Legislature(2023 - 2024)BUTROVICH 205
02/26/2024 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| Presentation: Mining Industry Update | |
| SB243 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 243 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 26, 2024
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Scott Kawasaki
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
Senator James Kaufman
COMMITTEE CALENDAR
SENATE BILL NO. 243
"An Act relating to the board of directors of the Alaska Energy
Authority."
- HEARD & HELD
PRESENTATION: MINING INDUSTRY UPDATE
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 243
SHORT TITLE: ALASKA ENERGY AUTHORITY GOVERNANCE
SPONSOR(s): RESOURCES
02/19/24 (S) READ THE FIRST TIME - REFERRALS
02/19/24 (S) RES, FIN
02/26/24 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
DEANTHA SKIBINSKI, Executive Director
Alaska Miners Association (AMA)
Anchorage, Alaska
POSITION STATEMENT: Co-presented the Mining Industry Update.
KAREN MATTHIAS, Executive Director
Alaska Metal Mines
Anchorage, Alaska
POSITION STATEMENT: Co-presented the Mining Industry Update.
KATIE SWEENEY, Executive Vice President and COO
National Mining Association (NMA)
Washington, D.C.
POSITION STATEMENT: Co-presented the Mining Industry Update.
ANGELA RODELL, Staff
Senator Cathy Giessel
Alaska State Legislature
POSITION STATEMENT: Presented SB 243.
CURTIS THAYER, Executive Director
Alaska Energy Authority
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of AEA.
ACTION NARRATIVE
3:30:36 PM
CO-CHAIR CLICK BISHOP called the Senate Resources Standing
Committee meeting to order at 3:30 p.m. Present at the call to
order were Senators Wielechowski, Kawasaki, Dunbar, Claman, Co-
Chair Giessel, and Co-Chair Bishop.
^Presentation: Mining Industry Update
PRESENTATION: MINING INDUSTRY UPDATE
3:31:13 PM
CO-CHAIR BISHOP announced the consideration of a presentation
titled, "Alaska Mining: Reaching Our Potential."
3:32:00 PM
DEANTHA SKIBINSKI, Executive Director, Alaska Miners Association
(AMA), Anchorage, Alaska, stated that the Alaska Miners
Association (AMA) AMA serves as a comprehensive membership
organization representing all facets of Alaska's mining
industry. This includes large hard rock and coal mines, as well
as exploration and development projects ranging from small
family-owned plaster mines to industrial sites, along with the
various vendors and contractors supporting mines statewide.
Given the aging workforce within the mining sector, there has
been a noticeable increase in non-work-related medical
incidents. She emphasized the unique position of mines, equipped
with medics who play crucial roles in providing care to
colleagues. Notably, she pointed out that while she doesn't work
directly at a mine site, it's essential for members to recognize
that many individuals may lack the necessary skills to assist
colleagues or loved ones during medical emergencies. She
encouraged the committee and those listening from home to
consider familiarizing themselves with essential emergency
procedures, such as locating automated external defibrillators
(AEDs), undergoing CPR training, or learning the Heimlich
maneuver. These skills can be invaluable in providing timely
assistance to others in need.
3:33:38 PM
KAREN MATTHIAS, Executive Director, Alaska Metal Mines,
Anchorage, Alaska, said formerly known as the Council of Alaska
Producers and established in 1992, the council initially focused
on representing large metal mines and promoting development
projects while addressing state-related issues and disseminating
accurate mining information. In August of last year, the
organization rebranded to Alaska Metal Mines to better convey
its involvement and mission: producing essential minerals with a
strong emphasis on safety, environmental stewardship, and
community engagement. She underscored the significance of
minerals in everyday life and emphasized their critical role in
national security. She expressed growing concerns about the
United States' reliance on other nations, particularly China and
Russia, for the minerals essential for military assets'
construction and operation. This dependency highlights the
importance of domestic mineral production and processing.
3:34:47 PM
MS. MATTHIAS moved to slide 2 and said each F35 stealth fighter
at Eielson Air Force Base contains over 900 pounds of rare
elements. However, production and processing of rare elements
are largely dominated by China. She emphasized the risk posed by
having key components of military equipment controlled by a
potential adversary. This concern underscores the Department of
Defense's (DOD) strong support for increasing domestic mineral
production. Beyond national defense, there's a broader global
demand for minerals driven by the need for greater energy
diversification and the development of new energy technologies.
She noted that people are increasingly recognizing the
importance of these minerals for various electronic devices and
technologies.
Top of Form
3:35:41 PM
MS. MATTHIAS moved to slide 3, which illustrates the growing
demand in electric vehicles (EVs). She said while conventional
cars primarily consist of steel, copper wiring, and lead acid
batteries, they also contain small amounts of precious metals in
components like catalytic converters and airbags. In contrast,
EVs require a substantial amount of minerals, notably copper and
manganese, with their batteries relying on several other
minerals such as cobalt, graphite, and lithium. She emphasized
that regardless of one's stance on electric vehicles, it's
crucial to recognize the increasing demand for them in the
United States, driven by consumer preference for lower emission
vehicles and government incentives. EVs are experiencing rapid
growth in popularity not only in Europe and China but also
globally. As a result, the global demand for these minerals is
on the rise and is expected to continue increasing.
3:36:59 PM
MS. MATTHIAS moved to slide 4 comprising a breakdown of minerals
found in Alaska. She noted that the information on this slide
was compiled by the Bureau of Land Management (BLM). Currently,
only two minerals, gold and silver, are actively produced in the
state. However, all other minerals depicted remain untapped in
the ground pending further investment, exploration, permits, and
feasibility studies. She emphasized Alaska's potential to
produce these minerals and cited a recent significant investment
by the Department of Defense (DOD) in Graphite One to support
its feasibility study. Graphite One is the largest naturally
occurring deposit of graphite in the U.S., a mineral crucial for
electric vehicle batteries and military applications. Despite
having graphite resources domestically, the U.S. has not
produced any since the 1950s. It currently relies on imports,
with China dominating global graphite production. China recently
added graphite to its list of minerals subject to export
restrictions for national security reasons, underscoring the
importance of domestic mineral production for security,
economic, and energy purposes. She expressed concern over
Alaska's reliance on China as a dominant player in mineral
production and processing and stressed the need for strategic
diversification and strengthening of the mineral supply chain.
