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MINING NEWS: Anglo American to steer Pebble project Northern Dynasty talked to several majors and has already attracted investment from Rio Tinto; new deal is worth $1.4 billion Sarah Hurst For Mining News
Like a magnet, Pebble’s inferred resources of 42.9 billion pounds of copper, 39.6 million ounces of gold and 2.7 million pounds of molybdenum attracted Anglo American to the southwest Alaska project. What this adds up to is a potential mine life of 50 years or more, which was Pebble’s biggest draw for the London-based major, representatives of the company told Mining News. In late July Anglo emerged as a 50-50 partner in Pebble with Vancouver-based Northern Dynasty, promising an investment of $1.4 billion.
Unwilling to succumb to any promotional hype, Anglo spent about 18 months doing its due diligence before agreeing to the deal. “We certainly wanted to find out about the project itself, to see if it fitted the criteria that we were looking for; the way the project was being developed, and the challenges and issues we might face,” said Paul Henry, vice president for sustainable development in Anglo’s base metals division.
“We wanted to know that the fundamentals of the reserve are there, factors that will influence the design, the metallurgy, the social and environmental issues, the whole gamut,” added Terry Burgess, head of business development in the base metals division. After signing a confidentiality agreement, Anglo had open access to Northern Dynasty’s data room to scrutinize its drill results and environmental studies.
Management team not yet set Henry will move to Alaska to join the new company that’s being formed to develop the Pebble project. Its management team hasn’t been determined yet, but both Anglo and Northern Dynasty will nominate candidates, Henry said. One person who will be less involved is Northern Dynasty’s chief operating officer, Bruce Jenkins, who has headed the project for the past few years. He will be working for Northern Dynasty’s parent company, Hunter Dickinson, in Vancouver, according to the company’s stakeholder relations manager, Heidi Franklin.
The high-profile campaign against Pebble, which includes regular TV, radio and newspaper ads, and even ads on the sides of Anchorage buses, is something that Anglo has yet to experience here, although, like all mining companies, it constantly faces opposition to projects all over the world. “We don’t really have the full knowledge and experience yet of the concerns of the people, these are things we really need to listen to,” Henry said. “I think one of the advantages of being in the U.S. and being in Alaska is that there is a set process that you need to go through with regard to permits,” he added.
Anglo’s only other recent foray into Alaska was its exploration at the MAN nickel-copper-platinum project between Anchorage and Fairbanks, which is now wholly owned by Toronto-based junior Pure Nickel. But Anglo does have experience in far northern climates, as it is part of the same conglomerate as the De Beers diamond division. De Beers is due to bring its Snap Lake mine into production later this year and is also hoping to develop the Gahcho Kué mine, both of which are in Canada’s Northwest Territories.
Focus will be on completing pre-feasibility by end of ’08 The new company that oversees Pebble will focus on completing a pre-feasibility study by December 2008, then a feasibility study by 2011, with commencement of commercial production tentatively scheduled for 2015. “We are excited to be initiating operations in the State of Alaska, a jurisdiction known around the world for the responsible development of its natural resources,” said Cynthia Carroll, Anglo’s CEO. “We also look forward to working closely with the people of Alaska, and, in particular, the communities of the Bristol Bay area and Kenai Peninsula to maximize the value of these resources for all stakeholders, taking into account the positive long-term demand prospects for copper.”
“We have sought a partner that shares our approach to development, has the ability to finance, and is an experienced mine operator,” said Ron Thiessen, Northern Dynasty’s president and CEO. “Anglo brings commitment and depth in all of these key areas. Our shared goal is to develop a state-of-the-art operation with a high annual metal production profile that will bring direct benefits to the local communities, as well as being a catalyst for sustainable economic development in the region and across the state.”
In its interim results statement for 2007, released Aug. 3, Anglo announced record underlying earnings of $3.1 billion, up 22 percent, and an additional $4 billion capital return. On the other hand, the company described its own safety performance as “unacceptable,” particularly in the platinum division. Additional safety measures have been put in place at the Rustenburg platinum mines in South Africa, where at least 12 workers have died this year. Since taking the helm in March, Carroll has pledged to improve the company’s safety record.
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