Legislature(2011 - 2012)SENATE FINANCE 532
02/23/2011 12:00 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Annual Mining Industry Briefing | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
JOINT MEETING
SENATE RESOURCES STANDING COMMITTEE
HOUSE RESOURCES STANDING COMMITTEE
February 23, 2011
12:05 p.m.
MEMBERS PRESENT
SENATE RESOURCES
Senator Joe Paskvan, Co-Chair
Senator Thomas Wagoner, Co-Chair
Senator Bill Wielechowski, Vice Chair
Senator Bert Stedman
Senator Lesil McGuire
Senator Hollis French
Senator Gary Stevens
HOUSE RESOURCES
Representative Eric Feige, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Peggy P. Wilson, Vice Chair
Representative Neal Foster
Representative Cathy Engstrom Munoz
Representative Scott Kawasaki
MEMBERS ABSENT
SENATE RESOURCES
All members present
HOUSE RESOURCES
Representative Alan Dick
Representative Bob Herron
Representative Berta Gardner
COMMITTEE CALENDAR
ANNUAL MINING INDUSTRY BRIEFING
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
STEVE BORELL
Alaska Miners Association
POSITION STATEMENT: Briefed the committee on large surface mines
in Alaska.
MIKE SATRE, Executive Director
Council of Alaska Producers
POSITION STATEMENT: Briefed the committee on underground mines
in Alaska.
STAN FOO, General Manager
Donlin Creek Project
POSITION STATEMENT: Briefed the committee on the Donlin Creek
project.
ACTION NARRATIVE
12:05:47 PM
CO-CHAIR JOE PASKVAN called the joint meeting of the Senate and
House Resources Standing Committees to order at 12:05 a.m.
Present at the call to order were Senators French, Stedman,
Stevens, Co-Chair Paskvan and Co-Chair Wagoner; Representatives
P. Wilson, Co-chair Feige and Co-Chair Seaton.
^Annual Mining Industry Briefing
CO-CHAIR PASKVAN announced the annual Mining Industry Briefing.
12:06:48 PM
SENATORS WIELECHOWSKI and MCGUIRE joined the committee.
12:07:32 PM
STEVE BORELL, Alaska Miners Association, said he would cover the
large surface mines.
He is often asked why Alaska has so little mining today. Until
World War II mining was the biggest industry in Alaska. A
presidential order closed mining during World War II. After the
war some placer mining resumed, but it was not economic. Base
metal mining had excess capacity, which held down exploration
activity in the state. From 1989 to the present there has been
steady growth, and today there are six large mines in the state.
The Prudhoe Bay oil discovery led to uncertainty until Greens
Creek and Red Dog went through the permitting process and proved
to the world that mining could work here and derailed the idea
that Alaska is just one big park.
12:10:38 PM
From a placer mining standpoint, approximately 200 small placer
operators produced about 57,000 ounces last year. They expect
that 2011 will be similar or slightly higher, because of metal
prices.
12:10:51 PM
REPRESENTATIVES MUÑOZ and FOSTER joined the committee.
Usibelli Coal Mine pictures show the strip mining technique; the
strip moves as mining and reclamation goes on. This is a
continuous process.
CO-CHAIR WAGONER wanted to talk about RS2477 problems.
MR. BORELL continued by saying that Usibelli is a fourth
generation family owned mine, with 68 years of operation and 130
employees. Last year they shipped two million tons, which was a
new record. About half of that was domestic and the other half
was exported.
The Red Dog Mine went through a two-year project to get the
necessary permits; the final permit was received in May of 2010.
REPRESENTATIVE KAWASAKI joined the committee.
MR. BORELL said that Red Dog has 550 full-time employees plus
contractors. Fifty-six percent of the employees are NANA
shareholders. As an example of permitting for a large mine, Red
Dog has 65 permits, 31 separate bodies of regulation apply to
the project, 13 different agreements are in place, and nearly
6,000 compliance requirements have to be met. Before mining ever
took place, there was naturally occurring acid rock drainage.
12:16:41 PM
Regarding Fort Knox tailings, a new heap leach of low grade ores
is being brought in; a dilute cyanide solution is dripped over
it and the solutions are pumped to the mill and processed to get
the gold out of solution. Eventually the ore is stacked. This
material would otherwise be waste material. Fort Knox has 500
full-time employees. They recently passed a major milestone with
four years without a lost time accident, and four million man-
hours without an accident.
