Legislature(2009 - 2010)SENATE FINANCE 532
02/24/2010 12:00 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Mining | |
| 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 24, 2010
12:24 p.m.
MEMBERS PRESENT
SENATE RESOURCES
Senator Lesil McGuire, Co-Chair
Senator Bill Wielechowski, Co-Chair
Senator Charlie Huggins, Vice Chair
Senator Hollis French
Senator Bert Stedman
Senator Thomas Wagoner
HOUSE RESOURCES
Representative Craig Johnson, Co-Chair
Representative Mark Neuman, Co-Chair
Representative Peggy Wilson
Representative Chris Tuck
MEMBERS ABSENT
SENATE RESOURCES
Senator Gary Stevens
HOUSE RESOURCES
Representative Bryce Edgmon
Representative Kurt Olson
Representative Paul Seaton
Representative David Guttenberg
Representative Scott Kawasaki
OTHER LEGISLATORS PRESENT
Senator Joe Thomas
COMMITTEE CALENDAR
PRESENTATION: ALASKA MINING
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
STEVE BORELL, Executive Director
Alaska Miners Association (AMA)
Anchorage, AK
POSITION STATEMENT: Gave a presentation on Alaska mining.
LORNA SHAW, Executive Director
Council of Alaska Producers (CAP)
Fairbanks, AK
POSITION STATEMENT: Gave a Presentation on Alaska mining.
ACTION NARRATIVE
12:24:49 PM
CO-CHAIR LESIL MCGUIRE called the joint meeting of the Senate
and House Resources Standing Committees to order at 12:24 a.m.
Present at the call to order were Senators Huggins, French,
Wielechowski and McGuire and Representatives Wilson and Johnson.
^Presentation: Alaska Mining
Presentation: Alaska Mining
12:25:58 PM
STEVE BORELL, Executive Director, Alaska Miners Association
(AMA), noted that in 2009 and 2010 about 175 family mining
operations around the state are expected to produce about 54,000
ounces each year.
Moving on to the major producing mines, he stated that the
Usibelli Coal Mine, in Healy, Alaska, has 130 employees and
shipped about 1.9 million tons last year; 52 percent came to
interior power and heating plants and 48 percent was export
coal. Usibelli's current lease area has approximately 700
million tons that could be produced. At their current rate of 2
million tons per year, that is 350 years of production.
12:29:56 PM
Greens Creek Mine has 331 employees plus 12 full-time
contractors, 79 percent of which are Alaska residents, equaling
about $32 million in annual wages plus benefits. Greens Creek
began operating in 1989 and has continually found additional
ore; it is the largest property tax payer in the Juneau borough
and the largest private sector employer in Southeast.
The Pogo Gold Mine saw significant improvements from 2008 to
2009, including a 50 percent reduction in reportable safety
incidents and a 12 percent increase in production to 390,000
ounces. Pogo Gold Mine has 297 employees plus 97 full-time
contractors. Fuel and electrical costs are Pogo's biggest
challenges.
12:32:49 PM
Nixon Fork Mine and Rock Creek Mine are in idle status. Pacific
Northwest Capital and Fire River Gold now own the Nixon Fork
property and are consolidating information and planning
drilling. They expect to begin production in two years.
Rock Creek Mine has 20 employees now and will have 135 employees
at full operation, with a $10.4 million payroll annually. Care
and maintenance costs are about $17.5 million annually. A water
management plan is being implemented and options for restarting
the project are being evaluated.
12:34:51 PM
SENATOR WAGONER joined the meeting.
MR. BORELL said several additional projects are in the advance
exploration phase. Chuitna Coal will provide about 350 jobs. The
overall deposit is 300 million tons of coal, which if converted
into oil, would be the fourth largest oil deposit in Alaska. He
summarized Chuitna Coal's logistical needs and said a
supplemental Environmental Impact Statement (EIS) is being
prepared.
Donlin Creek completed a project feasibility study and conducted
intensive outreach in villages in 2009. They are evaluating the
feedback and looking at options to meet the large energy
requirement.
12:38:09 PM
Pebble Project's 2010 budget will be approximately $70 million.
Pre-feasibility analysis continues and Pebble does not
anticipate applying for permits in 2010. A source of power is a
major challenge. The main parts of the project are: a road, a
port, the mill facility itself, permitting, workforce
development, commodity prices and evaluating if the project is
economic.
MR. BORRELL said 30 grass roots exploration projects around
Alaska spent more than $1 million each in 2008. That number
dropped to 17 in 2009 due to the financial crisis but 30
projects are expected again in 2010.
12:41:13 PM
He said Heatherdale Resources at Niblack, Full Metal Minerals at
Lucky Shot and International Tower Hill at Livengood are three
of the larger exploration projects. Heatherdale and CBR Gold own
the project at Niblack and a 25,000 foot drilling program is in
progress. Full Metal Minerals expects to take a 10,000 ton
sample at Lucky Shot. Drilling and geological understanding are
expanding at Tower Hill.
