Native corporations work with mining companies: exploration offers employment.

• Author: Liles, Patricia
• Position: NATIVE BUSINESS

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The largest single financial contributor to Alaska's $4 billion mining industry is the Red Dog zinc and lead mine. Located in a remote region of Northwest Alaska on land owned by NANA, it is the Alaska Native regional corporation for the Inupiat people of Northwest Alaska.

But Red Dog provides much more than just a large financial contribution to the state's mining industry--it showcases a successful, long-running operating relationship between industry and indigenous landowners that has weathered difficult economic times due to low market prices of the industrial metals produced. Red Dog provides hundreds of seasonal and year-round jobs, a career track for those inclined, a strong shareholder-hire policy and, in recent years, a wealth of resource-backed royalty revenue that is shared throughout the Alaska Native community.

SHINING EXAMPLE

In short, Red Dog is frequently held up as a best-case example of how resource development can flourish on Native-owned lands and can provide sustaining benefits to the region.

Toward the end of 2007, the mine achieved payback for developer Teck Cominco, shifting the financial relationship between the mining company and NANA into a net profit-sharing mode. During the last three months of 2007, NANA received 25 percent of the net profits from Red Dog, $68 million, compared to the $32 million paid to the corporation under the previous 4.5 percent net-smelter royalty paid during the same quarter in 2006. Total royalty payments to NANA and to the State of Alaska for 2007 were $230 million, compared to $112 million the year prior, according to Teck Cominco's fourth quarter and year-end report.

And the bulk of that revenue increase isn't included in NANA's fiscal year 2007 report, which closed at the end of September, according to Helvi Sandvik, president of NANA Development Corp., the Native corporation's operating arm. "We have a much larger financial contribution from Red Dog and we're happy about that. It's due to the price of zinc being so high, which accelerated Teck Cominco's recovery," Sandvik said. "So NANA's share of the royalty is higher, and we saw some of that benefit in 2007."

Beginning in 2012, NANA will receive 30 percent of the net proceeds of production, with the percentage increasing 5 percent every five years afterwards, until the Native landowners receive half of the production profits from Red Dog.

While the recent increase in revenue has helped NANA set new...