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Vol. 19, No. 13 Week of March 30, 2014
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Hot geology tempers cool policy in North

Infrastructure, land disputes, public policy dim miners’ view of Alaska, Canada North of 60; mineral potential offsets concerns

Shane Lasley

Mining News

When it comes to policies that attract mining investments, Alaska, British Columbia and the Canadian territories all lost ground compared to their global competition, according to the Fraser Institute’s Survey of Mining Companies 2013. The 690 mining executives that completed the annual survey, however, consider these northern neighbors among the top-20 places in the world in terms of “pure mineral potential.”

The policy perception index (formerly referred to as the policy potential index) is the centerpiece of the annual Fraser mining survey. Considered a report card on the mining policies of governments, the PPI is a compilation of responses on a broad range of policy topics important to miners, including: regulations; protected areas; disputed land claims; infrastructure; socioeconomic conditions; political stability; security; quality of the geological database; and labor.

Despite a slight improvement in its policy perception score, Alaska dropped off the index’s top-20 list, slipping three spots to No. 22 among 112 global jurisdictions ranked in the 2013 Fraser Survey.

Six United States mining jurisdictions made the index’s top 20: Wyoming (5); Nevada (8); Minnesota (15); Utah (16); Michigan (17); and Arizona (20).

Another six of the world’s highest-regarded jurisdictions hailed from Canada: Alberta (3); New Brunswick (7); Newfoundland and Labrador (9); Saskatchewan (12); and Yukon Territory (19). Like Alaska, British Columbia (32) saw a slight improvement in its score but dropped one position on the PPI. Northwest Territories (47) toppled 18 positions; and Nunavut (44) fell six spots on the index.

According to the mining executives that completed the survey, the 10 global jurisdictions with the most attractive policies (from the top) are: Sweden; Finland; Alberta; Ireland; Wyoming; Western Australia; New Brunswick; Nevada; Newfoundland & Labrador; and Norway.

“The confidence mining executives have in Sweden and Finland, for example, proves that it’s possible to enact sound environmental protections and still maintain a successful mining industry,” said Fraser Institute Senior Director of Energy and Natural Resources Kenneth Green.

The 10 least attractive jurisdictions for investment worldwide (from the bottom) are Kyrgyzstan, Venezuela, Philippines, La Rioja (Argentina), Angola, Mendoza (Argentina), Zimbabwe, Ivory Coast, Indonesia and Madagascar.

Land disputes weigh on Yukon

Mining executives’ perceptions of the Yukon Territory’s public policy fell sharply in 2013. Despite remaining in the top 20 percent of global mining jurisdictions, the Yukon Territory’s PPI tumbled 11 spots from survey results during the previous year.

This flagging opinion is partially due to a court battle in which the Ross River Dena Council claimed the Yukon government has a duty to notify and, where appropriate, consult with and accommodate the First Nation, before allowing any mining exploration activities to take place within the Ross River traditional area of the territory.

“The threat of the disbandment of the free entry system, which is before the courts in the Yukon Territories, has ramifications for all of Canada if the courts decide to require consent from [First Nations] before staking of claims,” a mining consultant noted in response to survey questions.

In December 2012, the Yukon Court of Appeal upheld a lower court ruling in favor of Ross River.

A year later, the Yukon Legislature amended the Placer Mining Act and the Quartz Mining Act to meet the requirements of further consultation on low-level exploration activities required by the court order. The government also designated the Ross River area, where new reporting requirements will apply, and temporarily banned mineral staking in the area until April 30.

A dispute over how much development will be allowed in the Peel Watershed is another issue weighing on Yukon’s PPI. Miners have pushed for more access to explore and develop this 68,000-square-kilometer (26,248 square miles) swath across the middle of Yukon. First Nations and conservation groups want this mountainous watershed that drains some 14 percent of Yukon’s land mass off limits to development.

“We do not want to see mining in the Peel watershed,” said Tr’ondek Hwech’in Chief Eddie Taylor. “To us that land is sacred and should be preserved for future generations. As our elders say, the Peel is our church, our university and our breadbasket.”

In January, the Yukon government released a final land use plan for the Peel River Watershed. Considered a balance between environmental protections and economic development, this plan has drawn criticism from First Nations, conservationists and miners alike.

When it comes to uncertainty concerning disputed land claims as a deterrent to investment, mining executives ranked Yukon 79th in 2013, a plummet of 39 positions from its No. 40 in the 2012 Fraser survey.

British Columbia, traditionally a poor performer when it comes to disputed land claims, ranked 95 on the index; NWT toppled 33 positions to No. 87; and Nunavut fell 13 positions but landed in the top half of the list in 50th place.

