Legislature(2019 - 2020)BUTROVICH 205
02/13/2019 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Overview: Ambler Mining District Industrial Access Project | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 13, 2019
3:30 p.m.
MEMBERS PRESENT
Senator Chris Birch, Chair
Senator Cathy Giessel
Senator Lora Reinbold
Senator Click Bishop
Senator Scott Kawasaki
Senator Jesse Kiehl
MEMBERS ABSENT
Senator John Coghill, Vice Chair
COMMITTEE CALENDAR
OVERVIEW: AMBLER MINING DISTRICT INDUSTRIAL ACCESS PROJECT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MARK DAVIS, Chief Infrastructure Development Officer
Alaska Industrial and Export Authority
Anchorage Alaska
POSITION STATEMENT: Participated in the overview of the Ambler
Mining District Industrial Access Project.
JEFF SAN JUAN, Infrastructure Development Senior Finance Officer
Alaska Industrial and Export Authority
Anchorage Alaska
POSITION STATEMENT: Participated in the overview of the Ambler
Mining District Industrial Access Project.
RICK VAN NIEUWENHUYSE, President and CEO
Trilogy Metals, Inc.
Vancouver, British Columbia, Canada
POSITION STATEMENT: Answered questions regarding mining
development in the Ambler Mining District.
ACTION NARRATIVE
3:30:17 PM
CHAIR CHRIS BIRCH called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Bishop, Reinbold, Kiehl, and Chair Birch.
CHAIR BIRCH read the following memoriam statement for the late
Jack Coghill:
Alaska elder statesman and Interior icon, Jack
Coghill, 93, died Wednesday morning in North Pole.
Coghill's death was reported by the troopers at 9:00
a.m. and the cause of death was not noted.
Coghill grew up in a working-family mercantile in
Nenana with his brothers and served in the first
territorial House of Representatives in 1953. Coghill
served a tour of duty during World War II and was one
of two surviving delegates with Vic Fischer to the
Alaska Constitutional Convention. He is the third
signature on the document according to a profile by
KUOC radio in Fairbanks. He also served as a senator
in the first three state legislatures and was known as
"Mister Republican" in a body then dominated by
Democrats. Coghill was a mayor of Nenana for more than
two decades. He was elected lieutenant governor under
the late Wally Hickel on the Alaska Independents Party
in 1990 and served until 1994.
His son John, our vice chair here, is a state senator
who served as a majority leader for four years and now
chairs the Senate Rules Committee. Senator Coghill is
traveling home to Fairbanks from Juneau this afternoon
and is unable to be here. John also has a great quote
I wanted to read, this is from Jack's son John, our
colleague, "Dad was a firm believer in utilizing
Alaska's natural resources to build a strong economy
and provide good paying jobs for Alaska. He had the
same passion for Alaska even at age 93."
I know I will personally treasure my copy of the
Alaska Constitution, actually signed by Lieutenant
Governor Jack Coghill. I just would extend our deepest
thoughts and prayers for our colleague, John Coghill
and his family on the passage of his father.
3:32:33 PM
SENATOR GIESSEL joined the committee meeting.
^OVERVIEW: Ambler Mining District Industrial Access Project
OVERVIEW: Ambler Mining District Industrial Access Project
3:33:14 PM
CHAIR BIRCH announced that the committee will hear an overview
from the Alaska Industrial Development and Export Authority
(AIDEA) on the "Ambler Mining District Industrial Access Project
(AMDIAP)." He noted that the committee's intent during the early
part of the legislative session is to focus on confirmation
hearings and presentations on industry and aspects of Alaska's
economy that are vital to the state's future and "Being open for
business;" AIDEA is a key to that.
3:33:52 PM
SENATOR KAWASAKI joined the committee meeting.
3:34:08 PM
MARK DAVIS, Chief Infrastructure Development Officer, Alaska
Industrial and Export Authority, Anchorage, Alaska, explained
that Mr. San Juan will start off the AIDEA presentation with an
overview of the project, then he will cover the permitting
process and where AIDEA is with the National Environmental
Policy Act (NEPA) process.
3:34:23 PM
JEFF SAN JUAN, Infrastructure Development Senior Finance
Officer, Alaska Industrial and Export Authority, Anchorage
Alaska, reviewed AIDEA's overview agenda as follows:
• AIDEA's role,
• DeLong Mountain Transportation System (DMTS) model,
• AMDIAP background,
• Project purpose,
• Proposed project,
• Permitting update and "next steps."
