500 tons
a day by Echo Bay. He stated 1,000 ounces a day would be produced
or 365,000 ounces a year. The amount of gold produced in 1993 by
the state of Alaska in total was 191,000 ounces and the AJ mine
would produce 365,000 ounces. He noted that Echo Bay has invested
in excess of $80 million on the project to date. In order for Echo
Bay to bring the mine into production, an additional $300 million
will need to be spent. Echo Bay acquired the lease for the
property in 1985 from the city and borough of Juneau and AJT Mining
Properties, Inc., which is related to the power company in Juneau
and is an investor owned utility. Since 1985, Echo Bay regained
access, reviewed the historical records, conducted feasibility
studies, developed an environmental impact statement and is still
in the middle of permitting.
Number 435
MR. STONE stated one of the interesting aspects about the project
is that Echo Bay has developed a number of recreational
opportunities. Echo Bay envisions building a visitor center that
will support the tourism industry and also has an obligation to
develop an archival center for the historic records which are
extensive. He showed an artist's conception of the project as it
would be located at Sheep Creek. He said the old historic design
of the AJ mine would be used. He mentioned that many of the
artifacts to be shown have never been seen by the public before.
MR. STONE commented on the Kensington venture which is a 50/50
joint venture between Coeur Alaska and Echo Bay. The Kensington
mine was a past historic producer, on a very limited scale. The
mine had problems with recovery of the gold because it is a complex
ore body, but today there is technology available to do that. Echo
Bay acquired a 50 percent interest in the Kensington project in
1987. Since then, Echo Bay has established access, built a camp,
identified ore reserves, done a feasibility study, and has spent
$40 million, along with the partner's share of $40 million. He
stated Echo Bay will need to spend an additional $80 million to
bring the mine into production. The Kensington mine will be a
4,000 ton a day operation. It is a higher grade ore body so Echo
Bay will produce 500 ounces a day or 190,000 ounces a year, almost
equal to the 1993 production throughout the state of Alaska.
He showed what the camp at the Kensington mine looks like today.
Number 470
MR. STONE stated the AJ mine will employ approximately 450 people
with a payroll of $21 million and the Kensington mine will employ
340 employees with a payroll of $19 million (due to the remoteness,
a lot of overtime will be paid). Echo Bay has a commitment to hire
locally--will hire Juneau first, Southeast second, and statewide
third. Echo Bay has established a training program with the
University of Alaska. The goods and services purchased in Juneau
annually during construction would be $15 million a year for the AJ
mine and $6 million a year at Kensington. During ongoing
operations that total would be $44 million a year at the AJ mine
and $19 million a year at Kensington. He stated the city will get
a royalty from the AJ mine of between $3 million and $3.5 million
a year; property taxes of $4 million a year for the AJ mine and
$1.5 million a year for the Kensington mine; sales taxes on local
purchases would be $1 million for the AJ mine and $.5 million for
the Kensington mine; state corporate and mining license tax would
be $5 million a year at the AJ mine and $2.5 million a year at
Kensington.
MR. STONE said Echo Bay is strictly a gold company and that is
their primary interest. He stressed the AJ mine and the Kensington
mine are Echo Bay's two key projects being developed today. Echo
Bay has a number of other projects being looked at throughout North
America, as well as in Latin America and Africa.
Number 497
CO-CHAIRMAN GREEN noted for the record that Representatives
NICHOLIA, MACLEAN, and WILLIAMS had joined the committee.
REPRESENTATIVE EILEEN MACLEAN wondered what Echo Bay wants the
legislature to act on.
MR. STONE stated he is not asking the legislature to act on
anything. He said he was present merely to inform the legislature
as to the status of the two projects.
CO-CHAIRMAN GREEN recalled when Mr. Stone was talking about the
Round Mountain project, he mentioned a heap leach. He wondered
what a heap leach is.
MR. STONE responded a heap leach process is a process that was
developed in the late 1970s where a weak cyanide solution is
sprinkled on top of very low grade ores and the gold is dissolved,
allowing recovery. He stated the heap leach process was an
economic process developed for very low grade ore bodies which are
typically open pit mined.
Number 519
REPRESENTATIVE SCOTT OGAN stated he thoroughly enjoyed the
presentation. He noted Mr. Stone was not asking for anything, but
he wondered if there is anything the legislature could do to help
get these projects going.
MR. STONE stated at this point it is premature for the legislature
to be doing anything. He felt Echo Bay's issues are with obtaining
federal permits and Echo Bay hopes to work closely with the federal
agencies to obtain those permits.
