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Southeast moves toward mining boom.

It's a struggle, particularly for a valuable property in Juneau, but operators are slowly overcoming environmental roadblocks in anticipation of a rich harvest of precious metals.

Thirty-three miles up the Haines Highway from the town of Haines, John Schnabel runs his 235 Cat excavator and a couple of loaders near the Porcupine River, just as he has for the last 22 years. Schnabel, 76, believes he is the last placer miner working in all of Southeast. He ascribes his long success to his talent for pulling out of the ground gold left behind by less efficient mining techniques used at the turn of the century.

"If it wasn't for their generosity, we wouldn't be working," he chuckles. Still, Schnabel says, he has seen a lot of miners go out of business. But he believes that the tide is turning and that some good properties presently being explored in the Haines area will eventually come into production.

"Big Nugget Mine," as Schnabel calls his enterprise, pays the bills most years and turns a profit some.

Meanwhile, at the other end of southeastern Alaska, Abacus Minerals Corp. is similarly optimistic about a big hard-rock strike on southern Prince of Wales Island. The Niblack project is expected to be as productive a polymetal mine as Kennecott's Greens Creek on Admiralty Island in the 20-million-ton range.

"We look like we've got our teeth into something that's pretty exciting," says Abacus president Steve Todoruk, from his office in Vancouver, B.C.

Abacus and two partners - Teck Corporation, one of the bigger Canadian mining companies, and Salman Partners Inc. - pumped $4 million into the Prince of Wales Island project this year, double last year's spending. A lot of that money has been spent in nearby Ketchikan, making a welcome contribution to that town's embattled, timber-based economy.

A-J Mine

Echo Bay Alaska Inc., the owner (with the City and Borough of Juneau) of the historic Alaska-Juneau gold mine near downtown Juneau, has been occupying the point man's spot in the eyes of the public and the press for continuing efforts to exploit Juneau's world-class gold reserves.

A rare urban mine, Echo Bay has drawn the criticism of not only large environmental organizations, but even many of the 100 or so people who live in the historic neighborhood of Thane, where the mine is located, a few miles north of Juneau.

Echo Bay's agreement not to use cyanide in processing ore and not to dump mine tailings near a popular hiking area has done a lot to ease environmental concerns, says Laurie Ferguson Craig, issues coordinator for Alaskans for Juneau, a leading critic of the A-J mine. But Craig's group still protests two main points - both involving water.

Craig says the proximity of the mine's drainages into Gold Creek run too close to the five shallow wells at Last Chance Basin, Juneau's main source of drinking water. The second problem is A-J's plan to dispose of mine tailings in Taku Inlet south of Gastineau Channel.

A proposed rule change to allow marine disposal was published by the feds in February. Strong support came from labor unions anxious to protect jobs, Craig said, but 68 percent of the comments were against it.

Backfilling the mine and placing the rest in an alpine valley, which environmentalists prefer, would cost Echo Bay 20 times that of ocean dumping.

But even with that much debate between the parties, Echo Bay spokesman David Stone says relations with A-J's critics have improved greatly in the last several years. But it hasn't been easy. In the past, both Echo Bay and its opponents used strong words against each other.

What Stone says often stops progress lies in the nature of adversarial roles. Environmentalists and other critics are wary of cutting A-J any slack for fear they would set a precedent.

"There is a fear factor that maybe the science is going to say that this is an OK application for A-J, but we don't want to open it up for anyone else," Stone laments. "But the point is anybody else would have to go through the same process we have."

"We believe (ocean disposal) presents a whole host of other problems and sets a very bad precedent for this part of Alaska where our fisheries resources are so important," counters Craig. "And it reverses a policy that EPA had for many years and we felt was made with a lot of justification."

With an estimated $77 million boost to the regional economy - including $20 million in payroll (400 jobs) and $18 million in taxes and royalties to the Juneau municipality - A-J has some strong support in the city. Stone says the company, despite announcing layoffs this summer, hopes to finish the permitting process in 1997.


Coeur Alaska Inc., owner-operator of the Kensington gold mine, 45 miles north of Juneau, has taken a different tack with critics. Still solidly in the midst of the permitting process, Coeur managers have volunteered to put their operating plan on the table.

"We are in the process of trying to negotiate a litigation avoidance agreement with eight environmental groups," says Vice President for Environmental and Governmental Affairs Rich Richins. "One of the provisions is that we will not direct our workforce to live in Berner's Bay."

