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Vol. 18, No. 26 Week of June 30, 2013
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Pebble battle frontline erupts in D.C.

Washington lawmakers, newspapers, U.S Chamber all weigh in on escalating resource development-conservation battle in SW Alaska

Shane Lasley

Mining News

A growing number of Lower 48 lawmakers are weighing in on the potential risks and rewards of building a mine at the enormous Pebble copper-gold-molybdenum deposit in Southwest Alaska, shifting the frontline of the escalating battle to Washington D.C.

With the U.S. Environmental Protection Agency seemingly positioning itself to exercise unprecedented powers to halt the Pebble project without giving developers the opportunity to have their plans vetted under the current permitting process, the stage is set for a mêlée that could shape environmental policy in the United States.

“The decibel level is rising,” Peter Robertson, senior vice president for corporate affairs with the Pebble Partnership, told The Hill. “It’s gaining more attention all the time — and appropriately so because of the momentous decision the EPA might make in a relatively short timeframe.”

On one side, a group of environmentalists, fishermen and West Coast Democrats contend that Bristol Bay’s world-class salmon run is too vital a resource to allow a large-scale mine like Pebble to be allowed there. Many belonging to this anti-Pebble contingent have urged the EPA to employ its full arsenal to stop the potential development of this large-scale mining project, including a presumed provision under Section 404(c) of the Clean Water Act to pre-emptively deny the issuance of permits needed to develop and operate a mine at the colossal deposit.

Although the U.S. Army Corps of Engineers has been relegated the authority over CWA Section 404 permits, a provision grants the EPA the power to prohibit, restrict, or deny such permits that pose an unacceptable adverse impact to fisheries or other water uses.

While this authority has never been used to deny a project the right to apply for permits, the EPA claims it has the power to do so.

Pebble proponents, including a group of Republican senators, argue that the EPA does not and should not wield the power to strike down Pebble before developers have the opportunity to apply for permits.

Even The Washington Post has opined that Pebble developers, Northern Dynasty Minerals and Anglo American, should be given the opportunity to have their mining plans vetted by the full permitting process.

“If complete federal reviews find that the companies can’t protect the fishery, regulators can reject the project. But, given the potential economic value of the mine, they should hear the companies out,” the newspaper concluded in a June 23 editorial on Pebble.

Republicans grill EPA

The latest volley on the Washington D.C. front of the Pebble battle was launched by group of five Republican senators concerned that the Bristol Bay Assessment – a study being carried out by EPA to determine the effects large-scale mining would have on the fish resources in the area where Pebble is found – is intended to build a case for denying the Pebble Partnership the ability to apply for permits.

Sens. John Barrasso, R-Wyo.; John Boozman, R-Ark.; Mike Crapo, R-Idaho; David Vitter, R-La.; and Roger Wicker, R-Miss., questioned the motivations of the assessment in a June 11 letter to Ken Kopocis, nominee for assistant administrator for EPA Office of Water.

“What harm would result from EPA allowing Pebble Mine proponents to actually apply for a Clean Water Act permit before commenting on potential mining impacts, instead of the agency speculatively opining on hypothetical scenarios?” the senators asked.

The hypothetical mining scenarios EPA used as a basis of the Bristol Bay Assessment have been a point of contention for Pebble proponents.

“The Bristol Bay Watershed Assessment process has truly become the theatre of the absurd,” Northern Dynasty President and CEO Ronald Thiessen said. “Rather than waiting for the Pebble Partnership to submit a proposed development plan for consideration by federal and state regulatory agencies under the National Environmental Policy Act, something that is expected to occur this year, EPA has invented its own hypothetical mine, it has continued to ignore modern mine engineering practices and regulatory requirements, it has shunned the best available scientific and environmental data at its disposal, and it has created a public and peer review process designed to minimize scientific scrutiny of its work.

The Republican senators claim the EPA has been evasive when it comes to the impetus for conducting the Bristol Bay Assessment, leading the lawmakers to surmise “that the agency feels the assessment is a necessary predicate for a future ‘pre-emptive veto’ of the Pebble Mine project.”

“This is a dangerous and unprecedented tactic that would allow EPA to jeopardize the project even before a CWA permit application has been submitted,” the lawmakers wrote.

The senators closed their letter with two final questions for Kopocis to ponder, “Has EPA identified a specific harm that will occur if Pebble Mine is allowed to submit a CWA permit application? If no specific harm has been identified, why is EPA dedicating precious and scarce resources to speculation on potential mining impacts to the Bristol Bay watershed?”

Vitter, the top Republican on the Environment and Public Works Committee, said, “EPA is playing a dangerous game, using hypothetical situations to shut down job creation.”

This sentiment is shared by the world’s largest business federation.

“EPA’s decision to choose a poor-performing hypothetical mine plan to base their study on is problematic and is stacking the deck against the project before it has even been proposed. At a minimum, this exercise by EPA prejudices the fair and unbiased consideration of a mine proposal that would actually provide much needed jobs — thousands of them — for America’s economy,” the U.S. Chamber of Commerce wrote in a Bristol Bay Assessment public comment letter to EPA.

Democrats petition Obama

While Republicans are pressing EPA for answers, a group of West Coast Democrats are urging the Obama Administration to remain vigilant in protecting Bristol Bay from large-scale mines, and Pebble in particular.