3:39:12 PM
CO-CHAIR BISHOP asked how much the state spends on importing
Graphite from China.
3:39:19 PM
MS. MATHHIAS replied she does not have a specific dollar amount
but could report back to the committee.
3:39:30 PM
CO-CHAIR GIESSEL acknowledged China's export restrictions and
asked about the origin of minerals. She wondered whether these
minerals originate from China or if they're sent from Alaska to
China for refinement and become China's possession, requiring
repurchase by the state.
3:39:49 PM
MS. MATTHIAS replied that both scenarios are accurate. She
explained that China has made significant investments not only
in its own mineral production but also in acquiring resources
from other parts of the world. This involvement can take various
forms, including indirect production or direct ownership in a
third country.
3:40:12 PM
SENATOR CLAMAN asked whether unmined graphite and cobalt in the
state are substantial enough to justify starting mining
operations.
3:40:37 PM
MS. MATTHIAS replied that the Graphite One project is the
largest deposit of natural Graphite in the U.S. Those involved
are currently working on a feasibility study.
3:40:52 PM
SENATOR CLAMAN asked if the project is in Alaska.
3:40:53 PM
MS. MATTHIAS replied yes and said it is on the Steward Peninsula
near Nome. The people involved in the project could provide
additional information.
3:41:12 PM
SENATOR CLAMAN inquired about Cobalt in Alaska.
3:41:20 PM
MS. MATTHIAS said Cobalt is naturally occurring in Alaska. She
cited the Embler Metals project as a notable example. This
project is primarily focused on copper extraction but has the
potential to yield Cobalt. Currently, the Democratic Republic of
the Congo accounts for 70 to 80 percent of global Cobalt
production, with many of its industrial mines under Chinese
ownership. She emphasized the opportunity for Alaska to reduce
its dependence on Cobalt imports by initiating domestic
production.
3:42:00 PM
MS. MATTHIAS moved to slide 5 and spoke to monitored and
enforced environmental standards. She pointed out that the image
on the slide depicts True North in Fairbanks, formerly a mine
site that has since been fully reclaimed. She emphasized the
rigorous process involved in developing a mining operation in
Alaska, which includes obtaining dozens of permits from various
state and federal agencies before operations can begin.
Additionally, mines must have a closure and reclamation plan
approved by the commissioner of the Department of Natural
Resources (DNR), and financial insurance is required to ensure
funds are available for reclamation efforts if necessary.
Environmental management in mining encompasses numerous areas,
such as water quality and bio-monitoring. She highlighted the
strict reporting requirements during mine operations and
underscored the significant enforcement powers held by the DNR.
She emphasized that current operating mines have a proven track
record of environmental responsibility, which is a source of
pride for the mining industry.
3:43:00 PM
MS. MATTHIAS moved to slide 6 and spoke to mining revenue:
[Original punctuation provided.]
Revenue to Local and State Governments
Local government revenue: $55 million
• Largest property taxpayers in Juneau, Fairbanks,
Northwest Arctic Borough
State government revenue: $131 million
• Alaska Mining License Tax, corporate income tax,
rents & royalties, other state agencies
MS. MATTHIAS stated that Mines contribute and both the local and
state level and highlighted their substantial regional impact.
She noted that mines are the largest local and property
taxpayers in Juneau, Fairbanks North Star Borough, and the
Northwest Arctic Borough. In 2022 alone, mines generated $55
million in revenue, providing stable income that local
governments can rely on for funding essential services. In
addition to property taxes, mines contribute to state revenue
through various fees, taxes, rents, royalties, and other
sources, totaling $131 million in revenue. Studies conducted by
the University of Alaska Anchorage (UAA) have demonstrated a net
benefit of mining to the state's economy. Mining activities
contribute more to the general fund than what is used for
general programs, resulting in a net benefit to the Unrestricted
General Fund (UGF). This surplus in funds can then be allocated
to support various government services for Alaskan citizens.
3:44:17 PM
MS. MATTHIAS moved to slide 7 and described business investments
from mines:
[Original punctuation provided.]
$1 billion spent on goods and services with 450 Alaska
businesses in 2022.
MS. MATTHIAS stated that mining companies prioritize sourcing
products and services locally. She emphasized that the $1
billion spent on Alaska businesses encompasses a wide range of
enterprises, from small mom-and-pop shops to larger companies.
3:44:43 PM
MS. MATTHIAS moved to slide 8 and spoke to jobs and training:
[Original punctuation provided.]
Jobs and Training for Alaskans
• 11,400 - Total Jobs
• $1 billion - Annual Wages
• 73 percent - Average Alaska residents employed at the
6 large mines
• 90+ - Communities where mining employees live
• $2.7 million - Invested in UA and vocational programs
MS. MATTHIAS noted that out of the 11,400 jobs supported by the
mining industry, 5,700 are direct positions where individuals
receive payment directly from mining companies. These jobs offer
an average salary of $130,000, which is notably higher than the
state's average annual salary, providing substantial support for
families. Additionally, vocational programs are available to
train Alaskans for employment in the mining industry or other
sectors. One advantage of the industry's remote locations is
that Alaskan residents may work in one location while choosing
to live elsewhere within the state. This flexibility offers
opportunities for individuals to access employment opportunities
while maintaining residence in preferred locations.
3:46:03 PM
SENATOR KAWASAKI pointed out that the Department of Labor and
Workforce Development (DOLWD) reported over 40 percent of metal
mining employees are non-residents, with this proportion
increasing by 5-6 percent over the past decade. He expressed
concern about this trend and inquired about the reasons behind
the increase and potential measures the state could take to
mitigate the rise in non-resident employment. Additionally, he
asked for comments on employees who reside in another state but
commute into Alaska for work.