Besides keeping a mining camp out of that favorite spot for recreational boaters, Coeur has positively addressed runoff problems, says Craig. And while Craig thinks that A-J may be fatally flawed by its proximity to Juneau, she gives Kensington a much better chance of success. Kensington's estimated 300 workers would come from Juneau, Haines or elsewhere in the northern Panhandle. Richins says his company has committed itself to strong local hire.

British Columbia

Southeastern Alaska's connection to Canada's mining industry comes not only in the form of financing and managers. Ore and supplies also flow over the border, in truly trans-national operations.

In the Hyder, Alaska-Stewart, B.C. southeastern corner of the state, for instance, a significant gold project is being developed in a historic mining area, says Al Clough, mining expert with the Alaska Department of Commerce and Economic Development.

Homestake Mining's Snip Gold Mine on the Iskut River, near the Stikine, stages supplies and ore concentrates through Wrangell, hauling materials by air and Hovercraft. Wrangell is another beleaguered timber town happy for the business.

The Polaris-Taku and Tulsequah Chief mines up the Taku River in British Columbia, are supplied from Juneau. Tulsequah Chief, like Greens Creek, is a base metal mine, where studies are proceeding to see if reserves can be economically removed. Polaris Taku has a year or two of exploration to go before there can be a feasibility study.

Clough also notes more than a dozen active claims in the Yukon Territories, some of which may go to mining.

"The tonnage of supplies coming through Skagway continues to go up," says Clough. "The Yukon government is working very closely now with the city of Skagway to see what the future of the port should be ... as the main port of entry for the Yukon Territories."

Greens Creek

In July, the first ore pushed through Kennecott's Greens Creek polymetal mine on Admiralty Island. By the end of the summer the mine was up to 70 percent of design capacity.

"We're being extremely careful and cautious as we ramp up, and I would not anticipate we would be at design (production) until late in the third quarter," says mine General Manager Clynt Nauman.

But Greens Creek is up. Even at less than full production, the site has a workforce of about 215. They are ferried 16 miles from Juneau aboard high-speed catamarans and then buses. And the workforce is slated to increase to 250. But the greatest benefit from Greens Creek may not be readily apparent.

Citing the progress of a host of mining projects around the state, Clough says with each new development, mining companies see Alaska more and more as a place where they can do business.

"All these projects are happening for a whole host of reasons," Clough says. "There's not one bellwether event - but nothing brings out success like success."

"The interest level in Alaska continues to expand," confirms the Alaska Miners Association's Steve Borrell. "Almost weekly I am getting calls from additional major or junior mining companies that are wondering what is happening in Alaska."

Among the best news, say industry representatives, is a clear message on the part of the state that it supports mining. New mapping efforts, streamlined procedures and longer shifts for miners have all helped.

But, says Juneau dentist and exploration geologist Roger Eichman, success is still only possible for larger companies with pockets deep enough to weather long delays.

"The problem talking to a person like you is that it ends up in publication - that's almost the kiss of death for many of these projects," he says. "The small little guy, until he's absolutely ready to go for his last permit, can't take any notoriety. And that's the situation here in Southeast - tremendous potential, but it's all potential and it will stay potential as long as the political and economic climate stays unfavorable. And that's particularly true in the Juneau area."

Noting that the average mine in Nevada employs 17 people, Eichman bemoans the labor losses incurred by shutting out small miners. People are still exploring, he says, but they are sitting on their claims and keeping their data out of government hands, afraid government agencies will leak vital information to the public, leading to controversy, costly lawsuits and permitting delays.

Clough says that situation would change drastically if A-J and Kensington succeed. Little guys often make their money by interesting big guys in their claims.

And the bigger operations are talking optimistically. The Southeast regional Native corporation, Sealaska, continues to have a very active geologic reconnaissance program to identify mineral resources on the 600,000 acres of land for which the corporation holds the subsurface rights.

Abacus Minerals' Todoruk is unabashedly bullish - with or without A-J and Kensington - at least for his company's Prince of Wales Island holdings.

"Once you get outside of Juneau, mining is very well regarded and people want to see it going," Todoruk says. "I feel very good where we are. As far as mining is concerned, Juneau in itself is not considered a part of Alaska."
COPYRIGHT 1996 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1996 Gale, Cengage Learning. All rights reserved.

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Title Annotation:1996 Alaska Miners Convention
Author:Swagel, Will
Publication:Alaska Business Monthly
Date:Nov 1, 1996
Previous Article:Whittier: the road to prosperity.
Next Article:Powering Alaska and the Pacific Rim.

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