Anglo American, one of the key backers of the controversial Pebble mine in Alaska's Bristol Bay region, announced Monday that it is withdrawing from the Pebble Partnership -- and will take a $300 million hit for doing so. The London-based Anglo American has a 50 percent share of the Pebble venture, with Northern Dynasty Minerals out of Vancouver, Canada controlling the other half. The company said that Northern Dynasty will assume sole responsibility for the project.
In a statement, Anglo American CEO Mark Cutifani said that the company was seeking other investment opportunities.
"Despite our belief that Pebble is a deposit of rare magnitude and quality, we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options," Cutifani said. "Our focus has been to prioritize capital to projects with the highest value and lowest risks within our portfolio, and reduce the capital required to sustain such projects during the pre-approval phases of development as part of a more effective, value-driven capital allocation model."
John Shively, CEO of the Pebble Partnership, insisted that reports of Pebble's death are premature. “Obviously we’re disappointed, but we still have a great project,” he said. “Anglo American was reviewing all of their assets. When they got to us, we didn’t make the cut,” he said.
Shively, who learned of the pullout this weekend in phone calls from the owner companies, said he expects that Northern Dynasty will decide in the next two or three weeks what its next steps should be. He said the “partnership has to be unraveled,” and Northern Dynasty has to consider its options.
Pebble has received intense scrutiny during the exploratory phase of the project. Critics say the mine's proposed location could present a risk to the Bristol Bay watershed and salmon fishery, one of the most lucrative fisheries in the world. Supporters have accused the Environmental Protection Agency of playing politics with the project after the EPA released an assessment of the potential impacts of a large open-pit mine on Bristol Bay fisheries last year. That report said that even barring a major mishap, damage to salmon runs were a likely side effect of mine development.
Meanwhile, the Pebble Mine prospect is also a high-value proposition: Northern Dynasty estimates that the proposed mining area could contain as much as 81 billion pounds of copper, 5.6 billion pounds of molybdenum and 107 million ounces of gold. Estimates have put the value of the resources at up to $300 billion.
The mine could have potential for the state as well, as it represents the largest mining prospect in Alaska's history. The potential tax revenue from the Pebble prospect -- despite mining taxes that are dwarfed when compared to the tax dollars brought in by oil -- could eventually prove valuable to the state as it faces declining oil tax revenues after a tax cut that could see the state lose $1 billion a year in revenue.
The two competing interests have made for a high-stakes public relations battle, with each side disputing the others' facts, and even residents of the region split between the mine's potential for job creation, the existing jobs in the fishery, and the possibility of damage to subsistence salmon stocks if something were to go awry at the hypothetical mine.
Can Pebble survive?
Environmental groups quickly adopted a gloating tone after Anglo American's announcement Monday morning, with the World Wildlife Fund issuing a statement that said in part: "When a company is willing to accept a $300 million charge to walk away from a project, it gives you a sense of just how bad of an idea the proposed Pebble Mine really is."
The group Commercial Fishermen for Bristol Bay issued a release noting that 900,000 people -- greater than the entire population of Alaska -- had submitted public comments on the EPA's draft Bristol Bay Watershed Assessment, and argued that the vast majority were opposed to mine development.
It's unclear where Anglo American's withdrawal from the Pebble Partnership will leave Northern Dynasty, which acquired the Pebble project in 2001. Anglo American, one of the world's largest mining conglomerates, came aboard in 2007. With Anglo American out of the picture, the question becomes who might take the company's place -- and if the Pebble project can go on without it.
While opponents of Pebble may regard this as a death blow, Shively said the venture may be worth more to some potential future partner than it was in 2007 when the two companies created their partnership.
“We have to sit down with Northern Dynasty and figure out where we go from here,” he said.
“Northern Dynasty has a better asset to sell now to a partner than they did in 2007. We’ve made a lot of progress in terms of defining the prospect and in terms of getting ready for permitting. None of that was on the table in 2007.”
Shively said the project managers believed they had been getting close to filing for permits with the state, but that’s likely to change.
“It’s not good news, but this is the way I look at it. Pebble is a great asset, not just to Northern Dynasty, but to the state.”
“This asset is going to be developed some day. I’m certain of it.”
A statement from Northern Dynasty CEO Ron Thiessen seemed to agree with Shively:
"Northern Dynasty will again own 100 percent of one of the world's most important copper & gold resources and will have the benefit of $541 million worth of expenditures, which opens the door to a number of exciting possibilities for Northern Dynasty and its shareholders and the Pebble Project and its stakeholders. Northern Dynasty and the Pebble Partnership have both the expertise and resources necessary to advance the Pebble Project."
At the market close Monday, Northern Dynasty's stock prices had fallen more than 30 percent from Friday's close.
Dermot Cole contributed to this report. Contact Ben Anderson at ben(at)alaskadispatch.com