3:46:59 PM
MS. MATTHIAS acknowledged the desire of the mining industry to
employ more Alaskans and expressed a shared concern about the
significant proportion of non-resident employees reported by
DOLWD. She noted that since the onset of the COVID-19 pandemic,
there has been a general outward migration of Alaskans from the
workforce, a trend not unique to the mining sector but affecting
various industries statewide. Ms. Matthias highlighted her
surprise at the relatively low representation of non-residents
in the mining and oil and gas sectors, comprising only six
percent of the total non-resident workforce in Alaska. There are
more non-residents working in state and local government, at 8
percent, than there are in mining and oil. Industries such as
manufacturing, seafood, and leisure and hospitality employ
larger numbers of non-residents. She emphasized that recruitment
efforts by individual mining companies are robust but also
acknowledged the need to look outside the state to fill
specialized positions due to the limited local workforce and the
increasing number of retirees. She stated there are challenges
faced by commuting employees, including housing shortages in
areas near mines. Juneau is one example, where housing
challenges have affected nearby mining operations. Additionally,
concerns about the quality of education and access to childcare
are factors influencing family-aged miners' decisions on
employment opportunities. The mining workforce is primarily
people under forty. These collective challenges require
collaborative efforts.
3:49:30 PM
CO-CHAIR BISHOP pointed toward the ongoing decline in population
in the country over the past thirty years. He stated it is the
11th year of outward migration, which is resulting in the loss
of the generation necessary to sustain the workforce. This trend
poses significant challenges for workforce retention and
economic stability.
3:50:01 PM
MS. MATTHIAS moved to slide 9 and spoke to royalty payments:
Royalty Payments to Alaska Native Corporations
• $266 million in 2022
• $1.8 billion in total since 1989
MS. MATTHIAS said Red Dog Mine has been providing benefits to
every regional corporation and village corporation through the
Alaska Native Claims Settlement Act (ANCSA) 7(i) and 7(j)
royalty sharing provisions since the mine commenced operations
in 1989.
3:50:32 PM
SENATOR DUNBAR asked what the difference is between royalty
payments to Alaska Native corporations and state revenue
payments. He sought clarification on whether this disparity
arises from the size and nature of mines on Alaska Native lands
or if companies pay a different royalty rate on those lands.
3:50:58 PM
MS. MATTHIAS replied that the amount of royalty is small because
there is only one large mine that is entirely on state land and
it is not as large as Red Dog. Red Dog's exceptional grade and
production levels have placed it in a unique category. Since Red
Dog is located on Native land, the Nenana Corporation, as the
landowner, negotiated a specific royalty agreement with the
mining company. This negotiation authority lies within the
purview of the landowner. Alaska Metal Mines suggested that if
there were more large mines on state land, the state would
receive significantly more royalties.
3:52:07 PM
SENATOR DUNBAR asked if the state could negotiate a similar
royalty rate to Nenana.
3:52:17 PM
MS. MATTHIAS replied that Nenana Corporation was aware of the
strong resource on its land prior to royalty negotiations.
However, the state possesses vast tracts of land that remain
largely unexplored. The state royalty framework was designed to
encourage exploration and discovery of mineral deposits on these
lands. Given the substantial risks involved in exploration,
rewards should reflect these risks, while also advocating for
reduced costs associated with exploration activities.
3:53:13 PM
SENATOR CLAMAN asked whether the two bullets on slide 9
represent royalty payments from Red Dog Mine or include payments
from other mines.
3:53:21 PM
MS. MATTHIAS replied that the royalty payments on the slide are
predominantly from Red Dog Mine. She acknowledged that there
might be a small portion related to projects or exploration on
other land, but since these areas are not yet in production, the
amount contributed by them is significantly lower.
3:53:42 PM
CO-CHAIR BISHOP highlighted the density of the ore at Red Dog
Mine, noting that it ran five thousand pounds per cubic yard.
3:54:11 PM
CO-CHAIR GIESSEL mentioned that Red Dog Mine plans to transition
development to state land once ANCSA land deposit is depleted,
which will affect revenue sharing arrangements. She asked if
Donlin, located on Native Corporation land, would participate in
7(i) revenue sharing.
3:54:46 PM
MS. MATTHIAS replied yes and said any mining or mineral
development on Native land is subject to revenue sharing under
7(i) and 7(j).
3:54:59 PM
CO-CHAIR GIESSEL asked for the progress status of Donlin.
3:55:11 PM
MS. MATTHIAS replied that she could not speak for the company on
its decision to move forward. However, she noted that many
permits have been prepared for the project. Ultimately, the
decision to proceed involves a significant multi-billion-dollar
investment, which includes infrastructure such as a gas pipeline
and power plant. The substantial investment required for mining
in a remote location like Donlin requires careful consideration
by the company.
3:55:58 PM
CO-CHAIR GIESSEL wondered whether Donlin's plan to install a gas
pipeline would stimulate more development in Cook Inlet
regarding natural gas, similar to how Fort Knox has influenced
utility prices for residents of Fairbanks. She expressed
concerns about the potential impact on revenue sharing, noting
that dividends from Native Corporations are significant for many
residents of the state. Diminishing dividends could have a major
impact on the economy. She emphasized that mining has far-
reaching effects on the economy in several ways.
3:56:55 PM
CO-CHAIR BISHOP noted that representatives from Graphite One,
Donlin, and other metals may attend a future hearing and could
answer questions.
3:57:22 PM
MS. MATTHIAS moved to slide 10 and noted the $4.5 million
dollars contributed in 2022 to more than 280 Alaska non-profit
organizations from the mining industry. Those contributions
ranged from sports team sponsorship to the million-dollar
contribution for the Troth Yeddha' Indigenous Study Center at
University of Alaska Fairbanks (UAF). She noted that the mining
industry is proud of its community partnerships. This amount
does not account for individual charitable contributions made by
individual miners.
3:58:15 PM
CO-CHAIR BISHOP asked how much was spent in exploration from
2022 to 2023.
3:58:27 PM
MS. MATTHIAS replied that $645 million dollars was spent in
2022. She offered to provide data for 2023 once it becomes
available in a couple of months.
3:59:17 PM
KATIE SWEENEY, Executive Vice President and COO, National Mining
Association (NMA), Washington, D.C, said NMA has a membership of
nearly 300 companies and organizations involved in every aspect
of mining from producers and equipment manufacturers to service
providers. NMA is the only national trade association that
serves as a voice of the U.S. mining industry and the hundreds
of thousands of American workers. It employs before Congress,
the federal agencies, the judiciary, and the media, advocating
for public policy that will help America fully and responsibly
utilize its vast natural resources. She said she will speak to
mining policies that are impeding mining across the country and
in Alaska.
