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Vol. 18, No. 17 Week of April 28, 2013
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Alaska miners get their day in Juneau

From establishing Mining Day to lowering Interior energy costs, legislators send a number of mining-related bills to governor

Shane Lasley

Mining News

The 28th Alaska Legislature has forwarded a slew of bills to the desk of Gov. Sean Parnell that are aimed at recognizing the Last Frontier’s rich mining history and ensuring the industry is a key component of the state’s economic future.

Senate Bill 1, which designates May 10 of every year as Alaska Mining Day, was the first of these to garner Parnell’s endorsement.

May 10 was chosen to coincide with the day the General Mining Act of the United States was adopted in 1872. This law, which established the system of locating mining claims on public lands still in use today, provided a framework for Alaska’s great gold rushes that started in Juneau in 1880 and spread across the state.

“Mining has created opportunities for Alaskan families for generations,” Parnell noted. “I am honored to sign this legislation to recognize the miners and the mining industry, which have greatly contributed to our state’s economy, and will continue to do so in the future.”

SB 1, which was introduced by Sen. Cathy Giessel, R-Turnagain Arm/North Kenai, offers an annual opportunity to celebrate Alaska’s rich mining history and raise awareness of the contributions the industry continues to make.

According to the “Economic Impact of Mining in Alaska 2012,” a report recently completed by the McDowell Group, roughly US$650 million in wages was paid to the some 9,500 workers directly and indirectly employed by Alaska’s mining industry last year.

“Mining was central to Alaska’s early development and economy,” Sen. Giessel said. “In the late 1800s, rugged individual prospectors came to Alaska and started what is now the state’s second-largest industry, providing thousands of high-paying jobs and producing almost seven percent of Alaska’s gross state product.”

SB 1 received unanimous approval in both the Senate and House.

Mining compact

As the ink was drying on SB 1, a second mining bill introduced by Giessel gained final legislative approval. This legislation, Senate Bill 2, authorizes the state to join the Interstate Mining Compact Commission.

“SB 1 Alaska Mining Day honors this important industry, and SB 2 helps move it forward by enabling Alaska to become a full voting member of the well-recognized IMCC,” Giessel said.

The IMCC is a multi-state governmental agency that advocates for responsible mining on a national level.

“It is the significant value and clout that comes from ‘compacting’ together and speaking with a strong, united voice that can make a difference in each state’s efforts to implement effective regulatory programs that will conserve natural resources and secure a vibrant state (and thus national) mineral economy,” the IMCC says on its website.

Alaska, previously an associate member of the national organization, now joins 20 other mining states as full members of the commission.

“In today’s legislative and regulatory climate in Washington, D.C., it is more important than ever for state governments to be heard,” said Giessel. “IMCC is recognized by many in the nation’s capital for its experience and expertise on mining issues. Becoming a member of the IMCC pushes Congress to recognize Alaska as an important player in environmental concerns and regulatory issues.”

Member state governors serve as commissioners of the IMCC. A representative is appointed by each commissioner, typically from the upper echelons of the states’ natural resources or environmental departments, to sit on the various IMCC committees.

In addition to a more robust voice in the nation’s capital, full membership in the IMCC offers Alaska’s regulatory agencies with access to a network of peers to exchange information about best practices and regulations to further advance the mining industry in Alaska.

“Joining the IMCC gives Alaska the opportunity to build on our successes, share what works with other states, and foster a better relationship with federal agencies,” explained Giessel.

SB 2 received unanimous approval by members of the Senate and House and was signed into law on April 16.

Minerals Commission streamlined

While SB 2 provides Alaska a stronger voice on mining issues in Washington D.C., House Bill 99 ensures the state’s mining industry continues to be heard in Juneau.

HB 99, introduced by Rep. Dan Saddler, R-JBER/Eagle River, extends and streamlines the Alaska Minerals Commission, an 11-person panel created in 1986 to make recommendations to the governor and legislators on ways to spur development of the state’s mineral resources.

“The Alaska Minerals Commission has done important work and provided sound recommendations on how to keep the minerals industry healthy in Alaska, and I’m grateful that it is being extended another 10 years,” Saddler said. “The commission members’ broad experience has helped the state keep up to date on industry trends, identify roadblocks and suggest solutions to maintain a healthy mining sector, which provides needed jobs and economic benefits to communities and regions across the state.”

Funding the Roads to Resources program, reforming Alaska’s permitting system and assuming state primacy on water quality regulation are among the commission recommendations that have been implemented by the Alaska Legislature.

