04/27/2005 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB121 | |
| HB27 | |
| SB188 | |
| SB179 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 27 | TELECONFERENCED | |
| + | HB 121 | TELECONFERENCED | |
| *+ | SB 188 | TELECONFERENCED | |
| = | SB 179 | ||
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
April 27, 2005
1:33 p.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Bert Stedman
Senator Thomas Wagoner
Senator Johnny Ellis
Senator Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 121(2d RLS)
"An Act relating to consolidating or abolishing certain road
service areas in certain second class boroughs; and providing
for an effective date."
MOVED CSHB 121(2d RLS) OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 27(FIN)
"An Act relating to an optional exemption from municipal
property taxes on certain residences of law enforcement
officers."
HEARD AND HELD
SENATE BILL NO. 188
"An Act increasing the maximum amount of loans from the bulk
fuel revolving loan fund to one borrower."
MOVED CSSB 188(CRA) OUT OF COMMITTEE
SENATE BILL NO. 179
"An Act relating to the taxation of mining property; relating to
contracts approved by municipalities for payments in lieu of
taxes; and providing for an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 121
SHORT TITLE: ROAD SERVICE AREAS: SECOND CLASS BOROUGHS
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS
02/02/05 (H) READ THE FIRST TIME - REFERRALS
02/02/05 (H) CRA, STA
02/15/05 (H) CRA AT 8:00 AM CAPITOL 124
02/15/05 (H) Heard & Held
02/15/05 (H) MINUTE(CRA)
02/24/05 (H) CRA RPT CS(CRA) NT 1DP 5NR
02/24/05 (H) DP: THOMAS;
02/24/05 (H) NR: CISSNA, NEUMAN, SALMON, LEDOUX,
OLSON
02/24/05 (H) CRA AT 8:00 AM CAPITOL 124
02/24/05 (H) Moved CSHB 121(CRA) Out of Committee
02/24/05 (H) MINUTE(CRA)
03/01/05 (H) STA AT 8:00 AM CAPITOL 106
03/01/05 (H) Heard & Held
03/01/05 (H) MINUTE(STA)
03/05/05 (H) STA AT 9:30 AM CAPITOL 106
03/05/05 (H) Moved CSHB 121(CRA) Out of Committee
03/05/05 (H) MINUTE(STA)
03/07/05 (H) STA RPT CS(CRA) NT 4DP 1NR
03/07/05 (H) DP: LYNN, RAMRAS, GRUENBERG, SEATON;
03/07/05 (H) NR: GATTO
03/16/05 (H) RLS AT 9:00 AM BELTZ 211
03/16/05 (H) Moved CSHB 121(RLS) Out of Committee
03/16/05 (H) MINUTE(RLS)
03/17/05 (H) RLS RPT CS(RLS) NT 4NR 2AM
03/17/05 (H) NR: HARRIS, KOHRING, COGHILL, ROKEBERG;
03/17/05 (H) AM: KERTTULA, BERKOWITZ
03/17/05 (H) RETURNED TO RLS COMMITTEE
04/04/05 (H) RLS AT 9:30 AM FAHRENKAMP 203
04/04/05 (H) -- Meeting Canceled --
04/13/05 (H) RLS AT 8:30 AM CAPITOL 106
04/13/05 (H) Heard & Held
04/13/05 (H) MINUTE(RLS)
04/20/05 (H) RLS AT 8:30 AM CAPITOL 106
04/20/05 (H) Moved CSHB 121(2d RLS) Out of Committee
04/20/05 (H) MINUTE(RLS)
04/21/05 (H) RLS RPT CS(2D RLS) NT 1DP 5NR
04/21/05 (H) DP: COGHILL;
04/21/05 (H) NR: KOHRING, BERKOWITZ, MCGUIRE,
KERTTULA, ROKEBERG
04/21/05 (H) RETURNED TO RLS COMMITTEE
04/22/05 (H) TRANSMITTED TO (S)
04/22/05 (H) VERSION: CSHB 121(2D RLS)
04/25/05 (S) READ THE FIRST TIME - REFERRALS
04/25/05 (S) CRA
04/27/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: HB 27
