Legislature(2015 - 2016)SENATE FINANCE 532
02/25/2015 12:00 PM Senate RESOURCES
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| Overview(s): Alaska Miners Association | |
| Adjourn |
* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE RESOURCES STANDING COMMITTEE
SENATE RESOURCES STANDING COMMITTEE
February 25, 2015
12:12 p.m.
MEMBERS PRESENT
HOUSE RESOURCES
Representative David Talerico, Co-Chair
Representative Mike Hawker, Vice Chair
Representative Andy Josephson
Representative Geran Tarr
SENATE RESOURCES
Senator Cathy Giessel, Chair
Senator Mia Costello, Vice Chair
Senator Bill Stoltze
Senator Bill Wielechowski
MEMBERS ABSENT
HOUSE RESOURCES
Representative Benjamin Nageak, Co-Chair
Representative Bob Herron
Representative Craig Johnson
Representative Kurt Olson
Representative Paul Seaton
SENATE RESOURCES
Senator John Coghill
Senator Peter Micciche
Senator Bert Stedman
COMMITTEE CALENDAR
OVERVIEW(S): ALASKA MINERS ASSOCIATION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
DEANTHA CROCKETT, Executive Director
Alaska Miners Association (AMA)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview regarding the
economic impacts and benefits of Alaska's mining industry.
KAREN MATTHIAS, Executive Director
Council of Alaska Producers (CAP)
Anchorage, Alaska
Alaska
POSITION STATEMENT: Presented an overview regarding mining in
Alaska.
MIKE SATRE, Representative
Hecla Greens Creek Mining Company (HGCMC)
Juneau, Alaska
POSITION STATEMENT: Testified regarding Greens Creek Mining's
permitting process.
ACTION NARRATIVE
12:12:56 PM
CHAIR CATHY GIESSEL called the joint meeting of the House and
Senate Resources Standing Committees to order at 12:12 p.m.
Representatives Josephson, Tarr, Hawker, and Talerico, and
Senators Stoltze, Costello, and Giessel were present at the call
to order. Senator Wielechowski arrived as the meeting was in
progress.
^OVERVIEW(S): Alaska Miners Association
OVERVIEW(S): Alaska Miners Association
12:13:39 PM
Chair Giessel announced that the only order of business would be
an overview of mining in Alaska by the Alaska Miners Association
and the Council of Alaska Producers (CAP).
12:13:58 PM
DEANTHA CROCKETT, Executive Director, Alaska Miners Association
(AMA), said that the Alaska Miners Association (AMA) is a trade
association that represents the mineral industry in Alaska from
large scale mines and projects to the placer mining membership,
vendors and contractors, and anyone involved in the mining
industry.
KAREN MATTHIAS, Executive Director, Council of Alaska Producers
(CAP), said the Council of Alaska Producers (CAP) members are
also members of the Alaska Miners Association (AMA) and work
closely together. She expressed that safety is a core value for
the mining industry and extended that safety should be a factor
around in the home in the use of safety glasses.
12:16:10 PM
MS. CROCKETT referred to slide 3, of the Mining Industry Update
presentation describing the importance of minerals in our lives
in that, gold is anti-corrosive and is used to ascertain that
air bags in cars deploy in the event of a crash; silver is used
in hospitals for patients with burns to prevent a skin infection
and to treat the burn; zinc is used to galvanize guard rails so
they hold the car in a crash and is also used to prevent
sunburn; copper tubes provide a safe potable water supply and
copper also acts as a reliable conduit for smoke detectors and
other emergency systems; lead provides battery strength
necessary for emergency back-up power of computer server systems
and telecommunications in the event of power failures; and
platinum, silver, gold, and aluminum, which are found in Alaska,
are critical elements of the IPhone.
CHAIR GIESSEL added that zinc is also found in diaper rash
ointment and is very effective.
