SB 1-ALASKA MINING DAY  8:04:37 AM CHAIR LYNN announced that the first order of business was SENATE BILL NO. 1, "An Act establishing May 10 of each year as Alaska Mining Day." 8:05:01 AM SENATOR CATHY GIESSEL, Alaska State Legislature, stated that SB 1 would establish May 10th as Alaska Mining Day. She said that this day was chosen since the General Mining Act of the United States was approved on May 10, 1872. The Act has been amended numerous times, but the essential principles remain in place: If a citizen ventures on to federal public land not otherwise designated as a park, refuge, or set aside in any other way, and with his/her own energy, intellect, finances, and hard work finds a valuable mineral deposit, then that citizen has the first right to develop that mineral deposit, after obtaining the required environmental and operating permits. Senator Giessel related that the Act paved way for mineral development in Alaska and many of the communities represented by the committee were established because of mining. Well-known, large gold rushes occurred in: Juneau in 1880; Turnagain Arm in 1885; Fortymile in 1886; Kenai in 1888; Circle in 1892; the Klondike in 1896; Nome in 1898; Fairbanks in 1902; and Iditarod in 1908. The Gold Rush and copper discovery at Kennecott in 1905 brought miners, adventurers, merchants and their families to Alaska in droves. They built towns, roads, dams, ports and railroads in Alaska and moved Alaska to a territory status in 1912 and eventually to statehood. SENATOR GIESSEL continued as follows: If Alaska were a country it would be in the top ten for a lot of our precious metals and strategic minerals: gold, zinc - largest zinc deposit in the world - silver, copper, platinum, molybdenum, rare earth developments, which are used in all of the new technology - clean energy technology. China now holds the monopoly on rare earth elements, but lo and behold, Alaska has a massive deposit. SENATOR GIESSEL stated that Alaska Mining Day highlights that tremendous history and the state's future in this industry, and contributes significantly to communities. For example, in Juneau, four of the hydroelectric projects were built over a hundred years ago by the mining industry and the hydroelectric projects still operate today. Also, hydroelectric projects represent clean and durable energy. She pointed out that at Lake Dorothy, the main purpose of the project was to bolster the energy needs of Greens Creek Mine. In fact, Greens Creek Mine in Juneau is now the largest private sector employer in Juneau - with 340 employees - and the mine contributes significantly to this economy. In conclusion, Senator Giessel stated that the purpose of Alaska Mining Day on May 10th is to highlight and draw attention and respect for Alaska's mining heritage. In response to a comment, she said, "If it can't be grown it must be mined." CHAIR LYNN emphasized that Alaska must diversify its economy, and one of the principal ways that can happen is through mining. 8:09:30 AM REPRESENTATIVE ISAACSON said he can see that some may find this bill frivolous. He wondered if the Alaska Mining Day could become a day of education and whether the sponsor envisions this as a day that students would have a day off from school. SENATOR GIESSEL highlighted the Alaska Resource Education Program, which is a program that has been developed, in part, by the Alaska Miners Association, with packets distributed to teachers throughout the state. In fact, the program emphasizes the significant role that minerals play in the everyday lives of Alaskans. She referred to a video in which fifth graders select and showcase a mineral. She offered her belief it is important for students to understand that mining is not detrimental to the environment, can be done safely, and can coexist with other industries. 8:11:35 AM REPRESENTATIVE ISAACSON referred language [in a sentence beginning on line 10 through line 13 of SB 1, which read as follows:] Alaska Mining Day may be observed by educational and celebratory events, projects, and activities to increase public awareness of and appreciation for mining and miners in the state and the many uses for the minerals mined in the state. REPRESENTATIVE ISAACSON suggested that if the language were amended to change "may" to "shall", it could ensure mining education would get into the school system. CHAIR LYNN asked whether the sponsor was amenable to such change. SENATOR GIESSEL advised that such a change should be pondered and she would consider it. In response to Representative Isaacson, she answered that the Alaska Mining Association, Inc. (AMA) is active in all communities, and she feels confident it will move forward with [the methods of promoting public awareness listed in the aforementioned language], "regardless of what this resolution says." REPRESENTATIVE ISAACSON said he wants to ensure school districts [observe Alaska Mining Day], because [to do so] is "a proper role of education." CHAIR LYNN said he is not opposed to any changes, but pointed out that any change to the bill at this point may slow the process. 