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Hope on the horizon: mining increases in value and potential as a principal employer.

Just as state revenues pivot on the brink of another oil-related downturn, a long-neglected Alaska industry -- mining -- stands poised for an economic upswing.

"Mineral production has the greatest potential for providing new, good-paying, year-around employment for Alaskans," says Steve Borell, executive director of the Alaska Miners Association.

"I think the future of mining in Alaska is very healthy," adds Dick Swainbank, a development specialist with the Alaska Department of Commerce and Economic Development. "We have a lot of projects coming together that could provide a lot of investment and jobs in the state."

These rosy predications are based on experience from two recent major developments. First, Alaska's largest mines, Red Dog and Greens Creek, are now in full-scale production, turning out tons of valuable minerals each year. Second, new projects, from the A-J Mine in Juneau to the Fort Knox gold deposit in Fairbanks, are clearing the final hurdles to become major mining employers in the state.

The total value of Alaska's mineral industry increased to $615 million in 1991, up from $611 million in 1990 and $459 million in 1989. The bulk of minerals came from Red Dog and Greens Creek mines, which achieved record production levels last year.

Alaska's Stars

Red Dog, the largest zinc mine in the world, employed 375 people last year. The mine produced 521,000 tons of lead-zinc concentrates, almost double the 322,000 tons produced in 1990.

Greens Creek, the largest silver mine in North America, employed 310 workers last year. Output from the mine near Juneau included 7.6 million ounces of silver, 37,000 ounces of gold, 84 million pounds of zinc, and 34 million pounds of lead.

"Prior to these two mines coming on line, many companies did not believe it was possible to start a major mine in Alaska," says Borell.

Together, in 1991 the two mines accounted for 65 percent of America's domestic zinc output, 20 percent of its silver, and 10 percent of its lead production.

World metal prices did drop in 1991, a fact which makes profitability for the two mines difficult to determine. Still, says Swainbank, "Our best estimate of the value of zinc concentrates was about $278 million in 1991, compared to $253 million in 1990 and $29 million in 1989."

Alaska's third and fourth largest mines also enjoyed good years. Cambior Alaska Inc. of Cantwell, North America's largest placer gold mine, employed 219 people and produced 50,537 raw ounces of gold. Alaska Gold Co. in Nome, with 75 employees, produced 22,000 ounces of gold in 1991.

Coal production reached record levels last year at Usibelli Coal Mine near Healy. With 110 employees, the company shipped more than 1.5 million tons of coal to Interior Alaska and to South Korea.

A total of 3,638 people found employment in Alaska's mineral industry last year, almost the same as in 1990. However, employment in the industry is down about 500 jobs since 1989. A close look at the statistics shows that when Red Dog and Greens Creek finished their development phases and entered into production, several hundred jobs associated with mine construction came to an end.

But the number of mining jobs could increase dramatically in the next few years -- if mineral exploration and development continues. Mineral exploration totals for 1991 stood at almost $38 million, nearly $26 million less than 1990. Mineral development rose more than $8 million from 1990 to 1991, to $22.5 million from $14.3 million.

Exploration Drives Employment

Experts aren't worried about the decrease in exploration. "Alaska's small drop in exploration expenditures is nothing like what has happened in the rest of the country, where there has been a mass exodus of exploration dollars," says Borell. "In 1992, we've seen some major international mining companies coming back to Alaska to explore. That's very encouraging."

Projects currently in their development phases could become important contributors to Alaska's mineral production. One such project is the Fort Knox gold mine, owned by Amax Gold, 15 miles northeast of Fairbanks. Currently working on obtaining about 40 permits from local, state and federal agencies, the mine could enter its construction phase in 1993 or 1994 and begin production in 1995. Once on-line, Fort Knox would become Alaska's largest gold mine, producing 300,000 to 350,000 ounces of gold annually for 16 or possibly more years and providing 200 to 275 year-around jobs.

"If Amax Gold is able to go through with Fort Knox, there will be a lot more interest in the Fairbanks and other Interior mining districts from other mining companies," Borell says.

"Rising Stars"

Three gold mines in southeast Alaska, also in their permitting phases, glitter with potential. The Kensington, 45 miles north of downtown Juneau, would produce 4,000 tons of gold ore per day and employ 340 people; the Alaska-Juneau underground mine could produce 22,500 tons of gold ore per day and employ 475 people. A third project, the Jualin gold mine, a few miles southeast of the Kensington project, is in advanced exploration stages.

Demand for Coal Rising

"By the year 2010, the Pacific Rim countries will need an additional 100 million tons of coal a year," says Swainbank. "That figure, combined with needs elsewhere in the world, may make it economically feasible for Alaska coal to be competitive."

Currently, the Brooks Range coal fields are too remote to warrant commercial production, and coal fields in southcentral Alaska lie locked in the land disputes of the state's mental health trust suit.

Cominco Alaska Inc.'s Pebble Copper deposit near Lake Iliamna contains a huge reserve of copper and gold for future development. Near Ketchikan, Cominco also owns one of the largest molybdenum deposits in the world that could become operational if world market prices rise.

A platinum mine near Red Mountain is currently being explored by Alaska Platinum Ltd., and holds an estimated 2.5 million ounces of platinum worth approximately $1 billion, making it probably the country's largest placer platinum reserve.

Other mineral sites, from the Lik zinc concentrate deposit near Red Dog to the Illinois Creek gold and silver reserves south of Galena, offer hope for employment in the more remote areas of Alaska.

At a surface glance, these future projects would bring a few thousand mining jobs to Alaska. Today, barely 3 percent of Alaskans earn a living directly at mining operations.

But, on a deeper level, each job in mining is vital for Alaska's future. A typical mining job pays $40,000 to $50,000 annually -- a sharp contrast to service-related jobs, such as those in the growing tourism industry, which pay under $20,000 annually.

"What other alternatives does Alaska have for providing skilled, well-paying, challenging permanent jobs?" Borell asks. "Mining is one alternative. In Alaska and the arctic, we won't have that many other opportunities in front of us for a long time to come."
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Title Annotation:Mining Special Section; Alaska's mining industry reports economic growth
Author:Woodring, Jeannie
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Nov 1, 1992
Previous Article:Mining industry outlook: the success of six projects may portend a new era for Alaska's miners.
Next Article:What attracts mining companies to Alaska? Mineral, human and governmental resources play key roles.

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