12:17:44 PM
MS. CROCKETT referred to slide 4, and advised that mining occurs
virtually everywhere in Alaska. She said slide 5, is the Red
Dog Mine in Northwest Alaska and is one of the world's largest
zinc mines which also produces lead and silver. The Red Dog
Mine is on NANA Regional Corporation land, is operated by Teck
Resources, and that the partnership is celebrating over 25
years, she noted. She further noted that the Red Dog Mine
employs 600 employees with a large percentage being Alaska
Native and NANA Regional Corporation shareholders. The Red Dog
Mine is the only tax payer in the form of the payment in lieu of
taxes system in the Northwest Artic Borough.
MS. CROCKETT referred to slide 6, and explained that the Fort
Knox Mine is Alaska's largest producing gold mine, is on State
of Alaska and Alaska Mental Health Trust Land and operated by
Kinross Gold. She advised that Fort Knox employs 650 people all
of whom live in Fairbanks and drive home at the end of their
shift. She noted that Fort Knox is the largest property tax
payer in the Fairbanks Northstar Borough. She referred to slide
7, and said it depicts the Usibelli Coal Mine in Healy, Alaska,
adjacent to Denali National Park and Preserve which has been
operating continuously since 1943. It employs 140 people who
live in Healy where the mine pays the majority of the severance
taxes for the Denali Borough. She noted that the Usibelli Coal
fuels 30 percent of interior Alaska's energy supply and last
year a study showed that without the coal in that electricity
supply, interior Alaska's power would cost $200 million more
annually. Slide 8, depicts the Pogo Gold Mine near Delta
Junction which is an underground gold mine operated by the
Sumitomo Group and is entirely on State of Alaska land. The
Pogo Gold Mine employs 320 people and has a promising future in
that last year the mine spent $57 million on capital
expenditures alone.
12:19:45 PM
MS. CROCKETT referred to slide 9, and stated that the Greens
Creek Mine in Juneau, Alaska, is one of the top 10 silver
producers in the world and also produces gold, lead, and zinc.
She advised that it is federally owned, is located on a national
monument, and is operated by the HECLA Mining Company. Greens
Creek Mine is the largest Southeast Alaska private employer in
terms of payroll and it employs 415 people. She referred to
slide 10, and advised that also located in Juneau is the
Kensington Gold Mine. She described it as a an underground gold
mine located in Lynn Canal, situated on State of Alaska,
federal, and privately owned land, and is operated by Coeur
Alaska, Inc. She remarked that Kensington Gold Mine is the
second largest private employer in Southeast Alaska, employing
320 people.
SENATOR STOLTZE stated there is a side story on the Kensington
Gold Mine in that its biggest challenge was not necessarily
economics or engineering, but legal challenges and how long it
took to get to approval.
MS. CROCKETT responded that the Kensington Gold Mine [lawsuit]
went all the way to the U.S. Supreme Court before being approved
and allowed to go into operation as there was litigation against
its tailings facility. She explained that Kensington Gold Mine,
during litigation, had to lay off all of the workers that were
ready to go to work. She pointed out that to have the mine
open, operating, and benefiting Juneau today is a huge victory.
12:21:29 PM
MS. CROCKETT referred to slide 11, and noted that the
exploration projects are highlighted, and the projects depicted
by green triangles are projects in the stages of determining
their economic feasibility, or are expected to go into
permitting soon, or are in the permitting stage. She stated
that the Upper Kobuk Mineral Project is pursing deposits of
copper, zinc, gold, and silver on NANA Regional Corporation land
in the Ambler Mining District. She conveyed that Livengood, in
Interior Alaska, will produce gold, that feasibility studies
have been conducted, and the company [International] Tower Hill
Mines is currently conducting project optimization. It
estimates it will employ 450 people at production. The Donlin
Gold Project is an open pit mine design in the Yukon Kuskokwim
region, is in its permitting process which began in late 2012,
and is proposing to develop a 315 mile natural gas pipeline from
Cook Inlet to the mine site for its power plant. The project is
located on Calista Native Corporation land and expects up to
1,400 employees at production. She explained that Wishbone Hill
is a coal project proposed by Usibelli Coal Mine, Inc., which
operates the states only coal mine and is situated in the Sutton
area of the Matanuska-Susitna Valley. The permits of Wishbone
Hill were upheld last year but it is currently evaluating the
project given the market conditions for coal exports and, she
related that it has the potential to employ 75-125 people in the
Mat-Su region. She described Chuitna as a coal project proposed
in West Cook Inlet, near Tyonek, and is on a combination of
state, Mental Health Trust Lands, private, and Kenai Peninsula
Borough lands. The project is currently in the permitting
stage, expects draft permit decisions late this year or early
next year, and expects 300-350 production jobs.
