Legislature(2017 - 2018)BELTZ 105 (TSBldg)
02/27/2018 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB203 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 203 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 27, 2018
3:31 p.m.
MEMBERS PRESENT
Senator Click Bishop, Chair
Senator Anna MacKinnon
Senator Lyman Hoffman
Senator Bert Stedman
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 203
"An Act authorizing the Alaska Industrial Development and Export
Authority to issue bonds to finance the infrastructure and
construction costs of the Graphite Creek graphite project."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 203
SHORT TITLE: AIDEA: BONDS FOR GRAPHITE CREEK PROJECT
SPONSOR(s): SENATOR(s) OLSON
02/19/18 (S) READ THE FIRST TIME - REFERRALS
02/19/18 (S) CRA, FIN
02/27/18 (S) CRA AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR OLSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 203.
JIM PUCKETT, staff to Senator Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained SB 203, version 30-LS1473\A.
ROSE FOSDICK
Natural Resources Division
Kawerak, Inc.
Nome, Alaska
POSITION STATEMENT: Didn't state a position on SB 203 but said
they are curious about the graphite process and the chemicals
used in it and think it could be harmful to subsistence.
BRANDON AHMASUK, Director
Subsistence Resources Program
Kawerak, Inc. Nome, Alaska
POSITION STATEMENT: Opposed SB 203.
SUE STEINACHER, representing herself
Nome, Alaska
POSITION STATEMENT: Did not state a position on SB 203 but asked
what degree of support this project has from all the residents
of Brevig and Teller.
BLAKE BOGART, representing himself
Nome, Alaska
POSITION STATEMENT: Supported SB 203.
DOUG TWEET, representing himself
Nome, Alaska
POSITION STATEMENT: Supported SB 203.
RICHARD BENEVILLE, Mayor
Nome, Alaska
POSITION STATEMENT: Supported SB 203.
JOHN TOPKOK
Igloo Native Corporation
Teller, Alaska
POSITION STATEMENT: Did not state a position on SB 203 but
agreed with comments about the need for subsistence resources
and housing in Teller.
RITA OLAN
Brevig Mission Native Corporation
Brevig Mission, Alaska
POSITION STATEMENT: Hesitant to support SB 203, because the
mining site is also their camping grounds for hunting moose and
berry picking.
BLANCHE OKBACK-GARNIE, Mayor
Teller, Alaska
POSITION STATEMENT: Opposed SB 203 although she is not for or
against the mine.
FRIEDA SOUTHALL
Native Village of Brevig Mission, Brevig Mission, Alaska
POSITION STATEMENT: Opposed SB 203.
HAL SHEPHERD, representing himself
Nome, Alaska
POSITION STATEMENT: Opposed SB 203.
HIEDI KELLER, representing herself
Nome, Alaska
POSITION STATEMENT: Opposed SB 203.
RACHEL MENADELOK, representing herself
Anchorage, Alaska
POSITION STATEMENT: Opposed SB 203.
JOHN SPRINGSTEEN, CEO
Alaska Industrial Development and Export Authority (AIDEA)
Anchorage, Alaska
POSITION STATEMENT: Could support SB 203 with the addition of a
June 30, 2025, sunset.
DOUG SMITH, Executive Chairman
Graphite One Resources, Inc.
Vancouver, British Columbia
POSITION STATEMENT: Supported SB 203.
ACTION NARRATIVE
3:31:39 PM
CHAIR CLICK BISHOP called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:31 p.m. Present
at the call to order were Senators Stedman, MacKinnon, Hoffman,
Gardner, and Chair Bishop.
SB 203-AIDEA: BONDS FOR GRAPHITE CREEK PROJECT
3:32:43 PM
CHAIR BISHOP announced consideration of SB 203 authorizing
Alaska Industrial Development and Export Authority (AIDEA) to
issue bonds to finance infrastructure and construction costs for
the Graphite Creek project.
3:33:12 PM
SENATOR OLSON, Alaska State Legislature, sponsor of SB 203, said
he was asked to introduce this bill to make sure that a
corporation like Graphite One could accept AIDEA funds to start
the initial stage of assessing the possibility of pulling this
graphite deposit out of the ground.
He explained that graphite is a rare mineral that the U.S.
imports 100 percent from places like China. That is why this
area is worth investing in.
3:36:00 PM
SENATOR GARDNER said she was struck by the overview that says
this company is proposing a vertically integrated enterprise: to
mine the graphite, process it into concentrate, and then
manufacture high-grade spherical graphite for vehicle batteries
and storage. She asked if any of that value-added processing
would be done in Alaska.
SENATOR OLSON replied that the Native corporation and a number
of other people in that area are excited about the jobs it would
create, not just for the mining but for the processing.
