ANALYSIS: Skeptics aren’t buying a smaller, safer Pebble Mine

There’s a new Pebble. It’s a mine that would be smaller and more compact, and with its environmental hazards scaled back, its proponents say.

Those who oppose the mine say they’re not yet convinced.

Pebble Partnership Ltd, the company developing the mine, hopes its scaled-back new design might make the project more acceptable to residents in the Bristol Bay region who oppose the mine, as well as Gov. Bill Walker, who is known to be skeptical.

The smaller design would also help the project clear stringent state and federal environmental rules to get its permits, said Pebble’s CEO, Tom Collier, in a briefing during November before the Alaska Miners Convention in Anchorage.

Skeptics, who worry about damage to the rich Bristol Bay fishery, say they’re unlikely to be won over.

In a statement, Bristol Bay Native corporation president Jason Metrokin said, “BBNC does not otherwise oppose mining development. Pebble Mine is simply different. In any configuration, the mine is too big and will be located in too important of a location. It poses unacceptable risks to the salmon resource and, consequently, the subsistence lifestyle and economic interests of our shareholders.”

Pebble is about 200 miles southwest of Anchorage and 18 miles north of Iliamna, on Lake Iliamna. It is a large copper and gold deposit, in fact the world’s largest undeveloped deposit of those metals, Pebble Partnership said. It also contains molybdenum, silver and other minerals in lesser amounts.

Collier told the miners association that Pebble Partnership intends to submit its permit applications to state and federal regulatory agencies in December, and to have a new partner on board soon, most likely a major mining company. Pebble would publish an updated Preliminary Economic Assessment in the first quarter of 2018, he said.

Even a scaled-back mine could strengthen and diversify the state’s economy, which now under pressure from reduced spending by the petroleum industry and fewer oil taxes and royalties flowing to the state treasury, Collier told the miners association.

“As Alaska continues to look for ways to bring in new jobs and economic activity, we believe the Pebble Project has a role to play,” Collier said in a statement.

“This project represents the potential for billions of dollars of investment, thousands of long-term, high-wage jobs and the potential for significant economic activity, while at the same time providing revenue for local, state, and federal governments. Responsible development could be an economic engine for decades to come,” Collier said.

Many tribal and community organizations in Bristol Bay have opposed the mine, at least in its original scope, fearful that accidental discharges of toxic chemicals could damage the region’s rich salmon fishery.

Collier said the new plan, however, includes changes like a greatly-strengthened tailings storage system that would greatly reduce the danger of accidental discharges.

Pebble had a near-death experience when the U.S. Environmental Protection Agency under President Barack Obama initiated a process under the U.S. Clean Water Act to foreclose development of large mines in the Bristol Bay region. EPA’s action was undertaken at the request of tribal groups in the region and was hotly contested as an unprecedented use of Clean Water Act power.

Pebble Partnership sued but the election of Donald Trump and his appointment of new leadership at EPA resulted in the initiative being withdrawn, which would allow Pebble to at least submit its permit applications with the intent of describing how the company would develop the mine and what mitigation measures it would put in place.

A plan to share benefits

What’s also new in Pebble’s latest plan is an explicit mechanism to share monetary benefits from the mine with people who live in the area, through an annual dividend.

This addresses a problem that has dogged Pebble for years, that people who live in the region, see a few ways to benefit, through jobs and local contracts, but not enough to offset the perceived risks to the regional salmon resource.

Unlike the Red Dog Mine or Donlin Gold project, which are on private lands owned by Alaska Native corporations, Pebble is on state-owned lands where mine royalties go to the state treasury, not local landowners. In the case of Red Dog or Donlin Gold the mining royalties go to Alaska Native corporation landowners.

Pebble hopes its revenue-sharing will address that. Company spokesman Mike Heatwole said a plan is being developed to share 5 percent of Pebble’s profits with Bristol Bay residents and local village corporations near the mine who sign up.

“This is still conceptual but our preliminary estimates, based on one scenario, could be an annual ‘dividend’ of $500 per year for a resident,” Heatwole said. The amount could be less if more people sign up, so that the 5 percent would be divided among more people. Alternatively, the dividend could be more if fewer people sign up, he said.

Elements of the new plan

Here are the key elements of Pebble’s new plan, which was announced in early October:

Under the development scenario currently being considered, the footprint of Pebble Project’s major mine facilities (pit, tailings storage facility) would be reduced to approximately 5.4 square miles. This is less than half the size of the footprint for mine facilities envisioned by the U.S. Environmental Protection Agency as a basis for EPA’s action to preempt large-scale mining in the Bristol Bay region.

Primary mine operations in the Upper Talarik River watershed region would be eliminated, minimizing the project’s environmental footprint. All tailings storage would be consolidated to the North Fork Koktuli River area.

Enhanced tailing storage facilities would be constructed with enhanced buttresses and slope and a greater safety factor. Potentially acid-generating tailings would be separated from other tailings and be stored in a second tailings storage facility which would be lined with an impermeable liner to prevent leakage.

A key change in the design of the tailings impoundment is building the slope of the impoundment at a shallower angle which would require much more rock to be placed, adding strength to the system.

Pebble would also no longer use waste rock piles, significantly reducing the risk associated with acid rock drainage and the related environmental impacts.

The company would also not use cyanide in the recovery process. Cyanide is safely used in Alaska and around the world to increase gold recovery. However, in response to concerns that have been raised Pebble would elect not to use this technique for this project.

The development would include the creation of a new ferry route across Iliamna Lake. The route would minimize the total road area, stream crossings, bridges, and culverts for the Pebble Mine and would minimize the project’s impact on local wetlands. The total road length would drop from 86 miles in the previous plan to about 42 miles, which would include a 27-mile road from a Cook Inlet port site to a ferry terminal on the south side of Lake Iliamna and a 15-mile road from a ferry terminal on the lake’s northern side to the mine. The Cook Inlet port site has changed from the previous plan from a location on Iniskin Bay to a site on Kamishak Bay, approximately 30 miles south.

A proposed slurry pipeline to carry ore concentrate, in a slurry mixture, from the mine to the port has been eliminated. Ore concentrates would now be shipped by truck, with truck beds covered, to the port by road and by barge across the lake. The scaled-back project would still require substantial amounts of power and a 250 megawatt power plant is now envisioned. A pipeline to bring natural gas from Cook Inlet to the mine is being studied.

Revenues and jobs

Meanwhile, the estimated annual revenue to the Lake and Peninsula Borough, in which the mine is located, would be $19 million to $21 million per year, while the estimated annual state revenue would be between $49 million to $66 million per year. Once in operation the project would create about 1,500 to 2,000 new jobs in the state’s economy, with most of them directly related to mine operations.

Many workers would be hired from local communities in the region, as has happened at the Red Dog mine in northwest Alaska. During construction the number of jobs would be greater, but there is no estimate yet for the number, Heatwole said.

Collier also said the development of Pebble would include a “business mentoring” initiative to ensure that Alaska Native village corporations are ready to compete for construction and operations contracts, which could be worth hundreds of millions of dollars annually. Pebble is working with an Arctic Slope Regional Corp. in developing the business mentoring program.

In another initiative, Collier said Pebble Partnership would work with commercial fishermen in the region on ways to help with challenges with the salmon price and run variabilities, and the decline of local participation in the fishery, or Bristol Bay residents who own salmon permits and are allowed to fish. Many of the higher-value salmon permits in Bristol Bay are owned by nonresidents.

Tim Bradner is copublisher of the Alaska Economic Report and Alaska Legislative Digest.