MS. CROCKETT pointed out that the Pebble Mine is a copper, gold,
and molybdenum deposit in Southwest Alaska near Lake Iliamna.
She explained that the project is located entirely on State of
Alaska lands. Currently, she noted, the project proponents are
actively seeking an investment partner in addition to conducting
studies needed at the site, and it estimates it will employ up
to 1,000 people at production. She offered that the last two
projects are located on the Prince of Wales Island and that the
Niblack Project is an underground copper, gold, zinc, and silver
project located on state and federally owned land. She advised
it is undergoing engineering and environmental studies needed to
support a feasibility study and the Niblack Project estimates
approximately 200 employees at production. She offered that the
last project is the Bokan-Dotson Ridge REE project which is a
rare earth element deposit located entirely on federally owned
land and the project is completing its studies to begin
permitting.
12:24:34 PM
MS. MATTHIAS pointed out that there are only six large producing
mines in Alaska, five metal and one coal. She referred to
slides 12-13, and stated that mining companies pay its
exploration, development, and construction costs. Alaska is
unique in that often the deposits are in remote areas so the
companies are also looking at paying for access and
infrastructure for the project, she explained. For example, the
Red Dog Mine and the Kensington Gold Mine are completely off the
grid so they supply all of their own power. She noted that
Green's Creek Mine and the Kensington Gold Mine built their own
ports, the Pogo Gold Mine built a 50 mile electrical
transmission line and a road to the site, and the Donlin Gold
Project is looking at a 315 mile natural gas pipeline. She
referred to permitting and advised that the state's costs for
permitting are billed to the project, for example, the Donlin
Gold Project is currently in state permitting and its
reimbursable service agreement for this year totals $900
thousand. She offered that there are also reimbursable service
agreements for those mines that are already in operation because
there is ongoing monitoring, normal regulation, and sometimes
expansion that are being permitted. Another example, she
offered, is the Red Dog Mine whose reimbursable service
agreement with the state is $659,000. There is also the
financial assurance for reclamation and closure which the
companies put up at the beginning of the project.
12:26:59 PM
SENATOR STOLTZE referred to the Chuitna Coal Project regarding
The Alaska Mental Health Trust Authority (The Trust) and asked
its percentage of ownership, or participation, and whether there
are ideas of potential revenues. [He asked that the record
reflect] The Trust's responsibility, and who the beneficiaries
are, such as individuals with autism, Down's Syndrome, drug and
alcohol abuse, Asperger's, who are the reason the Key Campaign
was here. He stated he does not want to lose perspective that
that's just not ... irrespective it has become a poster child
for advertising and so forth. He stated it is important to
recognize the beneficiaries and the responsibility of The Trust.
He said one of the potentials of revenues for The Trust
beneficiaries ... the class of Alaskans ... many seen last week
during the Key Campaign.
MS. CROCKETT responded that mining is a large contributor to the
The Trust of which was given lands to develop in order to fund
it moving forward. She advised she has seen both land ownership
of how much acreage the Chuitna Coal Project is on versus the
other borough and state land it is on, as well as what they are
projecting their revenues will be. She advised does not know
that information off the top of her head and will provide the
information to Senator Stolze's office in a couple of days.
