Mining can provide long-range benefits for Alaska

There is good reason for Alaskans to worry about the wobbly condition of our economy and state finances. Oil production and now oil prices are moving in the wrong direction; down. Federal budget cuts are looming. Oil and the federal government support two-thirds of our economy, according to University of Alaska studies, so we have reasons for concern.

Still, let's rejoice that some good things are happening with the Alaska economy: mining, for example. We don't hear a lot about it because miners are a conservative bunch who like to keep a low profile and stay out of the newspapers.

Still, our four large metals mines are doing well because prices are high. Alaska's one producing coal mine, the Usibelli Mine near Healy, may set another record for production and coal exports this year.

Several large mines are in the advanced stages of development planning, including the big Pebble gold and copper prospect near Iliamna. Alaskans have divided opinions on Pebble but let's not discount the benefits, jobs and tax base this project will bring to a very economically depressed region, and Southcentral Alaska in general. If built, it will be a huge economic stimulus that will last for decades.

In the mid-Kuskokwim River region west of Anchorage, the large Donlin Creek gold project, whose developers may soon apply for permits, would also be a jobs engine in a very poor Yukon-Kuskokwim Delta region.

We know mines like these can bring a lot of benefits because we have the example of the Red Dog Mine near Kotzebue. Red Dog has been producing since 1989 and is the largest zinc mine in the world. The jobs it has created largely lifted Northwest Alaska out of its previously economically depressed condition.

These aren't the only examples. Near Fairbanks, a large new gold mine is in an advanced stage of exploration and planning near Livengood, north of the Interior city. This could begin production just as the big Fort Knox gold mine, also near Fairbanks, begins to wind down in a few years. Workers from Fort Knox will be able to go to work at Livengood. Neat.


East of Fairbanks, more mineral resources are being discovered around the Pogo gold mine, which will extend the life of this underground mine. Ditto in Southeast Alaska, where the Greens Creek and Kensington mines, both underground, can look forward to long productive lives.

Juneau, as our capital city, is mostly populated by government bureaucrats. Now people who produce things -- miners -- are living and working there. Farther south, two new mines are at advanced stages of planning on Prince of Wales Island near Ketchikan: Niblack, a multi-metals underground project like Greens Creek, and Bokan Mountain, which could become an important producer of rare earth elements, minerals vital to technology industries.

Mines create high-paying jobs. They are good taxpayers for local municipalities. While they don't pay the same level of taxes as do oil companies, their contribution is still significant.

They are long-lasting too. Mines like Red Dog and, if developed, Donlin Creek and Pebble, will be multi- generational in terms of employment. Though it is smaller, the Usibelli coal mine near Healy has operated for decades. Three generations of Alaskans have been employed by Usibelli, including the owners, the Usibelli family.

Mining isn't without challenges, of course. Affordable energy is one of the biggest because producing minerals requires a lot of power and fuel. Meeting strict environmental standards is another but the operating mines show these standards can be met.

State government actively supports this industry and there seems to be a consensus among Alaskans and in the political community that mining is good. This is encouraging given the raucous debates over oil and gas.

In the late 1980s the state's chief development agency, the Alaska Industrial Development and Export Authority, played a key role in building infrastructure, a road and port, in support of the Red Dog Mine. This was no giveaway. It helped the mine financially at a crucial time but the state's profits on that investment have been good.

AIDEA is now in a good position to help other mines. It could provide important help to medium-sized new mines like Bokan Mountain and Niblack in Southeast. Very large mines like Donlin Creek and Pebble won't need state financial help because large, financially strong companies would develop them.

Some mining companies have turned down the state's offers of help with infrastructure. The Pogo mine east of Fairbanks decided to build and pay for its own 50-mile access road and said no thanks to the state's offer of financial help. Similarly, developers at the Donlin Creek mine decided to build a road to its exploration area from the Kuskokwim River.

Something new is that the state is now doing preliminary planning for a road into the Ambler mining district in the western Brooks Range, where copper discoveries have been made. This is an important strategic initiative that could open up a major new area. It is also the first case of the state building infrastructure into an area to enhance exploration before a mine is determined to be viable.

Some words of caution on state assistance, however: When the government steps in to aid a private project, there must be maximum transparency to ensure public trust.

This is a challenge because the details of financing a project are complex and there is usually a need for the confidentiality of some information to protect the private partner. A lot of information is usually public. For example, when AIDEA's board meets to approve an investment, information is available and the meetings are public.

AIDEA and other state entities must make sure they present and publish as much information as possible in a way that is understandable to the public. The tools for doing that are readily available in the age of the Internet, although sometimes agencies lack the will.

Gaining and keeping the public's trust is important to the private companies involved, as well as to the government. The companies have much to lose if things go awry politically.

Tim Bradner writes for an Alaska economic reporting service. He also consults for private clients and writes for business publications. His opinion column appears every month in the Daily News.

Tim Bradner