SENATOR GARDNER asked if this mine would be able to replace 100
percent of the graphite imports.
SENATOR OLSON replied that he didn't know, and he didn't think
anyone else did either. The military uses a lot of high-grade
graphite, but how much and what it used for they hold
confidential.
3:38:40 PM
At ease
3:39:09 PM
CHAIR BISHOP called the meeting back to order.
3:39:13 PM
At ease
3:40:02 PM
CHAIR BISHOP called the meeting back to order.
JIM PUCKETT, staff to Senator Olson, Alaska State Legislature,
Juneau, Alaska, said SB 203, version 30-LS1473\A, authorizes
AIDEA to issue the bonds under AS 44.88.172. The principle
amount that they can issue is limited to $80 million, including
the cost of issuing them. It requires legislative approval
according to AS 44.88.095(g).
He emphasized that this is not an approval for the project but
simply giving AIDEA the option to invest in the Graphite Creek
Project, that is estimated to cost more than $350 million.
Why is graphite so important and why now? Mr. Puckett answered
that United State Geologic Survey (USGS) had identified this
mineral as critical to the national economy and national
security. It is most important as an anode material in lithium
batteries, a market that is expanding rapidly. Currently, the
U.S. is totally reliant on foreign sources for graphite; China
being the biggest, but it comes from Brazil, Madagascar, and a
couple other sources, as well.
MR. PUCKETT explained that the very large flake graphite
deposits in the Kigluaik Mountains on the Seward Peninsula are
the largest known graphite resource in the United States. The
proposed processing plant at the Graphite Creek facility would
produce 60,000 metric tons of graphite concentrate annually. In
2016, the U.S. needed 39,500 metric tons of natural graphite.
He said that Tesla has built a new lithium battery giga factory
in Nevada and once it is at full production (expected to happen
in 2019) it will need 93,000 tons of graphite annually. That
factory is already producing more batteries than any other
factory in the world and it is not at full production, yet. A
2017 study showed this project has the potential to produce a
significant portion of the projected domestic demand for
graphite for 40 years.
CHAIR BISHOP remarked that he heard that Toyota Motor Company
wants to be hybrid or all electric by 2025 and some other car
companies are doing that same. He opened public testimony.
ROSE FOSDICK, Natural Resources Division, Kawerak, Inc., Nome,
Alaska, didn't state a position on SB 203, but said they are
curious about the graphite process and the chemicals used in it
and think it could be harmful to subsistence. They would like to
know the meeting schedule so people can comment and share their
needs for subsistence resources.
3:50:00 PM
BRANDON AHMASUK, Director, Subsistence Resources Program,
Kawerak, Inc. Nome, Alaska, said these communities are heavily
reliant on subsistence resources - salmon, moose, caribou,
berries - and will be the first ones to know if these mines will
negatively affect the area. If the resources around these
communities are impacted who will put food on the table? These
communities have 80-90 percent unemployment. He said the Imuruk
Basin has North America's farthest north red salmon run. It
holds three kinds of seals, two of which are listed as
threatened under the Endangered Species Act (ESA); they are
there because of the salmon. If any of these resources were to
fall, it will trickle down the food chain and ultimately to the
communities down-river from the mine. He concluded saying that
the subsistence people should be at the table in discussions of
this mine.
CHAIR BISHOP asked if seals are still available for subsistence
hunting.
MR. AHMASUK answered yes.
3:51:25 PM
SUE STEINACHER, representing herself, Nome, Alaska, did not
state a position on SB 203, but asked what degree of support
this project has from all the residents of Brevig and Teller.
Someone from Teller wrote on Facebook that Senator Olson has
heard only good things, but he has not heard from them.
Remember, when there is resistance this has caused them to build
a better project than first proposed.
Her next concern was when the state invests money for
development of a corporate project, it casts reasonable doubt on
the state's neutrality as a regulatory enforcer. If a company
doesn't spend its own money it overestimates their capabilities.
The Rock Creek Mine is an example of where the state invested
$7-8 million dollars building a road to the mine site - and she
didn't know who paid for the three miles of power lines - but
the company oversold its abilities and the mine failed. There is
now a three-mile road to nowhere along with power poles.
She mused that the state is being asked to post $80 million for
this project while Nome and the surrounding communities are
suffering from a severe lack of housing and a high cost of
living. Teller doesn't even have sewer and water to their homes.
A project like this will only add more pressure on the limited
housing and will cause already-high prices to rise higher. There
are already over 50 Nome families on the AHFC waitlist for 33
units and long waitlists at the regional housing authority. HUD
recently estimated a need for over 1,000 housing units in the
Bering Strait region including Teller and Brevig, and yet their
budget is so small that they can only afford to build six a
year.