12:28:41 PM
MS. MATTHIAS referred to slide 14, and advised that an area they
reviewed in terms of mining paying for itself, is emphasizing
the long timelines and how capital intensive it is to bring a
project into production in Alaska. The slide depicts the five
metal mines in Alaska: two of them had twelve years between the
deposit discovery and going into production; and two mines took
more than two decades. She noted that Kensington was delayed
due to litigation which was 27 years from what is defined as the
first modern deposit discovery because it was a historic
district. She pointed out that depending upon the project,
developing the mine into production could be hundreds of
millions of dollars, or many billions of dollars as these are
very large scale projects. In that regard, it is understandable
why companies need to have large market capitalization, access
to financing, and plenty of patience. Yet, she stated, with
regard to "First Production," these five large mines are young
as the oldest, Red Dog Mine and Greens Creek Mine, started
operations in 1989. She referred to slide 15, and stated that
the Alaska Industrial Development and Export Authority (AIDEA)
has been involved in infrastructure investment. The Alaska
Industrial Development and Export Authority investment in the
DeLong Mountain Transportation System (DMTS) which is the Red
Dog Mine road and port, is $265 million of which has been fully
recouped and the payments as currently scheduled will continue
to 2034. She reminded the committee that AIDEA's mission is
economic growth and economic development for Alaska and that
DMTS has been one of the best investments AIDEA has made to date
as it helped the Red Dog Mine become an economic engine for the
Northwest Artic Borough and also provided a steady and
reasonable rate of return on that investment. The Alaska
Industrial Development and Export Authority also invested in the
Skagway Ore Terminal. She pointed out that Skagway has a small
population, its economy is reliant on seasonal tourism, and the
jobs at the Skagway Ore Terminal are significant for Skagway's
economy.
12:32:03 PM
MS. MATTHIAS referred to slide 16, and stated that mining has
been involved in supporting infrastructure for over 100 hundred
years. Mining in Juneau built the first hydroelectric dams and
some are still in use today bringing clean affordable energy to
this building. She advised that the Fairbanks Fort Knox Mine
provided an economy of scale for an electrical generation that
resulted in lower electrical rates for residential customers in
Fairbanks. The Donlin Gold Project is looking at a natural gas
pipeline which could be a "game changer" for Western Alaska in
terms of bringing cheaper and cleaner energy into that section
of the state. She stated "mining pays for itself." Ms.
Matthias then referred to slide 17, and remarked that the five
metal mines in Alaska are very young and this is a modern
industry. The five mines were permitted under modern
environmental laws after the passage of the National
Environmental Policy Act of 1969 (NEPA) and the Clean Water Act
(CWA). There is a one hundred year history of mining in Alaska
but the metal mines are young, modern, and technologically
advanced. She offered that these mines were permitted in 1980s-
2000s, and the general public demands high standards in terms of
safety, environmental protection, and responsible resource
development.
12:34:04 PM
MS. MATTHIAS referred to slide 18, and stated that there is no
one permit required to build a mine as each project is different
and there are dozens of permits at the state, federal, and local
level. In fact, she advised, the Donlin Gold Project estimates
it is looking at approximately 100 different permits and
authorizations. She related that submitting applications and
going into the process is not a guarantee as projects have to
prove they meet Alaska's tough standards. Once a mine goes into
operation the strict regulatory oversight continues through the
life of the mine. During the operating period the state's
inspections to ensure that mines are complying with their
permits, the costs of the state's regulatory oversight is billed
to the mine. Ms. Matthias referred to slide 19, and advised
that when it comes time for a mine to close Alaska law is very
clear. The mine site must be returned to a stable condition
and, she advised that long before the mine goes into operation,
the Reclamation Plan must be approved by the commissioner of the
Department of Natural Resources (DNR). In that regard, the
company must put up a financial assurance that is calculated by
the regulators at third party costs so in the event the company
is unable to step up and undertake the reclamation closure, the
state has the resources to do so. She highlighted that the law,
[AS 27.19], and its requirements apply equally to United States
companies and non-United States companies. She explained that
the amount calculated as necessary at the beginning is not set
in stone and forgotten, as it is reassessed every five years or
whenever there is a significant change.