SHORT TITLE: MUNI PROP TAX EXEMPTION FOR POLICE HOMES
SPONSOR(s): REPRESENTATIVE(s) CHENAULT, GRUENBERG
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, FIN
02/15/05 (H) CRA AT 8:00 AM CAPITOL 124
02/15/05 (H) Heard & Held
02/15/05 (H) MINUTE(CRA)
03/22/05 (H) CRA RPT CS(CRA) 4DP 3NR
03/22/05 (H) DP: KOTT, CISSNA, THOMAS, OLSON;
03/22/05 (H) NR: SALMON, LEDOUX, NEUMAN
03/22/05 (H) CRA AT 8:00 AM CAPITOL 124
03/22/05 (H) Moved CSHB 27(CRA) Out of Committee
03/22/05 (H) MINUTE(CRA)
04/13/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/13/05 (H) Scheduled But Not Heard
04/14/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/14/05 (H) Moved CSHB 27(FIN) Out of Committee
04/14/05 (H) MINUTE(FIN)
04/15/05 (H) FIN RPT CS(FIN) 3DP 4NR
04/15/05 (H) DP: CROFT, FOSTER, CHENAULT;
04/15/05 (H) NR: HAWKER, STOLTZE, KELLY, MEYER
04/18/05 (H) TRANSMITTED TO (S)
04/18/05 (H) VERSION: CSHB 27(FIN)
04/19/05 (S) READ THE FIRST TIME - REFERRALS
04/19/05 (S) CRA, FIN
04/27/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 188
SHORT TITLE: BULK FUEL REVOLVING LOAN FUND CAP
SPONSOR(s): SENATOR(s) OLSON
04/22/05 (S) READ THE FIRST TIME - REFERRALS
04/22/05 (S) CRA, FIN
04/27/05 (S) CRA AT 1:30 PM BELTZ 211
BILL: SB 179
SHORT TITLE: MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
SPONSOR(s): SENATOR(s) THERRIAULT
04/18/05 (S) READ THE FIRST TIME - REFERRALS
04/18/05 (S) CRA, FIN
04/18/05 (S) CRA AT 2:00 PM BELTZ 211
04/18/05 (S) Heard & Held
04/18/05 (S) MINUTE(CRA)
04/22/05 (S) CRA AT 1:30 PM BELTZ 211
04/22/05 (S) Heard & Held
04/22/05 (S) MINUTE(CRA)
WITNESS REGISTER
Kaci Schroeder
Aide to Representative Bill Thomas, Jr.
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Introduced HB 121
Representative Max Gruenberg
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor HB 27
Steve Van Sant, State Assessor
Department of Commerce, Community & Economic Development
PO Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Available for questions on HB 27
Chief Walt Monegan
Municipality of Anchorage
Anchorage Police Department
P.O. Box 196650
Anchorage, AK 99519
POSITION STATEMENT: Supported HB 27
Sergeant Mike Couturier, Representative
Anchorage Police Department
Employee Association (APDEA)
POSITION STATEMENT: Supported HB 27
Senator Donald Olson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Sponsor SB 188
Nels Anderson
Dillingham resident
POSITION STATEMENT: Spoke in support of CSSB 188
Jim McMillan, Deputy Director, Credit & Business Development
Alaska Industrial Development and
Export Authority and Alaska Energy
Authority (AIDEA) and Alaska Energy Authority (AEA)
813 W Northern Lights Blvd.
Anchorage, AK 99503
POSITION STATEMENT: Supported SB 188
James Fueg
Technical and Permitting Coordinator for Donlin Creek
Placer Dome Mining Company
POSITION STATEMENT: Gave a presentation on Donlin Creek Project
ACTION NARRATIVE
CHAIR GARY STEVENS called the Senate Community and Regional
Affairs Standing Committee meeting to order at 1:33:35 PM.
