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Vol. 13, No. 30 Week of July 27, 2008
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Red and copper resources at stake

Engineers use $100 million in environmental studies, 100 miles of drilling at Pebble to design economic, environmentally safe mine

By Shane Lasley

Mining News

ILIAMNA — The Bristol Bay region of Southwest Alaska is the home to two world-class resources: a celebrated sockeye salmon fishery and the humongous Pebble copper-gold-molybdenum deposit. This combination offers the potential for an enduring vibrant economy.

But the challenge for owners of a proposed mine at Pebble is to create a workable development plan for the mineral resource that poses no threat to the fish resource that relies on the area’s rivers and streams for its very existence.

“We realized very early on that because of where we are operating, the significance of the fisheries and wildlife resource here and the fact that this area is largely undeveloped, there is going to be very high expectations in terms of environmental protection,” said Pebble spokesman Sean Magee during a July 14 tour of the project.

Pebble’s owners, Northern Dynasty Minerals Ltd. and Anglo American plc, said the only way Pebble will be developed is if engineers can design a mine that is profitable, addresses the concerns and needs of local residents and ensures regulators and the public that it will protect the water and fish resources of the Bristol Bay region.

Focus turns toward engineering

A partnership entity formed by the owners to manage the Pebble Project, so far, has spent more than $250 million studying all aspects of the Pebble project in hopes of providing engineers with needed information for preparing a mine plan that ensures the waters and fish of Bristol Bay are protected and that returns a profit.

The focus of The Pebble Partnership Ltd. and the bulk of its spending in past years has been on environmental studies and delineating the resource at Pebble. Though drilling and environmental studies are ongoing, the company’s focus this year has turned to engineering.

Magee said engineers are still working on a mine plan, and it is too early to discuss details. However, Pebble West is amenable to open-pit techniques, while the richer and much deeper Pebble East is a good candidate for underground extraction known as “block cave mining.”

Block cave mining is a method in which ore is allowed to collapse due to its own weight in a controlled fashion into chutes. Block caving is usually used to mine large ore bodies that have consistently disseminated grade throughout. Currently, only about 20 operations worldwide use this procedure, Magee said.

Completion of a pre-feasibility mine plan is not expected until sometime late in 2009, but the partnership anticipates it will begin releasing preliminary plans for the public to review by next spring.

49 billion pounds of copper

While engineers are hammering out a mine plan for Pebble that economically extracts the ore in a manner that will limit the project’s effect on the mine site, 10 drills are churning and consultants from 50 different firms continue to collect data about Pebble and the surrounding region.

In addition to drillers and consultants, reclamation crews are busy cleaning up and reseeding drill sites after rigs have been moved. The only evidence of their work is the lack of any sign that nearly 700 holes have been drilled on the property to date.

More than 100 miles of drill core has been recovered at Pebble, measuring 3.9 billion metric tons of ore containing 49 billion pounds of copper, 45 million ounces of gold and 2.8 billion pounds of molybdenum buried at some 1,000 feet to more than 6,000 feet below the surface. This year’s drill program is designed to further delineate and expand the mineral resource at Pebble East, which is still open to the north and east.

Power and road

Power to operate a mine is another issue for engineers. Even though it is anticipated that much of the power needed will be provided by natural-gas-fired generators, engineers are studying alternate energy sources, including run-of-river power generation and wind power. Supplying an economic power source is one of the benefits the partnership hopes to bring to the residents of the region.

Another benefit that will lower costs in the region is a road from a port on Cook Inlet. Villages in the region currently must have all their groceries, building materials, fuel, and other supplies flown in. This is a major expense that is reflected by the current $7.70-per-gallon price of gasoline in Iliamna.

Some local residents are concerned about the access tourists, hunters and others would have to the region. However, the 100-mile road would most likely be closed to the public and access would be controlled by the Native corporations whose lands it will cross, Magee said.

Workforce and business development

As the Pebble project moves closer to beginning the permitting process, the company is looking at how it will recruit the workers needed to build and operate the mine. The partnership anticipates hiring nearly 2,000 workers during construction and employing 1,000 people permanently when the mine goes into operation.

In addition to the mine’s work force, service and support businesses will need another 3,000 employees.

The partnership is crafting a work-force development plan that is focused on hiring local residents.

“We want as many of our employees to be from local communities as possible. It’s not just good for the communities to maximize benefits, but it is good for projects for regions to own and be responsible for how they work and manage it,” Magee said.

Pebble’s owners are also working on a program to provide scholarships to young people in the region. This early investment will help the company fill professional positions when the mine goes into production.

Young people are already looking to Pebble as a career opportunity.

For example, Brian McNutty from Talkeetna, who recently graduated from the University of Alaska Fairbanks, is applying his graduate studies on porphyry deposits in Pebble’s core shack, analyzing drill samples.

Skyler Lovelace, another young Alaskan who learned his trade at the project, works on Drill Rig #3, sending McNutty core samples from the northern edge of Pebble East.

The partnership also is focused on assisting local communities in developing businesses that will provide the support and services that a mine as large as Pebble would need. The partners will use Anglo American’s expertise in this area, Magee said. Anglo has implemented similar business development programs at many of its other operations around the world.

“This project has the potential to hire directly one out of every seven people living in this entire region,” Magee pointed out. “If the impacts can be limited to the mine site and (the mine) can operate three or four generations, it could make a very positive economic and social contribution to the region, one that would go on well beyond the life of the mine.”

Five keys to success

To ensure that its efforts succeed at Pebble, the partnership has pledged to be guided by five core principles:

Benefit the people – Pebble is for Alaskans;

Co-exist with healthy fish, wildlife and other natural resources;

Apply the world’s best and most advanced science; and

Help build sustainable communities.

At Pebble, we will listen before we act.

If the partnership sticks to these principles in developing a mine at Pebble, then the immediate region and all of Alaska will be able to benefit for generations to come from both world-class copper-gold-molybdenum and red salmon resources in Bristol Bay.

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