He addressed AIDEA's role and explained that by statute, AIDEA
was created with the foresight to develop the state's natural
resources, which in turn would provide long term economic growth
for the state and would directly and indirectly help alleviate
unemployment.
MR. SAN JUAN said AIDEA has been given certain tools and
resources to be able to accomplish its mission; with those
tools, AIDEA has been able to develop several projects in the
state by either owning the project or financing the project. He
detailed AIDEA's projects as follows:
• Mustang Operations Center 1, LLC (MOC 1):
o Location: North Slope.
• Mustang Road, LLC:
o Location: North Slope.
• DeLong Mountain Transportation System (DMTS):
o Location: Northwest Arctic Borough.
• FedEx Express Maintenance, Repair, and Operations (MRO)
Facility:
o Location: Anchorage.
• Blood Bank of Alaska:
o Location: Anchorage.
• Camp Denali Readiness Center Addition:
o Location: Joint Base Elmendorf-Richardson
• BlueCrest Energy Drill Rig:
o Location: Kenai Peninsula.
• Skagway Ore Terminal:
o Location: Skagway.
• Snettisham Hydroelectric Project:
o Location: Juneau.
• Ketchikan Shipyard:
o Location: Ketchikan.
3:36:02 PM
He referenced the "DMTS-Red Dog model success" as follows:
• Employment:
o Annual average of 550 jobs - average salary of
$99,000.
o 55 percent of year-round Red Dog Mine jobs filled by
the NANA Regional Corporation, Inc. (NANA)
Shareholders.
o 78 percent of Teck Alaska workers live in Alaska.
• Northwest Arctic Borough (NWAB):
o PILT payments for 2016 to 2021 estimated at:
square4 $14 million to $18 million annually.
o New Village Improvement Fund:
square4 Payments of $4 million to $ 8 million annually.
o Total wages in NWAB:
square4 $65 million.
• Native Corporation Participation:
o Royalties to NANA shared with other Alaska Native
Corporations (ANCSA Section 7(i)/7(j)).
o $1.1 billion shared by NANA since 1990:
square4 2016:
• $108.7 million NANA royalty;
• $65.8 million shared.
square4 2017:
• $247 million NANA royalty;
• $156.4 million shared.
MR. SAN JUAN said DMTS is considered one of the state's success
stories, providing over 500 direct jobs at the mine site and at
least 500 equivalent indirect jobs outside of the mine site.
Revenues to NWAB in the form of a payment in lieu of taxes
(PILT) is between $14 million and $18 million annually. New for
2018 is a village improvement fund which ranges between $4
million to $8 million annually. Revenues to the Native regional
corporation of NANA which are shared via ANSCA Section 7(i) and
7(j) payments with other Native regional corporations are a
success.
3:36:52 PM
He referenced the "Stakeholders in the Red Dog Mine" diagram and
explained that the image represented the stakeholders in the
region along with agreements and sources of revenue
illustration. The Red Dog Mine model was a complex project that
involved many stakeholders and agreements that made the project
a success.
He referenced "Project history" images as follows:
• 1968 image that highlights a prospect in the Ambler Mining
District, also known as the Bornite Deposit.
• 1981 image that showed potential routes to access the
mining district after the passage of the Alaska National
Interest Lands Conservation Act (ANILCA).
He addressed "ANILCA Provision for Ambler Access" and said after
ANILCA's passage, Congress understood the mining district's
potential and intended to unlock the state's natural resources
by adding the following provision in ANILCA, Section 2041(b):
Congress finds that there is a need for access for
surface transportation purposes across the Western
(Kobuk River) unit of the Gates of the Arctic National
Preserve (from the Ambler Mining District to the
Alaska Pipeline Haul Road) and the Secretary shall
permit such access in accordance with the provisions
of this subsection.
3:39:08 PM
MR. SAN JUAN addressed the "Project Purpose" to unlock the
resource-rich region's area as follows:
• 75-mile-long mineralized area.
• Minerals in the area:
o Copper,
o Zinc,
o Lead,
o Gold,
o Silver,
o Cobalt.
