HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT AND TOURISM FEBRUARY 23, 2000 5:11 p.m. COMMITTEE CALENDAR REVIEW OF THE MINING INDUSTRY IN ALASKA TAPE 00-3 SIDE A CALL TO ORDER REPRESENTATIVE GAIL PHILLIPS, Chair, called the meeting to order at 5:11 p.m. PRESENT Committee members present to order were Representatives Phillips, Cissna, Halcro, Rokeburg and Dyson. Other Representatives in attendance were Representative Harris and Representative Morgan. SUMMARY OF INFORMATION CHAIR PHILLIPS began the meeting by stating the intent of the hearing as to provide an overview of minerals industry of Alaska from multiple perspectives. It will begin with a general overview and focus inward to some specific project updates, specifically Pogo and Donlin Creek, with the purpose to provide the committee members with a better understanding of the challenges and opportunities for mining in the state. FRANKIE PILLIFANT Mining and Minerals Development Specialist, Division of Trade and Development (DTD), Department of Commerce & Economic Development (DCED), staff member, Alaska Minerals Commission, Member, City and Borough of Juneau Assembly, began her presentation by speaking on the general optimism across the state concerning the states mining industry and outlook. She stated that the overall value of the industry is over $1 billion dollars. Despite the current low gold prices the outlook is good. She continued to describe the where, what and who of the current mining activity across the state: Red Dog is the largest low cost producer of zinc in the world; Green's Creek is one of the world's largest deposits of silver; Fort Knox is the state's largest gold producer. FRANKIE PILLIFANT had a map that showed the mineral opportunities across the state and pointed to active coal, gold, and silver properties. A small map of the completed DGGS [Division of Geological and Geophysical Services] geophysical surveys was presented and it was stated that to complete the entire area of the state at the present survey rate it would take a total of 70 years. FRANKIE PILLIFANT provided a brief review of the reports put out by DGGS and DTD (DCED) and the Alaska Minerals Commission report. Finding A of the latter report calls for the establishment of a core permitting group. She also responded to questions from the committee. DR. LANCE MILLER, President, Red Diamond Mining, President, The Foundation for Glacier and Environmental Research, gave some specific information on the gold industry and mentioned a bit on gold prices and put Alaska in a global perspective. DR. LANCE MILLER presented a gold production graph and a copy of the Frasier report, which rates various areas, and Alaska rates quite well in spite of its remoteness. Copies of this report were included in the packet of information. He stated that world class gold deposits are generally on the order of 20-30 million ounces. He also mentioned that also there was a lot of interest in Alaska at the recent Cordilleran Roundup Conference in Vancouver. DR. LANCE MILLER presented a slide show to give people a prospective of world class gold deposits in relation to Alaska. A tour commenced of various other important gold districts including Nevada and South Africa with major social issues. Uzbekistan has the largest deposit of gold in the world with 150 million ounces. China has a great supply and demand for gold. Mongolia provides 70 percent of the rare earth elements. The Russian Far East provides about 350 million ounces comparing to 30 million ounces in Alaska. He stated that Alaska has a long way to go to catch the rest of the world, and Alaska deposits are minor in comparison. These are the issues that mining companies need to recognize before investing in Alaska. In Teck's view, the largest issue of Alaska is access, but the state has a lot of mineral wealth. KARL HANNEMAN, Alaska Regional Manager, Teck Resources, operator of the Pogo Deposit near Delta Junction, Board Member, The Alaska Minerals Commission, presented an update on the Pogo Deposit. Pogo is a joint venture between Teck Resources and Sumitomo and is undergoing continued exploration with the development of a decline toward the ore-body, which will reach the ore this month. Big issues for Pogo are the access. Road options would include full bridges over all water bodies. He also responded to questions from the committee members. JUNE McATEE, Vice President of Natural Resources, Calista Corporation, stated that Placer Dome has spent over $30 million dollars on the Donlin Creek project and drilled over 400 drill holes. Placer Dome is currently working toward an economic study on the project, but challenges to development will be difficult to overcome. At Donlin Creek, the local population has been more than 50 percent of the total employed on site. The problems encountered with Donlin Creek include access. Barging equipment to the site would be a major activity during construction. About 400 barges on the Kuskokwim would be required in the first year of development. She stated that the transportation issue is not one that needs to be vigorously pursued. Road construction should be carefully considered and begun as village to village roads, not a large road from Anchorage which would bring tourists. COMMITTEE ACTION The committee took no action CHAIR PHILLIPS adjourned the meeting at 6:25 p.m. NOTE: The meeting was recorded and handwritten log notes were taken. A copy of the tape and log notes may be obtained by contacting the House Records Office at 129 6th Street, Suite 229, Juneau, Alaska 99801-2197, (907) 465-2214, and after adjournment of the second session of the Twenty-first Alaska State Legislature this information may be obtained by contacting the Legislative Reference Library at 129 6th Street, Suite 102, (907) 465-3808.