Former Governor Bill Walker was absolutely correct. The Army Corps of Engineers Pebble Mine Environmental Impact Statement (EIS) is a waste of time and money. How can the Corps present an EIS to the public absent an economic analysis showing what they will inevitably approve is actually real? Or just as wastefully, how can they approve plans filed by a company who will not be the operator? The Pebble Mine “Partnership” consists of one company, Northern Dynasty, which does not have the experience, expertise or financial ability to plan and build this mine, nor does it have any intention to do so. In the increasingly unlikely prospect that a real mining company with financial resources steps in, it will control operation and determine its own mine plan, and that will not be the one the Corps just filed. Even more ridiculous is that history and facts indicate a mine does not exist at Pebble, a big low-grade deposit, sure, but not an economically viable mine.
Cominco (now Teck) discovered the Pebble deposit in 1987 and conducted exploration from 1988 to 1992 and again in 1997. I first learned about the Pebble deposit in 1992 after I assumed responsibilities for environmental matters at Cominco. The consensus was that it was uneconomic due to low-grade ore, infrastructure costs, and environmental challenges, especially water management, which is the second biggest operating cost after labor. Later, when Teck dumped Pebble in 2001 I was curious about the company that acquired it. Considering my long experience in the mining business in Vancouver and Forbes’s assessment of the Vancouver stock scene where more “junior” mining companies are headquartered than anywhere else as the “scam capital of the world”, I dismissed it as another stock hustle. I changed my mind, with reservations, when Anglo American bought in. Today I am back where I started.
Keep in mind that Cominco was the most experienced northern miner in the world. Even so they were learning hard lessons about water management in Alaska at the Red Dog Mine. Specifically, almost immediately upon beginning operation they intercepted a major aquifer that had not been identified during exploration that, along with unexpected amounts of run-off from disturbed ground, poured acid and heavy metals into Red Dog Creek. The pH of this discharge was 1.4. To put that into context, a bucket of this splashed on your car would overnight remove the paint.
The Ikalukrok Creek, to which Red Dog Creek is tributary, ran blood red for twenty-five miles to the Wulik River where a rusty plume was visible halfway to the ocean. Observing this from an aircraft for the first time I was told that this was natural. Red Dog has perpetuated this lie ever since. Fish kills in the Wulik, one of the most important Arctic Char waters in the State, were reported but never documented. Finally, several years after start-up and after two Clean Water actions for hundreds of violations and a four million dollar fine, this discharge was partially resolved. So, when considering Pebble with very low-grade ore, the water table at the surface and annual precipitation of forty inches, the Cominco mine planners wisely dumped it. Unlike the Galore Creek project they sold to Nova Gold just across the border in British Columbia, they did not retain back-in rights.ob
The Vancouver Company that acquired Pebble from Teck Cominco was the Hunter Dickinson Group who, according to their 2001 web page, was in the business of discovering properties and developing them to the permitting phase. There is a name for this business model: pump and dump. A shell company they owned, Northern Dynasty, was given the task of doing something with Pebble. And it has done really well, brilliantly in fact. In its sixteen-year history, shares have hit fifteen and then twenty bucks with lots of nice bumps in between. If you were an insider who got in at forty cents you are probably pretty happy. Otherwise, all it has produced is angst for salmon fishers, profit for executives, insiders, consultants and lobbyists, and interest from a couple of law firms who specialize in stock fraud. Perhaps they are the same ones who represented the plaintiffs against Nova Gold who not long ago settled out of court for $28 million (CDN) over alleged securities fraud at Galore Creek.
Northern Dynasty began exploration in 2002 and quickly discovered a really rich deposit that the most experienced northern miner in the world had “missed”. Soon Pebble was “world class”, “world’s biggest”, and so on. In 2007, this enticed Anglo American and Rio Tinto to buy in. Mitsubishi, which is not a mining company but has copper smelters, got in and the Pebble Limited Partnership was created. With the failure of Ballot Measure #4 in 2008, Pebble was in a perfect position to begin the permitting process; they had all the environmental and social data they needed along with compliant and supportive governments, and so they promised permit application in 2009 and almost every year since – this during a period when gold and copper were at record highs. But Anglo, Rio, and Mitsubishi saw things differently because by 2014 they had all abandoned Pebble without retaining any interest in the deposit.