4:00:19 PM
MS. SWEENEY moved to slide 12:
[Original punctuation provided.]
Behind the Curve in Meeting Demand
Nearly 400 Mines Needed
Biden Has Approved 6
Timeframe Predictions
S&P Global data on 127 mines production between 2002
and 2023 shows that a major new resource discovery
today would not become a productive mine until 2040 or
later.
Furthermore, this is on average: large and complex
projects in politically sensitive areas can take
longer.
MS. SWEENEY stated that Alaska possesses significant mineral
resources, including world-class deposits and strategic critical
minerals, making it an ideal location for mineral exploration
and development investment. Despite having a skilled workforce
and experienced regulators, the state has not fully capitalized
on this potential. The demand for minerals is rapidly
increasing, especially with the global push towards
electrification, leading to bipartisan interest in mineral
issues and supply chain security at the national level. However,
the mining industry has faced challenges, including a lack of
supportive policies and sometimes the political will necessary
to unlock its full potential. In the past three years, only six
mining projects or expansions requiring environmental impact
analyses on federal lands have been approved by the current
administration. This slow progress is partly due to the
bureaucratic nature of the federal permitting process, which can
take 7-10 years to navigate, not including additional time for
potential litigation.
4:02:22 PM
MS. SWEENEY moved to slide 13 and highlighted a recommendation
from DOI:
[Original punctuation provided.]
Upending Goal Posts
Interagency Working Group
"In its report, the IWG concluded that fundamental
reform of the Mining Law of 1872 the 151-year-old
law that still governs access to mineral resources on
hundreds of millions of acres of public land in the
United States is necessary to achieve the best
outcomes." Department of the Interior (DOI) press
release on the recommendations
MS. SWEENEY emphasized the importance of regulatory certainty,
particularly in understanding the rules governing mining
operations. She referred to the recommendations put forth by the
White House Interagency Working Group (IWG) on mining law,
regulations, and permitting. She noted that while not all 65
recommendations are problematic, the overarching message sends
the wrong signals to mining companies and investors. The current
administration maintains that the existing framework,
supplemented by rigorous federal and state environmental
standards, is not protective enough. She opined that the most
concerning IWG recommendations are proposals to convert the
locatable system to a leasing system, granting the federal
government greater authority to reject mining projects, and the
introduction of punitive royalties and fees, which could deter
investments. Additionally, there is a proposal for a tax on the
volume of material displaced at mine sites, applicable to
locatable minerals regardless of land ownership, which could
further hinder investment.
4:04:05 PM
MS. SWEENEY moved to slide 14 and said she believes the only
reason IWG included potential permitting improvements among
their recommendations is because they were tasked by Congress to
identify challenges and suggest solutions. However, most of
IWG's permit recommendations are low-hanging improvements and
include project tracking, the use of consistent application
requirements, and broadened use of the Nevada Bureau of Land
Management (BLM) permitting process models. While this approach
has been shown to somewhat reduce permitting timeframes, pre-
application meetings, and encourage greater coordination among
agencies, Congress has tried to take matters into its own hands
and institute major permitting reforms. In 2023, efforts were
made to implement significant reforms, which are ongoing. The
bipartisan passage of the Fiscal Responsibility Act in mid-2023
marked a milestone. This legislation introduced the first major
amendments to the National Environmental Policy Act (NEPA) since
its inception in 1970. The amendments aim to streamline and
coordinate reviews to address a process that has become
unnecessarily long, inefficient, and overly litigious. The
Fiscal Responsibility Act limits the scope of environmental
impact statements and environmental assessments to focus on
foreseeable impacts to the environment. It imposes time limits
of two- and one-year on impact statements and environmental
assessments, respectively, along with page limits. The act also
establishes procedures for determining the lead federal agency,
permits project proponents to contract or conduct their own
environmental analyses under the lead agency's supervision, and
refines the definition of major federal action.
4:06:33 PM
MS. SWEENEY moved to slide 15 and described major environmental
policy reforms:
[Original punctuation provided.]
National Environmental Policy Act
Council on Environmental Quality's NEPA Reforms
Phase 1
• Finalized in April 2022
• Largely nullified favorable components of the
2020 NEPA reforms
Phase 2
• Broader changes, including requirements to assess
climate change in NEPA documents
• Final rule currently undergoing interagency
review
• National Environmental Policy Act
Phase 2 NEPA vs the Fiscal Responsibility Act
• Ignores congressional goals articulated in FRA
• De-emphasizes the procedural nature of NEPA
• Undermines FRA timeframes
MS. SWEENEY said the National Environmental Policy Act (NEPA)
recently proposed phase 2 changes to supplement the favorable
reforms made in 2022. If finalized as proposed, this rule would
fail to honor the bipartisan spirit that drove the amendments
introduced by the Fiscal Responsibility Act and would not
effectively enhance or further reform the permitting process.
The proposed rule undermines the page limit requirements
established by the Fiscal Responsibility Act for environmental
analyses by removing the requirement for agencies to use
specific administrative procedures to approve environmental
documents that exceed the page limits. Additionally, it fails to
provide federal agencies with the necessary tools or a clear
path forward to meet the statutory deadlines set by the Fiscal
Responsibility Act. When Congress amended NEPA, the focus was on
improving the process of identifying, considering, and
disclosing effects and alternatives. She expressed her belief
that the proposed purpose of the new rule, compared to the
existing purpose, is telling. The proposed purpose characterizes
NEPA as the fundamental national charter for environmental
protection, whereas the existing purpose emphasizes NEPA's role
as a procedural statute intended to ensure federal agencies
consider environmental impacts in their decision-making
processes.
4:08:37 PM
MS. SWEENEY moved to slide 16 and described land access:
[Original punctuation provided.]
Land Access
• Lands off limits to mining by presidential
action/antiquities act: over 3.5 million
Nearly 1 million acres in Ariz.
506,814 acres in Nev.
