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In latest blow to Pebble prospect, mining giant Rio Tinto is pulling out

Sean Cockerham
Aerial view of a work camp in the area of the proposed Pebble Mine on Tuesday, August 27, 2013. Bill Roth

WASHINGTON - Global mining giant Rio Tinto is pulling out of the Pebble mine project in Alaska, the latest blow to the controversial plan to build an open pit mine in the best wild salmon stronghold in the world.

Rio Tinto said Monday that it will donate its share in the project to a pair of Alaskan non-profits, the Alaska Community Foundation and the Bristol Bay Native Corp. Education Foundation.

Rio Tinto's decision comes after the Environmental Protection Agency moved closer in recent weeks to blocking the mine. EPA Administrator Gina McCarthy said Pebble would "likely have significant and irreversible negative impacts on the salmon of Bristol Bay." She said her agency would decide on action to protect the salmon under the Clean Water Act, which could lead to a veto of the project.

The British mining powerhouse Anglo American pulled out of the Pebble project last year. Now Rio Tinto is abandoning the effort as well, saying Monday "the Pebble Project does not fit with Rio Tinto's strategy."

"By giving our shares to two respected Alaskan charities, we are ensuring that Alaskans will have a say in Pebble's future development," said Rio Tinto Copper Chief Executive Jean-Sebastien Jacques.

The charitable foundations will each receive half of Rio Tinto's 19 percent share in Northern Dynasty Minerals, the Canadian company whose principal asset is Pebble.

The Bristol Bay Native Corp. Education Foundation said "Rio Tinto's gift will benefit organizations that serve the people and communities of Alaska."

Executive Director Greta Goto said the shares would help the foundation to support educational opportunities for shareholders in the Bristol Bay Native Corp, which represents the interests of Alaska Natives from the area around the proposed mine.

The Bristol Bay Native Corp., though, has been among the fiercest opponents of the Pebble mine. It now suddenly has a stake in the project's success.

Corporation officials said in an interview that the education foundation is managed separately from the corporation as a whole and has its own distinct mission.

"This gift provides an example of what open discussion and relationship building between stakeholders with differing views can accomplish," said Bristol Bay Native Corp. President Jason Metrokin. "However, BBNC's opposition to the proposed Pebble mine has not changed."

The Alaska Community Foundation said its shares would go to create a new fund for supporting vocational education programs, with a focus on building worker skills for resource development industries.

Foundation CEO Candace Winkler said the foundation first heard from Rio Tinto about a week ago. She said she is excited about the possibilities, regardless of the controversy over the mine.

"We understand this is a complex issue and that people have strong feelings on both sides," she said. "We looked it as an opportunity to be involved in workforce development."

It's not clear how much the shares will be worth. Northern Dynasty's stock value has faltered with the continual problems experienced by the Pebble project. The stock fell another 5 percent on Monday at the news that Rio Tinto was pulling out of the project.

Rio Tinto's decision came under pressure from major investors, including the pension funds of California and New York City. Rio Tinto was risking its reputation with involvement in the Pebble mine, the chief financial officers who oversee those pension funds told the company in a December letter.

The Natural Resources Defense Council hailed Rio Tinto's move as a big step toward the end of the project.

"Rio Tinto's decision is the latest demonstration that the Pebble Mine is economically and environmentally infeasible, even for the largest mining companies in the world," said Joel Reynolds, the western director for the environmental group.

Gov. Sean Parnell, in a written statement, criticized the EPA.

"It's disheartening to see a company like Rio Tinto take its business elsewhere as a result of the current federal regulatory environment," Parnell said.

Pebble ranks among the largest undeveloped copper deposits in the world and Northern Dynasty Minerals is vowing to push on despite all the problems.

Last year's pullout of Anglo American was an especially big blow, leaving Northern Dynasty without the necessary financial backing to construct the mine.

Northern Dynasty is searching for a new partner, and said it will work with the two Alaska foundations that are now major shareholders in one of the most controversial development projects in the history of the state.

Northern Dynasty President Ron Thiessen said his company had previously worked with the Alaska Community Foundation on the Pebble Fund, a grant program for organizations in the Bristol Bay region.

"We look forward to meeting with the leadership of the Alaska Community Foundation and Bristol Bay Native Corp. Education Foundation in the days ahead to better understand their long-term goals and aspirations, and how their ownership interest in Northern Dynasty and the Pebble Project can make the greatest possible contribution to the people and communities they serve," Thiessen said in a written statement.

Email: scockerham@mcclatchydc.com; Twitter: @seancockerham.

Rio Tinto press release
By SEAN COCKERHAM
Daily News Washington bureau