• Resource estimates between two major deposits, "Bornite"
and "Arctic," discovered by Trilogy Metals, Inc:
o Copper: 8 billion pounds,
o Zinc: 3 billion pounds,
o Gold equivalent precious metals: 1 million ounces.
He addressed "Goals of the Project" as follows:
• Develop industrial access to the Ambler Mining District.
• Support exploration and development of mineral resources in
the Ambler Mining District.
• Promote economic development and job opportunities in the
region and the state.
He addressed "AMDIAP Department of Transportation and Public
Facilities (DOT&PF) Corridor Alternatives" and explained that
AIDEA took over the project in 2013 from DOT&PF and selected the
best route that would be less impactful to the environment.
AIDEA also avoided communities that did not want the road to go
through their community and was able to move the route away from
Bettles.
3:40:59 PM
MR. DAVIS addressed the "Ambler Permitting Process" and
explained that under NEPA, an environmental impact statement
(EIS) must be done, like a "building permit." The Clean Water
Act is triggered, Section 404(b), which brings in the U.S. Army
Corps of Engineers; their job is to make sure that the route
picked is the least destructive and environmentally positive.
MR. DAVIS said the final step relates to the right to cross the
preserve, as noted in the Alaska National Interest Lands
Conservation Act (ANILCA), that results in an interplay between
NEPA, Clean Water Act, and ANILCA. Permit filing required under
ANILCA triggers a federal action, the Bureau of Land Management
(BLM) is engaged, and AIDEA starts to spend money. To draft an
EIS, a third-party contractor is hired through the permission of
the federal government, "HJR, Inc." was selected through a
competitive bid process and the company is in the process of
drafting the EIS.
He detailed that four federal agencies are involved in
permitting for the EIS:
• BLM-NEPA and Title XI of ANILCA.
• The National Parks Service (NPS)/The Federal Highway
Administration (FHWA) - ANILCA Section 201(4) (Title II).
• U.S. Army Corps of Engineers (USACE) - wetlands permits.
• U.S. Coast Guard (USCG) - bridge permits.
He said after an EIS the permitting will then involve state,
local government, and other entities.
3:42:30 PM
He addressed the "NEPA Process" as follows:
• File Notice of Intent:
o Delays with BLM, eight-month process;
o BLM filed a notice in 2017;
• Scoping:
o Public meetings and input;
o Road shifted due to comments;
o Scoping process finished in February 2018;
• Alternative road analysis;
o BLM provided an alternative to AIDEA's route in
February 2019;
o HJR will analyze the alternative routes while keeping
that Congress has stated that the federal government
should provide Alaska with access to the mining
district;
o AIDEA wants to use the existing infrastructure of the
Dalton Highway.
• Existing conditions, environmental impact analysis;
• Mitigation:
o Federal government may ask for mitigation issues to
buy other land to be set aside if wetlands are being
filled in or to mitigate wildlife impact;
• Draft EIS:
o Public meetings and input;
• Final EIS;
• Record of decision;
• Note:
o Formal government-to-government consultation
throughout the NEPA process.
3:46:21 PM
MR. DAVIS addressed "Ambler Proposed Construction Costs (DOWL)"
as follows:
• Phase I:
o 16-foot single-lane,
o Seasonal road,
o Approximately $280 million,
o Allows other mines to explore deposits and get first-
production out for less money.
• Phase II:
o 18-foot single-lane,
o Year-round road,
o Approximately $40 million additional.
• Phase III:
o 32-foot two-lane,
o Year-round road,
o Approximately $60 million additional.
o Based on needs if four to five mines came online.
He noted that the road was permitted for two lanes, but the road
will be built for what works best for the project. DMTS is run
as a single-lane road with trucks driving down the middle for
safety reasons.
3:48:23 PM
He addressed the "CRA Agreement for EIS Schedule" as follows:
• Draft EIS August 2019,
• Final EIS November 2019,
• Record of Decision (ROD) December 2019.
MR. DAVIS noted that the recent government shutdown may impact
the schedule.
He summarized that AIDEA is trying to replicate the DMTS. DMTS
was needed because the mine could not operate unless there was
some way to get the mine's ore to market. Without access from
AMDIAP, getting ore to market is very hard. AMDIAP to the Dalton
Highway would allow the ore to be transported "all the way down"
or via the railroad. The decision on how the ore will ultimately
be transported is up to the mines and not AIDEA. AIDEA is only
trying to build an industrial access corridor and then the
private sector takes over. AIDEA will get paid back as was done
at the Red Dog Mine where bonds are "floated," and the road will
have tolls or payments made where the payments over time will
reduce the debt. The life of the road should be in excess of the
bonded indebtedness, the same as with the Red Dog Mine.
