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Mining industry outlook: the success of six projects may portend a new era for Alaska's miners.

The outlook for several parts of the Alaska mining industry is excellent, and during the next 18 months, six projects will reach the crucial stage at which managers must decide whether to begin construction. However, each is facing significant design, permitting, marketing or financing challenges.

The importance to the state of six major mines at this stage of development could easily be overlooked. Remember that from World War II until 1989 hard-rock (as opposed to placer) mining effectively ceased in all of Alaska. At the start of the Second World War, President Franklin Roosevelt's executive order closed all precious-metal mines so that miners would produce the iron, lead, zinc, copper and other metals needed for the war effort. Since then, only a few small hard-rock mines have operated for short periods.

All that changed in 1989. That year, the Greens Creek and Red Dog mines began operation and proved to the world that it's possible to start a major new mine in Alaska. The d(2) lands debate, the Alaska National Interest Lands Claim Act (ANILCA), unstable tax and regulatory policies and preservationist pressures to stop all development had convinced many companies that major mine development in Alaska was not possible.

Attitudes Changing

That notion has been effectively disproved. Also, with oil production declining, we are seeing changes in attitude toward mining by the public, by legislators and by the Hickel administration. Alaskans are looking for future economic opportunities, and they see that mining could be an important contributor.

For their owners, the six projects represent many years and millions of dollars spent -- on exploration, drilling, sampling, engineering and permitting as well as countless metallurgical and environmental studies -- now coming to fruition. To the Alaska economy, they will mean new jobs and many millions of dollars in supplies and services.

These six projects -- five gold mines and one coal mine -- are the Kensington Venture and Alaska-Juneau underground gold mines near Juneau; the Wishbone Hill coal project near Sutton; the Fort Knox and Citigold projects near Fairbanks and the Illinois Creek project southwest of Galena. If these projects become operating mines, they will create more than 1,400 new jobs -- challenging, good-paying year-around jobs -- in four parts of the state where they are sorely needed as North Slope employment continues to decline.

Another important aspect of these projects is that they are moving ahead in the face of extreme pressure from the various groups that oppose all development in Alaska. The fact that the mining companies are sticking with the projects despite this opposition means a lot for the future of the state.

An additional sign of the health of the mining industry involves expenditures for minerals exploration, which have decreased from previous years' growth. This must be seen in perspective; it is actually a good sign for Alaska. Many industries are leaving the United States due to excessive and over-bearing regulations and harassment. Just like the oil companies, major mining firms are taking most of their exploration dollars to other countries.

But for Alaska, there is a difference -- its lands are receiving continued interest by a wide cross-section of companies, and major international mining firms are again exploring in Alaska after an absence of 10 or more years. Exploration is the necessary first stage if new mineral deposits are to be found. Industry experts estimate that 1,000 prospects are evaluated for every major mine that begins operation. It's a good sign that exploration interest in the state remains high.

Placers Still Struggling

The segment of the Alaska mining industry that continues to struggle is the small placer miner. In the past 15 years, placer mining has gone from having only minimal regulation to being possibly the most heavily regulated of all industries. New requirements and permits of one sort or another are added each year. The uncertainty and sheer bulk of requirements make it nearly impossible for the small miner to continue.

Many of the new regulations being forced on placer miners are not scientifically based nor in proportion to the potential environmental hazard. In some instances, bureaucracy is simply out of control. However, some placer miners are hopeful that work by the Alaska Department of Environmental Conservation will bring some science and logic into the regulations.

Several projects slated for the more distant future, some on Native corporations lands, are still being evaluated. Almost all Native firms actively promote mineral exploration on their holdings, which include some of the highest-potential mineral terranes in the state. Their desire for economic development and jobs for their shareholders means Alaska can expect great things from these lands in the future.

Steve 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 throughout the United States and in Canada and South America.
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Title Annotation:Mining Special Section
Author:Borell, Steve
Publication:Alaska Business Monthly
Article Type:Industry Overview
Date:Nov 1, 1992
Previous Article:Slippery slopes: native firms adapt to changing oil industry conditions.
Next Article:Hope on the horizon: mining increases in value and potential as a principal employer.

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