Ambler Road: Investing in a diversified future

As an Alaskan since 1967 and the former CEO and founder of Trilogy Metals, I wanted to correct some misinformation in several opinion letters on the Ambler Road, as well as explain why we need mining for a diversified Alaskan economy, and a sustainable energy and transportation future. Yes, Trilogy Metals is a Vancouver, Canada-domiciled company, but we trade on the New York Stock Exchange, and more than 70% of our shareholders (including me) are Americans. Most of our summer hires for our exploration and development programs are Alaskans, with more than 60% local Alaska Native employees. And for the record, we have expended more than $120 million on the project to date – so we are seriously invested.

While all of Alaska could be described as wilderness, the fact is that only 57 million acres are classified as federal wilderness – created and defined by the 1964 Wilderness Act and other important legislation like the Alaska National Interest Lands Conservation Act. ANILCA not only created most of the federal wilderness areas of Alaska (national parks, monuments and refuges to protect pristine wilderness for sightseers and wildlife alike), but it also mandated a right-of-way through the Gates of the Arctic Preserve (non-wilderness). Congress mandated this right-of-way to recognize the importance of the Ambler Mining District – an area of great mineral wealth selected by the state of Alaska and NANA Regional Corp. specifically to develop rich mineral deposits. The Ambler Mining District and the Ambler Mining District Industrial Access Project (AMDIAP) are not located in any federal wilderness.

The Alaska Industrial Development and Export Authority is a private, state-owned corporation with a strong balance sheet. They have a great credit rating, in large part due to the highly successful Delong Mountains Transportation System (DMTS) that supports the Red Dog Mine, one of the largest zinc mines in the world, on land owned by NANA Regional Corp. — which, by the way, has been operating for more than 30 years with no significant effect on the migrating caribou or subsistence hunting. The same is the case on the North Slope, with more than 50 years of operations. That balance sheet allows AIDEA to issue bonds that private bond holders will purchase – no state general funds needed. The money raised from the bonds pays to build the infrastructure and then the mining companies pay a toll to use and maintain the road to haul rich concentrates of copper, zinc and precious metals from the AMD. Bond holders won’t buy the bonds unless they are convinced that they will make a profit. After all, these are professional money managers – pension funds and the like who want a long-term guaranteed payout. This is a proven business model - a classic public-private-partnership structure used to build infrastructure around the world. The DMTS was an innovative approach when it was done 35 years ago, and such structures remain an excellent way to finance and build infrastructure today. To date, AIDEA has paid the state general fund more than $400 Million since formation. The model works.

In a world where there is increasing pressure to lower atmospheric CO2 levels to address climate change, carbon-based energy will come under increased scrutiny. We currently fund 90% of our $2 billion health care, education and other services with oil. What will that look like in 10 or 20 years? No one industry in Alaska can match oil and gas – they are a business like no other. But meeting climate change mandates will lower demand for oil. We need to diversify our economy and mining is one avenue to generate more revenue for the state to continue to provide needed services to Alaskans. Mining jobs pay over $100,000 annually – a salary you can raise a family on. Red Dog hires mostly Alaskans, with well over 50% local Alaska Native hire. In 2018, the mining industry contributed $148 million to the state general fund and an additional $34 million paid to municipalities. If we want mining to contribute more, we need more mines.

The Paris Accord on Climate Change identified two areas where we could meaningfully reduce our global CO2 emissions - switch to non-carbon-based energy (such as wind, solar, hydro, geothermal and nuclear) and transportation (electric vehicles). Alternative energy and electric vehicles require three to 15 times more copper and a host of other metals than do carbon-burning forms of energy and transportation. That is a fact that people concerned about climate change need to accept. I would rather have my copper mined here in Alaska, where we have one of the best environmental records in the world, and not in the Congo, where there is little regard for the environment and where child labor is still sadly commonplace. Let’s not be delusional and say we can recycle our way through this: We already recycle 85% of all copper ever mined. Should we make it 99%? Absolutely. I am a firm believer in recycling, but recycling won’t fill our own needs for generating alternative energy or driving electric vehicles, let alone provide for the three billion people in the world still living in poverty. We should all want a better life for them as well — but that takes metals.

I respect Greta Thunberg’s passion, but at some point, we have to stop complaining about how bad things are and use our ingenuity to address the problem. And we have a solution: Build a sustainable energy and transportation future. But that takes metals. So let us get on with mining them in a state with a great environmental track record.

Rick Van Nieuwenhuyse is the former CEO of Trilogy Metals, Ltd. He lives in Fairbanks.

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