Present were Senators Stedman, Ellis and Chair Gary Stevens.
Senator Kookesh arrived at 1:33:55 and Senator Wagoner arrived
during the course of the meeting.
CSHB 121(2d RLS)-ROAD SERVICE AREAS: SECOND CLASS BOROUGHS
CHAIR GARY STEVENS announced HB 121 to be up for consideration.
He advised that it is the companion bill to SB 114, which the
committee heard three times previously.
1:33:55 PM
KACI SCHROEDER, Legislative Aide to Representative Bill Thomas,
Jr., said she was aware that the committee was familiar with the
bill, but she would highlight the changes made in the House.
The House added three required criteria before a borough
assembly may take action to abolish or consolidate a service
area.
· Taxes haven't been levied for 12 months and there is
no balance in the account to pay for road services
· The road service area board has not met with a
quorum in the last 12 months
· No road maintenance contracts are in existence or if
they are, they fail to provide minimum road standards to
protect the borough from civil liabilities.
1:35:35 PM
CHAIR GARY STEVENS ascertained there were no questions or
comments. He noted the zero fiscal note from the Department of
Commerce, Community and Economic Development (DCCED) then asked
for a motion.
1:36:07 PM
SENATOR STEDMAN motioned to report CSHB 121(2d RLS) and attached
fiscal note from committee with individual recommendations.
There being no objection, it was so ordered.
CSHB 27(FIN)-MUNI PROP TAX EXEMPTION FOR POLICE HOMES
CHAIR GARY STEVENS announced HB 27 to be the next order of
business.
1:36:57 PM
REPRESENTATIVE GRUENBERG, Co-Sponsor, said the purpose of HB 27
is to encourage law enforcement officers to purchase and live in
homes in certain areas of a municipality that are in need of
more police protection.
The bill gives municipalities the option to enact an ordinance
to exempt up to $150,000 of assessed valuation on a primary
permanent residence of a law enforcement officer who lives in an
area the municipality recognizes as high crime. He clarified
that municipalities may not enact such an ordinance without
passing this type of legislation.
REPRESENTATIVE GRUENBERG defined an eligible area as "either a
weed and seed program, a renaissance or, alternatively as an
area that has a higher occurrence of crime than a municipality
as a whole. Or it could meet both A and B."
He said co-sponsor, Representative Chenault believes this
legislation would be helpful in Nikiski and he believes it would
be helpful in parts of Anchorage.
1:39:08 PM
CHAIR GARY STEVENS asked if it's true that this isn't an
obligation; it's an opportunity for a municipality.
REPRESENTATIVE GRUENBERG agreed.
SENATOR BERT STEDMAN questioned why this couldn't be handled at
a local level.
REPRESENTATIVE GRUENBERG replied it can, but under AS 29.45.050
an enabling state law is required.
SENATOR STEDMAN asked if there is a reason that firefighters
aren't included.
REPRESENTATIVE GRUENBERG replied that would be a good idea.
Currently volunteer firefighters and EMS personnel have a
$10,000 exemption under another provision.
SENATOR STEDMAN said he was referring to fulltime paid rather
than volunteer firefighters.
REPRESENTATIVE GRUENBERG said he wasn't sure it would help as
much to have a firefighter on the block as a policeperson, but
he wouldn't have a problem with including firefighters if it
would help keep crime down.
1:42:09 PM
SENATOR THOMAS WAGONER asked for an explanation of the statement
that two or more individuals are eligible for an exemption on
the same property.
REPRESENTATIVE GRUENBERG explained that particular language was
taken from the subsection dealing with volunteer firefighters.
The idea is that the exempted valuation wouldn't be more than
$300,000 for a single property. This would accommodate the
instances in which one law enforcement officer marries another,
but wouldn't extend to multiple family members that are in law
enforcement or groups of officers going together to buy a single
residence.
CHAIR GARY STEVENS asked if this would apply only to actively
employed law enforcement officers.
