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Glitter in the economy.

On the surface, Alaska's mineral industry glitters like gold on a mountain peak: 1990 statistics top a decade of slow, steady growth, and abundant natural resources, from coal to gold, brighten future prospects.

But the economic impact of mining to Alaska stands on a delicate balance. "Worldwide, the mineral industry is very volatile right now," says Dick Swainbank, a development specialist with the Alaska Department of Commerce and Economic Development. "No one really has a hint of the way things are going."

This volatility doesn't readily appear in Alaska's 1990 mining statistics. Mineral production value for 1990 reached almost $534 million, almost double 1989's figure of $277 million. Development spending dropped more than 90 percent, while exploration expenditures rose 19 percent. The total value of the industry, which employed 3,870 workers, increased 31 percent -- to $602 million.

"We've seen nice, steady growth in the 1980s," says Steve Borell, executive director of the Alaska Miners Association. "A lot of major companies are looking at mineral deposits in the state right now."

Companies producing Alaska's mineral wealth include 200 to 300 small placer mines and 5 larger mines, each with more than 100 employees.

The largest mine, Red Dog, operated by Cominco Alaska in the northwest part of the state, employs 340 people. During 1990 it shipped 320,000 tons of zinc concentrates, about half of the projected full-scale annual production.

Greens Creek Mining Co. on Admiralty Island, the largest silver mine in the United States and the largest lode gold mine in Alaska, employs 320 people. In 1990, this company produced 385,000 tons of sulfide ore, 7.6 million ounces of silver, 38,000 ounces of gold, 37,000 tons of zinc and 16,500 tons of lead concentrates. "A few large mines like Red Dog and Greens Creek have shown the world it's possible to mine in Alaska," says Borell.

Cambior Alaska, preparing for full-scale production of placer deposits near Cantwell, employed 170 workers by late 1990. Usibelli Coal Mine in the state's Interior produced a record 1.6 million short tons of coal, valued at $44 million. The company employed 130 workers. The fifth largest mine, Alaska Gold Co. near Nome, employs 120 in its gold placer operation.

Despite the rosy statistics, however, the growth of Alaska's mining industry is threatened. Low world metal prices, for instance, make it tough for the state's largest mines to operate profitably. The Greens Creek silver mine, in operation since February 1989, may not turn a profit in 1991 if silver prices stay low throughout the year.

Low gold prices proved a factor in shutting down Westgold Inc., an offshore gold placer operation near Nome, which laid off 125 workers in 1990. Westgold also was hurt by the unpredictable weather in Norton Sound.

The same metal price fluctuations dim the prospects of digging out the vast wealth of Alaska's different minerals. By category, the state owns a significant portion of the nation's mineral resources: 55 percent of zinc reserves; the third greatest quantities of silver reserves; 15 percent of molybdenum reserves; 40 percent of coal reserves; and the largest tin reserves.

Production value by category for 1990 reflects the significance of this wealth. Zinc extraction, valued at $253.7 million, produced almost 50 percent of Alaska's 1990 mineral wealth and employed approximately 400 workers. Gold and silver production, valued at almost $140 million, accounted for roughly one-fourth of Alaska's 1990 mineral revenues and employed more than 1,400 workers.

Other important minerals produced in 1990 include coal ($45 million), sand and gravel ($42 million), lead ($31 million) and building stone ($22 million). Production of these four minerals employed more than 1,000 workers.

Low world metal prices, access problems and land questions make it difficult for companies to mine these resources cost-effectively. Also, notes Swainbank, "Other significant mineral discoveries around the world can occur at any moment, and can change the value of Alaska's resources."

While Alaska's production revenues soared during 1990, development expenditures dropped more than 90 percent, from $134 million in 1989 to $11.4 million in 1990. This dramatic drop reflects the fact that Red Dog and Greens Creek mines finished their development phases in 1990 and swung into production. Alaska mineral development employed more than 450 workers during 1990.

On a promising note, mineral exploration expenditures in Alaska rose 19 percent in 1990, to $56.7 million from 1989's $47.8 million. Most of the exploration covers huge projects that could promise tremendous mineral and employment potential -- if metal prices, access problems and permitting objections can be overcome.

During 1990, Alaska's mineral exploration provided jobs for 300 workers. Almost half of the exploration, $24.9 million, was concentrated at three gold properties in the Juneau area: the A-J/Treadwell, the Kensington and the Jualin mines.

The A-J Mine lies beneath Roberts and Gastineau peaks behind Juneau. Present reserves at the A-J include 63.6 million tons of proven and probable ore with a grade of 0.052 ounces per ton, and 42.1 million tons of possible ore, grading 0.051 ounces per ton. Present plans call for mining about 22,500 tons per day with a work force of about 450. The nearby Treadwell deposit, which produced 27.5 million tons of ore before it closed in 1922, is currently being explored to determine its mineral potential.

Fifty miles north of Juneau, the Kensington project contains reserves of 12.8 million tons with a grade of 0.148 ounces, containing 1.9 million ounces of gold. Preliminary plans suggest a mining rate of 4,000 tons per day or 200,000 ounces of gold per year, with a peak employment of 340 workers.

The Jualin project lies a few miles southeast of the Kensington prospect. Exploration efforts to date indicate a resource of 1.07 million tons containing a grade of 0.349 ounces or more per ton.

At the Fort Knox gold property, 15 miles northeast of Fairbanks, exploration efforts have turned up a very large ore body. One test hole found a zone of high-grade ore with up to a half ounce of gold per ton. It will take more than $200 million and two years of work to develop the mine. Initial startup could employ about 280 people, and full-scale production could result in 600 to 700 jobs. If developed, Fort Knox would be the largest gold producer in Alaska and one of the largest in the country.

Other exploration projects around the state that could become major producers: the Nixon Fork gold properties near McGrath, explored by Central Alaska Exploration Inc., with the potential of hiring 85 workers; the gold and silver resources at Illinois Creek, south of Galena, under exploration by North Pacific Mining; and the Wishbone Hill coal deposits near Sutton, which have the potential to employ 150 people but lack a coal sales agreement.

"There's a lot of interest in mining in Alaska right now," Borell says. "If companies can find it profitable to mine here, we'll see more of that steady growth we've enjoyed in the last decade."
COPYRIGHT 1991 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:the mining industry
Author:Woodring, Jeannie
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Nov 1, 1991
Words:1180
Previous Article:Industry outlook.
Next Article:Land access restrictions.
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