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Vol. 12, No. 4 Week of January 28, 2007
Providing coverage of Alaska and Northwest Canada's mineral industry

MINING NEWS: Don’t disrupt permitting, commission says

Defending mining projects from critics has become a priority for Alaska, and more funding and education are needed to do the job

Sarah Hurst

For Mining News

The Alaska Minerals Commission has made a long list of recommendations in its report for 2007, from funding for the Department of Natural Resources and education programs to ensuring that the Pebble project receives an objective legislative and regulatory process. As mining activity in the state has increased at a record pace, the campaigns against some large projects — including Pebble, Kensington and Rock Creek — have also gained momentum in the courts and among the public.

“Controversy regarding the Pebble project threatens the integrity of Alaska’s land management and regulatory process and if not managed appropriately, will jeopardize Alaska’s ability to attract venture capital,” the report says. “Mining industry opponents are using misinformation, political influence and money in an attempt to thwart the Pebble project even before the detailed scientific review necessary for the EIS (environmental impact statement) and permitting process has begun,” it continued.

Pebble’s opponents are attempting to change the land-use priorities or designations in the Bristol Bay area so that they can keep the land “for their own private purposes,” the report says. The minerals commission argues that a thorough and transparent project review should determine whether the fishing industry can co-exist with a large mining operation. It proposes that the Alaska Legislature should not change land-use designations in areas with valid existing rights and that the Legislature should not jeopardize the existing state and federal permitting process that has been established to evaluate projects and mitigate potential impacts.

Commission recommends state funding of chief position

Critics of the mining industry, and the Pebble project in particular, have suggested that the Department of Natural Resources’ Large Mine Permitting Team is biased because its staff’s salaries are dependent on user fees from project proponents. “While it is the view of the commission that the DNR LMPT conducts themselves in professional manner free of bias, the perception of some is that this is not the case,” the report says. “If the Large Mine Permitting chief position were fully funded by the state, this criticism would be largely alleviated,” it added. State funding for training is also necessary to keep personnel at the cutting edge of environmental protection technology and methodology, the commission says.

$500,000 should be spent on education, promotion

Turning to the question of improving the public’s understanding of the mining industry, the commission recommends that the administration and legislature should spend $500,000 on a statewide minerals education and promotion program that would be conducted in 2008 and 2009. “Such a program would have a positive influence on the attitude of residents of the state toward the minerals industry by encouraging good science to be used as the criteria for project evaluation,” the report says. “This will positively reflect on the acceptance of mining projects throughout the state and encourage further investment of risk capital.”

To enhance existing educational programs, the commission asks the governor and legislature to appropriate $100,000 to the Department of Education for curriculum development of AMEREF (the Alaska Mineral and Energy Resource Education Fund), as well as funding for the engineering degree programs at the University of Alaska Fairbanks and for the position of president’s professor of mining and energy technologies.

Recommendation: approved guidelines needed

The minerals commission also addresses the issue of mine reclamation and closure, pointing out that some of the state’s informal policies on its requirements have led to disagreements between permit applicants and the agencies, with differences in each party’s calculations ranging up to 300 percent. “Without approved guidelines, it is not possible for mining companies to meaningfully conduct financial planning for an operation until very late in the permitting process,” the report says. “The unpredictability of this significant financial liability is an unnecessary hardship for developing mines and a deterrent in attracting mining companies to invest in Alaska.”

To improve the situation, the minerals commission recommends that the state should form a working group comprising members of the mining industry, the Department of Natural Resources and the Department of Environmental Conservation to develop guidelines or policies related to the appropriate level of indirect costs to be included in financial assurance.

Lack of infrastructure a challenge

Lack of infrastructure, including power supplies, is one of the biggest challenges hindering the development of mines in the state, and the minerals commission suggests that coal-fired generation offers the means to provide a stable long-term power supply to enhance the existing power grid in Alaska. “The existing power grid in Alaska does not have an adequately diverse fuel mix, as it is currently critically dependent upon the uncertain supply and volatile pricing associated with Cook Inlet natural gas,” the report says. The commission recommends that the governor and Legislature follow the Railbelt Energy Study recommendation and facilitate construction of expanded coal-fired power plants on both ends of the Railbelt grid.

The minerals commission repeated several recommendations that it had made in previous years, for example requesting that the governor and Legislature provide an adequate budget to support the state as it assumes primacy over the National Pollutant Discharge Elimination System. The Environmental Protection Agency currently conducts NPDES permitting, compliance and enforcement for Alaska. The commission also requested again that the governor and Legislature increase the rate of investment in geophysical surveys to more than $1 million per year; and that the governor and Legislature establish an equitable, stable municipal tax system in the unincorporated regions of Alaska.

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