53,804 acres in Colo.
2 million acres in Utah
• Department of Interior withdrawals:
nearly 850,000 acres
• BLM Conservation and Landscape Rule
Overhauls how BLM manages land by
prioritizing conservation over other uses
Prioritizes Areas of Critical Environmental
Concern
Final rule expected in Spring 2024
BLM Conservation and Landscape Rule
• Other rulemakings/policies affecting access
30 x 30/America the Beautiful Initiative
Individual resource management plan updates
Forest Service climate resilience rulemaking
MS. SWEENEY said while the federal administration has been slow
to permit any new mines, it has quickly moved to restrict
additional lands from mining operations. To date, nearly 4.5
million acres have been designated off-limits for mining. These
withdrawals, orchestrated by the Department of the Interior
using the Antiquities Act, have included notable projects like
the Twin Metals project in Minnesota. However, the 4.5 million
acres figure does not encompass other imminent threats posed by
the administration, which could effectively result in de facto
withdrawals. One such threat is the Bureau of Land Management's
(BLM) proposed Conservation and Landscape Health Rule,
prioritizing conservation over development on federal lands.
This rule is expected to be finalized in the coming months.
Additionally, various resource management plan updates,
following a similar conservation-focused approach, pose further
challenges. For instance, the Rock Springs plan in Wyoming aims
to close nearly 3.5 million acres to coal mining and almost 2
million acres to hard rock mining. This conservation-centric
trend extends beyond the BLM, with similar initiatives evident
in the Forest Service's climate resilience efforts and the 30 x
30 America the Beautiful initiative. The latter seeks to
conserve at least 30 percent of lands and waters by 2030,
reflecting a broader commitment to environmental preservation.
4:10:44 PM
CO-CHAIR BISHOP asked her to explain the withdrawal in Minnesota
and whether it is in the iron range.
4:10:52 PM
MS. SWEEENEY replied it is outside the iron range but is not far
from it. She said it is a world-class copper, nickel, platinum,
and palladium deposit, and is one of the richest mines in the
U.S. outside of Alaska.
4:11:19 PM
CO-CHAIR BISHOP inquired about the number of mines that were
operational during World War II (WWII) compared to the number of
mines currently operating in the U.S.
4:11:43 PM
MS. SWEENEY replied she would report back to the committee. She
stated her belief that the country is in its most mineral-
intensive time since WWII.
4:12:04 PM
MS. SWEENEY moved to slide 17 and said the United Stated
Environmental Protection Agency's (EPA) comprehensive power
plant strategy is a coordinated regulatory assaults on coal
power that involves a suite of rule-making involving air, water,
and waste. The Interstate Transport ruled to limit ozone
emissions ranks as one of the latest threats with a potential
retirement of over 48-gigawatt in capacity in just a few years.
Despite EPA's acknowledgement that these rules are part of a
broader regulatory strategy, EPA has failed to conduct a
cumulative impact analysis of these coordinated activities. It
also continues to ignore clear warnings from the nation's grid
reliability regulators, grid operators, and other experts about
the dangers of forced coal plant closures. As the economy and
population expand and electrification increases, the demand for
electricity will continue to rise. Coal resources play a vital
role in supplying electricity at a reasonable price and in an
environmentally sound manner for consumers. Despite advancements
in renewable energy and natural gas, coal remains a significant
fuel for power generation, accounting for nearly 20 percent of
electricity generation in 2022 and 17 percent in 2023. Even
under ambitious scenarios aimed at increasing electricity
generation from renewables and natural gas, coal will still be
necessary to meet the nation's power needs. In certain regions
of the country, coal remains the primary energy source.
According to recent Energy Information Administration data, coal
was the largest source of electricity generation for 15 states
since 2021. Without access to affordable coal, the costs of
alternative fuels would rise, leading to higher electricity
costs and decreased reliability in power supply.
4:14:11 PM
MS. SWEENEY moved to slide 18 and said the mining industry needs
clear water regulations so it can comply with the law, permit
the mining projects the nation needs, and protect water quality
in communities. She highlighted the challenges posed by
confusing regulations that often change with each new political
administration, compounded by conflicting court decisions. This
uncertainty creates obstacles for the mining industry in
advancing projects crucial for the nation's infrastructure
development, energy production, and supply chain independence.
In 2020, a clear rule was established, providing practical
guidance for implementation on the ground. However, the Biden
Administration introduced changes that rendered the rules vague
and broad, making consistent implementation nearly impossible.
These changes relied on the confusing significant nexus test to
determine the scope of federal jurisdiction, potentially
allowing federal agencies to assert jurisdiction over nearly any
water body in the nation. Fortunately, the Supreme Court
provided some clarity through the U.S. Sackett vs. EPA case,
which struck down the significant nexus test. However, the post-
Sackett final rule, known as the conforming rule, still faces
legal and practical challenges, contributing to uncertainty and
backlog. Issues such as lack of transparency and inconsistency
in implementation among core districts persist, leading to
ongoing litigation related to the conforming rule.
4:16:05 PM
MS. SWEENEY moved to slide 19 and emphasized the regulatory
impact from three U.S. administrations in the federal
government. She emphasized that this data illustrates the
regulatory onslaught endured by the mining industry in recent
years and its implications for the nation's economy. Advocating
for reduced regulatory burdens does not imply a disregard for
environmental protection, but it highlights the necessity for
leaders to pursue innovative solutions that minimize taxpayer
burdens while ensuring a clean and safe environment for all.
4:16:42 PM
CO-CHAIR BISHOP recalled attending the anniversary of the
critical mineral summit two years ago. He said 90 percent of
rare earth minerals came from around the globe while China aimed
to expand its influence in other regions, particularly the Indo-
Pacific. He expressed concern that this situation could
potentially endanger American lives, as it did during WWII, when
417,000 American lives were lost. Co-Chair Bishop emphasized the
current threats posed by China and Russia and stressed the
importance of rebuilding the U.S. military industrial effort to
prevent history from repeating itself.
4:18:03 PM
MS. SWEENEY agreed and said that is sobering.
4:18:16 PM
DEANTHA SKIBINSKI moved to slide 21:
[Original punctuation provided.]
