Alaska mineral industry update.

• Author: Borell, Steve
• Position: SPECIAL SECTION: MINING

With the startup of the Kensington Gold Mine in June, Alaska now has six large mines--one coal mine (Usibelli) and five metal mines (Fort Knox, Greens Creek, Kensington, Pogo and Red Dog). Each of these continues to operate at a steady pace. Numerous smaller family placer gold mines are also in operation, and sand and gravel mines all around the state are operating to support local construction projects.

The uncertainty for the Red Dog Mine in northwest Alaska was settled when the Environmental Protection Agency was able to assure Red Dog that the water discharge permit being issued was legally defensible. Environmental groups, representing a few disgruntled local residents, had appealed a minor technicality in an EPA permit that the mine had to have to continue operating. EPA determined that the mine could operate under criteria previously approved by a court decision. Teck then announced that it would begin development of the next mining area, thus preserving approximately 500 jobs in rural Alaska.

Even with some metal prices improving, the worldwide recession forced the operating mines to tighten their belts and look for ways to improve efficiency.

It now appears that the amount of mineral exploration in 2010 will return to the levels we saw before the worldwide financial meltdown of 2008-2009. In 2009 a total of 17 exploration projects each spent more than $1 million. This was down from 29 in 2008. All indications are that the level of exploration expenditures this year will return to the previous levels.

During 2009, if the exploration companies did not have their financing in place by early spring, many were not able to begin field work until late in the summer, it at all. These companies had to manage their finances very judiciously to ensure they retained sufficient funds to make their lease payments (often to Alaska Native corporations) or claim-holding payments, and cover the...