When one considers the impact of the mining industry on Alaska’s economy, the hundreds of high-paying jobs created by large mines such as Red Dog, Fort Knox and Greens Creek and the recent mineral exploration boom are what immediately come to mind.
But what of the numerous small communities and businesses across Alaska for which mining has become a lifeline and an inspiration? Companies in the Alaska-Washington trade find themselves increasingly looking to mining for reliable commerce and steady revenue.
“Red Dog to the Northwest Alaska region is like Prudhoe Bay is to the State of Alaska,” said Lance Miller, vice president of natural resources for NANA Regional Corp. “Twenty years ago, the Northwest region had one of the lowest median household incomes in the state, and today, it is among the highest.”
In addition to 2,800 jobs that the state credits the zinc-lead mine with generating directly and indirectly across Alaska, Red Dog spent $27 million on good and services in 2010 with such companies as Foss Maritime, Denali Industrial Supply and Rotating Services Inc., along with NANA subsidiary, Tuuq Drilling.
NANA, which owns the land where the mine is located, has received $596 million in royalties and other income over its 22-year life in addition to the $341 million that has flowed through to other Alaska Native corporations, under provisions of the Alaska Native Claims Settlement Act. NANA shareholders also account for more than 300, or 57 percent, of the 500 people who work at Red Dog.
But NANA is also viable beyond mining and that translates back into the region, Miller said in a recent interview. The corporation has numerous subsidiaries that employ 9,300 workers and have a combined annual payroll of exceeding $500 million at operations in all 50 states and seven countries.
“Our goal is to use Red Dog to springboard businesses that go out and get other business whether on the North Slope, Alaska or the Lower 48,” said Miller. “We’re looking at how you build sustainable economies after mining is gone.”
Impact felt statewide
Alaska’s other mines have a similar impact on communities near their operations. Greens Creek Mine, for example, is the largest private sector employer in Juneau and responsible for creating 530 direct and in-direct jobs with a $42 million annual payroll and $111 million in operating, capital and exploration expenditures in 2010. Like Red Dog and the others, it also pays millions yearly in property taxes and state mining license taxes.
Many independent businesses across Alaska proudly claim the mines as clients.
Fairbank-based Denali Industrial Supply, which sells more than 12,000 types of fasteners along with all the major lines of power tools, counts Alaska’s mines as some of its best customers.
“Mining is a major part of our business portfolio, mainly when they start to build the mines and the mines go into production,” said Denali Industrial President Gary Swoffer.
He said the company provides Fort Knox, Pogo, Red Dog, Kensington and Greens Creek with an extensive range of products, including new lines added this year such as Brunner & Lay steel products and Mikita and Metabo power tools.
Denali Industrial, in turn, relies on various shippers to get its products to the mines. “Our products come predominantly by barge, with a very small percentage by air,” he said.
American Fast Freight, a freight forwarding company that works with both container ships out of the Port of Tacoma and barges, primarily to Southeast Alaska, out of the Port of Seattle, is another company that benefits indirectly from the recent upsurge in mining activity in Alaska. For example, the company recently managed a shipment of self-propelled drills from one of the Hawaiian Islands to Fairbanks for a mining operation in the Interior, said AFF Vice President of Marketing Mike Schuler.
Arctic remote logistics specialist Taiga Ventures and its sister company, Pacwest Drilling Supply Inc., happily supplies the mining industry with a range of goods and services, including portable temporary housing, drilling mud, PVC products and expediting services.
“We’re doing a lot this year to supply Livengood (gold project), Kinross (Gold Corp.), Pogo Mine and the Man Project, and we occasionally work with Doyon Ltd. on projects,” said Carole Romberg, administrative director of Taiga Ventures.
In addition to its year-round work force, Romberg said her operation has hired additional workers to cope with a “frantically busy” 2011 field season.
“The real key to the business is our ability to respond so quickly to our customers’ needs,” she added.
The Alaska mining industry also calls on the Alaska-Washington service sector for ongoing support with legal, financial, insurance and employment-related services. Firms such as Seattle-based Lane Powell PC and Anchorage-based Opti Staffing Group fill vital niches in this area with six locations each in ever-expanding networks of resources in the Pacific Northwest and beyond.