SENATOR STEDMAN joined the meeting.
SENATOR WAGONER asked about the feasibility of the Chuitna Coal
project being completed in the foreseeable future.
12:44:24 PM
MR. BORELL answered that, depending on legal challenges against
it, Chuitna Coal has a 98 percent chance of becoming a mine. He
said the coal is very low sulfur coal.
LORNA SHAW, Executive Director, Council of Alaska Producers
(CAP), said she would speak about the permitting process. The
Large Mine Permitting Team coordinates with the Department of
Environmental Conservation (DEC), federal agencies and other
agencies involved in mine permits.
REPRESENTATIVE NEUMAN joined the meeting.
12:47:26 PM
MS. SHAW said Kensington, a small, underground mine halfway
between Juneau and Haines, has gone through a 20 year permitting
process. In June, 2009, after the third round of permitting and
a Supreme Court Decision, Kensington was awarded permits.
Exploration and construction are underway and the mine has
worked 1,000 days with no lost-time accident. The operations
workforce is anticipated to be 200 employees and production is
expected to begin in the summer of 2010. State leadership played
a key role in the permitting process by cooperating with all
agencies involved to meet deadlines and requirements for permits
outside of Department of Natural Resources' (DNR's) boundaries.
12:50:22 PM
Kensington, though it is not operating yet, is in the renewal
phase for some permits originally issued in 2005.
MS. SHAW said the Fort Knox heap leach project is a new addition
to Fort Knox which is a low-grade, open pit mine 25 miles
northeast of Fairbanks. Fort Knox has been a mill and vat
leaching operation, with ore ground down to the consistency of
table salt and gold leached out in a series of tanks.
Alternatively, heap leaching involves placing ore on a heap
leach where the gold is leached in place. It is low cost and
allows recovery of gold from a much lower grade of ore.
Fort Knox applied for permits in November of 1992. State permits
were received in February of 1994, and federal permits in March
of 1995. Heap leach permitting began in 2006. The state was
critical in permit success. DNR had the engineering expertise to
review all the plans. Agencies without the expertise were able
to hire experts to provide oversight, review and verification of
the state agency's work.
12:54:13 PM
MS. SHAW said the heap leach leads to a longer life for Fort
Knox - 2016 for the mine and 2022 for processing. The mine has
500 full-time employees and 300 contractors will be on site this
summer, primarily related to the heap leach. The average annual
wage is $70,000. Seventy percent of the annual operating budget
is spent in Alaska and Fort Knox is the second largest property
tax payer to the borough and is a significant source of local
funding. She said mines must get through the permitting process
in order to bring these benefits to the communities.
REPRESENTATIVE PEGGY WILSON noted that Ms. Shaw said Fort Knox
was the second largest tax payer in the borough but the
literature says it is the largest.
MS. SHAW said Fort Knox is the single largest piece of property
that is taxed. Alyeska pays slightly more.
12:56:42 PM
MS. SHAW said Red Dog is an open pit zinc and lead mine in
Northwest Alaska and is one of the largest zinc concentrate
producers in the world. Red Dog began production in November,
1998, and has a complex permitting history. Zinc and lead prices
have rebounded from historic lows in 2008, bringing state taxes
and Northwest Arctic Native Association (NANA) royalties back
up. Red Dog pays about $50 million in wages and benefits and has
525 employees and contractors, of which 56 percent are NANA
shareholders. Red Dog's current ore body will soon be depleted
and Red Dog is in a permitting process to expand to the Aqqaluk
deposit. The National Environmental Policy Act (NEPA) requires
the supplemental EIS to evaluate impacts to human health
including a full Health Impact Assessment (HIA).
12:59:12 PM
The HIA, without any guidelines, could have derailed the EIS
process. State leadership worked with other agencies to
determine how health information should be included. State
Health and Social Services representatives are now on the Large
Mine Permitting Team.
MS. SHAW said the state is also involved in Reclamation and
Closure Plans. A closure plan must be in place before permits
are issued to build a mine; however, the plan changes and is
reviewed every five years. Red Dog had to update their
Reclamation and Closure Plan.
CHAIR MCGUIRE interrupted and noted that the House Resources
Committee had to begin their meeting. She asked Ms. Shaw to wrap
up.
MS. SHAW summarized that the state's involvement in the
permitting process is critical. State leadership and influence
ensures that the complicated permitting process is done well and
the state's interests are protected while working to find
solutions and implement regulations.
1:02:05 PM
CHAIR MCGUIRE thanked the presenters and, seeing no further
business to come before the committee, adjourned the meeting at
1:02 p.m.
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