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Vol. 18, No. 32 Week of August 11, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

AK-WA Connection 2013: Mining gets notice as important industry

Greens Creek Mine, others increasingly recognize need to recruit and train local workers, especially in remote areas of Alaska

Rose Ragsdale

Alaska-Washington Connection

On May 10, Alaskans celebrated their first-ever “Alaska Mining Day.”

The observance, to be held annually, reflects not only a growing awareness of the mining industry’s impact on the state’s economy, but also its importance as a source of stable, high-wage jobs.

The impact of mining in Alaska is legendary, dating from the Gold Rush years of the late 19th century. Historically, mining employment peaked in 1916 peaked at nearly 8,600. In recent years, mining employment has hovered around 1,500 jobs until 2005, before beginning a strong growth streak that pushed industry jobs past the 4,800 mark in July 2012, according to state labor and mining industry statistics.

Employment in the sector in 2012 was dominated by Alaska’s seven producing mines – the Red Dog zinc-lead mine near Kotzebue, Fort Knox gold mine near Fairbanks, Sumitomo Pogo gold mine near Delta, Usibelli coal mine near Healy Greens Creek silver-zinc-gold-lead and Kensington gold mines near Juneau and Nixon Fork gold mine near McGrath. Together, these operations employed about 2,600 people.

A number of mine projects, some advanced and some in early stages of exploration, provided the remaining jobs tallied for the industry, while some 4,700 workers employed by a host of mining support companies further bolstered the sector’s impact on the Alaska economy.

Adjusted for inflation, average mining industry wages in the early 2000s rose above $80,000 a year – well above the state average – and continued to climb to $98,000 by 2011, according to the Alaska Department of Labor and Workforce Development.

Given the remote locations of many mines in Alaska, average high wages and year-round jobs makes the sector one of the most important and stable employers in more than 120 communities, including rural villages located in the state’s poorest and most disadvantaged regions.

Add to this, the role mining plays as the biggest taxpayer in many of these communities. In addition to $650 million in direct and indirect payroll in 2012, the mining industry shelled out $137 million in state government revenue in rents, royalties, fees and taxes, $126 million to Alaska Native corporations and $21 million in local government revenue in property taxes and payments in lieu of taxes.

Major talent hunt

As a group, Alaska’s advanced mine projects have the potential to create an additional 3,800 mine jobs, along with an even larger number of construction and support positions over the next 10 years.

These worker-hungry projects range across the state, from the Upper Kobuk Mineral Project (gold, silver, copper and zinc) in the North to the Niblack (copper, gold, silver and zinc) and Bokan Mountain (rare earth elements) projects in the far Southeast. They offer the potential to create thousands of new mining jobs in Alaska in the next 10-20 years.

Human resources experts find this trend both daunting and challenging because it offers a duel opportunity to develop a skilled local labor force for each new mine, while stabilizing and strengthening nearby rural communities, many of which are currently experiencing significant economic stress and resident out-migration to urban areas.

Major mine projects in western Alaska, the Interior and Southeast are already planning for the day when they could open their doors to anywhere from a couple hundred to a thousand workers. These developments include Donlin Gold, which envisions welcoming at least 1,400 employees and contractors to permanent jobs for 27 years at its remote location in the Yukon-Kuskokwim region and the Pebble copper-gold-molybdenum project in the Bristol Bay region of Southwest Alaska, which could hire 915 mine employees, along with 2,000 support industry.

Local focus at Greens Creek

Alaska’s current producing mines, faced with the attrition of an aging work force and a need for additional workers as they expand, are recruiting and training new workers. The mining industry worldwide is facing a similar manpower shortage, so most of Alaska’s mines are opting to look for their new hires locally.

“Miners can be a transient work force. We’ve worked hard to temper that over the years, to recruit and train locally and regionally. That’s the bigger issue we are addressing as opposed to an aging work force,” said Mike Satre, community and government relations manager for Greens Creek mine.