At least one miner believes the uncertainty of being able to explore and develop mineral deposits in areas deemed First Nation traditional territories is limiting exploration in Canada.

“I don’t think the Canadian investment community understands the degree to which exploration is retracting from lands deemed traditional (First Nations) territory, which in turn is forcing companies to explore mainly in the shadow of past projects and effectively providing for a large distortion to the Canadian exploration market,” an executive of a producing mining company with more than C$50 million in revenue responded to the survey.

Alaska at No. 29 fared relatively well on the disputed land claims index. Though considered a good showing, the ranking reflected a drop of 14 positions compared to the previous survey.

Fed actions eyed in Alaska, BC

British Columbia (90) and Alaska (87) received extremely poor scores when it comes to “uncertainty concerning environmental regulations.”

While the Fraser survey does not specify what factors are weighing on the minds of mining executives, the Pacific Northwest neighbors both have enormous copper-gold projects that are being held back at the federal level due largely to strong local opposition.

In British Columbia, the Canadian Environmental Assessment Agency struck down Taseko Mines Ltd.’s proposal to develop New Prosperity, a huge copper-gold project situated near Williams Lake.

This denial comes on the heels of a federal review panel determination that the proposed New Prosperity Mine would likely cause significant adverse effects on fish and fish habitat, wetlands and aboriginal interest in the Fish Lake area.

Agreeing with these findings, Canada Minister of the Environment Leona Aglukkaq determined that the New Prosperity Mine project is likely to cause significant adverse environmental effects that cannot be mitigated.

“The Government of Canada will make decisions based on the best available scientific evidence while balancing economic and environmental considerations,” said Minister Aglukkaq.

This marks the second time Ottawa has denied Taseko’s plans to mine the some 13.3 million ounces of gold and 5.3 billion pounds of copper found at Prosperity.

Taseko’s original proposal met fierce resistance from the local Tsilhqot’in (Chilcotin) First Nations and was ultimately rejected by Canadian Environmental Assessment Agency review board in 2010. Addressing the issues that prevented the approval, Taseko refiled for permits for the New Prosperity mine.

“After a second lengthy and costly federal review, the federal government has once again stood in the way of the development of an important project to British Columbia,” lamented Taseko President and CEO Russell Hallbauer.

Taseko argues that the federal review panel did not include vital engineering parameters when determining that the New Prosperity tailings facility would leak into Fish Lake.

Going over the findings, Knight Piesold, a lead engineering consultant on New Prosperity, concluded that Natural Resources Canada failed to account for a low permeability compact soil liner engineered into the tailings storage facility – thus modeling the wrong project design and assuming water would seep into open ground.

In Alaska, the U.S. Environmental Protection Agency is contemplating banning the permits needed to develop the enormous Pebble porphyry deposit, even though project owner Northern Dynasty Minerals Ltd. has yet to submit a mine plan to federal and state agencies.

Pebble – containing an estimated 80.6 billion pounds of copper, 107.4 million ounces of gold and 5.6 billion pounds of molybdenum – is situated on state lands in an area of Southwest Alaska that has long been open to mineral exploration and potential mine development.

In 2010, Nunamta Aulukestai, a Southwest Alaska Native conservation group and fellow Pebble opponents such as Trout Unlimited urged the EPA to test the extent of its presumed Clean Water Act authority to proactively strike down the ability to permit Pebble.

Responding to these requests, the EPA conducted a three-year study of the potential effects of a large-scale mine on the environmental integrity of the Bristol Bay region.

“Extensive existing data, including information that was collected as part of EPA’s three-year scientific assessment, provided ample reasons for EPA to believe that a mine of the size and scope of the Pebble Mine would have significant and irreversible negative impacts on the Bristol Bay Watershed and its salmon-bearing waters,” EPA Administrator Gina McCarthy told reporters during a Feb. 28 briefing.

Based on these assumptions, EPA decided to initiate a process under Section 404(c) of the U.S. Clean Water Act in which the federal agency could decide to prohibit or restrict the permits needed to develop Pebble.

In a response to the Fraser survey, one mineral consultant said he believed the EPA used “guesswork and wishful thinking as a basis” for its assessment of the proposed Pebble Mine and the effects it would have on the Bristol Bay watershed.

Northwest Territories, at No 80, also ranked poorly on the “uncertainty concerning environmental regulations” portion of the Fraser survey; Nunavut (No. 57) fared better; and Yukon (No. 26) far outranked its North American Arctic neighbors.

Remote North

Lack of infrastructure is a common thread when it comes to how the mining sector perceives the potential of exploring for and developing mineral deposits across the more than 2-million-square-mile (5 million square kilometers) expanse of Alaska and Canada’s North.

