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Promise and peril mark the start of a boom decade.

The Alaska mining industry is in a mild state of euphoria. Prices are rising, exploration budgets continue their two-year upward trend and the first loads of Red Dog ore were shipped this summer. Not even fury at Environmental Protection Agency decisions regarding the Quartz Hill mine seem to dampen the mood of optimism.

Things are pretty active right now,' says Chuck Hawley, a veteran geologist and mining consultant.

An exultant Steve Borell, executive director of the Alaska Miners Association, says exploration in Alaska 'is probably more active this summer than any year since 1980.' He also points out the importance of two newly operating hard rock mines, Red Dog in Northwest Alaska and the Greens Creek gold/silver/lead/ zinc mine in Southeast Alaska.'Those two mines are effectively the first two hard rock mines in Alaska since World War II. That's a major, significant change for the state of Alaska,' he says.

Borell feels the success of the mines will be closely monitored by an industry that pulled back a decade ago from falling prices and what some contend was the chilling effect of the Alaska National Interest Lands Conservation Act. ANILCA designated millions of acres of federal land as conservation units off limits to mineral exploration.

Paul Glavinovich, a consultant who has been involved with the Greens Creek project, notes, We've seen a definite increase in the number of companies working up here, primarily due to optimism on the part of mining companies that the price levels are going to hold. Everything is up considerably in the base metals - copper, lead, zinc.' Those prices are up as much as 40-60 percent over levels of the last decade, according to Glavinovich.

They have expanded exploration budgets and with this they're looking at new areas instead of sticking with their own backyards, although properties found in this cycle may not be developed for 10-15 years,' he adds.

The precious metal gold continues to dominate Alaska's offerings. Often it is mixed with other metals, as at Greens Creek.

Hawley says the price of gold is fair at $350, but nothing to write home about.' In addition to gold exploration in Southeast, development continues in the Interior's venerable mining districts, typically utilizing new technologies that are economically viable at current price levels.

Coal, Alaska's third major mineral category, has seen some regulatory progress toward facilitating development of the Beluga field. But more significantly, the Wishbone Hill mine near Sutton is on track, thanks to legislative approval for purchase of $9 million worth of coal cars by the Alaska Railroad. The rolling stock is needed to make the project feasible for developer Idemitsu Kosan. Also, the progressive Usibelli Mine Co. is pursuing a number of initiatives to make Alaskan coal more competitive in world markets. Assessing Impact. Since territorial days, on a statewide basis, mining in Alaska has never produced revenue or economic spin-off comparable to oil and gas development. Though it has often been equally, or more, controversial. Tracking the industry's economic contribution to Alaska is complicated by a lack of current, reliable data.

According to state agency figures, the mineral industry in 1989 employed 4,179 people. Thirty-one percent, or 1,316, of those workers were employed on mechanized placer mining production; 19 percent (785) in mineral development; 1 0 percent (407) in base metal production; 15 percent (625) in sand and gravel production; 8 percent (325) in recreational mining; 6 percent (252) in exploration; 4 percent (161) in lode gold and silver production; and 7 percent (308) in undistributed coal, tin, jade, soapstone and stone production.

Gold was Alaska's most valuable mineral commodity in 1989, accounting for 39 percent of total production value. Gold production for 1989, valued at $108 million, increased 7 percent by volume over 1988.

Due to a decrease in infrastructure construction, related to oil and gas development, sand and gravel production values have been dropping dramatically.

Although overall, the mining industry expects a rosy future for the next ten years, the path paved with base metals and gold is not without hazards and rough terrain.

Mining experts don't agree on the most serious impediments to expansion of the industry. But it is generally accepted that high capital costs of exploration and development, combined with Alaska's challenging geography and bewildering land status patterns, give the industry its present complexion: Predominantly large corporations, heavily capitalized by financial centers far from the state that conservatively invest exploration and development dollars. With one eye on the market, the other on the ground, these companies prefer stability, and they don't like surprises.

Alaska's harsh climate and difficult terrain present obstacles, but not the moving target variety. The really bedeviling problems, say industry leaders, are land status and the way policies of the major landowners, the federal government and the state, affect the overall development climate and access. Pointing the Compass. Dick Swainbank is a minerals development specialist with the Alaska Department of Commerce and Economic Development, based in Fairbanks. Born in north England, the geologist earned his degree in Fairbanks 20 years ago. He is soft-voiced, intense and energetic, with a quick, often sarcastic wit. Swainbank's tan and wiry build suggest a man of the field, but he gave that up for his current position because of the opportunity it affords him to actively promote mining.

