August 31, 2011
Eric Christopher Adams
Mining in Alaska isn't as easy as it used to be. Old mines of Alaska lore like the fabled Kennecott copper mine near McCarthy did not face a maze of federal and state regulation. There was no Environmental Protection Agency back in the early 1900s, when Kennecott Minerals Co. mined and milled some 4 million tons of copper ore worth more than $4.5 billion in 2011 dollars.
There were no state agencies to please. No permits to apply for. No Department of Natural Resources or Department of Environmental Conservation. No state, in fact. Pre-statehood gold mining didn't involve Alaska Native corporations with massive landholdings, across which access rights would need to be negotiated.
When it comes to getting a big mining project going in Alaska, things are infinitely more complicated in the early 21st century. Just ask the folks at Pebble Partnership. A mining partnership between London-based Anglo American and Canada-based Northern Dynasty Minerals, the Pebble project is focused on trillions of dollars of gold, copper and molybdenum underneath the wetlands of Southwest Alaska. Near the state's largest commercial salmon and Pacific herring fisheries and a few small villages, as the many pro- and anti-Pebble Mine ads are quick to remind Alaskans.
Pebble Mine faces a great deal of uncertainty -- years of environmental hurdles and potential litigation to overcome, more "what ifs" than milestones. Despite seven years of planning, preparing and studying, Pebble hasn't yet applied for any permits from state or federal government. Geologists working on Pebble aren't even sure what kind of mine they're going to end up digging out near the headwaters of Bristol Bay.
Meantime, financing troubles loom over the project. In the last several months, Northern Dynasty, which launched the project initially, has begun attempting to sell-off its 50 percent, half-billion-dollar stake in the project.
Stepping back and looking at the political, legal and financial problems plaguing Pebble, it becomes eerily similar to another big Alaska pipedream, one afflicted with more doubts than sure bets.
Could Pebble become another Alaska natural resource bust?
What's at stake for mine companies and the environment?
Acquiring the permits necessary to get a rock mine going in Alaska can take more than a decade, depending on how the stars align for the project. And the proposed Pebble Mine may face an even longer timeline.
Pebble's deposit sits under a mile-and-a-half-wide swath of swampy, spongy tundra about 20 miles from the small village of Iliamna, on the shores of the 1,000-square-mile Lake Iliamna, the largest lake in Alaska and the eighth-largest in North America.
The Pebble Partnership has been working on the "big picture" development and exploration of the proposed mine since 2004, and project managers admit they haven't even gotten through the conceptual phase of the project.
Still, the mine's potential keeps everybody at it. Pebble prospectors believe they've discovered the world's largest undeveloped gold deposit.
On a recent, Pebble-sponsored tour of the deposit, geologists and environmental managers agreed that Pebble holds more than 100 million ounces of gold and more than 80 billion pounds of recoverable copper waiting in the ground. Given what gold is worth today -- $1,830 per ounce, or $3 per tiny grain -- that translates into a potentially huge fortune. If you can get it out of the ground, that is.
Critics say the mine would destroy the Iliamna area, forever changing the way wetlands, lakes and rivers are interconnected, as well as possibly Bristol Bay and its prized salmon fishery downstream from the deposit.
But looking out at the vast plain of tundra where the Pebble prospect lays, an observer is hard-pressed to spot any trace of anything disrupted by the small army of engineers, hydrologists, chemists, geologists, pilots, welders, fish biologists and even meteorologists. There is virtually no footprint yet visible after seven years of work to indicate that the world's largest mine could soon forever change Bristol Bay.
The long road to a Pebble mine
Mining and prospecting have long been big business in Alaska. Gold miners and sourdoughs are integral to the state's identity, its collective sense of self. Ask Steve Herschback, who's been mining here more than 30 years. Herschback cofounded Alaska Mining and Diving, the employee-owned company with the catchy jingles Alaskans have heard on radio or television.
Herschback doesn't envy the task at hand for Pebble Partnership. When it comes to getting big mines going in Alaska these days, a lot has changed.
"Rock mining isn't an easy prospect by any means in this state, or anywhere else for that matter," said Herschback recently as he was preparing for a six-week adventure in the Australian Outback on the hunt for more gold. "To make a rock mine profitable, you'd need at least 2 million ounces of known, recoverable gold or other minerals and a hell of a lot of investment."
Why so much when gold's value is nearing $2,000 an ounce?