He said the Ambler Mining District is an important district that
has a lot of good mineralization. Questions are asked if the
mines are going to open and be viable. Trilogy Metals, Inc. is
working very hard along with South32, and other investors should
be coming in as well. AMDIAP can be a longer, bigger DMTS. AIDEA
will not operate or invest in a mine, AIDEA will only provide
the infrastructure that ultimately could be sold by the state in
the future.
3:51:37 PM
SENATOR REINBOLD asked him to readdress the AMDIAP's
construction costs.
MR. DAVIS explained that the construction cost estimate was
provided by DOWL, a well-known contractor in the state who does
work for DOT&PF and acts as AIDEA's project manager for AMDIAP.
Construction is phased-in where the biggest cost is in phase 1
where gravel is brought in to get the roadbed down. Slight
expansion does not cost much. Moving to a two-lane road costs
more because the road's apron is affected where additional
gravel is required. The assumption is the road will have one-
lane bridges because two-land bridges are expensive. The road
will be controlled to limit usage. Radio and fiber optics will
be used to control trucks. Trucks will have GPS capabilities so
each truck's exact location will be known. Expansion will be
based on mining activity.
SENATOR REINBOLD asked how AMDIAP will be funded.
MR. DAVIS answered that it will be a public-private partnership
that combines AIDEA bonds with infrastructure funds that like to
invest in projects like AMDIAP due to its steady, long-term
payout. The EIS is paid for; BLM confirmed that no further funds
are required. HJR, Inc. has said they do not require any further
funds as well.
3:55:38 PM
SENATOR GIESSEL asked him to address why DMTS is a successful
model, have bonds been paid back, and is a toll still being
paid.
MR. DAVIS answered that AIDEA explained in its presentation the
regional success of DMTS. The success for AIDEA as the finance
entity is another story. The bonds for DMTS were backed-up by
legislative appropriation. The first thing AIDEA did on a big
project was with DMTS. The bonds were sold to the private market
and the bonds will be paid for in a couple of years. The mine is
looking to expand the road and port, but the mine is not looking
at AIDEA for assistance, private capital will be used for the
next phase.
MR. SAN JUAN added that there are bonds tentatively set to be
paid off by 2023. AIDEA has an agreement with Teck Alaska until
2040. The structured agreements with stakeholders in the Red Dog
Mine have helped accelerate note payments. The DMTS model is
successful because if the commodity prices go up over a certain
dollar amount, AIDEA gets additional funds. If zinc concentrate
shipments goes above a certain amount, AIDEA receives additional
funds.
SENATOR KAWASAKI addressed Public Law 96-487 that talks about an
access point between the Alaska Pipeline Haul Road to the Ambler
Mining District. He asked if there is a specific designation
from Congress on what the access to the Ambler Mining District
can be.
MR. DAVIS explained that Congress sometimes writes things rather
obliquely. AIDEA pulled out the committee record for Public Law
96-487 and the record showed that "surface transportation" meant
an "intermodal transportation system, i.e., a road" from the
Ambler Mining District to what was then called the Alaska
Pipeline Haul Road, now known as the Dalton Highway.
3:59:49 PM
SENATOR KAWASAKI noted that there was talk about using a
"western route" before the DOT&PF project. He asked why the
"western route" was not selected.
MR. DAVIS answered that DOT&PF did look at western routes and
determined that the routes were not as good environmentally or
economically; however, BLM may analyze and choose a western
route. The western routes will tend to cross conservation units
under ANILCA which are, in one case, a national park and another
is a national preserve. There is no congressional authority to
cross national parks or national preserves. Under Title 11 in
ANICLA there is a provision for crossing conservation units, but
the act has never been done; the Izembek Road is an example of
an attempt to use that authority but so far, the road has not
been built. Also, the western route has more wetlands. Congress
wanted to tie a road to an existing intermodal system, the idea
was the road would connect with an existing road. Also, too the
west, the state does not have a fully developed port which would
mean a port would have to be built.