12:36:30 PM
MS. CROCKETT referred to slide 20, and pointed out that the
mining industry brings "amazing" economic benefits to Alaska.
She advised that the mining industry provided: $620 million to
Alaska's miners; [$144] million in Alaska Native Corporation
revenues which under Alaska Native Claims Settlement Act (ANCSA)
70 percent of which are distributed to all regional and village
corporations; in 2013, $167 million in revenues went to the
State of Alaska and local communities; $169 million was spent in
exploration and development of future mining activity; $500
million spent on goods and services from Alaska businesses; $3
million in charitable donations and scholarships; and 8,700
direct and indirect jobs that carry an average wage of $100,000
annually and employ residents of over 50 communities of this
state. She noted that half of those communities are in areas
where there are few other economic opportunities. She pointed
to slide 21, and stated that in addition to jobs, local
spending, donations to non-profits, mining provides valuable and
stable local government revenue. She highlighted that mines are
the top property tax payers in the Fairbanks Northstar Borough,
Northwest Artic Borough through the Payments in Lieu of Taxes
(PILT) Program, and the City and Borough of Juneau. Mines also
pay various forms of taxes to the Denali Borough and the City of
Nome, and noted that the Pogo Gold Mine, which is not in an
incorporated borough, makes a significant donation each year to
Delta Junction and has established a community advisory board.
12:38:36 PM
MS. CROCKETT referred to slide 22, and advised that placer
mining takes place almost exclusively for gold but on a much
smaller scale in terms of operation size, employee count, with
the major difference being it does not use a blasting or milling
process, or chemicals to separate the gold from the rock. She
related that placer mining is becoming less common except in
Alaska. She referred to "Placer Mining in Alaska" insert within
the "The Economic Benefits of Alaska's Mining Industry" brochure
submitted to the committee and explained that this is a study
the Alaska Mining Association commissioned to determine the
economic impact of placer mining in Alaska. The results were,
in addition to the six large operating mines, that there is a
seventh large operating mine which is the combined placer mining
industry. She stated that there are approximately 300 hundred
placer operations actively mining that mine over 82,000 ounces
of gold each year. She noted there is a strong link between the
number of placer mines and production and the price of gold.
She referred to slide 23, and stated that in 2013 there were
approximately 1,200 jobs in Alaska's placer mining industry and
on average each mine had 4 workers but 27 percent of the mines
had only a "single one man band." She commented that Alaska has
a few significant larger placer mining operations that employ 50
or more people. Of the 1,200 workers, 73 percent are Alaska
residents with the total placer mining related employment impact
is 450 jobs in Fairbanks, 370 in the Anchorage and Mat-Su
region, and 600 outside of those two. She pointed out that well
over half of the placer mining jobs are outside Alaska's major
population centers, and a total direct income which includes
wages, shares of production, and owner profits are estimated at
$40 million for 2013. Interestingly, she said, nearly half of
the active placer operations have employees with at least one
family member working there, and their goal is to establish that
mining is the family farm of the north.
12:41:45 PM
MS. CROCKETT referred to slide 24, and explained that on a
procurement level placer miners spent approximately $65 million
on goods and services in 2013, and 88 percent of that was spent
in Alaska. Fairbanks had the highest impact at $32 million,
followed by Anchorage at $16 million, and the remaining $8.5
million was spent elsewhere in the state much of which supported
small rural economies. She referred to slide 25, and advised
that as to reclamation and placer mining operations, its permits
require it to restore the land to previous or better condition.