REPRESENTATIVE GRUENBERG said the intent is to cover just the
actively employed, but the municipal ordinance would address the
particulars.
CHAIR GARY STEVENS noted Mr. Van Sant, the state assessor, was
available for questions.
CHIEF WALT MONEGAN, Anchorage Police Department (APD), spoke in
support of HB 27. Over the years several different housing
incentives have been offered and about 12 APD members have
participated. That indicates that the proposal has merit, he
said.
He supports the bill because neighborhoods feel safer;
neighborhoods get to know the resident officer; officers are
reminded that they are citizens in the community; and they
provide positive role models for youth. Certainly, the program
would aid in officer recruitment and retention. Finally, he said
he supports including firefighters in the bill.
1:49:31 PM
SENATOR WAGONER questioned whether police officers were aware of
the bill.
CHIEF MONEGAN replied some are and the union representatives
keep members informed as well.
SENATOR WAGONER asked if he'd gotten any feedback.
CHIEF MONEGAN replied officers are waiting to see whether the
program becomes available.
SENATOR JOHNNY ELLIS stated support for the bill and said he
represented some of the low-income high-crime areas in Anchorage
and he knows that if cops make a decent salary and live in more
affluent neighborhoods it fosters bad feelings. Hopefully this
will encourage folks that could afford to live in better areas
to move into less affluent areas because that would help to
improve those neighborhoods.
CHIEF MONEGAN said when neighborhoods benefit there is an
operational benefit for the department in that crime goes down.
It's a plus to see neighborhoods change complexion for the
better, he said.
1:53:17 PM
SERGEANT MIKE COUTURIER, Representative, Anchorage Police
Department Employee Association (APDEA), stated that the
association supports HB 27. His job includes recruitment and
retention and this will be a distinct aid in attracting
applicants. More than likely, he said, the primary use will come
from officers that are attracted from out of state. The
association has the information on its web site and members have
already shown interest in the idea.
CHAIR GARY STEVENS recapped this would be at the option of the
local government and it could exempt city police departments and
state troopers. He asked if that was Sergeant Couturier's
understanding.
SERGEANT COUTURIER said yes.
CHAIR GARY STEVENS observed that the comments had been positive.
He was asked to hold the bill to review several issues, but it
would be dealt with quickly at the next hearing. CSHB 27(FIN)
was held in committee.
SB 188-BULK FUEL REVOLVING LOAN FUND CAP
1:58:23 PM
SENATOR DONALD OLSON, Sponsor, paraphrased the sponsor
statement:
I introduced SB 188 at the urging of members of the
Governor's Rural Energy Action Council. The council's
April 15 report has many recommendations to help rural
communities contend with rapidly escalating energy
costs.
SB 188 is one of their recommendations that, if
enacted this session, will allow communities to offset
rising fuel costs with large purchase economies
achieved through the bulk fuel loan program. This is
particularly of concern for those communities that are
ice bound during the winter and depend on just one or
two large shipments to supply their fuel needs for the
entire year.
Currently, the bulk fuel loan program has a maximum
loan of $300,000 that any one borrower may take in a
fiscal year. The effect of this cap during times of
high fuel prices is to reduce the maximum amount of
fuel that may be purchased. The bill will counteract
this effect by increasing the cap to $650,000 for
cooperative organizations that are purchasing bulk
fuel for more than one community. The larger purchase
for multiple communities should result in a lower per
unit price for all users.
The enactment of SB 188 will directly affect this
fall's bulk fuel purchase for most of rural Alaska.
The bill is timely and needed.
2:01:39 PM
CHAIR GARY STEVENS asked for a motion to adopt the CS.
SENATOR WAGONER motioned to adopt CSSB 188 \F version as the
working document. There being no objection, it was so ordered.
SENATOR OLSON explained there are two significant changes from
the original bill.
1. It includes electric utility cooperatives as a cooperative
corporation that may use the loan fund for multiple
community fuel purchases.