MR. SAN JUAN added that part of the purpose-of-need that BLM has
is for year-round access and that is part of the reason BLM
selected an alternative route. He said he was not anticipating
seeing "western routes" being proposed as an alternative due to
there not being year-round access.
SENATOR KAWASAKI asked if AIDEA checks and verifies the credit
worthiness of the company that is engaging in the prospect.
MR. DAVIS replied that AIDEA reads the reports; for example,
reports that Trilogy Metals puts out, including quarterly
reports. AIDEA met with South32 several times and due diligence
was done on South32's capabilities. The other potential partner,
Northwest Alaska Native Association (NANA), which owns the
Bornite, AIDEA has complete confidence in NANA. AIDEA works with
NANA on the Red Dog Mine.
4:03:39 PM
SENATOR GIESSEL noted that new committee members may not know
that the Red Dog Mine has a seasonal port. She asked him to talk
about the Red Dog Mine's storage facility used during the winter
months.
MR. DAVIS explained that the ore from the Red Dog Mine must be
lightered from a storage unit that is so large its buildings are
visible from outer space. AIDEA financed the Red Dog Mine's
storage facility so that the mine could get around the seasonal
shipment issue.
SENATOR GIESSEL pointed out that the idea of a western route
does not provide year-round access.
She addressed the proposed route for AMDIAP and noted that the
road would go through the southern "boot" of the Gates of the
Arctic National Park and Preserve. She asked him to confirm that
Congress provided for transverse of the "boot."
MR. DAVIS explained that ANILCA provides that the "boot" will
remain National Park Service (NPS) land, but NPS must provide
Alaska with access across the preserve. Thanks to U.S. Senator
Stevens, the proviso is unique with a statutory environmental
and economic assessment (EEA) that will probably not be seen
again. AIDEA has contracted with NPS for the preparation of the
EEA with NPS working on two possible routes. He noted that
northern and southern routes are proposed going through the
"boot" due to a lake that has some values. The secretaries of
U.S. Department of Transportation and the U.S. Department of
Interior will pick the route across the "boot" by May. He
reiterated that the route selection may be delayed due to the
recent government shutdown.
4:07:59 PM
SENATOR GIESSEL asked him to address the federally required
economic evaluation and pointed out that Alaska led the way with
health-assessment-impact evaluations for development on state
lands. Alaska was the first state to implement the health-
assessment-impact evaluations.
MR. DAVIS replied that AIDEA has retained a health assessment
contractor and they are working with BLM. He concurred that the
state is stricter with assessments.
SENATOR KIEHL asked if AIDEA helped develop DMTS with internal
funds or state general funds. He inquired if there was an
agreement for repayment via the mine company.
MR. DAVIS explained that there was an appropriation that the
Legislature gave AIDEA the money because at that time AIDEA did
small loans through banks; afterwards, financing was done
through the bond market based on the appropriation. Teck Alaska
already had the mine permitted but approached AIDEA and the
Legislature to get "gap capital." AIDEA funded the road and port
that Teck agreed to pay though agreements with acceleration
clauses and sideboards. AIDEA has paid back the entire
appropriation.
4:10:51 PM
SENATOR KIEHL asked how far AIDEA is in on funding for the
AMDIAP project and what is the funding source.
MR. DAVIS replied that he was not aware of how much DOT&PF spent
prior to AIDEA taking over the project. AIDEA has spent $17
million to date from appropriated funds.
SENATOR KIEHL asked him to confirm that the project does not
have agreements with potential mine operators for repayment or
road tolls.
MR. DAVIS explained that after the EIS and a satisfactory route
is selected, then a statutorily required finance plan will be
presented for approval; after the plan is approved, AIDEA will
meet with mining companies to draft agreements. AIDEA will not
build the road without agreements from the mining companies.
MR. SAN JUAN added that the Northwest Arctic Borough and the
North Slope Borough have presented resolutions to invest in the
AMDIAP project.
4:13:37 PM
SENATOR REINBOLD noted that AIDEA has websites on Ambler access.
She asked if the "Roads to Resources" strategy is still in place
so that Alaskans can connect to the AMDIAP project. She inquired
if there is any major pushback to the AMDIAP project and noted
the potential jobs associated with the project.