12:19:06 PM
MIKE SATRE, Executive Director, Council of Alaska Producers,
said he would review underground mines in Alaska. The mining
cycle for underground mines is highly mechanized, and
potentially hazardous. Safety is always foremost. After
decisions are made by the geologists on where to drill, drillers
come in and drill holes for explosives. Before drilling the
face, they must secure the ground with rock bolters and supports
for miners. Underground rock is then removed.
Most underground mines in Alaska are a combination of cut and
fill technique and long hole. A vertical section through an ore
body is mined in 60 ft. increments. They fill the void and then
continue mining on top, going through the cycle again and again
to maximize extraction of the ore body.
12:22:39 PM
He said that long-hole mining uses both an overcut and an
undercut; they drill vertical holes between and then blast out
anywhere from ten to 30,000 tons at a time. Once blasted there
is no way to secure the ground, so they operate a "mucker" by
remote control to keep them safe. This is an example of mining
without exposing workers to harm.
12:24:09 PM
MR. SATRE reported that the Hecla Greens Creeks Mine is a high
grade poly metallic ore body, containing world class deposits of
silver, zinc, lead and gold. Greens Creek produces three
different concentrates. Zinc, lead and gold concentrates are
shipped around the world. It has been in production for 20 years
and has another 10 years to go.
The economic impact of Greens Creek is 340 employees; 530 total
direct and indirect jobs; the largest private sector employer in
Juneau; in 2010 $2 million in pay and benefits; $111 million
operating, capital and exploration costs. It is the largest
property tax payer in the City and Borough of Juneau. For 2010
Greens Creek's Alaska mining license tax will bring $9 million
into state coffers. They are currently in the NEPA process,
trying to add 30-50 years of tailings storage capacity so that
they can develop additional ore bodies. They have a proposal to
expand the site by 200 acres. Construction will start in 2012
pending favorable permitting.
12:27:46 PM
Turning north to the Pogo Mine, Mr. Satre said, is the largest
gold producer in Alaska with over 300 employees and 100 full-
time contractors. Sumitomo Metal Mining is the operator. It uses
a complex milling process, with a conveyor belt taking ore from
the mine to the mill facility. The majority of waste material is
pumped underground. They have a strong focus on safety and
environmental protection. Reserves will take them through 2017,
and they are actively exploring for more ore.
12:30:18 PM
Kensington Gold Mine, a real success story, started operations
in July 2010. Average production is about 125,000 ounces of gold
per year. It has ongoing exploration to extend mine life. In
terms of community impacts, there are 200 employees; 170
indirect jobs, and $25 million in direct and indirect annual
payroll, making it the second largest Juneau employer in terms
of payroll.
12:32:06 PM
MR. BORELL discussed the Nixon Fork Mine that is currently idle
but expects to go back into production this summer. They have 40
jobs now and expect 100 by the end of 2011. It has no road
access.
He said the Rock Creek Mine was just getting started at the time
of the economic crash; they couldn't get a loan, so they
maintained permits by keeping people on site. They didn't want
to use up their $10 million. They have now decided to focus on
other two primary projects, including Donlin Creek.
Projects in advanced exploration and permitting include Chuitna
Coal, a 12 million metric ton per year surface mine. It will use
an elevated conveyor to have minimal effects on wetlands areas.
They expect have a draft supplemental EIS by the end of 2011.
12:35:53 PM
MR. BORELL reported that Donlin Creek is now in design status.
They are evaluating alternatives for energy at the site. They
are considering a 12-inch natural gas pipeline to bring energy
to the site, and hope to begin project permitting in 2011. They
expect to have 600-1000 production jobs once the mine is
operating. This area is incredibly depressed with all the
attendant problems that go with having no jobs.
12:37:54 PM
He went on to brief the committee on Pebble Mine that has
invested over $400 M through 2010, and continues with
exploration and infill drilling, as well as mine design and pre-
feasibility study. They expect to have 800-1000 production
jobs.
12:38:47 PM
Pebble Environmental Baseline Studies are added to each year.
Each one will be a chapter with multiple notebooks of data, the
most thorough studies done on any project in Alaska.
Major Exploration projects include the Livengood Gold Project;
at one point seven companies were looking and now it's found. A
highway is there and goes right past the project. They have 100
people onsite. The resources have increased and as additional
data give added confidence in results you can move resources.
