Pebble foes threaten mine tax
INITIATIVE: Petition written, but group waits to see how the tax bill fares in the Legislature.

April 3, 2007
Anchorage Daily News (AK)
By ELIZABETH BLUEMINK

Opponents of Pebble, the controversial copper and gold mineral prospect, are considering asking Alaskans to vote on a big new tax for certain mines.

The mine tax idea is one of several voter initiatives Pebble opponents are preparing to push if the Legislature and Gov. Sarah Palin don't tighten Alaska's environmental standards and raise the mining industry's taxes.

One voter initiative -- to levy a new 10 percent tax on the gross value of minerals dug out of state land -- has been drafted,though proponents say they aren't ready to start seeking signatures of registered voters.

That would be a huge tax increase for certain mines. Alaska mines now pay the state a license tax of zero to 7 percent of their profits, based on their size and how long they've been producing minerals. If they are on state land, they pay an additional 3 percent of profits in royalties.

Mining industry officials said a 10 percent tax on gross revenue -- before deducting expenses to determine profits -- would be much more onerous than a profits tax. They also argue the industry shouldn't have to negotiate tax reform under the threat of an initiative.

"(There's) basically a knife to industry's throat," said Steve Borell, executive director of the Alaska Miners Association.

A Juneau attorney confirmed Monday that he drafted the tax initiative language on behalf of the Renewable Resources Coalition and Trout Unlimited, two groups battling to block Pebble development over fears that a massive mine in Bristol Bay's headwaters will harm the region's world-class salmon fisheries.

Joe Geldhof, the attorney, said the initiative he drafted would collect a gross tax only from very large mines located on state land. The only mine in Alaska potentially in that category is the new Pogo gold mine near Delta Junction. Pebble is also on state land, and if developed, would also owe the tax. The state's biggest mine -- the Red Dog zinc deposit near Kotzebue -- is on private land.

Geldhof said he floated the tax proposal to the Alaska Miners Association, an industry trade group, several weeks ago to get some feedback.

"They clearly don't like this," he said.

Geldhof co-authored and co-sponsored the cruise-ship initiative containing new taxes and environmental rules that voters passed last August.

Pebble has also raised questions about fair taxation and the adequacy of the state's environmental standards for large mines, Geldhof said.

The rich Pebble deposit straddles tributaries of two of the five main rivers that feed Bristol Bay's salmon fisheries.

Backers of Pebble claim the state won't approve a mine if it harms Bristol Bay fisheries. They say Pebble could be one of the largest sources of copper and gold in the world, and could employ hundreds of Alaskans in an economically depressed part of the state.

Pebble opponents say a mine could decimate the region's most valuable industry, salmon fishing.

Renewable Resources Coalition members said they haven't decided yet whether to file for any mining-related ballot initiatives.

They are waiting to see if the Legislature will act this year on a variety of bills, ranging from a mining tax rewrite to a bill creating a 5 million-to 7 million-acre Jay Hammond State Game Refuge. They are also waiting to see if Palin does anything to increase protections for fish and clean water before pursuing initiatives on those topics, they said.

If the state doesn't improve its standards, its residents have the right to "step up to the plate," said Scott Brennan, the coalition's chief operating officer.

On whether to pursue a tax ballot initiative, "I don't think any final decisions have been made. We and others are looking at all options on the table right now," Brennan said.

The mining tax change now before the Legislature is under review by the House Ways and Means Committee. It would increase the license tax burden on the state's large mines from 7 to 11 percent, among other tax law revisions.

A Palin spokeswoman said Monday the governor wants to review this bill to determine its effects on the industry and future mining projects.

"The basic message is either Pebble gets killed, or (they) kill the industry," Borell said of the coalition's potential initiative.

It's either that or kill Pebble by excessive taxation, said Sean Magee, a spokesman for Northern Dynasty Minerals Ltd., the company exploring Pebble.

Magee fingered Bob Gillam, an Anchorage money manager who has helped fund the Renewable Resources Coalition's work.

"To me, Mr. Bob Gillam and the coalition don't want (Pebble). It's not about tax policy. It's about opposition to a single project," Magee said.

Geldhof countered that. He said his tax recommendation to the coalition would encompass very large mines anywhere on state land.

To get an initiative on a 2008 ballot, sponsors must collect thousands of signatures from registered voters and the lieutenant governor must approve the language.

Date: 4/3/2007