Mining explorers weigh in
The effect of numerous mining exploration and development projects, large and small, are also being felt throughout Alaska, especially in communities located near the projects and often by small local service businesses.
At the giant Donlin Creek gold project, for example, Chiulista Services Inc. is providing care and maintenance of the camp, food services and “catch-up work” with 12-25 employees this season, though future seasons could see Donlin Creek hiring hundreds of workers for construction and production.
Monique Henriksen, senior vice president of Chiulista’s Alaska operations, said the contractor’s presence at Donlin Creek enabled it to quickly hire additional workers to offer emergency food services to local residents in need during the Crooked Creek flooding disaster this spring and early summer. “This was not a mine operation, but it does put us on the map,” Henriksen added.
The Pebble copper-gold-molybdenum project, by contrast, has a major exploration and development program this year with spending projected to top $91 million among businesses directly related to mining, spin-off businesses, work-force development programs and general activity.
Iliamna Air Taxi, based in Iliamna, Alaska – the community closest to the Pebble property – is an example of a local business that benefits directly from the project, by providing air transport of employees, staff, supplies to the site area.
Though still in the exploration stage, Pebble provided work for a total of 496 people in 2010, including 134 workers who reside in 17 communities in the Bristol Bay Region.
The Pebble Limited Partnership, which manages the project, also notes that the opportunity to grow and educate as part of a mining project is prevalent at Pebble. A local resident who started out working at Pebble as a driller’s helper, for example, became a bear guard and then was inspired to become a helicopter pilot.
“The resident had never flown in a helicopter prior to being employed with Pebble as a driller’s helper,” said Partnership spokeswoman Nance Larsen. “He has since gone on to achieve his pilot’s license and is flying helicopters at the Pebble site.”
Millrock Exploration Group, a junior mining company with several smaller mineral exploration projects in Alaska, including two on the remote Seward Peninsula, spent $3.54 million with local businesses in its project areas, said President Sarah Whicker, who also observed that the company would like to spend more but has found that many of the goods and services that it requires are not available locally.
Still, much of its budget that is not spent directly in the Alaska economy includes large payments to highly specialized, technical companies and consultants who, in turn, do their own spending in Alaska.
Whicker, who is also vice president of sustainable development at Millrock Resources Inc., said the company works hard to maximize its hiring of local and Alaska Native workers and to consult local communities about wildlife and the potential impact of its activities on the environment. Millrock also has taken steps to support area businesses such as housing its workers at local hunting and fishing lodges.
“We’ve taken a regional approach to the mining projects by getting key stakeholders such as Kiska Metals together with us before the field season to discuss ways to maximize the companies spending locally,” she added.
State invests in infrastructure
Mining also supports a number of major infrastructure projects in Alaska which is contributing substantially to the earnings of companies in the Alaska-Washington trade, including Lynden Inc., the Alaska Railroad, American Fast Freight and others.
Lynden Shipping, for example, provides trucking services for Capstone Mining Corp.’s Minto Mine in west-central Yukon Territory. The carrier transports about 65,000 tons a year of copper-gold-silver concentrates to the Skagway Ore Terminal, where it is shipped from the ice-free port at Skagway, Alaska aboard oceangoing ships to a smelter in Asia. Meanwhile, the state-run ore terminal is engaged in ongoing expansion and upgrades to meet the mining industry’s growing needs.
Alaska Railroad Corp. has undertaken two major railroad expansion projects: A 32-mile rail extension that will link the deepwater Port MacKenzie to the main line of the Alaska Railroad, and 80 miles of new rail line connecting the existing Eielson Air Force Base Branch rail line near Fairbanks to a point to the east near Delta Junction. The Point MacKenzie Rail Extension project, with construction scheduled for completion in 2014, would expand resource development opportunities in Southcentral Alaska, while the proposed rail line to Delta Junction, which would cross the Tanana River, would provide freight and potentially passenger rail services as a common carrier to the general public, and to military and commercial shippers, including agricultural and resource development businesses.
Alaska’s fiscal 2012 capital budget includes $30 million for the Port MacKenzie rail project and $44 million for the Tanana River bridge project.
Alaska is also investing millions in building new roads to access areas with substantial mineral resources. This includes the Ambler Mining District’s rich deposits in Northwest Alaska. The FY12 state capital budget includes $1.25 million to complete environmental permitting and early public processes on this project.