He said the Niblack Project (Ketchikan) is a joint venture
between Niblack and Heatherdale Resources (which used to be CBR
gold). They have done over 100,000 feet of drilling at an
estimated cost of $6 million. $10 million more will earn
Heatherdale a 60 percent interest.
12:43:48 PM
Arctic Projects include Nova Gold; the legislature has
appropriated funding for the Ambler Access study, to investigate
the possibility of a road into the area. This would make the
project economic.
12:44:47 PM
The Palmer Project at Haines was discovered by Merrill Palmer in
1969. He staked claims all the way across the mountain over the
years. Seven major companies have been exploring over time. The
current company, Constantine, may have found a minable project
there. It is in the middle of an ice field, and is accessed by
helicopter.
12:47:47 PM
MR. BORELL said he would address Co-chair Wagoner's question
regarding RS2477 access. It is based on Revised Statute 2477,
which gave the state grants of access routes; if the state used
a route for commercial purposes, it became state property. The
road to Kensington was an RS2477. Several years ago the
legislature passed an act saying that the state of Alaska was
asserting its rights to 600 RS2477s rights-of-way. None have
been adjudicated. If you want to use one of those, you (either
the state or an individual) have to file a suit against the
federal government for a quiet title action. The state has
worked diligently at putting together the supporting
documentation. It is an expensive process.
This is especially important right now because the Secretary of
Interior has created a new category called "wild lands." This
goes against the Alaska National Interest Lands Conservation Act
(ANILCA). The state needs to pursue RS2477s. Without
adjudication, they are still state property, but probably can't
be used.
SENATOR STEVENS said Donlin Creek is an amazing pipeline, and
asked if it would be closer to go by water.
12:51:46 PM
STAN FOO, General Manager, Donlin Creek Project, said they have
looked at various routes. The area has a short shipping season.
They see potential areas in Cook Inlet, which is a year-round
port.
SENATOR STEVENS said the project is remarkably energetic. He
asked if it would open up energy for villages in the area.
MR. FOO answered they are reluctant to be the provider of
natural gas to the region, but they do have to allow for extra
capacity and they are open to that. It would have to be separate
from their project.
SENATOR STEVENS asked about the size of the proposed pipeline.
MR. FOO said it would be a 12-inch diameter pipeline, about 300
miles long.
CO-CHAIR PASKVAN asked about the projected start date.
MR. FOO answered they will complete the feasibility update in
the third quarter of this year. This will give them technical
justification for going forward with the pipeline. They hope to
start the permitting process this year, and expect that to take
three - four years. Once they have the permits, there would be a
tree to four years construction timeline as well.
12:55:16 PM
REPRESENTATIVE MUÑOZ asked them to speak to rare earth material
on Prince of Wales Island in terms of international agreements.
MR. BORELL said they sent a letter to the finance committees of
both bodies. The state has eight general areas with prospects
for rare earths: Vocan Mountain, south west of Ketchikan, had
been mined historically and a company is exploring there again.
There is half a million in the governor's budget to compile
existing data. In the past, companies weren't looking for rare
earth. It is incidental in their reports.
Alaskan rocks are very poorly explored. In many cases you can't
even see the rocks most of the year, if ever. Modern geophysical
analysis techniques allow companies to explore where it wasn't
possible before.
SENATOR MCGUIRE noted the demand from China and India for
thermal coal is increasing, and asked if the mining association
is doing to promote Alaska's coal. It seems to be a good
opportunity for Alaska.
MR. BORELL said the immediate need is to see Chuitna Coal going
forward. Usibelli is also looking at the Wishbone Hill property.
Coal usage is under attack, and the industry must get past that.
Companies can create new salmon spawning areas ahead of time
before an area is ever impacted. Alaska's coal is good quality
and wanted around the world.
1:02:05 PM
SENATOR MCGUIRE followed up asking white paper for legislative
offices to give to people looking at economic development. They
need to know how other countries can get in touch with the
mining industry in Alaska.
1:03:17 PM
CO-CHAIR PASKVAN thanked the Council of Producers and Alaska
Mining Association and adjourned the meeting at 1:03 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Talk-11-3 Joint Senate-House Industry Update - 2-23-11-FINAL.pdf |
SRES 2/23/2011 12:00:00 PM |