MR. SAN JUAN addressed Senator Reinbold's question regarding
opposition. He noted that most of the mineral resources are in
the Northwest Arctic Borough, NANA region, but the route crosses
Doyon lands and non-borough lands where there is pushback that
areas outside of the NANA region have said they are being
impacted but not benefiting from AMDIAP. He pointed out that the
Red Dog Mine has shown the benefits from mining.
MR. DAVIS explained that former Governor Murkowski had a general
idea of "Roads to Resources," but it was not defined. AIDEA did
not take the AMDIAP project over from DOT&PF as a Roads to
Resources project.
4:17:33 PM
SENATOR RENBOLD opined that there appears to be pushback from
Doyon. She noted that AIDEA's website on AMDIAP clearly defines
ANILCA as guaranteeing certain rights of access for subsistence,
hunting, fishing, recreational, and other economic and social
purposes, including ensuring access to resource development
areas within the state. She asked if AIDEA will be able to
overcome Doyon's objection and possibly others.
MR. DAVIS replied that the hope is to come up with a project
that is satisfactory to the stakeholders in the area. There is a
lot of interest in jobs as well as interest in preserving
subsistence hunting. DMTS has a good record with the caribou
mortality, very few trucks have killed caribou. The hope is to
get local hire. AIDEA must work with local communities when
developing a project.
SENATOR KAWASAKI asked him to verify that in the DMTS project
that Teck had already gone through the EIS and permitting
process prior to AIDEA's involvement and was that the big
difference between DMTS and the AMDIAP project.
MR. DAVIS explained that AIDEA is building the AMDIAP
infrastructure for exploration and development whereas DMTS was
designed to help a mine that was already permitted. He noted
that companies will be charged to use AMDIAP for exploration. He
opined that there is a lot of interest in the Ambler Mining
region and the risk allocation for AMDIAP is less.
4:21:20 PM
MR. SAN JUAN pointed out that the AMDIAP road is to unlock
resources for a whole district, not just for a specific mine as
was done with the Red Dog Mine.
SENATOR KAWASAKI asked if the road for the Pogo Mine Project was
permitted prior to road construction.
MR. DAVIS answered that he did not know. He noted that the
project had changed its "road usage."
SENATOR KAWASAKI pointed out that AIDEA has spent $17 million in
addition to money spent by DOT&PF prior to AIDEA's involvement.
He asked if the AIDEA board has assessed whether the risk is too
high. He opined that prospectors finding something prior to a
road project would be the logical process.
MR. DAVIS replied that AIDEA monitors the development of the
resources. He said Trilogy Metals is available to answer Senator
Kawasaki's specific questions. Trilogy Metals is finding
minerals and the mineralization is improving. Trilogy Metals is
moving towards "feasibility" which is an advanced stage of
development. Bornite was mined at one time, so bornite is a
known resource in the district. AIDEA believes that there's a
good chance to enter into agreements after the EIS. He
emphasized that AIDEA is, "Not going to build the road and hope
that somebody shows up."
4:24:23 PM
SENATOR BISHOP asked him if AIDEA is going to spend $40 billion
for a $20 billion project to build a road.
MR. DAVIS answered no.
SENATOR BISHOP commented that he doubted if Fort Knox would have
been built without a road. He said infrastructure is the key to
unlocking the state's resources and referenced the "7(i) and
7(j) royalties" that have been paid out to all 13 regional
corporations from one project.
CHAIR BIRCH recognized that Tomas Boutin, the new executive
director for AIDEA, was in attendance.
SENATOR KAWASAKI asked if the state would assume road
maintenance.
MR. DAVIS explained that AIDEA's model is not to use state funds
or any further funds. The road will probably be owned by a
limited liability corporation in which there would be multiple
investors. Within the multiple investors structure a reserve
account would be set up to cover maintenance. The maintenance
cost would be recouped from the tolls assessed for using the
road. An escalation clause would allow for the toll to be
increased in order to cover unanticipated maintenance costs.
4:27:21 PM
SENATOR KAWASAKI asked him to verify that because the state
would not be a party to ownership of the road itself, the road
will not be public road or public access easement.
