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Mining News: Challenges and opportunities Pebble CEO is optimistic that extensive environmental studies and planning are the keys to unlock the project’s potential Shane Lasley Mining News
John Shively’s longstanding commitment to bringing new opportunities to rural Alaska and his love of a challenge are two qualities that make him the ideal CEO of the Pebble Limited Partnership.
“If there is one thing that attracted me to this project – one reason why I walked up to this hornets’ nest and beat it with a stick, against some of my friends’ better judgment – is the opportunity here,” Shively told an audience at the Resource Development Council for Alaska’s 2008 annual conference Nov. 19.
Overcoming the environmental challenge Developing a mine that ensures the protection of the waters flowing away from the project is the first challenge the Pebble project must overcome.
The Pebble partnership has spent more than $100 million on environmental and socioeconomic studies at the project, so far, to guide the development of a plan that will be submitted for government and public review.
“When I took over the job as CEO I did not realize how much effort we were putting into the studies,” Shively told the RDC crowd.
The environmental studies at Pebble include testing for more than 350,000 parameters in the nearly 9,000 samples collected by consultants studying the environment of the Pebble region. The Pebble CEO said the extensive environmental information collected will be a benefit that the Pebble project provides Alaska even if a mine is never developed.
Challenging location Pebble’s location is the key factor in the primary challenges facing the project. Not only does the project sit at the headwaters of the world-class Bristol Bay salmon fishery, but the remote location and lack of infrastructure also make the economics of the project problematic.
The Pebble property currently can only be accessed by helicopter, and if the project is developed, an 82-mile road to the coast would need to be built, and the developers also would need to construct a deep water port to bring in supplies and ship out concentrated ore produced at the mine.
To get the ore to the port, the partnership plans to build two pipelines; one would carry the concentrate as a slurry to the port; water removed from the slurry would then be shipped back to the mine site via the second pipeline.
The most challenging piece of the infrastructure may be supplying the mine’s energy needs. It is estimated that a mine at Pebble would consume more than 600 megawatts of electricity, about the current usage of Anchorage, Alaska’s largest city with a population of more than 250,000 people.
The current plan is to generate the power at a natural gas-fired plant near Nikiski on the Kenai Peninsula and transmit DC power to the project and convert it to AC power for use at the facility. The transmission line would be nearly 200 miles long, 50 miles of which would need to be buried beneath the waters of Cook Inlet.
While Cook Inlet is known for producing natural gas for power generation and residential use in Southcentral Alaska, Pebble engineers say they cannot count on the gas basins in the region to provide a reliable source of energy and will include the option to import liquefied natural gas for power generation in plans for the projects.
“We heard yesterday that Cook Inlet gas supply would probably not support the kind of use we are talking about. On the other hand, we could be the base-load for some of the other things that you hear about. In Southcentral , the bullet line, the spur line; Susitna’s (natural gas) fields; the state recently let some leases for geothermal near Mount Spur. All of those are possibilities, but none of those are in a position right now to provide us (with) what we need for power. My guess is, our base case will be imported LNG. Which seems sort of weird to import natural gas into the State of Alaska, but right now that is the only option that we know actually could work,” Shively explained.
Affordable power Providing inexpensive power to Southwest Alaska is one of the opportunities that Shively envisions the Pebble project could provide. The Pebble CEO told the audience that he would like to see the electrical lines provide power to communities as far as 150 miles beyond Pebble.
“If we are going to take inexpensive power to the mine, I believe we have to take it to the rest of the region. Not just the villages that are near the mine, but to Dillingham, Naknek, King Salmon (and) places like that.”
Shively said providing affordable power to the people of the region would benefit the state’s power cost equalization program, and the Pebble Partnership hopes the state would help it with the transmission lines running to these outlying communities.
Economic opportunities “We have heard a lot in the press recently about people moving out of rural Alaska because of the high energy prices, this problem has been going on for some time as the costs have risen and the economic opportunities have not been there. For me, one of the big wins of this project could be providing economic opportunities so people can stay where they want to live.”
Shively said it could take a work force of 4,000 people during the four years it will take to construct a mine at Pebble, and once completed, the mine could provide 1,000 jobs for 50 to 80 years. In addition to direct employment, businesses and residents in the Bristol Bay region are already benefiting through supply and service contracts for vehicle rentals, lodging, catering, construction, transportation and personnel services.
The partnership said it is working to identify and develop opportunities for local businesses related to mine development. Local business development will remain a priority in the years ahead. An important goal of the partnership is to ensure that some of the businesses survive beyond the life of the mine. This sustainable development model is the true promise of Pebble, according to Shively.
He said the economic benefits also would bolster local governments. He cited the North Slope Borough and the Northwest Arctic Boroughs as examples of regions which have been able to build structure for their governments due to the tax base provided by large development projects.
Unlocking Pebble’s opportunities The Pebble Partnership is expecting legal challenges as the project moves toward development. The project timeline, presented at the RDC conference, anticipates the permitting process for Pebble beginning in late 2009 or early 2010 and taking about three years. Once permitting is complete, the partnership has allotted an undetermined amount of time for litigation before the four-year construction phase begins.
To unlock the opportunities that Pebble offers, Shively recognizes the copper-gold-molybdenum project in Southwest Alaska has many challenges to overcome; but he believes with the extensive environmental studies and baseline work completed at the project, the opportunities Pebble has to offer can be realized.
“If I didn’t think the challenges at Pebble could be overcome, I would not have taken the job,” he said. “My one goal is to try and get us into a situation where we can present this project to the people of Alaska, where they can judge whether these are opportunities they want for the future of our state.”
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