Reclamation techniques in Alaska generally are not a one-size
fits all for placer mining as the vast majority in this case is
in the AMA membership and the miners have been there for several
decades. She advised that many of AMA's placer miners have been
honored by the Bureau of Land Management (BLM) and DNR for their
reclamation efforts.
12:42:59 PM
MS. MATTHIAS referred to slide 26, reiterating that mining pays
for itself in covering its exploration and development costs as
well as permitting, contributing to infrastructure, following
environmental regulations, together with the requirement that
the companies provide financial assurance for reclamation and
closure. She stated that the economic benefits of mining
regarding the 8,700 jobs in mining, which offer direct and
indirect jobs, and the average salary being $100,000 per year.
She questioned why, with the above information, there isn't more
mining in Alaska. Ms. Matthias opined that a portion is
permitting uncertainty as on the state level the mining industry
is confident in the rigor and strength of permitting agencies,
and noted it is important the permitting agencies are funded to
do the job thoroughly and efficiently. She specified that the
uncertainty is on the federal side and as an example, last year
the United States Environmental Protection Agency (EPA) started
a process that could preemptively veto the Pebble Project before
it submits an application to be reviewed under the National
Environmental Policy Act of 1969 (NEPA) process. She advised
that this is the first time it would be done since the history
of the Clean Water Act. It worries not just mining in Alaska,
but people all over the country because it is unprecedented and
involves more than just the mining industry. She stated it is
not just about the Pebble Project in that permitting delays
impact companies such as Greens Creek. She said that Greens
Creek started operations in 1989, and recently it needed to
expand its existing tailing storage facility. She pointed out
that ultimately it was approved as an 18 acre expansion of an
existing facility that took five years for permitting. She
referred to slide 27, and stated that during the period of
January 2011-January 2015 the S&P/TSX Global Mining Index
dropped 50 percent. She related that people do not follow metal
prices quite as closely and they follow oil and many are unaware
of the continuing decline in metal prices since the highs of
2011. She offered that during that same time frame, 5 global
mining companies active in Alaska saw an average 75 percent
decrease in its share price. The impact of lower metal prices
is especially seen in exploration spending so generally the
companies that develop and operate large mines "The Majors," and
companies going out looking for the next large deposit, do the
exploration are referred to as "The Juniors." The Juniors tend
to cover the costs of its operations by raising money
predominantly on the Canadian Stock Exchange. She stated that
investors are uncertain due to lower metal prices and are
looking at non-mining investments. Globally, exploration was
cut in half between 2012 and 2014, but in Alaska there is a
record high in 2011 of $365 million. She explained that the
money was raised in Canada and spent in Alaska on exploration
drilling, helicopters and transportation, and remote camp
services. She remarked that last summer the amount spent on
exploration in Alaska was $67 million, which is a large drop
from the numbers in 2011.
12:47:37 PM
MS. MATTHIAS responded to Representative Josephson that
according to AMA's McDowell report, in 2011 exploration spending
in Alaska was $365 million.
12:47:58 PM
SENATOR WIELECHOWSKI asked for a basic understanding of why
metal prices have gone down as the economy is doing well. He
said oil has gone down because there is a glut of oil, but with
the economy going well there would be more of a need for these
metals.
MS. MATTHIAS responded that it is hard to underestimate the
impact that China has on the base metal prices. During the
1980's the amount of base metals China was consuming was a small
percentage and now 45 percent of zinc in the world is bought by
China. She pointed out that China's economic growth has slowed
over the last couple of years, and there are also complicated
issues such as stock piling, hedging, and futures that she does
not have the expertise to discuss.
