Legislature(2013 - 2014)BELTZ 105 (TSBldg)
03/20/2014 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB193 | |
| SB183 | |
| SB189 | |
| SB156 | |
| SB190 | |
| SB99 | |
| Confirmation Hearings | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 193 | TELECONFERENCED | |
| += | SB 189 | TELECONFERENCED | |
| += | SB 190 | TELECONFERENCED | |
| += | SB 156 | TELECONFERENCED | |
| += | SB 99 | TELECONFERENCED | |
| *+ | SB 183 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 99-AIDEA: DEVELOPMENT LOANS
2:17:30 PM
CHAIR DUNLEAVY announced the consideration of SB 99."An Act
correcting a reference to the Alaska Industrial Development and
Export Authority revolving fund; limiting the use of the Alaska
Industrial Development and Export Authority sustainable energy
transmission and supply development fund for certain loans and
loan guarantees and allowing the development fund to be used as
security for a bond guarantee; and amending the definition of
'qualified energy development.'" He noted that this was the
second hearing and there was a new committee substitute (CS).
2:17:51 PM
SENATOR STEDMAN moved to adopt CS for SB 99, labeled 28-
LS0741\C, as the working document and then objected for an
explanation.
2:18:07 PM
JESSE LOGAN, Staff, Senator Lesil McGuire, Alaska State
Legislature, Juneau, Alaska, sponsor of SB 99, summarized that
SB 99 corrects a few ambiguities in the SETS fund that was
created in 2012. The CS makes two changes to the original bill.
Language on page 2, lines 4-5, directs that the transfer of
funds between other funds within AIDEA is done by a vote of the
members. This constitutes an action of the board within AIDEA.
The second change found on page 3, lines 14-25, authorizes AIDEA
to issue bonds for up to $145 million for the infrastructure and
construction costs of the Bokan-Dotson Ridge Rare Earth Element
Project.
SENATOR STEDMAN removed his objection.
VICE CHAIR MICCICHE found no further objection and announced
that Version C was adopted. He asked if there were any
amendments.
2:19:13 PM
SENATOR STEDMAN moved to adopt Amendment 1, labeled 28-
LS0741\C.1.
AMENDMENT 1
OFFERED IN THE SENATE
TO: CSSB 99 ( ), Draft Version "C"
Page 1, line 8, following "project":
Insert "and the Niblack project"
Page 3, following line 21:
Insert a new bill section to read:
"* Sec. 6. The uncodified law of the State of
Alaska is amended by adding a new section to read:
LEGISLATIVE APPROVAL; NIBLACK PROJECT. (a) The Alaska
Industrial Development and Export Authority may issue
bonds to finance the infrastructure and construction
costs of the Niblack project. The Niblack project
includes a mineral processing mill, associated dock,
and loading and related infrastructure facilities at
the Gravina Island Industrial Complex, as well as
infrastructure at the project site on Prince of Wales
Island. The mineral processing mill, associated dock,
and loading and related infrastructure facilities at
the Gravina Island Industrial Complex, as well as
infrastructure at the project site on Prince of Wales
Island, shall be owned and operated by the authority
or financed under AS 44.88.172. The principal amount
of the bonds provided by the authority for the Niblack
project may not exceed $125,000,000 and may include
the costs of issuing bonds considered reasonable and
appropriate by the Alaska Industrial Development and
Export Authority.
(b) This section constitutes legislative approval
required by AS 44.88.095(g)."
VICE CHAIR MICCICHE objected for discussion purposes.
SENATOR STEDMAN read Amendment 1.
2:20:44 PM
SENATOR OLSON asked if the amendment affects the amount of money
that AIDEA would encumber for the project.
SENATOR STEDMAN replied he wasn't aware that it would but would
defer further comment to AIDEA.
SENATOR OLSON asked if AIDEA was in favor of the amendment.
SENATOR STEDMAN suggested he pose the question to AIDEA but his
understanding was that they did favor it.