Bringing it Home to Alaska
As a State, we're doing a lot of things right
Statehood Defense
• Agency efforts to oppose federal overreach and
encroachment on States' rights
• Citizens Advisory Commission on Federal Areas
(CACFA)
Promotion of Alaska to investors
• Alaska Minerals Commission
• University of Alaska Minerals Summit
• Marketing Alaska by demonstrating high standards
MS. SKIBINKSI said the Statehood Defense coordinates agency
efforts against the onslaught of negative federal actions.
According to Senator Sullivan in his recent address to the
legislature last week, there have been 56 Alaska-specific
actions from the federal government. Additionally, there are
numerous nationwide actions that have a significant impact on
the state, given its extensive federal land acreage.
4:18:58 PM
MS. SKIBINSKI said mining industry is actively involved in
lawsuits against many of these federal actions, as several are
deemed illegal and violate important laws such as IMILCA and
others established during Alaska's statehood. She expressed
gratitude to the legislature for funding many of these efforts,
including the establishment of the Citizens Advisory Council on
federal areas and the extension of the Alaska Minerals
Commission. These initiatives are invaluable as the mining
industry works to assert state rights amidst numerous federal
challenges. From a promotional standpoint, Ms. Skibinski
commended the state for effectively promoting itself as a smart
place to do business and for highlighting its responsible
resource development efforts. She mentioned the transparency of
Environmental, Social, and Governance (ESG) documents and
reports on the mining industry's environmental and societal
impacts, as well as corporate policies and governance. She
emphasized that operating in Alaska is made easier by the fact
that companies operating in the state are proven leaders in
environmental protection, community investment, and
transparency. The University Critical Mineral Summit includes
representatives from the state, legislature, university system,
and other public members to showcase responsible resource
development and align with the social values of the mining
industry, which has been ongoing for decades. She emphasized the
significant value of these initiatives from a global mining
industry perspective.
4:20:36 PM
MS. SKIBINSKI moved to slide 21:
[Original punctuation provided.]
Bringing it Home to Alaska
As a State, we're doing a lot of things right
Investment in education and training to grow
Alaska's workforce and labor pool
• University of Alaska degree programs
• Vocational training across the state
• K-12 education through Alaska Resource
• Education
• Education Tax Credit
• Workforce development initiatives and
• Incentives
MS. SKIBINSKI emphasized the importance of education in the
mining industry, highlighting the longstanding partnerships
between the state, mining industry, and education and training
entities that have led to significant progress in workforce
development. She mentioned creative initiatives like the Mining
Education Tax Credit, which leverages private funds to support
university programs and vocational training. She acknowledged
the support of Alaska Resource Education, which has helped
generate interest in working in the resources industry at a
younger age among youth. She expressed gratitude for the
partnerships with the state and legislature in building a
skilled workforce for the mining industry.
4:21:28 PM
MS. SKIBINSKI moved to slide 22:
[Original punctuation provided.]
Bringing it Home to Alaska
As a State, we're doing a lot of things right
Partnerships with communities
• Mines: anchors of Alaska communities
Partnerships with Alaska Native Corporations
• Alaska Native Claims Settlement Act
• Success stories from resource development and
ANCs
Partnerships with Legislature
• Annual mining presentation to Resources
Committees
• Two-way communication on health of industry and
growth of benefits
MS. SKIBINSKI said in Juneau, mines are the largest taxpayers
and private sector employers. Interior Alaska is anchored by its
three large mines and dozens of placer mines. Even projects in
the development stage, such as the Donlin Gold Project in
Southwest Alaska, have brought life-changing investment to their
regions. Mines maintain special partnerships with their
neighbors and make a meaningful difference in local communities.
She shared an example from Donlin's 2023 backhaul project, which
sponsored programs that reached 26 villages in the region and
collected 235,000 lbs. of electronic and heavy waste for proper
disposal, preventing it from filling landfills or fields. The
mining industry's longstanding relationships and partnerships
with Alaska Native Corporations have led to long-term success
for Alaska Native communities, earning praise internationally.
She stated that she frequently receives compliments from mining
colleagues around the world about Alaska's successful model. She
highlighted the unique opportunity in Alaska to utilize
resource-potential lands to generate revenue for mental health
patient care. She expressed gratitude for the annual mining
update provided by the legislature, which allows for discussions
on increasing mining activity in Alaska while recognizing its
benefits. Many members have invested time in touring mines and
projects, fostering a strong partnership between the industry
and the legislature. She noted that last year, every large mine
in Alaska facilitated tours for the legislature, demonstrating a
unique partnership not found in every state.
4:24:55 PM
MS. SKIBINSKI moved to slide 24:
[Original punctuation provided.]
Bringing it Home to Alaska
What can we do better?
Infrastructure
• Access to deposits: roads, ports, etc.
• Broadband and technology
• Other mining jurisdictions have this in place
Energy
• Power and heat at remote mine sites
• Baseload customers and regional needs for
Alaskans and communities
• Reliability, availability and cost
MS. SKIBINSKI highlighted the significant challenges of
exploring, building, and operating a mine in Alaska, emphasizing
two major cost drivers including the lack of infrastructure and
high energy costs. Alaska's insufficient road networks, ports,
and other infrastructure put the state at a disadvantage,
requiring long-term solutions to address these issues.
Additionally, mines are highly energy-intensive operations, and
the availability, reliability, and costs of energy pose
significant barriers to establishing more mines in Alaska.
Addressing these challenges is crucial for the mining industry's
growth and sustainability in the state.
4:25:52 PM
MS. SKIBINSKI moved to slide 24:
[Original punctuation provided.]
Bringing it Home to Alaska
State challenges are our challenges, too
Housing
• Statewide issue
• Availability and cost
Childcare and schedule flexibility
• Mine jobs are rarely "work from home"
• Multiplier effect when childcare is scarce
• Availability and cost
Mine worker shortages
• Ability to find skilled workers to meet stringent
technical criteria
• Driving up the cost of labor
MS. SKIBINSKI acknowledged the community and housing issues in
Alaska, recognizing that these challenges can lead to the risk
of losing employees and further complicate workforce issues for
the mining industry. She expressed appreciation for the state's
efforts in addressing childcare issues, recognizing their
importance in supporting a stable and reliable workforce in the
mining sector.