2. It provides a more flexible loan cap increase for multiple
community fuel purchases - "may not exceed $300,000
multiplied by the number of communities on whose behalf the
bulk fuel is to be purchased, or $1,000,000, whichever is
greater;"
2:03:49 PM
SENATOR BERT STEDMAN asked if the CS is applicable to
communities with good credit.
SENATOR OLSON replied that's true; communities that place high
regard on bill paying and good credit should be rewarded and
should be able to get needed fuel. Without this cap communities
will run short of fuel during the winter and it would need to be
flown in, which would boost fuel costs dramatically. He said
it's imperative to give communities the benefit of the doubt so
they won't run short during the winter.
NELS ANDERSON, Dillingham resident, testified that the bill
would help cooperative purchasing, which is a goal REAC has
established. Legislation that helps to bring down the cost of
fuel for small communities across the state is good legislation.
He encouraged members to support CSSB 188.
2:07:18 PM
JIM MCMILLAN, Deputy Director of Credit & Business Development,
Alaska Industrial Development and Export Authority and Alaska
Energy (AIDEA) and Alaska Energy Association (AEA), stated
support for SB 188. Forming cooperatives may help reduce the
cost of bulk fuel purchases for rural communities. The change
will allow a borrower that is a cooperative formed under AS
10.15 or an electric cooperative organized under AS 10.25 to
borrow more than the current $300,000 limit. This is a step in
the right direction, he said.
CHAIR GARY STEVENS noted there were no questions or further
testimony. He asked for a motion.
SENATOR WAGONER motioned to report CSSB 188(CRA), \F version,
and attached fiscal notes from committee with individual
recommendations. There being no objection, it was so ordered.
SB 179-MINERALS TAX/PAYMENTS TO MUNIS IN LIEU
CHAIR GARY STEVENS announced the committee would hear a Donlin
Creek Project update that relates to SB 179.
JAMES FUEG, Technical and Permitting Coordinator for the Donlin
Creek joint venture, gave a review of the Placer Dome mining
company and an overview of the project. He said he would touch
on the highlights of a larger presentation.
2:10:54 PM
Page 2
Project Location
The Donlin Creek project is located about 12 miles north of the
village of Crooked Creek and 180 miles up the Kuskoquim River
from Bethel. The location is remote and all materials are
supplied by air transportation. If the mine goes forward, all
supplies for construction would be barged up river to a point
about five miles from the mine. The company would construct a
road to transport goods the final five miles to the mine site.
Page 3
Donlin Creek Joint Venture
· Placer Dome Managing Joint Venture Partner
· Nova Gold Resources Joint Venture Partner
· Calista Regional Corporation is the subsurface estate owner
· The Kuskokwim Corporation - the regional village
corporation - owns the surface estate
Placer Dome has been in the area for ten years and has a strong
local hire history. Currently 50-70 people are on site, but the
number varies depending on what's going on. Typically 65-80
percent of the people in the camp are from the local area. A lot
of professional staff comes from Alaska and a local charter
company transports personnel to and from the site.
2:12:51 PM
Page 10
Current Resource Estimate:
Work began in 1995 and expenditures to date are on the order of
$58 million. Of that, Placer Dome has spent about $45 million
and Nova Gold Resources has spent about $10 million. The budget
for 2005 is about $11.5 million. The payroll directed to
shareholders in the area for the Month of March was about
$180,000.
In spite of the amount of time and money already spent the
company is still several years and millions of dollars from
making a final determination on whether or not to go ahead with
the project.
As it stands now the total resource amounts to about 25 million
ounces of gold of which 11 million ounces is measured and
indicated and 14 million ounces is inferred. Measured and
indicated is a reflection of the measure of confidence that is
needed to be able to do a pre-feasibility study. Not all of the
25 million ounces will necessarily be mined. The decision is
driven by economics that will evolve as the studies advance and
as the mine advances - if indeed it does goes forward.
2:14:43 PM
Page 12
Primary Issues:
There are three major issues upon which the project rests and
they are power, lime and logistics.
