Mining
 
  Alaska’s Mining Industry

Background

Historically, mining has been a cornerstone of Alaska’s economy. Many roads, docks and other infrastructure throughout Alaska were originally constructed to serve the mining industry. Major communities like Fairbanks, Juneau, and Nome were founded on mining activity. Today, a rejuvenated mining industry brings a broad range of benefits to Alaska, offering some of the highest paying jobs in both urban and rural Alaska, as well as generating significant local government tax payments and royalties to Native corporations for activity on their land.

Alaska’s mining industry includes exploration, mine development, and production. The industry produces zinc, lead, copper, gold, silver, coal, as well as construction minerals such as sand, gravel, and rock. Alaska’s seven large operating mines (Fort Knox, Greens Creek, Red Dog, Usibelli, Pogo, Kensington, and Nixon Fork) provided nearly 2,300 full-time jobs of the nearly 9,500 mining industry jobs in Alaska in 2012.

In addition to jobs, mining creates public revenue by paying state and local taxes. Mines help support local economies in both urban and rural Alaska with mining companies serving as the largest taxpayers in the City and Borough of Juneau, the Fairbanks North Star Borough, the Denali Borough, and the Northwest Arctic Borough.

Worldwide interest in Alaska’s mineral potential is increasing, along with its accompanying spending. The State estimates the mining industry spent $275 million on exploration during 2012, a slight decrease from 2011. Driving exploration is demand for metals, primarily from Asian countries like China, Japan, and India. Development spending in 2012 increased from the prior year, to $270 million.

Additionally, Alaska faces two significant logistical challenges: lack of energy and surface access infrastructure to remote prospects. In addition, drillings costs and fuel expenses (to transport workers and supplies by air) have risen sharply.

Perhaps the biggest challenge the industry faced in recent years, are anti-mining initiatives proposed on the statewide ballot. The initiatives were so broadly written that they would have affected all major metal mining in Alaska – existing and future. They would have been especially damaging to Alaska Native communities, which depend upon revenue and jobs from natural resources. Fortunately, Alaskans spoke out against the initiatives, by voting no.

Finally, the Alaska Minerals Commission has warned that opposition efforts to new projects threaten the integrity of the land management process in Alaska, not only for mining, but future investment in other resource industries. In its annual report, the Commission said issues relating to the land management and permitting process must be addressed and resolved satisfactorily or the mining industry’s demonstrated ability to bring economic development to diverse, remote areas of Alaska will be compromised.

Facts & Economic Impact

  • In 2012, the cumulative production value of Alaska’s mining industry was approximately $3 billion, divided between exploration and development investments, and the gross value of the mineral products. Minerals produced included zinc, gold, silver, lead, copper, coal, rock, gravel and sand.
  • The industry spent an estimated $275 million in Alaska mineral exploration in 2012, down from the previous year. Exploration spending in Alaska account for a large percent of the total exploration monies spent in the U.S. each year.
  • In 2011, there were 30 projects in Alaska that spent more than $1 million each on exploration.
  • The industry spent $270 million on mine construction and developing of existing mines.
  • Minerals are the state’s second largest export commodity. Mineral exports accounted for 38% of the state’s export total and consist primarily of zinc and lead from the Red Dog Mine. Relatively strong prices for zinc have helped to sustain the high level of mineral export values over the past several years, as has the historically high prices received for lead.
  • Total direct and indirect jobs attributed to the mining industry in 2012 was 9,500 with a payroll of $650 million. The mining industry provides some of Alaska’s highest paying jobs with an average annual wage of $100,000, significantly higher than the state average for all sectors of the economy.
  • Mining industry payments to municipalities exceeded $21 million in 2012, and royalties and other fees paid to the State of Alaska was estimated at $137 million.
  • The industry paid $28 million to the state-owned Alaska Railroad Corporation for shipments of coal and gravel, and $25.5 million to the Alaska Industrial Development and Export Authority for use of state-owned facilities. The industry also paid $3.4 million to the Alaska Mental Health Trust for rents and royalty payments, and construction material sales in 2012.
  • In 2012, Alaska’s mining industry provided $126 million in payments to Alaska Native corporations, benefiting all Alaska Native Corporations.
  • Approximately 300 placer mines produced 85,000 ounces of gold, as well as platinum, in Alaska in 2012. In addition to Alaska’s active precious-metals mining industry, there were more than 120 active rock quarries, and sand and gravel operations throughout the state.

