ALASKA'S MINING INDUSTRY
BACKGROUND  •  FACTS  •  PRODUCTION  •  EXPLORATION
LINKS  •  SOURCES
  •  COMMENTS
 

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 six large operating mines (Fort Knox, Greens Creek, Red Dog, Usibelli, Pogo, and Kensington) provided over 2,400 full-time jobs of the nearly 4,600 mining industry jobs in Alaska in 2013. Direct and indirect jobs totaled 9,100, paying $630 million in payroll.

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, and the Northwest Arctic Borough, and important tax payers in rural communities like Denali Borough and the City of Nome.

Worldwide interest in Alaska’s mineral potential continues to increase, but investment in exploration is down. The State estimates the mining industry spent $180 million on exploration during 2013, a significant decrease from 2012. Driving interest is demand for metals, primarily from Asian countries like China, Japan, and India. Development spending in 2013 was $250 million, down from the prior year of $270 million.

Investor concerns of unpredictable regulatory and permitting processes are likely compounding what is a very difficult economic cycle for the mining industry. As an example, in 2013 the Environmental Protection Agency continued a premature Bristol Bay Assessment.  This action of federal overreach likely jeopardized investment in Alaska.

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

Perhaps one of the largest challenges 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 and defeated these initiatives.

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.

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FACTS & ECONOMIC IMPACT

• In 2013, the cumulative production value of Alaska’s mining industry was approximately $3.4 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 $180 million in Alaska mineral exploration in 2013, down from the previous year. Previously, exploration spending in Alaska has accounted 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 an estimated $250 million on mine construction and development of existing mines in 2013.

• Minerals are Alaska’s second largest export commodity. Mineral exports accounted for 36% of the state’s export total in 2012, with a value of $1.6 billion, consisting 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 2013 was 9,100 with a payroll of $630 million. The mining industry provides some of Alaska’s highest paying jobs with an average annual wage of $100,000, twice the state average for all sectors of the economy.

• Mining industry payments to municipalities is estimated at $17 million in 2013, and royalties and other fees paid to the State of Alaska was estimated at $150 million.

• The industry paid $23.8 million to the state-owned Alaska Railroad Corporation for shipments of coal and gravel, and $21.1 million to the Alaska Industrial Development and Export Authority for use of state-owned facilities. The industry also paid $4.8 million to the Alaska Mental Health Trust for rents and royalty payments, and construction material sales in 2013.

• In 2013, Alaska’s mining industry provided $144 million in payments to Alaska Native corporations, benefiting all Alaska Native Corporations, an increase from 2012.

• Approximately 300 Alaska placer mines produced 100,000 ounces of gold in 2013. 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 producing $70 million in materials.

• Mining in Alaska involves a rigorous permitting process.  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 begins.

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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, employed 639 people of which over half are NANA shareholders. Red Dog is the sole taxpayer to the Northwest Arctic Borough and the payment for 2013 is estimated at $8.7 million. In partnering with NANA, Red Dog operations paid $143 million to NANA, with $93.5 million of that being redistributed to other regional and village corporations. 

• Located 25 miles northeast of Fairbanks, Kinross Fort Knox mine is the largest gold producer in Alaska and has been operating since 1996. The mine produced 359,948 ounces in 2012 and a record 428,822 ounces in 2013. 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 630 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 2013.

• The underground Pogo Mine began producing gold in 2006, and paid out $56 million in wages and benefits in 2013, while spending over $127 million with vendors and suppliers. Approximately 320 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.

• 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 celebrated its 70th year mining Alaskan coal last year. Of the coal the mine produced half was exported in 2013, while much of the remainder was used to fuel 30% of Interior Alaska’s electricity. Roughly 700 tons was exported to customers in Chile, South Korea, and Japan, and the remainder was used to fuel about 30% of Interior Alaska’s electricity. The mine employs 120-140 Alaskans, including several second and third generation employees at Usibelli. UCM produced about 1.7 two million tons of coal in 2013.

• 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 employed 400 people in 2013. Greens Creek is the largest private employer in Juneau and is the largest private property tax payer in the City and Borough of Juneau, paying $1.44 million in 2013. Greens Creek produced 7,448,347 ounces of silver, 57,457 ounces of gold, 20,114 tons of lead, and 57,614 tons of zinc in 2013.

• 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 324 people full-time in 2013, paying $38 million in payroll.  The mine paid $1.6 million in property taxes to the City and Borough of Juneau, and produced a record 114,821 ounces of gold in 2013, up 40% from 2012.

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SELECT EXPLORATION & 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 project is expected to provide up to 1,400 production jobs.

• 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, with anticipated draft permits in 2014-2015. 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 gold resource in North America. The prospect has the potential to supply 35% of U.S. copper needs in the future. So far, over $500 million has been spent on research through 2011, including socioeconomic studies and $150 million on environmental baseline 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. If the project is ultimately permitted, the potential for well-paying, full-time production jobs could reach 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.

• 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 resources 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. A feasibility study was completed in 2013.

• The Niblack prospect in Southeast Alaska, on Prince of Wales Island, would produce gold, silver, copper, and zinc, if developed. The project is owned by Heatherdale Resources Ltd., and is expected to employ 200 people during production. Since 2009, $37 million has been invested, and the focus is now on the prefeasibility study.

• 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. The project employed 80 people in 2013.

• Located just east of Palmer and Sutton, the Wishbone Hill coal project completed a feasibility study in 2011. It has been explored since 1983, and is expected to provide up to 125 production jobs.

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USEFUL LINKS

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SOURCES

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

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