In Nome, people in the service industry make only $12-17 an hour
and yet have to live in two-bedroom apartment for $1600-
1800/month plus utilities. Families are doubled and tripled up
just to get by. This is true in Teller, as well. If the state
wants to invest in infrastructure and development in rural
Alaska for a large corporation it has to first invest in
affordable housing and infrastructure for the people who already
live there.
MS. STEINACHER proposed if this bill goes forward that 25
percent of the bond amount be dedicated to addressing the
existing needs for communities most impacted by this mine. She
added that while this project will bring jobs, the highest
paying ones go to the people who move into the region and too
often the cost of development puts the greatest pressure on the
lowest earners.
3:55:12 PM
BLAKE BOGART, representing himself, Nome, Alaska, supported SB
203. It's a great opportunity for this region and the state
directly and indirectly with its jobs and economic growth. It
could lead to America's first domestic supply of graphite that
goes through a rigorous permitting process. He said making
batteries is an up and coming industry.
DOUG TWEET, representing himself, Nome, Alaska, supported SB
203. He is the third generation of the Tweet family and the
owner in the claims that Graphite One is leasing. These claims
were staked in 1900 by his grandfather. So, the mine will be
locally owned. The family knows and loves the country and
wouldn't allow any degradation of the environment.
He explained that these are federal mining claims and the state
wouldn't get any benefit from them, but they are being converted
to state claims, which means the state would get substantial
royalties. He said this a "world class" mine and that the
graphite is very large flake and rare. The mine would be a huge
benefit to the local economy paying high wages and providing a
tax base. As claim owners, the family has worked with Graphite
One for seven years and found it a good company to work with.
They are committed to local hire as much as possible and want to
keep local communities involved in the mine plan and
development.
3:59:40 PM
RICHARD BENEVILLE, Mayor, Nome, Alaska, supported SB 203. He
thanked Senator Olson for bringing it to the attention of the
legislature. He said western Alaska has some of the highest
energy costs in the country and they are in the process of
trying to develop its resources to where it can be a lot more
self-sustaining. He said that graphite also helps the nation and
it gets used in the development of storing energy in batteries.
4:02:11 PM
JOHN TOPKOK, Igloo Native Corporation, Teller, Alaska, didn't
state a position on SB 203, but agreed with comments about the
need for subsistence resources and housing in Teller. He said
besides red salmon, they rely on tom cod, herring, and smelt,
that all inhabit the Imuruk Basin, which needs to be protected.
They also catch moose around the Graphite area.
4:05:00 PM
RITA OLAN, Brevig Mission Native Corporation, Brevig Mission,
Alaska, said they are hesitant to support SB 203, because the
mining site is also their camping grounds for hunting moose and
berry picking. The streams from the Kigluaik Mountains are used
for drinking and fishing. She didn't know how the area will be
kept clean if it is contaminated with "mining stuff." People in
the area live a life of subsistence and can't live off graphite.
"If there is a spill, will the state keep their freezers full,"
she asked. They have been told the limestone will neutralize the
chemicals, but don't know how long that will take. If one of
these resources collapses, the rest will follow.
4:08:38 PM
MS. OLAN said her people have been taught by their fathers and
forefathers how to live off their land and were taught to share
what they catch, but what will happen when they have nothing to
share because of the contaminants, noise, and interruptions the
mine will bring? She said Graphite One has said they will start
a subsistence board (to which she has been elected to represent
her council) to keep a close watch on the activities but so far
this board has only been imaginary.
According to the Environmental Protection Agency's (EPA) toxic
release inventory, Kotzebue is the most toxic community in
America, because of the Red Dog Mine. In her mind, the graphite
mine will bring destruction to their land and culture and to
their food and people. She asked the committee when making
decisions that will directly impact communities to allow them
the opportunity to voice their concerns and let them decide
their future.
4:09:54 PM
BLANCHE OKBACK-GARNIE, Mayor, Teller, Alaska, opposed SB 203
although she is not for or against the mine. She didn't want to
see a road built up to their wilderness campsite. The road in
Teller has brought dust and trash that ruins their subsistence;
it invites anybody from out of state or other parts of the state
to hunt and do subsistence in the same area they depend on. They
don't have jobs; they have to subsist to survive. She suggested
spending $80 million on toilets, water and sewer for their
community.
4:11:51 PM
FRIEDA SOUTHALL, Native Village of Brevig Mission, Brevig
Mission, Alaska, opposed SB 203, because it will negatively
affect their subsistence lifestyle. Because there are no jobs in
the area most people live a subsistence lifestyle picking
berries and greens, gathering fish and hunting moose in the same
place the mine would be located. Once that is destroyed, they
will not be able to go back to subsistence.