12:49:25 PM
MS. MATTHIAS referred to slide 28, and advised the impact of
metal prices going down, exploration spending going down, and
operating costs going up. The slide depicts the difference in
prices in a 10 year span between 2003 and 2013 and during that
period salaries are going up, equipment almost doubling, and the
price of diesel tripled. She noted that fuel prices are a lot
lower right now and that is true if an individual lives in South
Central Alaska, and it is relatively true in Juneau, but it is
not true in rural Alaska. For example, she remarked, the Red
Dog Mine, which is entirely off the grid, must bring in
approximately 20 million gallons of fuel, a year's supply, to
power the entire operation during the period the port is ice
free, and pays July 2014 prices. She noted this equates to it
paying some of the highest diesel prices around and will only
see relief on its diesel prices if the prices are low next July.
She referred to slide 29, and pointed out that the decline in
exploration spending has a real impact in communities where
employees of mining companies are living. She depicted, on the
slide, that in 2012 the little orange dots represent over 120
communities where at least one mining employee lived. She
stated that one of the issues AMA has been most proud is the
rural regional impact of mining in Alaska. She pointed out that
two years later there are fewer communities where mining
employees live, which is directly connected to less exploration
activity. The good news is that the overall jobs numbers in
mining have not gone down much because the producing metal mines
have added jobs. Although prices have declined and operational
costs have increased, the five producing metal mines are
employing people at good salaries, contributing to local and
state government, making payments to Alaska Native Corporations,
and buying local goods and services, all while maintaining the
strictest standards on environmental and safety.
12:52:28 PM
MS. CROCKETT referred to slide 30, saying the single largest
factor to continue to draw investment to Alaska is its potential
to bring increased activity on the mining scale, both discovered
and undiscovered. Alaska has an excellent reputation and it is
known that Alaska has "really great rocks." Alaska has world
class deposits that despite some formidable challenges both
economically and politically are worthy of pursuit and will
bring new investment, more jobs, and countless other benefits to
Alaska. In addition, the mining industry has tremendous support
from the State of Alaska lawmakers and the general public.
Referring to slide 31, she recapped that mining passes the test,
and will continue to work for Alaska as the six large producing
mines and hundreds of placer mines have bright futures, and
future projects bring the promise of an increasingly diversified
economy. The mining industry has excellent environmental and
safety records and intends to build on those successes moving
forward. The industry has proven to be a significant
contributor to the economy and, she reiterated, Alaska's mineral
resources are significant and impressive on a global scale which
will put Alaska in the spotlight for increased mining and
subsequently increase economic benefit for the state.
12:54:03 PM
SENATOR WIELECHOWSKI queried where the mining industry is headed
in the near future in terms of rare earth minerals.
MS. MATTHIAS answered that there is a project on the Prince of
Wales Island that is a rare earth deposit. She related what is
special about the project is that there is a segment of rare
earth that is considered rarer than rare earth. These elements
are considered "heavy," and a fraction are being pursued at the
Bokan-Dotson Ridge REE project. Currently, she explained, there
are other rare earth deposits in the state that are not being
actively pursued at this time. Alaska stands to be the sole
domestic supplier of rare earth to the United States. She
advised that almost 100 percent is being imported from China and
Alaska would be the one domestic supplier in the United States
should the Bokan-Dotson Ridge REE project move forward.
12:55:15 PM
REPRESENTATIVE TARR stated that in reference to the Pebble Mine
and the Mount Polley mine disaster, she noted that the design of
the tailings pond to be somewhat similar. She then referred to
the reclamation piece of the presentation and reiterated that at
least $500 million was estimated in reclamation costs, yet the
company had only $14.5 million in its bonds. She questioned the
relationship between $500 million and $14.5 million.
MS. MATTHIAS expressed that the Mount Polly disaster was
unacceptable and should never have happened. She opined that
track record of mines in Alaska that have tailings storage
facilities is excellent, and AMA is confident that the State of
Alaska has a robust regulatory system. She explained that the
dam safety officer's responsibility is oversight of design,
construction, and monitoring of the tailing storage facilities.
She said that the Pebble Project has not submitted an
application and does not know exactly what the Pebble Project's
operation would look like. She described it as premature to
access its tailing storage facility options when AMA lacks
information at this point. She assured Representative Tarr that
the company will be looking at the best available technologies
in order to put forward the application.