MR. DAVIS replied that currently the road would be a limited
road and it would not be a public road in the sense that it is
built with public, federal, or DOT&PF dollars. The right-of-ways
have not been negotiated. AIDEA must see what type of right-of-
way BLM is willing to give; then, if the road receives the EIS
and the decision is to move forward with the project, AIDEA will
have to negotiate for permission to cross land from the possible
landowners: DNR, Doyon, and NANA. Landowners often put
restrictions or easements across their land. He assumed that
there would be easement restrictions as well as other
restrictions due to environmental mitigation. The road will not
be open to the public, but there could be other uses of the road
beyond just the mines. The maturation of the DMTS may serve as
an example; originally, strictly ore was moved on the DMTS, then
the local people asked if Tech could haul supplies and Tech
currently brings fuel to drop-off points. If the road goes
along, the road's governing body may accommodate petitioners.
4:29:34 PM
SENATOR REINBOLD referenced the slide, "What is AIDEA's role"
that highlights AS 44.88. She noted that ANILCA established the
10 federal parks, preserves, and monuments by guaranteeing
certain rights, one of the rights was ensuring access to and
from resource development areas within the state. She reiterated
her previous question on whether AIDEA believes it will be able
to overcome the resistance to the road project, noting that
Congress has recognized access to the Ambler Mining District to
ensure the state's economic and social needs are met.
MR. DAVIS replied that the congressional intent is clear that
Alaska was meant to be able to cross some of the conservation
units, but the crossing has not occurred. He noted that there
has been some opposition, as mentioned in the scoping document,
a public document that is posted on BLM's website. AIDEA has
read every comment and part of the EIS will be to develop a
route that is compatible with all of the comments; for example,
the route was adjusted to Bettles' request for not having trucks
drive through town.
SENATOR REINBOLD clarified that her question relates to ANILCA
being more powerful than public comment. She inquired if AIDEA
will be able to work through the resistance for an affirmative
"yes," noting that ANILCA is already law.
MR. DAVIS replied that he cannot comment on the state's position
on ANILCA. He said personally he would agree with Senator
Reinbold that there are certain provisions. ANCILA was a
compromise and legislation for the state to have certain rights,
the federal government to have certain rights, and to preserve
certain subsistence rights. He pointed out that the U.S. Supreme
Court in the "Sturgeon" decision finally admits that, "Alaska is
different." One of the reasons AIDEA was interested in the
project was to take the right granted in ANILCA to cross "the
boot" and see if AIDEA could make it work, that was the idea.
4:33:11 PM
SENATOR KAWASAKI asking if the Alaska Department of Fish and
Game, Alaska Department of Environmental Conservation, and the
Alaska Department of Natural Resources have enough staff to be
able to properly permit the project.
He inquired what would happen if the road gets permitted but a
mine at the end of the road does not get permitted.
MR. DAVIS answered that he cannot comment on the levels of each
agency regarding staffing. AIDEA has worked with the Office of
Project Management and Permitting (OPMP) on projects including
the Ambler road and OPMP has given tremendous service in working
with BLM or the state.
He addressed mine openings in the Ambler Mining District and
noted that agreements will have "sideboards" to handle
contingencies. He emphasized that AIDEA will not enter into any
kind of agreements where if something does not work AIDEA does
not get paid.
SENATOR KIEHL pointed out that unlike DOT&PF, AIDEA does not
have eminent domain. He asked if significant route changes occur
to accommodate private landowners, does AIDEA have the funding
in hand to go through the additional process.
MR. DAVIS answered that AIDEA's board passed a resolution
process called "G11-18" that allows AIDEA, under new statutes
passed by the Legislature, to use its own funds for permitting
as part of a project. He detailed that prior to "G11-18" there
was a legal issue about whether AIDEA could permit or AIDEA had
actually built hard assets and that was clarified. Now if AIDEA
needs more money for permitting, change the route, or do an
environmental assessment (EA) which is part of an EIS for
modifications, then AIDEA with board approval could spend its
own funds.
4:36:03 PM
SENATOR BISHOP asked how long the Record of Decision is good.
MR. DAVIS answered that the length of the "record of decision"
is a matter of the U.S. Court of Appeals for the Ninth Circuit.
There is nothing in NEPA that says how long a record of decision
is good for. He said any definitive legal opinion should be
addressed to the attorney general. He noted that he has looked
at cases where the tendency is to say five to six years, after
that the court has tended to say, "Well, we need to dust this
off and look at it again."
