Water ballot issue hinders Alaska's mining industry in 2008.

• Author: Liles, Patricia
• Position: MINING

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Alaska's mining industry posted a record value in 2007 of nearly $4 billion, thanks to a hectic pace of exploration, construction of new mines and increasing market prices for metals produced in the state.

Growing nearly 300 percent in a four-year period, Alaska's mining industry has attracted global interest and is perched on the edge of becoming a major player within the world's mining jurisdictions with anticipated exploration and development of large-scale deposits and expansion of existing mine operations.

But the rate of mining-related activity has suddenly and unexpectedly slowed this year, attributed in part to two voter initiatives that may be included on August's primary election ballot.

A coalition of mining opponents gathered signatures last year for two voter initiatives that, if passed, would dramatically change regulations regarding water and waste handling at large mine operations in Alaska. The two initiatives are currently making their way through Alaska's judicial system in an effort to determine whether a public vote is legal, as the state's constitution reserves the duty of allocating state resources to the Alaska Legislature.

In May, ballot sponsors sought to withdraw one of the two initiatives from the August election, saying they would focus efforts on promoting the remaining initiative.

But the impact of the anti-mining ballot initiatives, combined with the public debate between mining industry advocates and critics permeating throughout Alaska's media, has dampened enthusiasm and industry investment, even before Alaska voters have a chance to decide the issue.

MINING FREE FALL

"There is no question in my mind that the unforecast, but very real slowdown in the Alaska mining industry being felt so far in 2008 versus 2007, is in part due to the uncertainty placed over Alaska by the water ballots question," said Curt Freeman, a Fairbanks-based consulting geologist. "And this slowdown is taking place despite the fact that demand for metals continues to rise and commodity prices remain at historic or generational highs."

At Avalon Development, Freeman has fielded questions regarding the water ballot initiatives from a number of mining companies, investment firms and individuals.

"The fact that they have taken the time to call or e-mail inquiries indicates to me that they are perceiving a possible negative change in Alaska's future," he said. "Regardless of whether or not the water ballots pass, smart money and smart companies put their resources in jurisdictions that minimize their risk."

DAMAGE DONE

"So in one respect, damage has already been done," he said.

Mining opponents who have pushed the water ballot proposals say their efforts are targeted at only the Pebble copper-gold-molybdenum deposit, located near Iliamna Lake in Southwestern Alaska.

Yet the initiatives include stringent proposals regarding use and disposal of water and waste, key components of any mine operation. Waste includes handling overburden, tailings and low-grade or non-mineralized rock for all large-scale operations.

Both of the two initiatives would apply to mine operations in excess of 640 acres, which includes all components of a...