12:56:59 PM
[Senator Giessel passed the gavel to Co-Chair Representative
Talerico, House Resources Standing Committee.]
SENATOR COSTELLO questioned the taxes on the mining industry and
how Alaska compares with other jurisdictions in the world, and
whether Alaska is competitive.
MS. MATTHIAS pointed to the committee handout entitled "Mining
Works for Alaska," and midway there is information presented
that goes into the details of mining taxation in Alaska. She
advised that some years ago the State of Alaska hired an
international consultant, Dr. James Otto, to review mining
taxation. She remarked that Dr. Otto determined that Alaska was
at the middle of the pack in terms of competitiveness with
mining jurisdictions and the rest of the world.
SENATOR COSTELLO referred to DNR's successful Office of Project
Management and Permitting (OPMP) paid for by the companies
themselves. She asked if any improvement is expected in terms
of the permitting process becoming less timely.
MS. CROCKETT replied that permitting on the state level (OPMP)
provides permit coordination among both state and federal
agencies where generally on the federal level there are many
struggles. She offered that the employees with OPMP are engaged
with the federal agencies that Alaska projects need permits from
as well. On the state side there is always room for improvement
but AMA is happy with both the timeliness and the rigor and
standards of the system. On the federal side the biggest issues
are uncertainty and delay in receiving [permits].
SENATOR COSTELLO indicated that her question was whether the
process could be less time intensive, not less timely.
1:00:49 PM
REPRESENTATIVE TARR requested specific examples of the federal
delays that are problematic, excluding the Pebble Project.
MS. MATTHIAS answered that the most recent example is Greens
Creek and the expansion of an existing tailing storage facility
that took five years and ultimately what was approved was an 18
acre expansion. She described it as a considerable amount of
time for a permit of an existing facility to be expanded.
REPRESENTATIVE TARR requested that Ms. Matthias explain how the
end result was different from the initial application to
understand why it might have taken five years.
MS. MATTHIAS deferred to Mike Satre of Greens Creek.
MIKE SATRE, Representative, Hecla Greens Creek Mining Company
(HGCMC), said Greens Creek Mine initiated a National
Environmental Policy Act of 1969 (NEPA) process requesting an
expansion for the tailings facility in late 2009. He advised
that approximately 150 acres of tailings expansion was requested
to support more than the full potential by asking for everything
at one time. He explained that it could be opened up
incrementally in order that Greens Creek could review the
cumulative impacts of ongoing development in the area. At the
time the process began it was estimated to take approximately
two years on the federal side and then there would be some
permits following that. The Greens Creek Mine ran into
significant delays during development of the draft Environmental
Impact Statement (EIS) process which ultimately lead to a
delayed issuance of the Record of Decision. Due to the change
in the Record of Decision they were allowed a small expansion
relative to the original expansion requested. Mr. Satre noted
there were delays in the Section 404 permitting process because
the project had changed and Greens Creek had to look at
different issues in how it would deal with litigation on the
wetlands. It was the hope of Greens Creek to take a good hard
look at, together with all the stakeholders on Admiralty Island
and Juneau, the long term accumulative impacts of establishing a
tailings facility off the mine. Unfortunately, he advised,
Greens Creek has a tailings facility that will barely support
its 10-year mine life. Therefore, he remarked, it will have to
start another full NEPA process within the next two years.
1:04:14 PM
CO-CHAIR TALERICO advised he was involved in safety in this
industry at one time, and that safety has turned into a regular
routine. He stated that the mining industry's safety records
are good and recommends to anyone in any industry that it is a
good idea to start the day with a safety share.
1:05:03 PM
ADJOURNMENT
There being no further business before the committee, the House
Resources Standing Committee meeting was adjourned at 1:05 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SRES-HRES 2015-02-25.pdf |
SRES 2/25/2015 12:00:00 PM |