In its 2013 report, the Alaska Minerals Commission these recommendations:

•Improve tax climate for mineral investment and resource revenue sharing;

•Support Roads to Resources;

•Support K-12 and college level resource education;

•Fund opposition to federal intervention on mining projects;

•Fund retention of state mineral geologists; and

•Fund upgrading the Alaska Geologic Materials Center.

In addition to extending the commission until 2024, HB 99 limits membership to two three-year terms and staggers these appointments.

In February 2014, all of the seats on the commission will expire. To fill the commission, five of the panel members will be appointed by the governor and three each by the Alaska Speaker of the House and president of the Alaska Senate.

To stagger the expiration dates, the first appointments under HB 99 will be divided between one-, two-, or three-year seats. Once staggered, all appointments will be for three-year terms.

HB 99 received unanimous approval in both the House and Senate.

Resolved to oppose federal overreach

Federal efforts to impede the development of Alaska’s resources are not only a concern of the mineral commission but are on the minds of the state’s legislators as well.

Senate Joint Resolution 2, introduced by Sen. Fred Dyson, R-Eagle River, lends the Legislature’s support to the stand taken by the Parnell Administration to protect the state from federal intrusion into the management of Alaska’s resources.

“At statehood, the debate over how Alaska would support itself focused on stewardship of the state’s natural resources, and the state being able to develop those resources,” said Dyson. “Unfortunately, we find ourselves in an unprecedented dangerous time, when national environmental groups and their allies within federal bureaucracies are making every effort to finally lock up as much of Alaska’s land and resources as they can.”

Dan Sullivan, who is commissioner of the Alaska Department of Natural Resources Commissioner and the state’s former attorney general, said that a resolution such as SJR 2 would help demonstrate that the Legislature and its constituents support the Parnell Administration when it needs to stand up to the federal government in court.

“In these critical times, it is imperative that we have a governor and attorney general who are proactive in standing up to these federal efforts, and it is equally necessary that we the people, speaking through our elected representatives in the Legislature, affirm our strong support for the governor and AG (attorney general),” Dyson expounded.

The resolution also urges “the United States Congress and the President of the United States to limit federal government overreach into management of state resources.”

SJR 2 was unanimously passed by the Senate, and Rep. Andy Josephson, D-Anchorage, was the only member of the House who voted against the resolution.

Dredge and fill primacy

Senate Bill 27, a bill to establish Alaska primacy over administering dredge and fill activities under section 404 of the federal Clean Water Act, was the most highly contested of the mining-related legislation to run the gambit to Parnell’s desk.

Supporters of SB 27 contend that because nearly half of Alaska is considered wetlands, most major projects – such as mines, pipelines and roads – and a large number of minor construction projects – such as housing pads – require 404 permitting. Meanwhile, the Army Corps of Engineers, the agency currently charged with issuing the 404 permits, is experiencing budget and staff cuts that will likely slow the permitting process.

“In a state like Alaska with a very narrow window for construction, such delays can and do result in project delays of a year or more. A state-run program that is accountable to Alaskans and the Legislature will assure that it is the state that decides the level of resources to devote to a program that is so essential to the state’s economy. The state will have control of its permitting priorities,” the Alaska Department of Environmental Conservation penned in a testimony to the Senate.

Pointing to Michigan and New Jersey, the only other states with 404 primacy, opponents of SB 27 argue that administration of the dredge and fill activities will be expensive.

Nunamta Aulukestai, a Southwest Alaska conservation organization that played an active role in opposition to the Pebble copper-gold-molybdenum project, testified that in a time of budgetary belt-tightening the authority over 404 permits “would commit significant financial resources for decades to come.”

DEC and the Alaska Department of Natural Resources will be charged with administrating the 404 program.

DEC informed lawmakers that it has worked closely with DNR in recent years to streamline the state’s permitting processes, and the two agencies are poised to apply this experience to wetlands dredge and fill permitting.

“These faster, streamlined practices place more emphasis on results – protection of wetlands and water resources – and less on cumbersome processes,” DEC testified.

While SB 27 sets Alaska in motion to gain 404 primacy, DEC anticipates further legislative actions will be needed once the state agencies have a better grip on the amount of money and other resources that will be required to implement the program.

“By the (fiscal 2016) budget cycle, however, we expect a decision point regarding whether to advance the primacy effort. At that point, DEC and DNR will have a much better understanding of the resources that will be required for the full program. We expect that additional resources, likely significant because it is a significant program, will be required at that time,” DEC forewarned.

SB 27 passed the Senate on a 15-2 vote and received 25-13 approval in the House.