Swainbank outspokenly deplores government policies that he feels have locked up Alaska's mineral potential. Chief among these is ANILCA, which he argues will continue to have a profound impact on mineral development for years to come.

Like many miners, Swainbank only reluctantly concedes the expansive boundaries of Alaska's new national parks and refuges. For many in the business, there is a bitter aftertaste from the Congressional Alaska land battles of the 1970s.

It was in the mid-70s that members of the industry, under the auspices of the Northwest Miners Association, decided to cooperate with one another in an unprecedented sharing of data to identify and prioritize known Alaskan deposits of major significance. Swainbank explains the effort as a sort of peer group review, intended to assist Congress in its deliberations over federal land classification. About 250 deposits made the list.

In the meantime, a fuse was burning inexorably toward a waiting charge. As part of the Alaska Native Claims Settlement Act, a period of study and debate over permanent federal land conservation units in Alaska was due to expire in December 1978 that would have reopened federal land to state selection and mineral entry. But with Congressional debate far from over, President Jimmy Carter invoked a seldom-used authority to keep the lands withdrawn on an emergency basis.

Environmentalists cheered the brilliance of the maneuver. Others have never forgiven the administration. Swainbank is still fuming. We got clobbered,' he asserts.

The tactic kept 208 of industry's 260 favored deposits off limits until a permanent conservation bill could be passed and signed in 1980. What was particularly galling to the industry, Swainbank says, was the way the Carter administration's national monument boundaries exceeded the generally accepted boundaries under legislative discussion, particularly where there seemed to be mineral deposits.

Boundaries that didn't actually take in deposits checkmated potential development by absorbing or otherwise affecting access routes, according to Swainbank. For example, two salients were added to the southern boundary of the Gates of the Arctic unit, right across the path of the logical access route extending from the pipeline corridor to a deposit. In a similar case, a promising rare earth uranium deposit was absorbed by extending a 40-mile southern bulge from the Yukon Flats unit over the mile-high mountains that formed a more logical ecosystem boundary for a wildlife refuge.

At another point, the boundary of a unit was changed from a ridge top to a section line boundary - a geographically miniscule move that incorporated a short stretch of Porcupine Creek into the unit, thereby raising the level of water quality standards that any development upstream would have to meet.

Not all of these changes survived the final legislative debate, and provisions were written in to protect access to mineral deposits. But for his part, Swainbank is not convinced these provisions will make development any easier.

Curt McVee, former executive director of the Alaska Miners Association and now federal co-chairman of the Alaska Land Use Council, a body created by the lands bill to monitor implementation and defuse tensions between land managers and users, is somewhat more hopeful. Noting that the access provisions have yet to be tested, McVee feels it might be appropriate for Congress to rethink those provisions.

Nobody's ever run the whole gauntlet, the whole process. It really is complex. I think it would be worthwhile to go back and take a look at it," he says. MeVee suggests the land use council would be an appropriate vehicle for conducting an interagency analysis of access policies and possible modifications to streamline right-of-way procedures. Players with Pull. Another source of hope to the mining industry is Native regional corporations. Those firms are key players in respect to securing favorable changes in mineral access rules for federal lands and in terms of overall potential for developing important deposits. Political clout of the corporations, which own millions of acres of subsurface estate, much of it specifically selected for mineral potential, could swing the balance in future debates on access.

Swainbank calls the Native land factor 'supremely important." But many corporate officials say they would like to dispel a certain mythology, popular with some industry cheerleaders, that Native-owned minerals are hooked to spigots just waiting to be turned on.

"A lot of exploration needs to be done,' says James Mery, vice president for lands and resources for Doyon Ltd. the huge Interior Native regional corporation. "It takes a long time even to begin to assess some of those (mineral) possibilities.'

With a 12.5 million-acre entitlement, Doyon has a lot of ground to cover. Subsurface selections were made largely based on known mineral occurrences, with the initial focus on base metals. Early survey data refined knowledge of key deposits, but the decline of base metal prices precluded much additional progress. In the mid-80s, a second round of exploration work was begun to enhance known prospects and to develop new prospects.