4:27:08 PM
MS. SKIBINSKI moved to slide 25:
[Original punctuation provided.]
Bringing it Home to Alaska
State challenges are our challenges, too
Long-term fiscal policy
• Lack of fiscal stability creates uncertainty for
investors
• Policies that attract mining investment
Funding of permitting agencies
• Need for qualified personnel to permit and
oversee mines
• Promotion of Alaska's stringent environmental
regime
• Implementation of reasonable policies that
attract investment, not deter it
MS. SKIBINSKI said that the absence of a long-term fiscal plan
can portray Alaska as having weak jurisdiction, which can impact
the state's ability to attract investment and develop its
resources. She highlighted the mutual benefits of utilizing
these resources effectively for the state and its residents. Ms.
Skibinski stressed the importance of ensuring that statutes and
regulations applied to resource projects meet necessary
standards without imposing undue burdens on the industry.
Top of Form
4:28:26 PM
SENATOR DUNBAR highlighted the need for funding to cover
essential areas such as infrastructure, energy, childcare, and
others. He expressed concern about the instability of the state
budget due to reliance on returns from the Permanent Fund
Dividend (PFD) and oil prices, noting that Alaska lacks a broad-
based tax unlike other states. He asked Ms. Skibinski and Ms.
Matthias if they have a position on implementing a broad-based
tax in Alaska.
4:29:34 PM
MS. SKIBINSKI said AMA has a policy about a long-term fiscal
plan that encourages the adoption of a broad-based tax.
4:29:48 PM
MS. MATTHIAS said during a period of declining oil prices and
significant budget shifts, Alaska Metal Mines held a three-
pronged positions. They wanted to see more efficiencies in state
government, use of the Permanent Fund earnings, and was open to
the idea of implementing a broad-based tax.
4:30:24 PM
SENATOR KAWASAKI asked how much of Alaska's minerals are
exported to China.
4:30:50 PM
MS. MATTHIAS replied that she would follow up with the committee
in writing. She said Alaska's primary exports include seafood
and ores. However, Alaska lacks refining capacity for various
reasons. As a result, ore concentrates for base metals and gold
need to be sent elsewhere for refining. Some of these
concentrates are sent to Canada, Europe, and Asia/China. Until
opportunities for refining are developed within the country,
this will remain the ongoing reality.
4:31:38 PM
CO-CHAIR BISHOP recalled when some members took a trip to
Iceland and opined that if Alaska could achieve similarly low
electricity costs at two cents per kilowatt, mineral refining
would become feasible in the state.
4:32:00 PM
SENATOR KAWASAKI said Kensington, as a 50 percent shareholder,
previously had the China Investment Corporation invest in
refining raw gold materials. He expressed curiosity about the
requirements to establish refining capacity in Alaska instead of
solely being an export state. He opined that while the state is
exceptionally rich in resources, it lacks proficiency in
executing refining operations.
4:33:02 PM
MS. SKIBINSKI said the nation has not permitted a smelter in
decades, which has presented a federal challenge for refining
opportunities.
4:33:25 PM
SENATOR CLAMAN drew parallels between timber and mining, noting
that most of the valuable timber resources are owned by Native
Corporations, with fewer on state lands. He inquired about the
location of the most promising mineral resources in Alaska and
whether they are primarily situated on federal, state, or Native
Corporation land.
4:34:42 PM
MS. SKIBINSKI replied that he might be surprised by the amount
of resource potential on state lands. She highlighted the Pebble
Project as the most notable project entirely situated on state
land, boasting tremendous mineral and revenue potential. She
offered to provide the committee with an overview of advanced
exploration projects and early development projects, along with
their land status. She said there is substantial potential on
state lands.
4:35:36 PM
SENATOR CLAMAN asked whether Native Corporation and federal
lands are included on the report.
4:35:45 PM
MS. SKIBINSKI replied yes. She said there are also some
promising Alaska Native Corporation and federal deposits within
state boundaries.
4:36:12 PM
SENATOR KAWASAKI asked if there are many mining claim leases
that have yet to be developed or properly explored and asked for
the reasons for any hold-ups in their development.
4:36:38 PM
MS. SKIBINSKI explained that there are numerous mining claim
leases, particularly in the locatable system for metals found in
hard rock. These claims are established regardless of land
status. However, the development of these projects faces
barriers due to federal challenges. Recent federal actions in
the mining sector have often resulted in project setbacks, with
instances where projects have been denied or faced obstacles
such as land exchange or status changes.
4:38:14 PM
MS. MATTHIAS added that claims are not static and there is a
requirement to work to maintain them.
4:38:33 PM
CO-CHAIR BISHOP suggested discussing prospects, targets, and the
permitting timeline with DNR and other agencies.
4:38:55 PM
MS. SKIBINSKI said efforts are becoming timelier within the
mining industry and more relevant. There's a growing awareness
among households about the sourcing of their items, particularly
in light of global conflicts. With these factors in mind, it's
crucial to capitalize on the state's mineral potential and
expedite the development of new mines to bolster the domestic
supply.
SB 243-ALASKA ENERGY AUTHORITY GOVERNANCE
4:40:31 PM
CO-CHAIR BISHOP announced the consideration of SENATE BILL NO.
243 "An Act relating to the board of directors of the Alaska
Energy Authority."
4:41:02 PM
SENTATOR CATHY GIESSEL, District E, Alaska State Legislature,
Juneau, Alaska, sponsor of SB 243, introduced herself.
4:41:18 PM
ANGELA RODELL, Staff, Senator Cathy Giessel, Alaska State
Legislature, introduced herself.
4:41:21 PM
SENATOR GIESSEL recalled reading a book about Susan B. Anthony,
a suffragette who fought for the right to vote. She noted the
significant progress since then, highlighting the presence of
five women presenting to the committee today. 106 years ago,
women lacked voting rights and property ownership.
