Bruce Switzer recently poked Pebble and mining in the eye (compass, May 23) so I would like to offer additional context about these issues.
First we need to understand that mining in Alaska is a tough business. Always has been and probably always will be. From the small placer miners to the global mining houses, it takes time to find the resource, responsibly develop it, and make the venture turn a profit. We are at the mercy of commodities prices and costs to produce are always increasing. It takes a lot of hard work to get the minerals out of the ground responsibly and off to markets. It is labor and cost intensive.
And in our large state, many of our mineral resources are not conveniently located on the road or rail system and require a lot of investment to get minerals from mine to market. Developers have to balance the technical issues, meet federal and state environmental regulations, and still earn a positive return on their financial investment.
This is grossly simplifying a very complex business. Companies spend years, sometimes decades, building their geological, engineering, and environmental knowledge base while watching developments across the world influence commodity prices and financial markets. All of this factors into decisions about when to advance a project into permitting, when to construct, and how to ultimately operate a mine. Given the sensitive environment around the Pebble deposit, we should all welcome the patience developers have shown in wanting to get it right before permitting.
In this business, mineral claims often change hands multiple times before a project goes into production. This is typical, actually, and does not reflect on the quality of a mineral resource but on the difficulty of advancing a project from exploration to mining to closure.
The enterprise often requires different types of companies with different expertise, as well as significant financial resources. Someone finds and finances exploration to determine value. Larger deposits sometimes get picked up by larger operators as evidenced by the Anglo-American investment in Pebble.
Switzer incorrectly stated why Anglo-American left Pebble and that they had walked away from $800 million. Anglo-American, and for that matter Rio Tinto and Mitsubishi, made clear that they withdrew from Pebble as part of global strategies to reprioritize their capital allocation and not as commentary on the quality of the Pebble resource. Anglo-American's investment in technical and environmental work and investment in our communities and schools was about $550 million.
Switzer then went on to trash the Alaska Department of Natural Resources and the Parnell Administration. His claim that the administration is "all for" Pebble is simply not true.
I have listened to many presentations by Gov. Parnell and his administration about Pebble and their message is consistently to allow the project to apply for permits and undergo evaluated in the permitting process. I personally have never heard the governor say he is "all for" Pebble. But I thank the governor, attorney general, and DNR commissioner, who have stood up for due process and pushed back on the EPA's power grab in Bristol Bay. Some forget that the Pebble deposit is located on state land that is open for mineral exploration and responsible development. This deposit is an asset for Alaskans that could create thousands of jobs and inject billions into our economy, so the state is obligated to defend the process and not prejudge a project for which no permits have been sought.
Switzer also minimizes the state and federal permitting process, alleging it is a slam dunk to get a mine operational in Alaska. In truth it takes years to get through the permitting process. Then, most Alaska projects get sued by environmental groups, adding to the time it takes to get into production, assuming positive outcomes from permitting and litigation. In many conversations with my mining colleagues, the uncertainty about the permitting and regulatory process is a frequent topic of discussion.
I welcome constructive conversations about mining in general and Pebble in particular. Mining is part of Alaska's rich history and will be a critical part of our future.
Richard Hughes is a professional mining engineer with more than 50 years experience in Alaska and other parts of the United States. He lives in Fairbanks.
By RICHARD HUGHES