Major Production Sites

  • The Northwest Arctic Borough is home to Teck and NANA Regional Corporation’s Red Dog Mine, a surface mine and mill that produces zinc, lead, and silver in concentrates. Red Dog, one of the largest zinc mines in the world, both in terms of production and reserves, employs more than 600 people of which over half are NANA shareholders. Red Dog is the sole taxpayer to the Northwest Arctic Borough and the payment for 2012 amounted to $13 million. In partnering with NANA, Red Dog operations paid $124.7 million to NANA, with $76.4 million of that being redistributed to other regional and village corporations.  Red Dog produced 529,100 tonnes of zinc and 95.4 tonnes of lead in 2012.
  • Located 25 miles northeast of Fairbanks, Kinross - Fort Knox Mine has been the largest gold producer in Alaska since production began in 1996. The mine produced 289,794 ounces in 2011, and 359,948 ounces in 2012. Fort Knox is an open pit mine using standard truck and shovel ore extraction methods. Gold is recovered using both gravity and carbon in pulp processes. A heap leach facility was constructed in 2008. The mine employs 550 people and all employees live and work in the Fairbanks area. Fort Knox is the largest property tax payer in the Fairbanks North Star Borough, paying $5.2 million in 2012.
  • The underground Pogo Mine began producing gold in 2006, paid out $38.5 million in wages in 2012, while spending over $127 million with vendors and suppliers. Approximately 330 employees, and a large number of contractors work at the mine, operated by Sumitomo Metal Mining.  Pogo is about 85 miles southeast of Fairbanks, and produces about 340,000 ounces of gold annually, with 2013 expected to be higher.
  • The Usibelli Coal Mine, a family-owned mine located outside Healy, is the only operating coal mine in Alaska. The mine has been in continuous operation since 1943 and celebrates its 70th year mining Alaskan coal in 2013. Of the coal the mine produced half was exported in 2012, while much of the remainder was used to fuel 40% of Interior Alaska’s electricity. The mine employs 124 Alaskans, including several second and third generation employees at Usibelli. UCM produced two million tons of coal in 2012.
  • Hecla's Greens Creek Mine, located on Admiralty Island, in Southeast Alaska near Juneau, is an underground polymetallic mine producing silver, gold, zinc, and lead. The mine is one of the world’s top 10 silver producers. It employs 390 people. Greens Creek the largest private employer in all of Southeast Alaska and is the largest private property tax payer in the City and Borough of Juneau, paying $1.2 million in 2012. Greens Creek produced 6,394,000 ounces of silver, and 55,496 ounces of gold in 2012.
  • Fire River Gold's Nixon Fork Mine, located 35 miles northeast of McGrath in Interior Alaska reopened in 2011 to produce gold and copper. Resources are indicated at 76,000 tons at 0.95 ounces per ton gold with total resources amounting to 160,000 tons containing 136,300 ounces of gold. It provided 90 jobs in 2012 and produced 8,799 ounces of gold.
  • Coeur Alaska’s Kensington Gold Mine, located on the east side of Lynn Canal about 45 miles north-northwest of Juneau resumed production in April 2012. Construction began in July 2005, but project completion was delayed by litigation brought on by environmental groups regarding the Corps of Engineers Permit for the project's tailings facility. Kensington employed about 300 people in 2012 and paid $1.5 million in property taxes to the City and Borough of Juneau. Kensington produced 82,25 ounces of gold in 2012.

Selected Exploration and Development Projects

  • The Donlin Gold Project in Southwest Alaska is a world-class gold deposit. NovaGold Resources and Barrick Gold have formed the jointly-owned Donlin Gold LLC to manage and direct the project through its ongoing feasibility study, the permitting process, and into construction and operation. The project is situated on lands owned by the Calista Corporation (subsurface) and The Kuskokwim Corporation (surface). In 2012, Donlin Gold LLC filed permit applications to federal and state agencies for its $6.7 billion gold mine. With little to no infrastructure in the region, logistics and power are key concerns. Donlin Gold has a local hire rate of 90% Calista shareholders at its camp, and low employee turnover.
  • The Chuitna Coal Project, located in the Beluga Coal Field of Southcentral Alaska, consists of three major components, the Chuitna Coal Mine, a coal transport system and export terminal, and a supporting infrastructure component. The cornerstone of the development is 20,000 acres of State of Alaska leases with measured reserves of ultra low-sulfur coal in excess of one billion tons. The Chuitna Coal Project is currently in the permitting process. PacRim Coal anticipates the project will employ approximately 300 – 350 people during production.
  • The Pebble Project is an initiative to develop a globally significant copper, gold, and molybdenum deposit in the Bristol Bay region of Southwest Alaska, approximately 19 miles northwest of Iliamna/Newhalen. It is owned by Canadian mineral exploration company Northern Dynasty Minerals Ltd. The Pebble deposit is the largest known copper and the largest known gold resource in North America. The prospect has the potential to supply 35% of the U.S.'s copper needs in the future. So far, over $500 million has been spent on research through 2011, including on environmental and socioeconomic studies. Information from these environmental and socioeconomic studies will be used to evaluate various mine design alternatives prior to the submission of a proposed development plan for permitting. The Pebble Project is at a pre-permitting phase. When a plan is put forward for permitting, a multi-year process, involving 11 federal and state government agencies, over 60 individual permit requirements, and multiple and ongoing opportunities for public input will begin. If the project is ultimately permitted, the potential for well-paying, full-time production jobs is up to 1,000. Mine operations are likely to continue for 50-80 years, create hundreds of millions of dollars in annual operating expenditures, and generate tens of millions of dollars in annual tax payments to government. In 2012, it employed 131 people from 13 of the local villages, and more in other areas in Alaska.
  • The Livengood gold project about 70 miles north of Fairbanks has recently undergone a feasibility study. The area was mined beginning in 1914, with a new lode discovered in 2007. Tower Hill Mines expects the project to provide approximately 450 jobs during production. Gold esources are estimated at 15.7 million to 20.1 million ounces. An estimated 577,600 ounces could be produced per year for a mine life of 14 years. Approximately $200 million has been invested, including $58 million in 2012.
  • The Niblack prospect in Southeast Alaska, on Prince of Wales Island, will produce gold, silver, copper, and zinc. The project is owned by Heatherdale Resources Ltd., and will employ 200 people during production.
  • The Upper Kobuk Mineral Projects is located in Northwest Alaska on lands owned by the State of Alaska and by NANA Regional Corporation. The prospect area is being explored by NovaCopper Inc., and contains known resources of zinc, lead, gold, silver, and high-grade copper. NovaCopper has an agreement with NANA that provides a framework for the exploration and potential development of the Ambler mining district in cooperation with the local communities.

Web Links

Sources

  • Alaska Department of Natural Resources
  • Alaska Miners Association
  • World Trade Center Alaska