REPRESENTATIVE OGAN questioned if any resolutions would help.
MR. STONE stated no and he would hate to see the legislature spend
much time on such a thing.
CO-CHAIRMAN GREEN recalled Mr. Stone had indicated that $80 million
had been spent on the AJ mine. He wondered if Echo Bay has seen
progress and asked if there is a reasonable expectation the
necessary permits will be received.
MR. STONE responded Echo Bay would not spend these monies if they
did not feel there was a serious potential for success. He stated
Echo Bay has established its commitment by investing these monies.
He noted that Echo Bay's budget this year for the AJ mine project
is $13 million.
CO-CHAIRMAN GREEN noted the statistics which Mr. Stone had
presented were very impressive, especially in a down-turned
economy. He asked if Echo Bay has any idea when it might receive
all of the necessary permits.
MR. STONE stated Echo Bay has a scheduled meeting with the
Environmental Protection Agency (EPA) and the Corps of Engineers on
February 27 and a variety of options to address their concerns will
be discussed, as well as concerns of citizens in the community. He
felt some sort of schedule should be developed at that time.
CO-CHAIRMAN GREEN thanked Mr. Stone for his presentation.
HRES - 02/22/95
ALASKA MINERALS COMMISSION PRESENTATION
Number 570
EARL BEISTLINE, CHAIRMAN, ALASKA MINERALS COMMISSION (AMC), stated
he will introduce other members of the commission who are present,
give a brief review of the January 1995 Alaska Minerals Commission
report, and answer questions. He said the report shows members of
the commission and members of the staff. The commission is
composed of 11 people by virtue of state law. The composition of
the committee is made by three entities. The Governor appoints
five members, the Speaker of the House appoints three members, and
the President of the Senate appoints three members. He explained
that members of the commission are required to have at least five
years experience in the mining industry within the state.
MR. BEISTLINE noted the commission meets three or four times a year
in various communities, various topics are discussed, and testimony
is received from industry, agencies and other people interested in
any particular project. The overall format of the report is shown
on page 1. He explained the format and stated for each
recommendation there is a topic, findings, and then a
recommendation. He noted in some cases a recommendation will be
directed towards the Governor, legislature or the appropriate
federal agency.
MR. BEISTLINE stated the type of recommendations are varied
throughout the report and reviewed them.
Number 644
REPRESENTATIVE MACLEAN noted the commission recommends that the
Governor and legislature should invest $5 million per year for the
next decade. She wondered what would be accomplished with that
investment.
MR. BEISTLINE said the overall purpose of the geophysical and
geological mapping is to find out more about the mineral resources
in the state. He stated this is the number one step for private
industry to come in and do the additional work necessary, such as
what is being done now by Echo Bay. He noted money has been given
the past several years for this project. As a result, there are
indications that mining companies have taken interest. The most
recent example of a study being open is the Circle Mining District
in the Fairbanks area.
MR. BEISTLINE explained the original thought on this recommendation
was that it would take $50 million to take care of the entire
state. When money has been received in the past, certain areas
have been reviewed. He noted this priority has come from the
Division of Mining in the Department of Natural Resources (DNR).
REPRESENTATIVE MACLEAN noted another recommendation deals with the
Alaska National Interest Land Conservation Act (ANILCA). She asked
Mr. Beistline to explain further "the State should assert an access
route pursuant to Title XI of ANILCA..."
MR. BEISTLINE responded the state has identified hundreds of
potential revised statute 2477 Rights-of-Way and the commission
recommends that the state should aggressively assert all of the RS
2477 routes which have been established. He said the 2477 routes
come from a federal regulation which allowed access into certain
areas over the public land of the state. To do this there would
normally be a trail or road which would get into the area to allow
people in to do their work related to the mineral industry. He
stated that federal law was repealed several years ago. However,
the thought is these trails or roads continue to exist and the
state should take positive action to guarantee that in the future,
there will be access into these key areas.
TAPE 95-22, SIDE B
Number 000
REPRESENTATIVE MACLEAN wondered why it is necessary to go through
Title XI of ANILCA to test the process.
MR. BEISTLINE responded Title XI is a process which never has been
workable in the eyes of the people who have tried to get the routes
established confirmed. He said the issue becomes more important
because of the ownership of Alaska land.
REPRESENTATIVE MACLEAN said if the regional corporations do not
want RS 2477 to be crossing the paths of regional corporation
lands, why would the commission want to pursue this recommendation.