8:15:25 AM REPRESENTATIVE HUGHES acknowledged Alaska is a resource state, and said she likes the pun, "We've barely scraped the surface." She said she has had an opportunity to tour Usibelli Coal Mine, Inc. She asked to put on the record that prior to all the environmental laws being adopted, the Usibelli family for three generations has shown stewardship. She offered her belief that the reclamation the mine performs is impressive. In fact, the care and stewardship by Alaskans has also been impressive. She mentioned she attended a recent Energy Council meeting in Washington, D.C., and she enjoyed telling members of Congress how Alaskans take care of Alaska's environment. She asked about the rare earth elements and if there has been any effort to encourage the rare earth metals industry in Alaska. SENATOR GIESSEL answered that Niblack Mining Corporation has a mining project, which is located just south and west of "here" [on the southeast side of Prince of Wales Island]. She deferred to Ed Fogels for more information. CHAIR LYNN remarked that he gets nervous when China has a monopoly on anything. REPRESENTATIVE GATTIS said that she thinks Alaska Mining Day is a great thing to do to ensure Alaskan kids recognize the effects of mining on Alaska. She also said she is going to be voting yes today. CHAIR LYNN related that he is the first cross-sponsor in the House for SB 1. REPRESENTATIVE KREISS-TOMKINS commented that the Prince of Wales Niblack and Bokan Mountain mines are in his district. These communities are excited about the potential of these mines, and he is excited about this bill and the companion bill. 8:20:14 AM DEANTHA CROCKETT, Associate Director, Alaska Miners Association, Inc. (AMA), stated that making Alaska Mining Day a state holiday would increase the popularity of the industry. She expressed appreciation for Senator Giessel's sponsorship of SB 1. She said it is important not to forget the contributions of the mining industry. Ms. Crockett related that the mining industry employs about 5,000 people directly and about 9,000 indirectly, with an average industry wage of $100,000. Many of these jobs are in rural areas that do not offer many other opportunities. She stated that AMA helps fund local governments and the Alaska Native corporations. She emphasized the importance of recognizing the presence that mining has in the state, including its rich history in communities such as Juneau, Fairbanks, and Nome. She offered her belief that having an Alaska Mining Day is a great way to recognize the mining history in Alaska. 8:21:53 AM EDMUND FOGELS, Deputy Commissioner, Office of the Commissioner, Department of Natural Resources (DNR), stated that the department supports the bill, which would establish May 10th of each year as Alaska Mining Day. He acknowledged that mining has played a critical role in Alaska's history and continues to play a critical role. While mining may seem overshadowed by oil and gas in economic contributions, it is still very significant. He echoed Ms. Crockett's statement that mining provides over 5,000 jobs, with an average wage of $100,000. He characterized the jobs as being highly skilled jobs, including engineers, environmental scientists, heavy equipment operators, and mechanics. In fact, these are career building jobs. Mining provides economic benefits to some of the poorest regions in rural Alaska. For example, the Red Dog Mine is the only taxpayer in the Northwest Arctic Borough (NWAB). He pointed out that mines like the mine proposed by Donlin Gold LLC have the potential to really carry the economy for generations. He stated one aspect of his job has been to ensure that a strong environmental permitting process exists for these projects. He said all seven of the currently operating mines have a sound environmental record with agency people monitoring the sites. He offered his assurance that Alaska's water and fish are being protected, as well as other environmental resources. He pointed out that the division has been working to strengthen the mining sector. He said the governor has initiated a strategic and critical minerals initiative, including a statewide assessment for strategic and critical minerals, including rare earth elements. He noted that rare earth elements are also referred to as REE. He described the Bokan Mountain project on southern Prince of Wales Island as very promising. 8:24:11 AM MR. FOGELS explained there are two types of rare earth elements: heavy rare earth elements and light rare earth elements. He pointed out that one of the biggest mines in the nation in California contains light rare earth elements, but the more valuable and important ones are the heavy rare earth elements. He indicated that Bokan Mountain is blessed with high concentrations of heavy rare earth elements. 