The reason, he says, is to pay for the studies and environmental protection efforts required to make sure a mining operation doesn't profit at the expense of everything else around it, to make sure the land isn't spoiled for others living on or near it.
Therein lies the challenge before Anglo American and whatever mine buys Northern Dynasty's share of the Pebble project.
But Anglo is betting that it can take the long view. The deposit has some $214 billion of recoverable gold at today's prices, even if most of the gold is submicroscopic. And Pebble's estimates on the future value of a mine don't include the value of copper and molybdenum -- billions of pounds of it -- that project supporters also hope to bring to market.
Pebble engineers are still working to complete the very first steps on the long road to a mine. Exploration. Advanced exploration. The "daydreaming phase" of the project when everything is conceived, said Jane Whitsett, environmental studies manager for the project. This is when the company figures out how to economically and responsibly engineer the mine.
"We're still working from a starting point in the design of the project," Whitsett said. "We're locking a lot of the details in. The level of design is a long ways from final. We're not looking at every little screw or pipe that we're going to use at this point."
"People need to realize Pebble is still in the concept phase," she added.
About four years ago -- and several years into the exploration phase -- engineers discovered an entirely new mineral deposit. The eastern deposit, as Whitsett described it, contains a much higher grade of recoverable ore than the western deposit, where Pebble originally planned to mine.
But even much of the higher grade ore is miniscule, perhaps 1 percent of the rock and earth it's trapped in. Most of the western deposit is even less valuable. The metals in the eastern deposit are also much deeper than what had previously been discovered to the west, beginning about 1,400 feet below the tundra and extending down to more than a mile underground. Whitsett said it could go even deeper. This is just what geologists have discovered so far, she said.
Critics have been loud and consistent about the dangers of rock mining in Bristol Bay, particularly of open-pit mining. Adding to their concerns and the project's complexity is that engineers aren't sure yet what type of mine they're going to end up with. Maybe it's an open rock mine. Maybe it's an underground mine. Maybe it's a combination or hybrid of both. Engineers are still trying to figure out the best way to get at the ore, Whitsett said.
Pebble will figure out in the next year, maybe longer, what type of mine it will build. What comes next is many, many years of assessment, permitting and possibly litigation. The latter -- a barrage of lawsuits challenging the project and its permits -- could play out similarly to what Royal Dutch Shell has encountered in its pursuit of offshore drilling in Alaska's Arctic.
"Shell's process (in the Chukchi) indicates how something can be delayed … a number of years," Whitsett said.
In the next two years, the Pebble Partnership will wrap up its project design -- plans for a mine and the infrastructure it requires -- and submit it to the Feds when it applies for a wetland permit, the first of 25 to 30 environmental permits necessary to get the go-ahead to mine near Bristol Bay.
The permit will trigger a federal environmental review of the project under the National Environmental Policy Act, with various government agencies assessing the project's environmental impact. The process is rigorous: "To ensure that projects are designed, located and operated in ways that reduce adverse and increase beneficial environmental impacts for existing and succeeding generations."
Another Alaska pipedream?
Let's imagine everything went exactly as planned in Pebble's favor -- that the proposed mine didn't face opposition from environmentalists, fishermen and concerned locals plotting legal and political strategies to halt the project: How long would it take to bring a mine like Pebble online?
Whitsett said that without the litigation, Pebble still wouldn't be through planning and permitting the project for another seven years or so.
"Companies spend a lot of time and investment keeping all of this in motion," Whitsett said. "In the cases of all companies, there are dozens of permits required. You might get 27 of 30 permits. If you don't get 28, 29 and 30, everything stops. It's too risky to keep going."
If permits sailed through -- if the years of planning and preparation and analysis and mitigation to protect Bristol Bay's natural resources were immediately acceptable to regulators -- Pebble still wouldn't begin mining until 2017 or 2018.
If Pebble mine becomes reality there are even more challenges to overcome. Massive infrastructure projects will be required in a remote area of Alaska that's not on any road system, including a deepwater port and an 80-mile road connecting that port to the deposit, as well as a power plant big enough to "electrify Anchorage," Whitsett said. Arrangements for a mill, tailings pond and millions of tons of waste rock must be achieved without harming Bristol Bay. And that's to say nothing of potential political hurdles from an organized coalition of opponents.
Add to all this the investment woes that Pebble already faces and the project begins to look akin to another Alaska pipedream, another of those developments that have eluded the state for generations.
All that gold and copper could well become just another hugely valuable natural resource, like North Slope natural gas, trapped underground far from world markets.
from Alaska Dispatch