We've been actively engaged in all those phases for 10 years. (Then) we decided we were going to have to go out to the marketplace, dispel myths about Alaska and encourage them to come up,' Mery says.

He explains that he hopes in making presentations to mining company leadership to pave the way for thoughtful mineral development that meets shareholders' financial as well as cultural goals. You have to help focus these companies, get them comfortable, encourage them to come up to Doyon and look at the data. We save them a lot of time and effort. The more attention that's focused on Alaska, the better it is for everybody,' Mery adds.

Swainbank agrees. He notes that active mineral programs such as Doyon's, and the success of Cominco's efforts on the Native-owned Red Dog deposits, are generating new, worldwide interest in Alaska. 'Alaska has world-class deposits. People in South Africa, Germany, Australia, England have all heard of these deposits, which is a change from 10 years ago. These people are much more aware of Alaska as a player,'he says. Still, if the battle over federal land designations is essentially over, conflicts of potentially equal magnitude over development of available deposits remain in the industry's future. Industry Orienteering. Swainbank says there are a number of things the state can do to pave a smoother way for mining's future. He notes that Alaska's tax structure for mining companies is conducive to mineral exploration, but that more resources should be devoted to geologic mapping and data collection. He believes the state in partnership with industry shares responsibility for correcting some of the misperceptions about mining that exist in the environmental community and the general public.

Other developments in the state regulatory arena have been a mixed blessing. Although the industry is not thrilled about a newly passed state reclamation bill, that legislation was written to make it easier for small operators to bear reclamation costs. Waning are initial concerns that a new judicially mandated state mining claim rental fee might put a damper on exploration and development.

Very few of the miners actually dropped their claims, which was quite a surprise,'Swainbank says. He adds that when the state begins earning royalties from Red Dog and Greens Creek, in about three years, public and legislative support for mining likely will increase.

Other observers agree. Though many miners are frustrated that the state has not taken on the EPA over its controversial Quartz Hill tailings dumping decision, the state gets passing to favorable marks from a number of quarters.

Says consultant Hawley, We've got EPA kind of running amok. It's going to take awhile to settle that down. But legislators see quite a few dollars are being spent and generated (by the mining industry). I think they see it's time for mining to happen. That's one thing Cowper hasn't done badly on.'

But Hawley notes that state and federal environmental regulations and the way they are implemented are sobering factors for the future. It's a long-term serious problem. Are we going to be rational about this? I haven't seen the sword (of Damocles) move that much in 20 years,'he says.

The Alaska Miners Association's Borell laments the continued presence of those in state government who have a'wilderness agenda.'But he predicts their influence will soon begin to wane: "The attitude of the state has improved a little bit in that people have seen that mining can be a good neighbor. The preservationist pressures of the past have turned people off to Alaska. Now people are willing to stand up to that (pressure). People aren't putting up with it, they're getting smarter."

Like others,consultant Glavinovich is concerned about environmental regulation. And he feels strongly that the state should take a stronger role in developing the type of infrastructure industry needs to flourish. We need roads. I'm very much in favor of industry paying its way, but where it benefits the state, the state should help,' he says.

But Glavinovich, too, is hopeful, noting that Red Dog and Greens Creek will make important contributions not only in terms of royalties, but through an expanding, qualified mining sector work force and critical technical knowledge that will greatly enhance future developments.

Although acceptance of the mining industry may be growing in Alaska, many of the critical perceptions of mineral development reside with decision makers other than the Alaskan public. The nation and the world are grappling with balancing environmental impacts of economic solutions to human problems and needs and are revising values and priorities for a new decade.

Although a far-reaching public education effort may be one of the most important things that the mineral industry can do for itself, the industry's future maybe more closely linked with resolution of issues on the global scale.

Swainbank sees a lurking danger in over-reliance on foreign ore sources. The United States, with 6 percent of the world's population, uses 90 percent of global resources, a ratio that will shift as the Third World reaches for its overdue share of affluence, he says. "Once they begin to use their proportional share of resources, we're going to be in a world of hurt in this country." r
COPYRIGHT 1990 Alaska Business Publishing Company, Inc.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Richardson, Jeffrey
Publication:Alaska Business Monthly
Date:Sep 1, 1990
Words:2570
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