Anchorage Daily News

Over the past year, the firm owned by one of the biggest enemies of Pebble -- a huge copper and gold prospect -- has been investing millions of dollars in an international mining firm that wants to develop the controversial project in Southwest Alaska.

Bob Gillam is one of the state's wealthiest individuals and also a major donor to a campaign to block Pebble from being built. Developing Pebble is controversial due to its location near the headwaters of several rivers that feed Bristol Bay's world-class salmon fisheries.

Gillam, a financial manager and fervent sportfisherman, has a personal stake in blocking industrial development in the region: He owns a large, private lodge on Lake Clark, roughly 30 miles northeast of the Pebble deposit.

Last year, he told The Wall Street Journal his cabin has nothing to do with the Pebble fight. He has not said how much he has spent to fund Pebble's opposition.

His company, McKinley Capital Management, an Anchorage investment firm, focuses its global investing on companies whose stock has strong growth potential. Its clients include the Alaska Retirement Management Board, which runs state employees' retirement funds, the Alaska Permanent Fund Corp. and other institutional investors.

A couple of years ago, Gillam told a state legislative committee while testifying against Pebble that he is not anti-mining and that his firm manages "upwards of $1 billion in mining stocks."

As recently as last June, McKinley began purchasing stock in Anglo American, the London-based mining conglomerate that joined the Pebble project as a 50 percent owner last August. Anglo has proposed spending at least $1.4 billion to develop it into a massive mine.

Since then, a number of Pebble opponents have sought to draw attention to the company's safety problems and human rights record in third-world countries.

The shares McKinley purchased in Anglo over the past year on behalf of the state's retirement pension fund are valued at more than $7 million, according to state officials.

Another McKinley client, the Alaska Permanent Fund, does not own any Anglo stock, officials with the $39 billion state savings account said.

McKinley Capital officials declined to comment for this story. A company spokeswoman, Jennifer Murray, said the company doesn't discuss its investments.

'A WRY CHUCKLE'

Others interviewed for this story had mixed reactions. Many said they weren't surprised that McKinley would invest in a rising stock -- its mandate is to make a profit for its clients -- yet found it merely ironic that Gillam's company was investing in one of Pebble's major backers.

Paul Henry, an Anglo American executive based in Anchorage, said his company has been aware of McKinley's investment in their company.

"Had a wry chuckle?" he asked.

The state's deputy commissioner for treasury, which oversees pension funds, didn't find anything alarming about McKinley's investments in Anglo, which has been profitable so far.

"I applaud him for keeping his personal and professional obligations separated," said Brian Andrews, the deputy revenue commissioner.

"I think it is interesting," said Dick Cattanach, executive director emeritus of the Associated General Contractors of Alaska, and a board member of a pro-Pebble group, Truth about Pebble.

"Bob is a smart investor and he wouldn't buy a company for personal reasons. ... He may disagree with Anglo being out there. If (Anglo) is a good investment, he should buy it for (his clients)," Cattanach said.

MILLIONS IN STOCK

Art Hackney, an Anchorage political consultant and spokesman for the anti-Pebble group, the Renewable Resources Coalition, said he doesn't have a problem with Anglo as a company, just its project in Southwest Alaska.

Yet Anglo has come under fire from some Pebble foes for its safety and civil rights record in other countries.

A federal securities filing on Wednesday shows McKinley reported it held 138,695 shares in Anglo stock worth roughly $4 million during the first quarter of 2008. It's unclear whether the report to the Securities and Exchange Commission includes all of the stock McKinley holds.

For example, McKinley's investments for the state retirement funds include 119,315 shares of Anglo worth $7.7 million at the end of last month.

"It's been a profitable investment," said Gary Bader, the department's chief investment officer, noting that the stock was worth $135,000 more than the state paid, as of the end of April.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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