MR. BEISTLINE stated it would probably be desired to have
development take place for the benefit of the regional corporation
so there would be access and stimulate industry to come in.
MR. BEISTLINE introduced members of the commission present.
Number 084
HAROLD NOYES, MEMBER, AMC, stated in regard to the RS 2477 rights-
of-way, there are several areas which could be asserted on state
lands as well as across Native lands. He noted that Native
corporations have a different viewpoint on whether or not there is
a need for an RS 2477 to cross Native lands.
CO-CHAIRMAN GREEN noted for the record that Representative BARNES
had joined the committee.
REPRESENTATIVE MACLEAN said if Native corporations want to develop
their lands, they will do it on their own time. She felt RS 2477
would have an adverse impact to regional corporation lands.
NEIL MACKINNON, MEMBER, AMC, stated even though there is a focus on
Native lands and ANILCA with the RS 2477, there are broad areas in
the state which are private in-holdings, surrounded by federal
lands and state lands. He said there are some claims north of
Juneau which are surrounded by federal lands and the RS 2477 has
been used to get the U.S. Forest Service to issue a road permit.
Without that permit, a road would not have been possible, which
would have hindered the development of the property. He noted
there are private lands the RS 2477 crosses but that is weighed
against the fact it is a public access easement. He questioned if
the developer cannot get to it, what good is it. He pointed out in
the case of Native lands, it would depend on where the lands are
and what lands were involved. He stressed if there are ten
sections of land and it is not possible to cross the one section of
federal land, the ten sections are worthless.
MR. MACKINNON said the Title XI of ANILCA is so cumbersome that
when the Red Dog mine was developed, it was easier to get an act of
Congress to allow the road from tidewater to the Red Dog, than to
go through Title XI of ANILCA. He stated in the case of the Red
Dog, the Native corporations had the power to persuade Congress to
do that. He pointed out other citizens and corporations in the
state do not have that power.
Number 153
REPRESENTATIVE RAMONA BARNES asked in regard to the Red Dog mine,
if there was a land swap needed before the road could be put in.
MR. MACKINNON said that was correct.
REPRESENTATIVE BARNES noted that not in all cases would the state
or private in-holdings have land to swap with the federal
government in order to have a road to access their property. She
said the state only has until August to identify all the RS 2477
rights-of-way.
CO-CHAIRMAN GREEN stated he was not sure the deadline but said
there is a limited time.
MR. MACKINNON thought the deadline was August. He said the federal
regulations are in limbo but are onerous. He noted the state has
done a great job in the past two years identifying and building the
case for some of the assertions.
REPRESENTATIVE MACLEAN stated she likes all the recommendations in
the AMC report except for number three.
REPRESENTATIVE PETE KOTT invited Representative MacLean to co-
sponsor item number four and five.
REPRESENTATIVE BARNES noted recommendation number seven regarding
Citizens Advisory Commission on Federal Areas. She said prior to
the time of the Federal Land Use Planning Commission, there were
two agencies who could interact with the federal government on the
problems in Alaska with federal areas. Now the state only has the
Citizens Advisory Commission on Federal Areas which has been short
funded the last few years. She felt that commission is one of the
most effective commissions the state has.
Number 229
REPRESENTATIVE KOTT said it was his understanding that the make-up
of the commission does not change often. He wondered what happens
to previous recommendations.
MR. BEISTLINE responded past recommendations are reviewed and
sometimes recommendations are included from year to year. He noted
the purpose of the commission is to bring out points which will
stimulate resource development, particularly the minerals.
AL CLOUGH, STAFF, AMC, stated if one takes a broad look at the AMC
report, it is not a mining and geology report but is a regulatory
report. He noted the legislature and the Administration continues
to talk about jobs. He pointed out the minerals industry is ready,
willing and able to provide jobs but is blocked by a regulatory
system that is a circular system. He stressed it is not a linear
system. He said the industry is willing, ready, and able to make
adjustments, commitments and changes but what is needed from the
state and other supervisory groups is a linear system.
MR. CLOUGH noted that Mr. Stone had failed to mention that because
Echo Bay is stuck in the permit process currently, they are going
to be forced to lay off some of their crew beginning in about a
month. The certainty of permits is what is stifling any kind of
development in the state and he gave several examples. He
complimented Representative Williams and Representative Kott for
their efforts in legislation introduced this year to help the
industry. He said he gets calls regularly from people trying to
invest in Alaska in the minerals business and their question is not
on where to go to look for minerals but it is will the local
political regulatory environment allow a project to move forward
after a lot of money has been invested.
