Donlin Gold Mine gets Corps of Engineers approval

The U.S. Army Corps of Engineers issued its long-anticipated approval Friday, April 27, on the Final Environmental Impact Statement for the big Donlin Gold Mining Project near the Kuskokwim River.

If it is built, the project would be one of the world’s largest gold mines, and would require an approximate $6.7 billion investment by its owners, Barrick Gold and NovaGold Resources.

That’s enough to provide a big economic lift for Southcentral Alaska.

The project would include a 315-mile, 14-inch pipeline built from the Matanuska-Susitna Borough to carry natural gas to the mine. Donlin Gold is at Donlin Creek 227 miles west of Anchorage and 10 miles from the village of Crooked Creek on the Kuskokwim River.

Gov. Bill Walker said he was pleased the Corps’ decision.

“This is great news for Alaska, a major step toward development of a gold mine that would bring jobs to the Yukon-Kuskokwim region and help utilize Alaska’s vast natural resources. The Donlin Gold project still has a long way to go in the permitting process before construction and operations can begin, but the company has already proven its commitment to engage local stakeholders and make sure all development is responsible and minimizes impacts on nearby communities and the environment,” Walker said in a statement.

Donlin Gold has an 39 million ounces of measured and indicated gold resources, a category with a high degree of confidence. Barrick and NovaGold did additional drilling at the site in 2017 to confirm its modeling of the resource.

A Record of Decision by the Corps, the next step in a lengthy regulatory process, is expected later this year, and decisions on other major state and federal permits are expected next spring.

Barrick and NovaGold would make their decision on whether to build the mine after receiving the final permits and reviewing cost estimates.

Donlin Gold is on land owned by Alaska Native corporations in the region. Calista Corp., the Alaska Native regional corporation for the Yukon-Kuskokwim delta region of state, owns the subsurface mineral rights and would receive royalties. The Kuskokwim Corp., a consortium of Native village corporations in the area, is the owner of surface lands.

Under terms of the 1971 Alaska Native Claims Settlement Act, Calista would share 70 percent of its royalty revenues with other Alaska Native regional and village corporations,

If the mine is built, its construction would have a major impact on Southcentral Alaska communities, which would supply much of the equipment and service, as well as labor according to the environmental impact statement.

A priority would be given to hiring construction and production workers from the 56 villages in the Yukon-Kuskokwim delta under the agreements between the mine developers, Calista and TKC Corp.

Building the mine is expected to take about four years with 3,000 employed, mostly in construction at the mine itself but others in building the gas pipeline from the Mat-Su, the environmental impact statement said.

For construction labor, a priority for mine developers is to hire as many workers as possible from the 56 villages in the Yukon-Kuskokwim region. “Many of the project workers needed to fill the construction jobs are currently available in the Y-K region,” the environmental impact statement said.

It is estimated that 78 percent of the Donlin Gold project construction labor would be performed by resident Alaskans and that 50 to 60 percent of these will come from the Y-K region, or about 1,600 to 1,900 workers of the 3,000 needed, according ro the environmental impact statement.

“A large number of working-age adults residing in the Y-K are currently qualified to fill project construction jobs,” as many as 4,000, the document said. Many residents are also immediately available for employment and, “are likely to have the requisite skills for construction jobs or could be trained for construction jobs at the project worksites.”

The mining companies’ experience during exploration bears this out, says Andy Cole, Donlin Gold’s general manager. A substantial number of people from the region worked at the project in those years, and a 90 percent local-hire rate was achieved.

“The raw talent is an important resource for us. People (in the region) are interested, eager to work, and they’re a valuable asset,” he said.

The project would have a big ripple effect in the regional economy.

Over the four-year construction period direct employment in building the mine would create an additional 7,300 jobs, much of this in Southcentral Alaska, due to the indirect and multiplier effects of construction. This would also create an additional $390 million in wage income.

Sales of goods and services in the state, in addition to those related to direct construction, would increase by about $1.1 billion over the four-year period due to the multiplier effects.

Direct labor expenditures during construction are estimated at $1.2 billion the environmental impact statement said, with about $940 million expected to go to Alaska resident workers, or an average of $235 million a year earned by workers.

Firms based in Anchorage are likely to receive most of the contracts related to construction. Calista’s own subsidiaries would gear up to bid on construction. These include Anchorage-based Chiulista Camp Services Inc.; Brice Inc.; Yukon Equipment Inc., and Yulista Management Services.

Calista itself discovered the gold mineralization at Donlin Creek over 40 years ago. The Native corporation had hired geologists to survey federal lands where it had land selection entitlements through the 1971 Native claims act, and chose the Crooked Creek area as a place to explore because of earlier gold mining in the area.

Calista is working with the local village corporations, now part of TKC Corp., to select the lands.

The corporation then began work to attract a mining company to explore the prospect and after a couple of false starts wound up with Placer Dome, an experienced company.

Placer Dome was eventually acquired by Barrick. NovaGold, a “junior” mining company specializing in exploration, earned rights to the project by investing in exploration.