Code red! Environmental challenges alarm mining industry.

• Author: Liles, Patricia
• Position: SPECIAL SECTION: MINING ISSUE

[ILLUSTRATION OMITTED]

Three years ago, a Fairbanks-based environmental group appealed a water discharge permit issued by federal regulators to Teck Cominco, developer of the Pogo gold mine in Interior Alaska.

The environmental challenge came a month after the permit had been issued and contractors had started work at the remote underground mine and mill complex, located about 40 miles northeast of Delta Junction.

In the following weeks, state and federal regulators met with representatives from the environmental group and the developers, and eventually hammered out an agreement in which the environmental group would retract its appeal, the developer would add some additional monitoring and construction work could resume.

The quick response by regulators and a timely resolution of the permitting issue was touted in Alaska's mining industry for months afterwards, held up as a graphic example of how the state is "open to mining."

Yet it appears that this tactic--environmental action groups appealing regulatory permits after the environmental review process is completed--has become the norm for Alaska's large mine projects.

Both the Rock Creek gold mine near Nome and the Kensington gold mine near Juneau faced a similar situation in their development.

State and federal regulators issued permits, allowing developers to start the large-scale construction projects, each well over $100 million. In both cases, environmental groups appealed federal permits regarding wetlands, causing the U.S. Army Corps of Engineers to withdraw its previously awarded approval of the project plans.

The Rock Creek project has since received its wetlands permit back, allowing the project to be completed. But as of late September, developers of the Kensington underground mine are still working to find resolution to the permitting problem that involves disposal of tailings in a nearby lake. The tailings disposal plan was previously approved by federal regulators before the appeal and subsequent lawsuit.

Construction of the mine and mill facilities continued and in late spring, the Ninth Circuit Court of Appeals, based in San Francisco, overturned a lower court decision upholding the permit validity.

[ILLUSTRATION OMITTED]

"The company is continuing to review its options, including engaging the environmental organizations' plaintiffs, and hopes to find a solution to the tailings facility at Kensington so it may proceed with production," the company said in a July statement.

Other options include possible appeals to a 15-judge panel of the Ninth Circuit and the Supreme Court of the United States.

Kensington is expected to produce 150,000 ounces of gold per year at an estimated cash cost of $310 per ounce of gold, with an expected mine life of 10 to 15 years. Contractors completed the main access tunnel for the underground workings and the surface facility structures...