4:14:19 PM
HAL SHEPHERD, representing himself, Nome, Alaska, opposed SB
203. He worked for the past four years as a consultant to Brevig
Mission, Teller, and Mary's Igloo Tribal Council and has
followed the graphite mine proposal during that time. He
supported comments from those having concerns about subsistence
and said there is pretty much unanimous opposition to this mine.
MR. SHEPHERD said one of his main concerns is how the mine will
use water. He explained that the DNR routinely issues temporary
water use authorizations to this mining company every year. They
just recently issued another one for another five years, which
will allow the mine to take water out of six creeks that drain
the Kigluaik Mountains that contain salmon habitat. However,
Graphite One claims there are no salmon using these creeks. DNR
is currently allowing the mine to remove over 65 gallons/day
from June to October. These creeks are quite small and there is
no doubt that removal of that amount of water will affect them.
Also, as everywhere else in the Arctic, which is warming faster
than anywhere on earth, temperatures are going to start rising
in those creeks and will start affecting fish habitat.
4:17:33 PM
HIEDI KELLER, representing herself, Nome, Alaska, opposed SB
203. It will affect their subsistence way of life. Imuruk Basin
is where the villages have fished and hunted for thousands of
years. Imuruk Basin is connected to the Kuzitrin River and the
Pilgrim River where Nome locals fish for their year-long supply;
for her that includes her household, her parents' household, and
her grandparents' household. Community members in Teller and
Brevig can't just drive to the store for food like people in
Nome. Their lives depend on their subsistence way of life.
How will Graphite One stimulate the economy in Teller where last
winter it ran out of fuel. Will they help with infrastructure
upgrades?
Recently, Ms. Keller said, the National Geographic had an
article regarding the harmful effects of the Red Dog Mine on
Kotzebue and Kivalina, and asked if health risks will be ignored
because Teller and Brevig have such small populations? She also
quoted a Nome Nugget article detailing how the mine would
negatively impact the area.
MS. KELLER said the residents were forced to settle in these
villages or their children would be taken away and sent to
schools. And the mine would have water and sewer facilities
before the villages did.
Graphite One is a Canadian company that will hire out-of-town
employees and a few token local employees. There is no income
tax in that area and all the employees' money would go to
wherever they are from. DNR has said they cannot regulate it
closely and the company will be receiving tax breaks. This has
been seen time and again. The mine down Glacier Creek Road
didn't turn out well and now the land is all torn up and will
never be the same.
4:21:34 PM
RACHEL MENADELOK, representing herself, Anchorage, Alaska,
opposed SB 203. She grew up in Teller and Brevig and said this
mine is not a good idea. These are subsistence villages where
people can't go to a grocery store; subsistence is all they have
for food. There are more important things in the world than
trying to get a few dollars off of the small amount of land that
is left for subsistence, she said.
4:24:28 PM
JOHN SPRINGSTEEN, CEO, Alaska Industrial Development and Export
Authority (AIDEA), Anchorage, Alaska, said he could support SB
203 with the addition of a June 30, 2025, sunset.
DOUG SMITH, Graphite One Resources, Vancouver, British Columbia,
supported SB 203. The project is in its early stages and must go
through environmental studies and mining plans and meet with the
communities as it progresses. He assured them that the
communities will have ample opportunity to follow the planning
process and contribute their input into the decision-making on
this project.
4:26:04 PM
CHAIR BISHOP, finding no further questions or comments, closed
public testimony.
SENATOR GARDNER said she wanted to know who owns Graphite One
and the land on which the mine is proposed to be located. She
also said she had researched the Graphite One Company and found
that the income statement for the period of 2012-2016 is all
zeros, the expenses are in an upward trajectory, the pre-tax
income is all in bright red, and the balance sheet has a lot of
zeros and some red. The cash flow statement is red, also. She
remarked if she were making a decision about investing in this
company she would have some serious concerns. For instance, she
would question whether this company has the resources to follow
through if there would be a spill. This is not even considering
the concerns of the local people.
4:27:56 PM
CHAIR BISHOP said he had no intention of moving the bill today.
SENATOR OLSON commented that the issues that people brought up
certainly gives one pause. Certainly, the balance sheet is very
concerning. He reiterated that the property was federally
patented in 1900 by Doug Treet's grandfather, and Graphite One
would be leasing from them.
4:29:06 PM
CHAIR BISHOP, finding no further comments, held SB 203 in
committee.
4:29:24 PM
SENATOR OLSON closed by saying that he wants to make sure the
project consults with the communities, and if they don't support
the project, he recommends not going forward with it.
4:30:16 PM
CHAIR BISHOP adjourned the Senate Community and Regional Affairs
Committee meeting at 4:30 p.m.