2:21:57 PM
TED LEONARD, Executive Director, Alaska Industrial Development
and Export Authority (AIDEA), Anchorage, Alaska, said AIDEA
believes that it has the capacity to fund both Bokan Mountain
and Niblack. Funding is based on the revenues of the projects so
this would not affect AIDEA's capacity to fund other projects.
2:23:11 PM
SENATOR OLSON asked for assurance that the amendment would not
affect the amount that would be encumbered by AIDEA for these
two projects.
MR. LEONARD said he didn't believe it would.
SENATOR OLSON asked if AIDEA was in favor of the amendment.
MR. LEONARD answered yes and added that it could have a positive
economic impact for the areas of Ketchikan and Prince of Wales.
2:24:33 PM
PATRICK SMITH President, Heatherdale Resources Ltd., owner of
the Niblack Project on Prince of Wales, offered to answer
questions.
VICE-CHAIR MICCICHE removed his objection and opened public
testimony. Version C was before the committee.
2:25:55 PM
JAMES SULLIVAN, Southeast Alaska Conservation Council (SEACC),
Juneau, Alaska, said his prepared comments were to the CS that
included Bokan Mountain but he'd try to incorporate the
amendment to include the Niblack Project since it was closely
related. He stated the following:
Bokan Mountain venture is near an abandon uranium mine
and has been conducting exploration activities since
2006. It was April 30, 2013 that the Bloomberg
Business Week noted that in the most recent audit
report filed by Ucor, the auditor gave an unqualified
opinion expressing doubt that the company can continue
as a going concern. Their most recent, the 2013
annual, has not been released or was not as of last
week when I checked. But it's our belief that they
will get a very similar report from their auditor.
Ucore has not put out a final economic assessment
report showing that the project is even economically
viable. Work to date has documented an inferred
resource of rare earth mineralization at the Bokan
Mountain property. This legislation proposes owning a
mine - or financing - that is not finished in its
speculation process. Investors have not joined Ucore
so why is the state of Alaska? The question begs - Is
the state propping up a company that can't make it in
the real market?
As for the comments that I didn't have prepared for
the Niblack, but I want to put on the record that it
was just this past summer that Niblack announced
publicly that they were pulling back and putting
everything on hold. This is due to, I believe, the
fact that they're not able to find investors to help
them bring this mine to viability. I think it is very
concerning that we're proposing buying into a mine
that isn't finished with its speculation process, that
hasn't gone through the permitting process. There is
an inherent conflict of interest. And yes I understand
the capabilities of AIDEA and I don't want my comments
in any way to disparage AIDEA, which I believe has put
up a great track record over the last couple of
decades. But this is a departure in our feeling on
what AIDEA has done in the past with mostly
infrastructure dealings and support through revenue
bonds to help mines and other industrial activities
within the state of Alaska. This is highly speculative
and we believe that before you put the state of Alaska
and before we start using public money, we should get
a better understanding of where they are in the
speculation process and if they are actually viable.
There is no reason to think that if we wait that we're
doing damage in any way.
2:29:34 PM
SENATOR OLSON said it was his understanding that the rare earth
elements (REE) from Bokan Mountain would be competing against
those coming out of China. He questioned whether it wasn't
better for the environment to rely on U.S. mining practices
rather than the relatively unregulated practices in China.
MR. SULLIVAN said SEACC was concerned with China's mining
practices and was aware of the potential for a successful mine
on Prince of Wales. The point is that the state should wait
until the project proves that it is economically viable before
it steps in to offer help. The project isn't at that point and
it's incumbent on the legislature not to get into the
speculation fever.
2:32:12 PM
SENATOR OLSON asked if it's true that the project has no
permits.
MR. SULLIVAN replied they have permits for the exploration
process, but none to create a mine.
2:32:41 PM
VICE-CHAIR MICCICHE asked Mr. Leonard to describe AIDEA's
process to assure the committee that it doesn't hand out money
to companies that can't prove fitness.
