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Without monied partner, Pebble cuts staff, ends contracts

Lisa Demer

Just three weeks after mining giant Anglo American abruptly announced it was pulling out of the proposed Pebble gold and copper mine, the Pebble Partnership said it is laying off numerous staff members and suspending contracts.

Northern Dynasty Minerals Ltd., a Canadian exploration firm that is seeking to develop Pebble as its first project, will be left as the sole company in the Pebble Partnership, spokesman Mike Heatwole said Monday.

Of Pebble's 70 or so direct employees, an untold number were let go last week, he said. The employees are being given severance packages. Pebble won't provide specifics on how many people are being cut or the overall hit to this year's budget, though Heatwole said a significant number are losing their jobs.

"It's a pretty somber time, unfortunately," he said.

Many of Pebble's contracts have been suspended or are being canceled outright, he said.

The mine developer has been a leading employer in the Bristol Bay region for the last decade, Heatwole said. One mine advocate said the impact will be devastating to the region. Mine opponents said it wasn't the time for them to comment.

Pebble has had hundreds of contracts for everything from telephone service to environmental studies to exploration drilling. About 100 of them are major contracts for scientific and exploration work, Heatwole said Monday afternoon. Earlier in the day he had estimated a lower number.

The Pebble Partnership is not abandoning the project, just stepping back to reassess, according to both Heatwole and Sean Magee, Northern Dynasty spokesman.

"This still remains an important project," Heatwole said.

"We have the means to keep the project moving forward," Magee said. "I think we want to be very cautious in how we do that."

Anglo American had put $541 million into the project before announcing Sept. 16 that it was abandoning it. The mine project is under intense scrutiny because of the potential for harming the world's best remaining run of wild red salmon. Anglo American said it wanted to focus on lower-risk projects.

Northern Dynasty has invested $180 million and still has $22 million to spend, Magee said. But developers are scaling back from what Anglo was able to fund.

"There's no doubt that to take the project to the next steps, to go into permitting and through permitting, is going to require more money than we currently have in our treasury," Magee said. "We're not Anglo, we're not a major international company with very deep coffers."

Northern Dynasty is looking for a new partner. Rio Tinto, another major mining company, already owns just under 20 percent of Northern Dynasty shares, Magee said.

"Pebble is the largest undeveloped copper resource and the largest undeveloped gold resource in the world," Magee said. "Deposits like that are extremely rare."

In the spring, Pebble announced it intended to begin the major permitting process this year. Northern Dynasty hasn't decided whether to move ahead on that, Magee said.

"All of the work completed this year is on track to meet the time line if we chose to do so," he said. "We want to make sure that we have the resources in place to support that process once it begins."

Pebble's budget for 2013 was $80 million, and it is still evaluating how much of that will be spent. The work included engineering studies, environmental studies of fish habitat and water quality, and workforce developmen, Pebble has said.

About 180 Bristol Bay area residents worked for the project directly or through contracts during the summer of 2012, and 150 did so this summer, Heatwole said.

Some may have worked only a few days while others spent the whole season at the Iliamna project site. They worked as drillers and bear guards, on reclamation and in housekeeping, among other things. Many are shareholders of Bristol Bay Native Corporation, which has opposed the mine. Efforts to speak with Bristol Bay corporation leaders were unsuccessful Monday.

"It's going to be devastating to the region," said Abe Williams, who was born and raised in King Salmon and now lives in Anchorage. "In the Lake and Peninsula Borough alone, Pebble was probably the No. 1 employer."

Williams founded and served as president of a nonprofit organization called Nuna Resources Inc., which Pebble supported financially, that advocated for "responsible resource development." The group urged due process for Pebble during the regulatory process.

Pebble was a good employer, Williams said. One local man was put through helicopter school and then flew crews to the remote project site, he said. Another was a leader in exploration drilling, he said.

Anglo American's withdrawal surprised even Northern Dynasty, Magee said. The two had joined as 50-50 partners in 2007. It's a friendly if sudden split. Anglo is putting more money into the project to close out contracts and ensure severance packages, according to Pebble.

"Anglo has been very gracious with its employees and it's been fun working for Pebble," said Sharon Wilson, a Pebble community associate in Naknek whose job is ending. She said her role was to be a "conduit of information between the stakeholders and the company."

The Environmental Protection Agency is finalizing an assessment of the Bristol Bay watershed that it began in February 2011. Nine Alaska Native tribal groups had petitioned EPA to block the mine using its Clean Water Act power. Instead, EPA began studying the watershed.

Northern Dynasty doesn't think EPA will take that bold step once it wraps up the assessment.

"It isn't going to lead to any sort of preemptive action on Pebble," Magee said. "We're confident about that."

The Pebble mine is a potential $300 billion deposit near the headwaters of the tributaries of the Kvichak and Nushagak rivers. A quarter of the world's sockeye salmon are produced from those two river systems. If developed, the project could become the biggest open pit mine in North America.

Reach Lisa Demer at ldemer@adn.com or 257-4390.

Panel set to talk Pebble at APU on Wednesday

The Alaska Native Professional Association has organized a panel discussion Wednesday on the Alaska Pacific University campus called "The Pebble Project: A Conversation Worth Happening."

The Pebble Partnership, the Alaska Miners Association, the Alaska Peninsula Corporation, Bristol Bay Native Corporation and the U.S. Environmental Protection Agency all have been invited to the event at the Grant Hall theater on University Drive. Doors open at 11 a.m. and the discussion will start at 11:30 a.m. It costs $20 for Native professional association members and $25 for nonmembers. Lunch is provided. People are asked to register ahead, which can be done through eventbrite.com.

-- Lisa Demer

 


By LISA DEMER
ldemer@adn.com
Contact Lisa Demer at LDemer@adn.com or on