Number 343
REPRESENTATIVE MACLEAN asked someone to explain the recommendation
on page 7, 16 b. She stated she loves mining but if the commission
wants to go through RS 2477, she recommends using railroads instead
of roads.
DON STEVENS, MEMBER, AMC, said this recommendation refers to the
"no more" clause in ANILCA where Congress said they would not
designate any more conservation units in Alaska and the commission
is trying to hold Congress to their commitment.
REPRESENTATIVE MACLEAN asked Mr. Stevens to explain conservation
units.
MR. STEVENS responded those units are national parks, national
monuments, wildlife refuges, etc.
MR. BEISTLINE asked each commission member present to comment on
any points they wished.
MR. STEVENS said when hearing Mr. Stone's presentation, he was
again reminded that Echo Bay is the flagship of the mining industry
in Alaska. Echo Bay has great projects. However, the time it has
taken Echo Bay to get their permits and get through the
environmental impact study, etc. is being watched by the rest of
the industry. He noted Echo Bay has at least another two years to
get all their permits, which is not acceptable to the mining
industry. He stated if a company goes to several other countries,
permits for similar scale projects can be received much faster. He
stressed it is not to the credit of Alaska that it takes so long to
get the permits required. There is a need for regulatory reform.
CO-CHAIRMAN GREEN said many of the problems Echo Bay has
experienced are federal related. He wondered if there are any
specific state problems the legislature could address.
MR. CLOUGH said the water quality regulations could make a
significant difference, not just for Echo Bay but anybody working
with water. He stressed there has to be a reality check in the
system.
MR. MACKINNON stated one of his projects was ready for drilling
when it was discovered there was a need for a discharge permit for
the drill wastes, which delayed the project for 60 days. He made
comments on how difficult it is for small mining projects in the
state.
CO-CHAIRMAN GREEN stated the same problem is occurring over and
over in other industries.
MR. CLOUGH gave another example of the problems being experienced.
He noted there is a Canadian mining company trying to restart a
lead/zinc/silver/gold operation up the Taku valley in British
Columbia. This mine operated in the 1950s. He said the cheapest,
most effective and most reasonable way to supply that mine was as
it was done in the 1950s--bringing supplies up and down the Taku
River into Alaska, giving the majority of the infrastructure and
jobs to Alaskans. He noted when he met with the company over a
year ago, he counseled the company on avoiding anything in the
state which required a permit because they did have an option of
running their supplies through British Columbia, up through the
Yukon. Fortunately, the mineral concentrates most likely will be
hauled down the Klondike Highway to the port of Skagway.
MR. CLOUGH commented on the mine training program. He said by the
time the Greens Creek Mine was fully operational, over 80 percent
of their work force of 240 people were trained through the mine
training program.
MR. NOYES stated much of his time is spent promoting mineral
development on Native corporation lands. He stressed it is a very
competitive environment. He said the points issued in the report
will go a long way towards improving the environment for mining
companies to explore in the state and help generate employment and
investment in the state. He commented on the airborne geophysical
program which has generated interest by mining companies in the
state. He noted the Fairbanks Industrial Development Corporation
will be requesting funding for a program in the Interior for
several old mining districts which have not had much modern work
done in them. He felt the airborne program would go a long way
towards inspiring new interest in the area.
MR. NOYES noted the Fairbanks Industrial Development Corporation is
requesting $1.5 million for that program. He said if that is done
in the next year, hopefully in one to three years after that an
equivalent amount of money would be invested by industry.
Number 519
REPRESENTATIVE JOHN DAVIES wondered what the source is for the
money the Fairbanks Industrial Development Corporation is seeking.
MR. NOYES said he did not know.
REPRESENTATIVE DAVIES questioned, in regard to recommendation
number two on page one of the report, what foundation funding was
being referred to.
MR. NOYES stated the original idea was to have a fund of money
which would continuously fund the airborne surveys, allowing long
range planning for the program, so systematically the most
attractive parts of the state could be evaluated.
REPRESENTATIVE DAVIES said he did not understand the recommendation
as it relates to investing $5 million.
MR. CLOUGH responded the idea was if a dedicated fund were set up
in the amount of $50 million, the interest could allow an
investment of about $5 million a year for a 10 year period to
implement this program. At the end of the program, the principal
could be used for something else or it could be rolled over for an
ongoing, broad-based mineral investment. He reiterated the need
for the airborne survey program. He said the initial return is
straightaway. The long term return, if this program helps
facilitate the discovery of a major mine, pays back many times over
the modest investment.