· Power: About 80 megawatts will be produced on site with
diesel generation plants with an anticipated 40 percent wind power
offset.
· Lime: A low-grade lime resource has been identified in
the region of the deposit and is being drilled out to determine
whether it will meet the requirements.
· Logistics: Up to 250,000 tons of consumables per year
would be required for operation. It would be barged up the
Kuskoquim River to a port location then over to Donlin Creek.
Page 13
Power - Potential Solution
· Current Plans require 80 MW Peak Load, 70 MW Average Load
(30k tons per day mill)
· Evaluated more than 10 options
· On site generation using diesel is current focus
· Potential to supplement with wind generation
· Wind option requires data collection for
validation
· Objective - offset ~40% of fuel requirement
Page 15
Logistics and Infrastructure
· Annual consumables (30,000 tons per day mill)
· General Consumables 50,000 tons
· Fuel (no wind generation) 140,000 tons
· Lime (assumes on site CCE) 20,000 tons
· Barge materials up the Kuskokwim River
· Port location at Jungjuk Creek
· All weather road to Donlin Creek
· Construct a new 6,000 foot airstrip near Donlin Creek
Page 16
Preliminary Process Outline
· Conventional open pit
· 2 pits (ACMA, Lewis)
· Track and shovel mining
· Evaluating 30,000 and 40,000 tons per day scenarios
· Logistical Supports
· Grade control/dilution issues
· Three stage crushing and primary ball milling
· Floatation/Pressure oxidation mill - This process cooks the
refracted ore out of the sulfide in giant pressure cookers,
which is why so much power is needed for the operation.
· Conventional tailings
2:16:54 PM
Page 17
Infrastructure
If the project moves ahead, approximately 25 miles of road would
be constructed from the river to the site. A port and laydown
area would be constructed at Jungjuk Creek as well as a 6,000
foot surfaced runway to fly personnel and equipment in and out.
The company will build all facilities associated with power
generation, including fuel storage and transmission lines, which
amounts to a significant part of the project.
2:17:34 PM
Page 18
Environmental studies have been ongoing including more than just
the project area itself. The entire access corridor up the
Kuskoquim River down to the shores of the Kuskoquim Bay must be
considered and evaluated to ensure that the project can be done
in an environmentally sound manner.
2:17:59 PM
Page 20
Project Description
· 30,000 to 40,000 ton per day mill operation
· Waste rock and initial tailings deposited in American
Valley where the deposit is located. Later tailings may be
deposited in Anaconda Valley if the first is filled.
· Supplies barged up Kuskokwim River to port at Jungjuk Creek
· Power provided by onsite diesel supplemented by wind
Based on current estimates, the direct costs of the project are
in the neighborhood of $1 billion. That is the cost of
purchasing equipment, constructing buildings, building
infrastructure. It doesn't include construction overhead so the
total cost will be significantly more than $1 billion.
This is a large project with large scope and he speculated that
if the project goes ahead, it would be the biggest private
industry project in Alaska after the pipeline. This is in an
area that would stand to benefit tremendously from the project.
Because of the remote location and the difficult nature of the
entire process, the capital investment would be huge. Therefore
a sound understanding of the process, and a well defined
economic model is necessary so the board can make a final
determination and get financing for the project.
Currently, one of the biggest unknowns in the economic model is
the element of local taxation. This is why SB 179 is so
important to Donlin Creek and any similar projects in the
future.
MR. FUEG concluded:
It's not an issue of us wanting to bypass the local
community. We recognize the concerns about imposing
agreements on local communities and we certainly
respect and share your concern about all these issues.
What we are doing, is asking for some mechanism that
we can use to negotiate and develop a tax certainty
that we're going to need to move this project forward.
CHAIR GARY STEVENS asked how many personnel are required now and
during full operation.
MR. FUEG replied during the summer between 40 and 60 people
would be employed on any given day. During construction the
estimate is for about 600 people for about two years. Depending
on final size, between 350 and 400 people would be employed
during operation.