4:42:37 PM
CO-CHAIR GIESSEL highlighted the merger of the Alaska Energy
Authority (AEA) with the Alaska Industrial Development and
Export Authority (AIDEA), which has raised concerns within the
committee. She mentioned an audit conducted in 1994 and
discussions in 1993 about combining the boards. Currently, AEA
faces significant tasks, particularly regarding renewable
energy, while AIDEA has a different mission. Senate Bill 243
aims to separate the two boards, drawing from an executive order
(EO) issued by the administration. The EO was noted to be an
overstep, which sparked SB 243. The bill proposes a six-member
board, including the commissioners of the Department of
Commerce, Community, and Economic Development (DCCED) and the
Department of Revenue. Co-Chair Giessel emphasized the
importance of including the Department of Revenue, especially
given the board's management of funds for government system
upgrades.
4:45:44 PM
MS. RODELL presented the sectional analysis:
[Original punctuation provided.]
SENATE BILL 243
Alaska Energy Authority Board of Directors
SECTIONAL ANALYSIS
Section 1: Amends AS 44.83.030 to create a stand-alone
eight member board of directors for the Alaska Energy
Authority that includes the Commissioner of Commerce,
Community & Economic Development, the Commissioner of
Revenue and 6 members of the public that meet the
specified qualifications.
Section 2: Amends AS 44.83.030 to allow the
commissioners the ability to designate a deputy or
assistant to act in the commissioner's place, sets the
public member term at 3 years and provides for the
governor to immediately appoint a member to fill and
unexpected vacancy.
Section 3: Amends AS 44.83.040 (a) is amended to
require the authority to elect a chair and vice chair
every two years, requires that five members to
constitute a quorum and that actions taken and motions
and resolutions adopted require an affirmative vote of
five members.
4:47:21 PM
SENATOR CLAMAN noted there is no confirmation by the legislation
under SB 243 and if wondered that option was considered.
4:47:37 PM
SENATOR GIESSEL replied yes and said it was considered. However,
members would not be able to be confirmed for this type of
board.
4:47:48 PM
MS. RODELL said it is considered unconstitutional to have non-
quasi-judicial boards subject to confirmation by the
legislature. She offered to provide the relevant information to
the committee.
4:48:04 PM
SENATOR CLAMAN mentioned that the governor could fire board
members without confirmation, leading to the loss of
institutional memory on the board. He noted that SB 243 does not
offer protection to board members.
4:48:51 PM
MS. RODELL replied that it was not discussed but member
protection is something that could be incorporated.
4:49:01 PM
CO-CHAIR BISHOP asked for a list of member qualifications.
4:49:18 PM
MS. RODELL said there would be six members from the public:
• One member with expertise or experience in managing or
operating an electric utility that is not connected to an
interconnected electric energy transmission network
• One member with expertise in developing in energy projects
rural communities
• One member with expertise or experience in managing or
operating an electric utility connected to an
interconnected electric energy transmission network
• One with financial expertise in large scale energy project
development
• Two members with expertise or experience in finance, energy
policy, energy technology, engineering, law, or economics
4:50:25 PM
CO-CHAIR BISHOP opined that this bill does a good job of
capturing the breadth and depth required to set up this board.
4:50:40 PM
SENATOR CLAMAN observed that the state is well served by having
independently operated boards and expressed concerns that SB 243
would not provide that level of independence. He mentioned
witnessing governors from both parties take such actions.
4:51:27 PM
SENATOR GIESSEL invited him to provide an amendment if he
chooses. She noted there is an amendment to establish an
effective date.
4:52:04 PM
CURTIS THAYER, Executive Director, Alaska Energy Authority,
Anchorage, Alaska, AEA serves as Alaska's energy office,
dedicated to reducing energy costs, diversifying the energy
portfolio, and enhancing resilience, reliability, and redundancy
across the state. Structured into six categories, including
Railbelt Energy, AEA owns critical assets such as the Bradley
Lake hydro project, a key provider of affordable power at four
cents per kWh for the Railbelt region. Notably, AEA's
transmission lines from Sterling to Quartz Creek on the Kenai
Peninsula and from Willow to Healy play a crucial role in
delivering power without charging wheeling rights. This saves
the Fairbanks economy an estimated $40 million annually by
facilitating power purchases from the Railbelt. Additionally,
AEA oversees rural energy initiatives, renewable energy
integration, and energy efficiency programs. It evaluates
alternative energy technologies like biomass, hydro, solar, and
wind for their benefits to Alaska. AEA's grant and loan
programs, including the Renewable Energy Fund, have attracted
over $300 million in state investment, leveraging federal funds
to create jobs and displace 85 million gallons of diesel fuel.
AEA also conducts energy planning at state and regional levels.
This was exemplified by its recent completion of the Governor's
Energy Task Force. With significant projects totaling $750
million, AEA's focus on lowering energy costs differentiates it
from AIDEA's economic growth promotion through financing. Thayer
emphasized the need for a dedicated board with expertise
tailored to AEA's goals, citing the burden on the current
volunteer board. While AEA had its own board until the mid-90s,
legislation in 1994 combined the boards of AEA and AIDEA. He
emphasized the importance of separating the boards to enhance
policy development and resource allocation specific to AEA's
objectives.
4:58:03 PM
CO-CHAIR BISHOP held SB 243 in committee.
4:58:32 PM
There being no further business to come before the committee,
Co-Chair Bishop adjourned the Senate Resources Standing
Committee meeting at 4:58 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 243 Sponsor Statement Ver. A.pdf |
SRES 2/26/2024 3:30:00 PM |
SB 243 |
| SB 243 Sectional Analysis Ver. A.pdf |
SRES 2/26/2024 3:30:00 PM |
SB 243 |
| SB 243 Fiscal Note DCCED 02.26.24.pdf |
SRES 2/26/2024 3:30:00 PM |
SB 243 |
| Mining Industry Update Presentation 02.26.24.pdf |
SRES 2/26/2024 3:30:00 PM |
|
| SB 243 Supporting Documents AEA Dissolution Special Report.pdf |
SRES 2/26/2024 3:30:00 PM |
SB 243 |
| SB 243 Legislative Legal Memo on Confirmations.pdf |
SRES 2/26/2024 3:30:00 PM |
SB 243 |
| Mining Industry Update Follow Up from 02.26.24.pdf |
SRES 2/26/2024 3:30:00 PM |