Greens Creek, located 16 miles south of Juneau on Admiralty Island, is the fifth-largest silver producer in the world and one of Alaska’s oldest current mineral producers, with an initial startup in 1989 and several years of shutdown before a restart in 1997. The mine’s work force has grown during nearly 20 years of operation to 400 people, plus various contractors for specialized functions.

Greens Creek has mounted major recruitment and training programs in recent years that reflect a focus on both near- and long-term work force needs.

In addition to offering university scholarships in geology and mine engineering and internships, the mine’s owner Hecla Mining Co. has invested in recruitment programs at in-state universities and some technical universities in the Lower 48.

About six or seven years ago, Greens Creek’s management “realized the obvious,” said Satre, “that work force development is a long-term commitment.”

“Now, we have a couple of different pathways to train people and to continue to train them once they are on board,” he said.

Working with the University of Alaska Southeast, Greens Creek started a “new miner” five- to six-week class at UAS, accepting individuals who might have some equipment or labor force experience but no mining experience. The course is designed to familiarize participants with basic safety, tool use, and communication practices, and is offered when the mine has openings for entry-level workers.

“Then we realized we had to continue training them, and we had to formalize this progression. So we actually created an internal mining training school for entry-level people. We took experienced employees and provided one-on-one mining training where (new hires) could get the expertise to move up to next level,” Satre said.

One success story he cited is that of a former janitor who landed a promotion to entry-level core technician. When his supervisors observed his outstanding work ethic, Satre said he was again promoted to entry-level underground miner.

“Now, he’s one of the mine’s most experienced underground miners, making an incredible wage,” he said. “We find that local people are much more committed to staying here than someone we offer a bonus to come in (from) the cutthroat (global) market.”

Far-reaching program

Thinking long-term, Green Creek also initiated a five-step “Pathway to Mining Careers” program at UAS in 2011 for high school students, and funded the three-year venture with $300,000. The program, which is offered at night, gives students the opportunity to take an “Introduction to Mining” course for college credits.

“If kids want to continue, they can take the entry-level miners course in the summer. Once they complete that, they can go to the mine and do job shadowing with a focus on diesel mechanics. From there, we offer summer internships and encourage them to enter the two-year UAS career education program,” Satre said. He said that program expects its first graduates next year.

Students from other areas of Alaska also joined in through UAS’ distance learning education program to complete the course.

For example, Donlin LLC, a 50-50 venture between Barrick Gold Corp. and Novagold Resources Inc. has young interns who are participating in the Greens Creek-sponsored program.

“Other mining companies across the state are benefitting from the program, but we knew we had to address the need, and we knew that was going to happen,” Satre said.

The Pathways program’s impact is impressive. In year 1, 20 students participated, of which 11 continued on to attend the mine’s internal “Hecla Mine Academy,” while five received scholarships to pursue two-year diesel mechanics degrees at UAS. In year 2, 63 students entered the program; 12 enrolled in the mine’s internal academy and 14 won scholarships to pursue various degrees.

“Next year, the university is targeting 100 students, and Greens Creek is already “discussing re-upping funding for the program next fiscal year,” Satre added.

Support for mining development

Mindful of the economic and employment opportunities offered by successful mine projects, the State of Alaska is taking a variety of steps to encourage mining, including developing new infrastructure to support the industry. For example, Alaska officials spent about $10 million studying a proposed access road to the Ambler mining district in the northwestern Interior and committed a further US$8.5 million in the state’s 2013 fiscal budget to support permitting activities for the new thoroughfare. NovaCopper Inc. is working to develop the Upper Kobuk mineral project, which encompasses both the Bornite and Arctic deposits.

Other current mine projects that could create potential production jobs include the Livengood gold north of Fairbanks (500); the Chuitna coal west of Cook Inlet (300-350); Wishbone Hill coal northeast of Anchorage (75-125) and Niblack (200) and Bokan (190) in Southeast Alaska.

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