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Industry outlook.

The mining industry in Alaska has experienced steady growth during the past several years, and the outlook for the future is excellent. Steady growth is expected to continue in most parts of the industry. The exception is small-scale placer mining, which is likely to be maintained at current levels or to continue a decline begun 10 years ago.

Metals production almost doubled from 1989 to 1990, as the Greens Creek and Red Dog mines began to reach full production. Alaska coal production in 1990 was the highest ever. Many major mining companies have returned to the state and are again exploring here for minerals. The legal and regulatory uncertainties of the past are being clarified, and the attitude of the Hickel administration is one of fair and consistent treatment for the industry.

Several new mines are approaching development decisions. If these projects become producing mines, the economic and political effect on the state will be considerable.

In Southeast Alaska there are two projects for which federal Environmental Impact Statements (EIS) are nearly complete. The first is the reopening of the Alaska-Juneau Mine whose development would result in approximately 450 direct mine jobs and produce 369,000 ounces of gold per year. The Kensington Venture, located north of Juneau near Berners Bay, also is in the EIS stage. Its development would provide more than 250 jobs, while producing 200,000 ounces of gold per year.

In the middle Yukon-Kuskokwim area, two hard-rock gold projects are in the final stages of evaluation and/or financing. The Nixon Fork and Illinois Creek deposits have the potential of providing 85 and 40 jobs, respectively, to that area of Alaska. Decisions on these projects are expected this winter for possible production in 1992 or 1993.

In Southcentral Alaska, the Pebble Beach copper-gold porphyry deposit is in the initial stages of evaluation. This deposit has the potential to provide much needed jobs and cash flow for another region of the state.

Although probably farther off in the future, the Fort Knox deposit north of Fairbanks is exciting for many reasons. First, it is likely to provide more than 300 jobs for the Interior. The deposit has been shown to contain at least 5 million ounces of gold. This project is exciting because it would be the first major low-grade, hard-rock, open-pit mine in the state and would utilize methods and technology that have been in common usage in other states and parts of the world for many years.

Several of the Native corporations have entered into agreements for exploration on their lands. Owners of more than 44 million acres of private land in Alaska, these corporations are interested in developing mines that will provide jobs and opportunities for their shareholders.

Except for state or federal agency jobs, most rural -- and especially remote -- areas of the state currently have little opportunity for employment. The Native corporation leaders recognize that mining can provide good-paying, skilled, year-round employment that would benefit rural communities.

Many other significant exploration programs are being conducted all around the state. Various large and small mining and exploration companies have made significant finds that are being evaluated. Old mining districts are being revisited, and new grass-roots exploration is occurring.

Many people have asked why there is so much renewed interest in the mineral potential of Alaska. The answer to that question has many different parts that complement one another. First, even with all of the land set-asides -- including parks, preserves and refuges -- Alaska has more land available for mineral exploration and mineral entry than any other state. Much of this land has excellent mineral potential but has seen very little exploration.

A second reason for renewed interest in mining is the fact that land status is now more certain than at any time in the past 20 years. In 1971 the Alaska Native Claims Settlement Act (ANCSA) began a period of land status uncertainty as the Native corporations began selecting their lands. This was followed in 1980 by the Alaska National Interest Lands Conservation Act (ANILCA), which took public lands that had been open to mineral entry and mining and placed them in various parks, preserves, refuges, wildernesses, wild and scenic river corridors and the like. These two acts resulted in tremendous uncertainty regarding land status, but most of that uncertainty is now past.

Alaska has long been seen by many groups as their private park, and ANILCA is testimony to their power. This view is not expected to change, but it now is being applied to all of the public lands in the United States. The result is that similar pressures affecting mining regulation that have been felt in Alaska are being felt by companies working in other states.

The attitude of the state also has boosted interest in Alaska's mineral potential. Since the start of construction of the oil pipeline, Alaska has been drunk on oil. Oil production is now in decline, however, and jobs and state revenues are following. This has forced everyone to look for ways to diversify the economy.

Due to the fixation on oil and preservationist pressures, I feel that mining often did not receive fair treatment in the state legislature or from past administrations. State bureaucrats have had free reign to push their own private agendas at the expense of the industry, especially at the expense of the small placer miners.

Another influence is changes in technology. Companies have begun applying new technologies, techniques and geologic models in Alaska that they have been using elsewhere. Economically justifiable mineral deposits are relatively small and very hard to find. As new changes in technology occur, lands can be re-evaluated and deposits can be found that were not recognized previously.

Greens Creek and Red Dog have played a role in highlighting Alaska's mining potential. In 1989 these two mines began operation and proved to the world that it is possible to start a major hard-rock mine in Alaska, a notion that had been debated for many years. These two mines are effectively the first hard-rock mining to occur in Alaska since the presidential order during World War II closed all precious metal mining in the country.

Oil and gas will continue to be the big players in the economy of Alaska. Tourism is important and likely can provide additional jobs in the future. Timber has tremendous potential, but the preservationist pressures are apt to limit its expansion. Fishing is facing increasing pressure from foreign competition and is not likely to provide a significant increase in jobs. That leaves mining as the one industry that can provide new good-paying, skilled, year-round jobs for all parts of Alaska.

Steven Borell is the executive director of the Alaska Miners Association. A registered professional engineer in Alaska, Colorado and North Dakota, he has worked in coal and metals mining for more than 17 years throughout the United States and in Canada and South America.
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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:mining industry
Author:Borell, Steven
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Nov 1, 1991
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