MR. LEONARD explained that SB 99 was a bond application to allow
AIDEA to move forward if the due diligence process proves that
the mine is feasible. The due diligence process verifies that
the mine is feasible, that it has all the required permits, and
that investors are willing to invest. AIDEA can't go to the bond
market until all the questions are answered and a regional
advisory has looked at the social, economic, and environmental
impact of the mine. By statute, AIDEA can't move forward until
it can show a financing plan that will pay for the bonds that
are issued as well as any costs.
2:35:31 PM
KEN COLLISON, Chief Operating Officer, Ucore Rare Metals Inc.,
stated that Ucore will be doing a feasibility study this year
for assurance that the project is economic and something that
investors would support. Ucor came to the legislature this year
because it may have to make down payments on some of the large
equipment that has 18-24 month lead times on delivery. Waiting
until next year could potentially delay the project.
SENATOR STEDMAN stressed that allowing these projects to go
through AIDEA for some underwritten and preferential treatment
in the bond market increases the probability of one or both of
them going forward. Reasons to support these projects are that
the environmental concerns are much less than anything that's
done in China, access to REEs in the U.S. addresses a national
defense concern, and the projects create much needed jobs. He
suggested that this was an effort to replicate the successful
model that AIDEA used for the Red Dog mine in Senator Olson's
district. It's good public policy to support both projects if
AIDEA's due diligence process proves them feasible, he said.
2:39:02 PM
SENATOR OLSON expressed reservation with committing resources
for projects that might not go forward.
SENATOR STEDMAN suggested that Mr. Leonard clarify the timeline
of the due diligence process.
VICE-CHAIR MICCICHE asked Mr. Leonard to discuss how AIDEA might
participate early and more heavily later if a mine like these
was found to be economic.
2:40:23 PM
MR. LEONARD restated that for full financing AIDEA would need to
have all the final details of construction, permitting, and
economic assessments completed before starting the due
diligence. In this process AIDEA would verify that stockholders
were interested in investing in a portion of the mine and
determine how much AIDA was willing to finance. He noted that in
the past that's been limited to hard assets like the mill and
the road. He reiterated that AIDEA would not be able to issue
any of the $145 million in bonds until all the questions were
answered and the social, economic, and environmental impact
studies were finished and the full mine was able to move forward
through operations.
He advised that AIDEA does have the ability to finance pre-
development with much smaller loans if they believe that a
project should move forward and they want to support the
feasibility analysis of the project. This would be done through
AIDEA's development finance program, not issuance of bonds. He
assured the committee that AIDEA would not invest bond proceeds
into a project that was piecemealed together.
SENATOR OLSON expressed satisfaction with the explanation.
2:44:55 PM
SENATOR STEDMAN moved to report CS for SB 99, Version C as
amended, from committee with individual recommendations and
attached fiscal note(s).
VICE-CHAIR MICCICHE announced that without objection, CSSB
99(L&C) moved from the Senate Labor & Commerce Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 183 Version A.pdf |
SL&C 3/20/2014 1:30:00 PM |
SB 183 |
| SB 183 Sponsor Statement.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SB183-DCCED-AEA-03-17-14.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SB 183- Supporting Document- EETF Fund Award Project Write Ups 11 16 12.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SB 183- Supporting Document- EETF Award News Release 11 16 12.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SB 183- Supporting Document- EETF Round 1 Project Status Updates - Feb 2014 (2).pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SLA2014_Senate L&C_Confirmations.doc |
SL&C 3/20/2014 1:30:00 PM |
Confirmation Hearings |
| SB99_OppositionLetter_Claus.pdf |
SL&C 3/20/2014 1:30:00 PM |
SB 99 |
| SB183_AEA Project Status Updates_Feb 2014.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |
| SB183_AEA_EETF Presentation.pdf |
SL&C 3/20/2014 1:30:00 PM SL&C 3/27/2014 1:30:00 PM |
SB 183 |