Resolved to develop REEs

The realization of Alaska’s rare earth minerals potential is one notion that every policymaker in Juneau seems to support. Senate Joint Resolution 8, which urges increased production of rare earth elements in Alaska, drew sweeping support in the state House and Senate.

“The United States used to be almost self-sufficient in rare earth elements, but now we almost completely rely upon foreign sources for those important elements,” said Sen. Lesil McGuire, R-South Anchorage, sponsor of Senate Joint Resolution 8. “We need to move now to become a dominant world player in the development of rare earth elements which are critical for military and economic security, as well as renewable energy systems.”

The resolution also calls for the federal government, including the United States Geological Survey, to work with the State to identify REE deposits in the state, develop an REE information database, and promote the development of Alaska’s REE industry. Additionally, the resolution calls on agencies that deal with permitting to expedite consideration and issuance of REE permits.

“So far, we have identified at least 70 sites in Alaska that contain rare earth elements. Several experts have said it is likely that Alaska has one of the most significant rare earth prospects in North America,” said McGuire. “If we play our cards right, this could secure our future as the lead supplier of America’s rare earth mineral needs.”

SJR 8 recognizes the deposits at Bokan Mountain as “rich in the heavy rare earth elements of europium, gadolinium, terbium, dysprosium, thulium, holmium, erbium, ytterbium, lutetium, and yttrium” and “the only known (heavy rare earths) deposits in the world that have deep water access, accessible labor, and prospective power sources.”

“There are actually two opportunities developing REEs offer for Alaskans. One is the value of the actual minerals and the other is creating a whole new layer of the economy by refining those minerals here,” McGuire added.

In addition to lending its support to the exploration for and mining of rare earths, SJR 8 urges Alaska permitting agencies to expedite consideration and issuance of permits required for the development of REE projects in the state and urges “the United States Congress to support efforts of the state to develop rare earth elements in the state for the benefit of the economic and national security of the United States.”

SJR 8 received unanimous approval in both the House and Senate.

Lowering Interior power costs

Senate Bill 23, which authorizes the Alaska Industrial Development and Export Authority to provide up to US$275 million in financing for a natural gas liquefaction plant on the North Slope and a liquefied natural gas distribution system within the Fairbanks North Star Borough, is part of Gov. Parnell’s strategy to lower energy costs in Interior Alaska.

“For too long, Interior and rural Alaskans have been suffering from skyrocketing energy costs,” Gov. Parnell said. “I am pleased the Legislature worked quickly to address this issue and provide the necessary framework to reduce energy costs for Alaskans.”

Lower electricity and heating costs will bring relief to the Interior’s residents and mines alike.

Kinross Gold Corp.’s Fort Knox Mine, situated about 26 miles (42 kilometers) north of Fairbanks, spent roughly US$40 million, or about US$110,000 per day, on power in 2012.

“When I am paying 78 percent more for the same unit cost of power than my sister mine in Washington and 68 percent more than they are in Nevada, I struggle with that,” said Fort Knox General Manager Dan Snodgress. “If this mine was located near Anchorage, near Southcentral, versus the Interior of Alaska, the cost differential of power is substantial.”

Snodgress said lowering power costs in the Fairbanks region is not only important to the bottom line at Fort Knox but is crucial to developing other mines in Alaska’s Interior.

“Mining in the Interior is expensive and if we are going to develop new mines, we are going to have to figure out how we reduce the power rate,” he told the mining community.

He suggests trucking liquefied natural gas down from the North Slope to fuel Interior Alaska power plants as one avenue of reducing costs.

SB 23 would not only build the necessary infrastructure to accommodate trucking LNG to Fairbanks but it also would ready the Interior city to connect to a natural gas pipeline, if and when it is built.

SB 23 received unanimous approval in the Senate and House.

A natural gas pipeline also moved one step closer to reality during Alaska’s 28th Legislature.

House Bill 4, legislation authorizes the Alaska Gasline Development Corp. to develop, finance and operate a 500-million-cubic-feet-per-day in-state pipeline that would bring natural gas from the North Slope to Fairbanks and Southcentral Alaska.

“This is Alaska’s opportunity to advance the state’s interests to get Alaskan gas into the hands of Alaskans on our schedule, without waiting for others to determine our future,” HB 4 sponsors Rep. Mike Hawker, R-Anchorage, and House Speaker Mike Chenault, R-Nikiski said in a joint statement.

“Alaskans have had to wait too long to get their gas,” Parnell said. “I commend Representative Hawker and Speaker Chenault for spearheading this legislation to get Alaska’s gas to Alaskans first, then to markets beyond.”

HB 4 passed the House with a 30-9 vote and received a 34-4 approval in the Senate.



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