MR. CLOUGH stated the commission wants to see if there is a way for
the legislature to institutionalize this program. He said there is
nothing magic about $5 million and 10 years--it is just one way to
look at it. He noted it can be an ongoing program that can be
slowly moved across the entire state and added that the program
involves no cost to maintain. He pointed out the data is just as
good 50 years from now as it is today. He noted reports from the
turn of century are still being used.
Number 576
MR. MACKINNON said a recent magazine article featured worldwide
mining. He noted that geophysical and geological mapping has been
done in those nations featured and is being advertised.
REPRESENTATIVE DAVIES felt the airborne surveys is something that
is appropriate for the state to do. He felt if private enterprise
is going to be encouraged, the ground work has to be laid.
REPRESENTATIVE BARNES wondered how aerial mapping affects
geophysical mapping. She asked if it helps identify where there is
mineral potential.
MR. NOYES stated it does. He said aerial mapping provides a basic
geological map showing different types of rock units. He added
that in some cases, it can identify characteristics which specific
mineral deposits have. He felt it was a very useful guide.
REPRESENTATIVE BARNES wondered if the entire state had been mapped.
REPRESENTATIVE DAVIES said only a few percent of the state had been
completed.
MR. BEISTLINE read several of the other recommendations contained
in the AMC report.
TAPE 95-23, SIDE A
Number 000
MR. BEISTLINE noted everyone is concerned with the state budget and
sometimes reductions have to be made but at the same time, it is
important to keep those entities going which will produce jobs and
the economy in the future. He stated the development of resources
is quite important. He expressed appreciation to the committee for
inviting commission members to attend the meeting.
Number 048
CO-CHAIRMAN GREEN thanked the commission members for their
presentation and complimented them on their report.
CO-CHAIRMAN BILL WILLIAMS asked Mr. Noyes to get more information
for Representative MacLean on the access problem which she had
concerns about.
MR. NOYES said he would be happy to do so.
HRES - 02/22/95
CSSJR 6(RES) - TRANSFER FEDERAL LAND TO POST-1802 STATES
Number 105
JOE AMBROSE, AIDE, SENATOR ROBIN TAYLOR, PRIME SPONSOR, stated the
idea of the resolution goes back to what has become a federal
doctoring of public domain and in the process resulted in 22 states
of the Union not on equal footing with the remaining states because
they do not own the property within their borders. He said in
response to a question at the last hearing, a zero fiscal note
approved by the Senate has been provided to committee members.
Number 120
REPRESENTATIVE BARNES said the military bases in Alaska include
many acres of land. She clarified under this resolution it will be
suggested that the federal government buy the land presently held
for military bases.
MR. AMBROSE replied yes. He noted the Constitution provides for
the sale of property for arsenals, forts, and other needful
buildings to the federal government with the consent of the
legislature.
REPRESENTATIVE BARNES stated she would like to see that happen but
with the military shutting down bases all over the country, she
would not want to ask the federal government to buy the land from
the state because she is afraid the federal government would shut
down those military bases.
MR. AMBROSE said there was a bill introduced in the last session of
Congress which started this process and provided for the return of
federal holdings within the states with exceptions such as military
bases and national parks.
Number 164
REPRESENTATIVE MACLEAN expressed opposition to CSSJR 6(RES) because
she feels it is a back door approach to attack the subsistence
problem. She said she would rather have the federal government
taking care of the state's subsistence on navigable waters rather
than the state, in light of the fact that the state legislature is
not even willing to consider a constitutional amendment to
subsistence.
REPRESENTATIVE DAVIES stated the fiscal note given to committee
members is not responsive to the question he asked at the last
hearing on CSSJR 6 as it is an estimate for fiscal year 1996 only.
He cannot conceive that anyone would conclude that there are no
costs associated with this resolution. He stressed this fiscal
note does not represent reality in respect to the proposal.
REPRESENTATIVE BARNES made a MOTION to MOVE CSSJR 6(RES) with
accompanying zero fiscal note out of committee with individual
recommendations.
REPRESENTATIVE NICHOLIA OBJECTED.
CO-CHAIRMAN GREEN asked for a roll call vote. Voting in favor of
the motion were Representatives Austerman, Kott, Ogan, Barnes,
Williams, and Green. Voting against the motion were
Representatives MacLean, Davies, and Nicholia. The MOTION PASSED
6-3.
ADJOURNMENT
There being no further business to come before the House Resources
Committee, Co-Chairman Green adjourned the meeting at 9:40 a.m.
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