Nunavut, at 808,000 square miles (2.1 million square kilometers), is the largest and most isolated of these four Arctic jurisdictions. It ranked 103rd out of the 112 jurisdictions rated by Fraser survey respondents when it comes to the quality of roads, power and other infrastructure. Roughly 91 percent of the mining executives surveyed said the lack of infrastructure in Nunavut is a mild to strong deterrent to investment there.

With 80 percent of the respondents considering lack of infrastructure as a deterrent to investment, NWT ranked No. 86; Alaska took 79th place; and Yukon was No. 70.

Though Alaska drew low marks on the infrastructure portion of the Fraser survey, one mineral consultant commended the state for setting up the Alaska Industrial and Export Development Authority, a quasi-state-owned public corporation that facilitates and provides low interest loans to support large development projects across the Far North State.

He said AIDEA has been “particularly helpful for infrastructure needs such as ports, roads, or power generation to support mining projects.”

British Columbia, which is far less remote than its northern neighbors, scored high marks on infrastructure development. Only 33 percent of the mining executives familiar with the jurisdiction considered lack of roads or power as deterrents to investment, placing the westernmost province at number 40 on the survey.

Alaska’s red hot potential

While mining executives’ perceptions of Alaska policy was lukewarm, they said the Far North State’s mineral potential is red hot.

To level the playing field, the Fraser Institute asked mining executives to ignore current policies that may sway investment decisions and rank the geological potential of global jurisdictions based on best practices such as a world-class regulatory environment, competitive tax regime, no political risks and a stable mining regime.

With policy considerations stripped away, Alaska is considered the richest place on the planet when it comes to “pure mineral potential.”

This perception of Alaska’s mineral endowment is not without foundation. Rich stores of gold, copper, zinc, molybdenum, lead, silver, coal, graphite, rare earth elements and other minerals have been identified across nearly every region of the 663,300-square-mile- (1.72 million square kilometers) state.

These rich stores of minerals include enormous gold deposits such as Donlin Gold (40 million ounces) and Livengood (20 million ounces); and massive copper deposits such as Pebble (80.6 billion pounds of copper, 107.4 million ounces of gold and 5.6 billion pounds of molybdenum).

British Columbia, Alaska’s Pacific Northwest neighbor, is considered the fifth-best place in the world to find minerals, a marked improvement over the 18th position in the previous survey.

This high regard for the mineral potential of the North American Arctic trends eastward from Alaska into the Canadian territories. Yukon (9), Northwest Territories (11) and Nunavut (15) all ranked among the top 20 on the Best Practices Mineral Potential Index.

“The potentials in the NWT, Nunavut, and Nunavik Quebec are unlimited,” the president of an exploration company observed on a survey questionnaire.

According to mining executives that responded to the Fraser Survey, the top 10 richest mineral districts in the world are (from the top): Alaska, Western Australia, Nevada, Chile, British Columbia, Philippines, Yukon Territory, and Greenland.

Overall high marks for Alaska, Yukon

Attractive mining policies are without value without a mineral endowment and rich mineral deposits are of little good if public policy prevents their development. The Investment Attractiveness Index of the Fraser Survey considers miners’ views of both the public policy and mineral endowment of mining jurisdictions.

On this measure, Alaska ranked fifth in the world, continuing a long-running trend of being considered among the top 10 when both public policy and mineral potential are given equal weight.

Yukon Territory, which had been considered the most attractive mining investment jurisdiction in the world for two years running in 2011 and 2012, dropped to eighth on the 2013 Fraser Survey.

British Columbia, on the other hand, climbed four positions to 16th place on the Investment Attractiveness Index.

“While there is certain room for improvement, B.C. remains an amicable and stable place to conduct exploration and develop mines,” Association for Mineral Exploration British Columbia Chair David McLelland said. “B.C’s dynamic mineral exploration and development sector is chronically undervalued in the survey, but we certainly see indications that current exploration expenditure trends and stable government policy are increasingly reflected in participants’ perceptions. We are hopeful that at the end of the day, an improved industry outlook on B.C.’s policy as well as mineral potential will result in investment in B.C. exploration projects when commodity prices and market conditions improve.”

Hampered by a poor performance on the PPI, Northwest Territories dropped five spots to No. 25 on the Investment Attractiveness Index, and Nunavut slipped three positions to No. 27.

According to mining executives who were survey respondents, the top 10 places in the world to find mineral deposits and have policies that allow for development are (from the top): Western Australia, Nevada, Newfoundland and Labrador; Finland; Alaska; Sweden; Saskatchewan; Yukon Territory; Greenland; and Alberta.



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