8:24:49 AM CHAIR LYNN remarked that someone said China has a monopoly on rare earth elements. He asked whether any rare earth elements are being produced in the U.S. MR. FOGELS offered that Mountain Pass in California is the only mine he is aware of at this time. Most of the rare earth elements are being produced by China so it is imperative for other sources to be developed. CHAIR LYNN asked for the impact if China were to "cut off" rare earth elements. MR. FOGELS offered his belief that it would be a bad situation if that were to happen; the minerals are important for defense and alternative energy purposes. One interesting fact, he noted, is the color red in flat screen televisions can only be produced by the rare earth element europium. He characterized these metals as being very important. CHAIR LYNN asked whether this is critical to the U.S. defense. MR. FOGELS answered yes. CHAIR LYNN asked how close Alaska is to producing rare earth elements. MR. FOGELS answered that in Alaska, the company is close to submitting permit applications. He estimated an average time frame for permitting something like the Bokan Mountain mine, which is anticipated to be a small mine, would be two or three years in permitting - including federal permitting - and another year in construction. CHAIR LYNN asked whether any other locations in Alaska may have rare earth elements. MR. FOGELS answered that about 70 known locations contain rare earth elements, but the department has not investigated them enough to know if the minerals are economically feasible to develop, so right now Bokan Mountain is the only one. In fact, the Division of Geologic and Geophysical Surveys (DGGS), [within DNR], is in the process of reviewing rare earth elements in Alaska. 8:28:41 AM REPRESENTATIVE HUGHES asked whether the department has put a price tag on REE in Alaska. MR. FOGELS answered no. REPRESENTATIVE HUGHES asked whether any work has occurred. MR. FOGELS explained that exploration companies drill, perform assay reports, and develop an exploration model. He stated that the value is unknown, but he predicted the state has so much unexplored land that many more mining deposits are likely to be found. REPRESENTATIVE HUGHES said she thinks it would be helpful and supportive if the information was available. 8:31:16 AM REPRESENTATIVE KELLER asked whether the legislature needs to work on the royalty tax structure. MR. FOGELS responded that a number of years ago AMA brought up a leading expert on mining taxes who reviewed the state's taxes and royalty taxes as compared to other countries and determined that Alaska was "in the middle of the pack." Beyond that the state has not done significant work on tax structure evaluation. He stated the primary economic benefit of mining is that it benefits the local economies. For example, mining benefits the community of Fairbanks with the Fort Knox mine; Juneau with the Greens Creek and Kensington mines; and the Northwest Arctic Borough with the Red Dog mine. He pointed out that while some people focus solely on the state treasury as a benchmark, some mines, such as the Red Dog Mine, are located on private land. Kensington mine and Greens Creek mine are located on federal land. He reported that Pogo and Usibelli mines are the only ones on general state land, while Fort Knox is located on Mental Health Trust Land. Therefore, it really isn't fair to consider mining based solely on mining tax contributions to the treasury. REPRESENTATIVE KELLER asked where he could find a copy of the report on the tax structure. MR. FOGELS answered there wasn't a specific report since the aforementioned royalty tax analysis was performed in a series of meetings with a tax specialist, although he offered to try to locate a PowerPoint on the matter. REPRESENTATIVE KELLER commented that when he hears the term "Roads to Resources," it reminds him of the big deposit at the Ambler mineral project. He remarked the legislature is working on the preliminary stages of this mining project. 8:35:29 AM MICHAEL SATRE, Executive Director, Council of Alaska Producers (CAP), stated that the council is a non-profit trade association that represents the large producing metal mines and major metal development projects in Alaska. He emphasized that the council supports establishing Alaska Mining Day. He reiterated Ms. Crockett's comments on the significant economic benefits the industry provides to the State of Alaska. He offered his belief that Deputy Commissioner Fogels has done a wonderful job talking about many aspects of the mining industry and has emphasized the importance of the industry today. He also reminded members that establishing Alaska Mining Day is about honoring the people who have built the mining industry over the years. He mentioned former Deputy Commissioner David Stone, Department of Labor, who unexpectedly died last year. He remarked that Mr. Stone would have loved to share his stories with the committee. He also mentioned contributions by other Alaskans, such as Earl Beistline, Fairbanks; Bartlett Lee "Bart" Thane, Juneau; and Peter Miscovich, Flat, Alaska. He said that through their sweat equity, they helped build the mining industry and the state. Further, mining has allowed him to work in his hometown of Juneau. In closing, he remarked that Alaska Mining Day is not just about infrastructure and the economics, but about people that have built the state, as well. 8:37:40 AM CHAIR LYNN, after first determining no one else wished to testify, closed public testimony on SB 1. 8:38:00 AM REPRESENTATIVE KELLER moved to report SB 1 out of committee with individual recommendations and the accompanying zero fiscal note. There being no objection, SB 1 was reported from the House State Affairs Standing Committee.