Army Corps still full speed ahead on Pebble despite Canadian partner pullout

The U.S. Army Corps of Engineers is proceeding with regulatory work on the big Pebble copper/gold project despite the loss of a key partner in the project, corps officials said in a briefing last week.

A public comment period on “scoping,” or planning for the Environmental Impact Statement, ends June 29 and the corps is on track for a draft of the EIS next January, said Shane McCoy, program manager for the corps’ Pebble EIS program.

Northern Dynasty Ltd., through its operating subsidiary Pebble Partnership, has also mounted a small field program this summer to do geotechnical drilling and other work related to the company’s applications for permits to the corps.

About 40 people are working at the project site, Pebble spokesman Mike Heatwole said.

Pebble is a large copper, gold and molybdenum deposit near Iliamna, southwest of Anchorage, being developed by Northern Dynasty Minerals, of Vancouver, B.C. First Quantum Minerals, also of Vancouver, had taken an option to buy into the project last December, but on May 25 decided it would not continue.

Environmental organizations, led by the Natural Resource Defense Fund and accompanied by local tribal groups opposing the mine, had lobbied First Quantum management and shareholders on withdrawing.

“As of now we are continuing our review of the application,” said McCoy.

First Quantum’s withdrawal is raising questions on the ability of Pebble’s owner, Northern Dynasty Minerals, also Vancouver-based, to continue financing of work on the DEIS and the federal regulatory permits.

Pebble Partnership, Northern Dynasty’s operating subsidiary, has not yet filed for state or local permits.

First Quantum’s option agreement, agreed on Dec. 18, providing for $150 million to be paid over four years for a stake in Pebble, with a $37.5 million first payment.

That money enabled Pebble Partnership to complete work on its mine application and to submit it to the Corps of Engineers. It is not clear whether a second installment payment was made.

The corps is being criticized by opponents of the mine for continining the regulatory work when the basic feasibility of Pebble appears in doubt.

“The financing (of the mine) is not an issue for us,” McCoy said. “Economic feasibility and the applicant’s ability to finance the project are not a part of our decision, and we do not require a preliminary economic analysis from the applicant. Our responsibility is on the dredge-and-fill application and the effects on navigable waters,” he said.

“We have a statutory responsibility continue to develop the EIS unless the applicant withdraws the application,” McCoy said.

Pebble Partnership is paying for the EIS, which is being done by an independent contractor, AECOM, of Calgary. Their work continues to be financed by the company, McCoy said. “We would know if there was a problem (in the funding),” he said.

If the EIS process is interrupted by Northern Dynasty’s inability to fund the work, or to comply with a request for more information by the corps, “we stop the process,” McCoy said. “But that does not preclude the company from coming back and restarting.”

The corps’ regulations provide for a “reasonable limit” to the suspension, such as 30 days, he said, but there is really no time limit on the ability to restart if the EIS work is temporarily halted.

The company has meanwhile submitted some information on revisions to the mine plan in its application filed late last year and the corps is expecting more information, he said.

Pebble has been lightning rod of controversy since Northern Dynasty took over ownership of the state mining claims in about 2001. The mineral deposit is in a sensitive spot in hills north of Lake Iliamna because it sits astride high ground over two watersheds that support streams that are salmon habitat for Bristol Bay, which is to the west.

Bristol Bay is the world’s largest commercial salmon fishery, so fishing organizations and local communities are very wary of any development that might affect habitat. The region around the Pebble deposit is in addition an important sports fishing area.

Meanwhile, although Pebble Partnership lost First Quantum as a participant and, before it, two other major mining companies, Rio Tinto and Anglo American, Northern Dynasty is confident that a new partner will be attracted.

First Quantum itself noted the potential of Pebble:

“The Pebble Project is widely acknowledged to be one of the outstanding unmined copper projects in the world, estimated to contain some 26 million tonnes of copper, 70 million ounces of gold and 1.5 million tonnes of molybdenum in measured and indicated resources,” First Quantum said in its a statement.

A “tonne” unit of measurement, used in Canada, is 2,200 pounds compared to the U.S. “ton,” which is 2,000 pounds. “Measured and indicated” resources are those measured by actual drilling of an ore deposit.