The lawmakers – Sens. Maria Cantwell and Patty Murray, D-Wash.; Sens. Barbara Boxer and Dianne Feinstein, D-California; and Sen. Jeff Merkley, D-Oregon – worry that developing the mammoth copper-gold-molybdenum project could harm the salmon runs in the Bristol Bay region of Southwest Alaska and by extension threatens thousands of fishing-related jobs in their states.

“Our states have a strong maritime history of which our commercial fishing industries are a key part. In order to maintain these direct fishing and processing jobs, and the jobs supported by associated businesses like gear manufacturers, shipbuilders, suppliers and other maritime businesses, we must maintain healthy, sustainable fishery resources,” the senators penned in a June 10 letter to President Obama.

The policymaking quintet referred to a recent study by the University of Alaska, Institute of Social and Economic Research that shows the Bristol Bay salmon fishery generates some 6,000 full-time jobs in Washington, Oregon and California.

The letter to Obama claims the Bristol Bay fishing and processing industry “fuels approximately 12,000 seasonal jobs and another 10,000 salmon-related industry jobs across the United States, from Alaska to Maine.”

This assertion, though, was a misread of the Bristol Bay salmon industry study by ISER.

The report reads, “In 2010, the Bristol Bay sockeye salmon fishery supported 12,000 fishing and processing jobs during the summer salmon fishing season. Measuring these as year-round jobs, and adding jobs created in other industries, the Bristol Bay salmon fishery created the equivalent of almost 10,000 year-round American jobs across the country, and brought Americans $500 million in income.”

The University of Alaska research group did find that the West Coast states are large beneficiaries of the economic activity created by the Bristol Bay fishery.

According to the ISER report, “About one-third of Bristol Bay fishermen and two-thirds of Bristol Bay processing workers live in West Coast states (Washington, Oregon and California).”

“Today, the state’s (California) fishing industry remains closely tied to the health of Bristol Bay; Californians hold over 140 Bristol Bay fishing permits, the second highest number for any state after Alaska and Washington; and these permits enable over 550 jobs related to salmon fishing,” the lawmakers wrote.

The letter urges Obama “to protect Bristol Bay from any large-scale mining that would threaten our nation’s vibrant fishing economy.”

To further this discussion, the West Coast lawmakers requested staff meetings with the Obama Administration’s Council on Environmental Quality and Department of Commerce.

Economic engine

The Pebble Limited Partnership – a 50-50 alliance forged between Vancouver, B.C.-based Northern Dynasty and London-based Anglo American – contend that West Coast fishermen could enjoy their annual bounty while mining the massive Pebble deposit could add several thousand jobs and billions of dollars in economic activity that centers on Bristol Bay and ripples outward across the country.

In late May, the Pebble Partnership released “The Economic and Employment Contributions of a Conceptual Pebble Mine to the Alaska and United States Economies,” a 69-page report commissioned by the developer that forecasts a mine at Pebble could contribute US$1.1-US$1.4 billion annually to gross state product during the initial 25 years of operation.

“Pebble is a substantial multibillion-dollar state asset as shown by this report, which provides great insight regarding the long-term positive economic impacts the project could have for the region, state and the Lower 48,” said Pebble Partnership CEO John Shively. “For perspective, the report indicates Pebble development alone would pay more in annual taxes to the state than the entire fishing industry combined. This clearly shows Pebble development could be an important economic driver for Alaska’s future.”

Compiled by IHS Global Insight, which is considered among the leading economic analysis and forecasting firms in the world, the economic report estimates that some US$4 billion in taxes and royalties from mining the ore at Pebble is projected to be deposited into Alaska coffers over the first 25 years of production. The federal government would collect another US$4.4 billion in taxes during the same time-span.

Construction of the mine will require a capital investment of more than US$1.2 billion annually in direct spending over a five-year timeframe.

During the construction phase, the Pebble project would support some 16,000 jobs across the United States, nearly a third of which are projected to be held by Alaskans. Roughly half of the some 5,000 in-state jobs would be directly involved with developing the mine; the balance of the swell in employment would be with suppliers or result from jobs induced by the added economic activity spurred by the development of Pebble.

Once the mine is built, it is projected to provide roughly 2,900 operating jobs, of which 915 will be at the mine. The average annual wage for on-site workers at Pebble is expected to be roughly US$109,500, according to the report, and about 75 percent of these high-paying jobs are expected to be filled by Alaska residents.

“What is critical for us is that Pebble does provide a major positive impact in the region and in Alaska,” Shively said. “At the local level, Pebble could provide a dramatic increase in potential revenues to the borough. This sort of project can create an economic transformation in a region that currently faces economic challenges, due largely to a serious lack of year-round jobs.”

In addition to jobs and entrepreneurship opportunities available to the residents of the Bristol Bay region of Southwest Alaska, the report estimates the mine would contribute some US$30 million in taxes to the Lake & Peninsula Borough where the massive copper deposit is located.

The IHS Global Insight study is based on a conceptual mine plan using an iteration of the ongoing engineering work undertaken by the Pebble Partnership. The study estimated the state and national economic benefits associated with a five-year construction phase, followed by a 25-year production phase, and the potential for three subsequent 20-year development phases.

Pebble engineers are hammering out the final details of a mine-plan that is expected to be released to the public later this year.

“While we are still finalizing our initial development plan for Pebble, this starts to give us some context about the project from an economic perspective. We are continuing our work on the environmental package for the mine which is one of its most critical design elements. We look forward to sharing our plan with Alaskans later this year,” Shively added.

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