CHAIR GARY STEVENS asked what happens to the ore when it leaves
the site.
MR. FUEG clarified this is strictly a gold mine. Gold bars would
be molded on-site and the finished product would be flown out.
2:22:12 PM
SENATOR STEDMAN asked where the crew would come from.
MR. FUEG replied the company would hire locally to the extent
possible and transportation would be similar to what's done at
the Red Dog. Flights would go to and from Anchorage and smaller
charter aircraft would provide transportation to and from the
various local villages. The rotation would likely be two weeks
on and two weeks off. The mine would run 24 hours a day 365 days
a year.
SENATOR STEDMAN asked about reclamation.
MR. FUEG said a reclamation plan is in progress. Although they
can't leave things the way they were before mining began, they
don't intend to leave issues behind once the mine has moved on.
SENATOR STEDMAN asked for the estimated lifespan of the mine
once it's operational.
MR. FUEG replied it depends on the mill size that is settled on
and the percentage of the reserves that can actually be mined.
The number they are using currently is 15 years, but it's worth
noting that mines typically run longer than the original
estimated life.
SENATOR WAGONER noted the concern associated with capping the
millage rate and whether 6 mills would be sufficient if the area
were to incorporate.
MR. FUEG said he could only speak to Donlin Creek as a Placer
Dome representative. That being said, $1 billion in direct
capital cost translates to $1 million per mill. That would give
the newly organized, rural, government a $2 million operating
budget. Assuming the area goes with the model borough, the
Kuspuk School District has about 1,500 people. Looking at other
rural boroughs in the state, that amount is more than in line
with the typical budgets.
SENATOR WAGONER remarked corporate and other taxes would amount
to another 9 or 10 percent.
MR. FUEG said in addition to corporate and mining license taxes
there is a royalty component that would go to Calista
Corporation.
CHAIR GARY STEVENS asked for some background information on the
company.
MR. FUEG explained that Placer Dome is an international mining
company headquartered in Vancouver, Canada. Currently the
company employs 18,000 people in mines that are scattered from
Africa, Indonesia, and Australia to North and South America. The
company operates several mines in Nevada and one in Montana.
Donlin Creek would be the only mine in Alaska.
Placer Dome has a history of building mines in undeveloped areas
such as Donlin Creek. The mine in Indonesia and the Mussel White
Mine in northern Canada are probably the most similar to Donlin
Creek and are located in completely undeveloped areas.
Placer Dome has a history of working successfully with Native
people in remote mine areas and a philosophical cornerstone of
doing business is their sustainability policy. They look at what
would be left behind and what the long-term benefits would be to
the community. They recognize that mining isn't a renewable
resource so it's a corporate policy requirement to leave behind
something positive. Typically that takes the form of a more
skilled and more highly educated workforce.
Placer Dome produces about 4 million ounces of gold a year plus
several hundred thousand tons of copper. Currently they have
three large projects at a similar stage of development as Donlin
Creek. One is in Chili, one is in the Dominican Republic and the
third is Donlin Creek.
2:30:37 PM
CHAIR GARY STEVENS questioned how far the mine site is from
Bethel.
MR FUEG replied it's about 180 miles away. The closest community
of any size is Aniak and the closest town is Crooked Creek,
which is 12 miles south.
2:31:10 PM
SENATOR WAGONER asked if he thought the mill rate is excessive.
MR. FUEG said the company was hoping for something a little
lower and they are still evaluating the effect. Certainly it is
a burden to the project, but they recognize their responsibility
to the local community. As a company they've taken a neutral
position on borough formation in the area. They want to meet
their commitment in terms of education and if a borough forms
they would like to contribute their fair share to the operating
costs of the borough while recognizing that they would draw no
services.
SB 179.was held in committee.
2:32:34 PM
There being no further business to come before the committee,
Chair Gary Stevens adjourned the meeting at 2:32:44 PM.
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