SENATOR KIEHL addressed the slide, "AIDEA proposed AMDIAP
Corridor" and pointed out that AIDEA noted "major mineral
deposits" in four locations and "mineral resources" in 18
locations. He noted that minerals that "hit the haul road" still
has a ways to go and questioned the cost to a mine developer. He
asked how many mines will be needed to make sure there are
enough payments to payoff the road without making a mine
uneconomic. He inquired if the first mine does it and everybody
else is gravy.
MR. DAVIS answered that AIDEA has developed computer-driven
counter-metric models. Analysis has shown that one mine would be
sufficient to pay the tolls for the first two phases; however,
one mine would not be the optimal model. The optimal model would
be more than one mine. He noted that the scenario he just
described is one of the advantages of using AIDEA because the
process is not political, an agency is not making a decision,
and the AIDEA board has seven members who are tasked with making
the decision.
SENATOR KIEHL commented that one mine pays for the first two
phases.
CHAIR BIRCH thanked the AIDEA presenters. He noted that
questions were raised on development costs and asked Rick Van
Nieuwenhuyse from Trilogy Metals to address the committee.
4:39:33 PM
RICK VAN NIEUWENHUYSE, President and CEO, Trilogy Metals, Inc.,
Vancouver, British Columbia, Canada, disclosed that he has
history as a geologist in the Ambler Mining District dating back
to the late 1970s. He commended U.S. Senator Stevens for
forwarding a hard-wired right by the state to traverse federal
lands to access the incredible Ambler Mining District.
He disclosed that Trilogy Metals has spent $120 million in the
district since 2004. Trilogy Metals has formed a partnership
with a major Australian mining company based in Perth called
"South32." Australian mining companies have been moving into
Alaska in a significant way in terms of investment, particularly
in mining. South32 is a $17-billion-market company, generating
$1.5 billion of free cashflow a year from their mining
operations, mainly in the southern hemisphere.
MR. VAN NIEUWENHUYSE said Trilogy Metals has expended a
significant amount of dollars and without an access road there
will be no mine. Trilogy Metals has had discussions with the
U.S. Army Corps of Engineers who has said they would not permit
the mine before a road is permitted because there is no way to
connect anything.
He explained that the proposed mine would produce metal
concentrates of copper, zinc, and lead. The lead contains the
gold and silver. Trilogy Metals has looked airships and Boeing
747 long-haulers, but air transportation is too expensive. He
detailed that the concentrates will be transported in metal
boxes with locking lids so that concentrates are not lost, and
the environment is protected. The concentrates would be hauled
to Fairbanks to link with the Alaska Railroad and ultimately be
hauled to the Port of Anchorage where the metal boxes are loaded
directly into ships' holds via overhead cranes. He pointed out
that there will be jobs at the mine, jobs at the security gate
to ensure the road has limited private access, jobs in
Fairbanks, and jobs in Anchorage.
4:43:45 PM
SENATOR KAWASAKI asked where the metal concentrates go.
MR. VAN NIEUWENHUYSE answered that the concentrates will most
likely go to smelters in Japan, Korea, and China. The United
States strictly has dedicated smelters.
SENATOR KIEHL said he reviewed Trilogy's recent 10-K financial
report and noted that the company had said it does not have
proven or probable reserves yet. He asked if Trilogy has an
indicated reserve that Mr. Van Nieuwenhuyse could share with the
committee.
MR. VAN NIEUWENHUYSE answered that there are resources and
reserves. Trilogy completed a pre-feasibility study and
therefore Trilogy has "probable" reserves of 43 million tons of
roughly copper five-percent copper equivalent. Trilogy is in the
process of completing a feasibility. Trilogy is spending $18
million in a summer field program in the Ambler Mining District.
After the summer field program, Trilogy will have proven and
probable reserves at the Arctic mineral deposit. He disclosed
that the Bornite mineral deposit is a few years behind, about
four or five years behind Arctic in terms of its development
cycle. He said Arctic has indicated and inferred resources and
Trilogy will be updating at the end of the month.
CHAIR BIRCH thanked Mr. Van Nieuwenhuyse, Mr. Davis, and Mr. San
Juan for providing information to committee members on the
Ambler access road project.
4:46:10 PM
There being no further business to come before the committee,
Chair Birch adjourned the Senate Resources Standing Committee
meeting at 4:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| AIDEA Ambler Access Project Presentation 2.13.19.pdf |
SRES 2/13/2019 3:30:00 PM |