Alaska mining industry sets record in 2007: will activity continue to grow or fall off in 2008?

• Author: Liles, Patricia
• Position: MINING

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In 2007, Alaska's mining industry set an all-time record for the amount of spending and value of minerals produced in the state, thanks to dramatic increases in metal prices and increased activity in the exploration sector.

According to state mineral industry officials, the total value of Alaska's mining industry is $4 billion for 2007, although that number could vary slightly, as final statistics are being gathered from the state's producing mines, current developers and mineral prospectors.

One key factor driving the global upswing in metal prices is increased consumption by Asian countries, primarily China and India, according to Tom Albanese, president and chief executive officer of Rio Tinto, the world's largest producer of aluminum, the second largest producer of publicly-traded iron ore and the fifth largest producer of copper.

CHINA'S GROWTH

"Look past the problems of the U.S. economy, to the broader shift of economic balance. China will continue to grow, despite the U.S. economy," Albanese said in an interview preceding a speech given in Fairbanks in mid-March. "China has gone from being a small consumer and the U.S., a large consumer, to the reverse--they are consuming twice as much of the basic building blocks as the U.S. and the pace is only moving faster."

During his presentation at the Alaska Miners Association's biennial conference in Fairbanks, Albanese said he anticipates increased consumption by China and India, and resulting demand on the mining industry, to continue for "...not for the next couple of months or years, but the next couple of decades.

"The entire industry will not keep up with the increase in demand," he added. "We couldn't even find tires to put on the trucks--that was three years ago, and we still have a tire crisis."

Industry interest is growing in Alaska's potential to supply that demand from the state's natural resources. Also growing in Alaska is stakeholder attention and involvement in development projects, Albanese noted.

"If Alaska can manage it, you will continue to attract mining investment from the world stage," he said.

Concerns about recent stakeholder and political policy actions--specifically circulating around the contentious debate over the Pebble project and resulting ballot initiatives instigated by environmental opposition groups--has the mining industry carefully considering their risk exposure by working in Alaska.

"The sentiment about Pebble has had an effect on industry's perspective of mining in Alaska on the world stage," Albanese said.

Albanese cited Alaska's falling ranking, from 13th in 2005 to 34th in 2007, on the Fraser Institute's annual survey of mining companies working in 68 providences throughout the world.

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