Along with Cominco, they spent around seven hundred million dollars learning it was not viable. Four years later, no senior mining company has shown the least interest except for Quantum Minerals, which is allegedly teetering on bankruptcy, was less than forthcoming regarding its intentions, whose executives have zero experience in North America and who are involved in an ugly legal conflict in the Democratic Republic of Congo. After a brief flirtation with Northern Dynasty even they backed out. All this time Northern Dynasty soldiered on with Washington lawyers and public relations shills – who wouldn’t know a trailer hitch from a frontend loader – complaining about environmentalists and the EPA for blocking a “world class” development – even the Trump EPA.
Besides routinely exaggerating benefits and employment projections, Pebble has released two mine “plans” beginning in 2011 with the “Preliminary Assessment of the Pebble Project”. This five hundred and twenty-nine page report showed a mine plan in some detail but when it came to infrastructure it collapsed. In 2017, Northern Dynasty released a much less detailed plan called “A New Path Forward” and this one forms the basis for the current Army Corp EIS. The “New Path” proposes a smaller and differently oriented mine, one never to experience an earthquake, one never to expand or use cyanide (until they do), and using icebreaker barges to cross Lake Iliamna.
Like the first plan it too falls apart over infrastructure, proposing various options for power and access. We are assured the new plan is environmentally even better than the old one; the one they promised would have zero environmental impact and no “net loss” of salmon. Regardless of the scenario, what will be missing in any plans submitted for approval will be risk analysis. The real risks will not be identified. Risks like dam failure, of which the company designing the Pebble tailings dam has had three disastrous failures since 2000. Nor will there be risk analysis of the inevitable road spills, blocked culverts, inevitable mine expansion with use of cyanide and therefore mercury release, acid mine drainage, fuel spills, accidents and so on. And an icebreaker barge carrying ten-ton pallets of cyanide could never be a problem. And how about dredging the port? And how about earthquake? To say they know the actual location of the Clark Lake fault is highly questionable. As if that were not enough, who would pay for cleanup and maintenance in case of a disaster or when the markets tanked and the foreign operators vanished behind legal firewalls?
What is consistent between both of these “plans” though, is reliance on public funding for infrastructure regardless of the scenario. The 2011 report states: “It is expected that the Pebble Project will utilize the natural gas source ultimately selected by the State of Alaska to supply its power plant by connecting to the existing natural gas distribution system on the Kenai Peninsula. The Pebble Project may also serve as a catalyst and anchor customer for new natural gas production and infrastructure development in the State of Alaska”. The “New Path” states: “…our plan aligns with public policy prioritizing development of low cost energy for rural Alaska”, and “Energizing Southwest Alaska”, and “Low cost electric power or natural gas for region.”
The Pebble CEO recently admitted that they haven’t conducted even a preliminary economic feasibility analysis nor will one be ready any time soon. What major mining company is going to buy-in without one? Not only that, since Northern Dynasty will not be the operator – whoever that might be will have different ideas how to mine Pebble and these will be dramatically different than the current “New Path.” The notion that some foreign mining company is going to spend six or more billion dollars and build the “New Path” mine and never expand and leave all that gold in the ground and in the tailings is nuts. That would not impact approval though. Permit applications would be modified and quickly approved again.
Finally, who would pay for power and other infrastructure? Both published mine plans allude to State contribution for infrastructure. It’s hard to imagine that Northern Dynasty has for sixteen years promoted a project, for which well over half a billion dollars were spent, without conducting an economic feasibility analysis. Beyond doubt they have – many of them – and they have all been negative. It’s also hard to believe they counted on public financial support without assurance from the State that this was forthcoming. Or perhaps not, but in any case both published plans tout regional development as justification for State money.
The people of Alaska need to know where these discussions are at, what commitments the State has made to Northern Dynasty, and what intentions they have for the region. If they have made none, and will not make any, then Pebble is dead even before considering all the environmental risks. Finally, consider that Cominco, Anglo American, Rio Tinto, and Mitsubishi decided it was a no go after they spent twenty-six years and seven hundred million dollars.
Bruce Switzer served as senior technical advisor and public spokesperson for Alaskans for Clean Water during Ballot Measure #4 in 2008. He was in charge of environmental affairs at Cominco, reporting to the President at the time Red Dog was going into production. Previously, he held a similar role at Denison Mines and has worked as a consultant to businesses in the mining industry. He has managed the successful permitting of mines and worked on the permitting of projects that did not proceed. He wrote a novel in 2012, “The Copper Mine,” which is about a tailings dam failure at a Canadian owned mine in Chile.