Red dog advances: metal prices have rebounded, as the global demand for such industrial minerals increases, meaning good news for Red Dog and its improvement and exploration projects.

• Author: Liles, Patricia
• Position: 2005 Mining Special Section

Alaska's largest metal mine completed several projects in 2005, keeping managers busy with planning and evaluating the extra work, while continuing to maintain production of Red Dog's zinc and lead concentrate.

"Overall, it's been pretty much business as usual for us," said Rob Scott, general manager of the Red Dog Mine, located in Northwest Alaska. The openpit zinc and lead mine is operated by Teck Cominco Inc. in partnership with NANA Regional Corp. and the Alaska Industrial Development and Export Authority.

The Native corporation owns the ore deposit and has contracted with mining giant Teck Cominco for mining. In turn, Teck Cominco has contracted with AIDEA for use of the Delong Mountain Regional Transportation System, consisting of a 52-mile road, ore storage facilities and the shipping port on the Chukchi Sea, about 12 miles south of Kivalina.

Red Dog has struggled through some lean times in past years, as zinc and lead prices dropped during the late 1990s and early in 2000.

But metal prices have rebounded, as the global demand for such industrial minerals increases. Recently, zinc has topped 60 cents per pound, Scott said, enabling the mine to report growth in revenues during the first half of 2005 compared to 2004, despite a decrease in seasonal sales volume.

"The price is up so much that our profits are up, even though the sales volume was lower," he said.

For the first six months of 2005, Red Dog posted an operating profit of $52 million, a $4 million increase over the prior year, according to the company's second-quarter report released July 25. Zinc sales for that period dropped to 160,000 tonnes of zinc, compared to 227,000 tonnes sold during the first six months of 2004. Lead sales dropped from 5,200 tonnes to 1,800 tonnes during the same period.

The decrease in sales is not due to any significant changes in production, Scott said. Rather, it's more of a timing issue, he said. While mining and milling operations continue year-round at Red Dog, metal concentrates are shipped only during the summer and fall. Concentrates are further refined by overseas smelters and the final product is sold throughout the year, as demand warrants.

"More product was sold in 2004, so we've had less to sell in 2005," Scott said. "It's just a timing thing."

The recent strong mineral prices have helped Red Dog managers to plan and invest in operations that will benefit the future of the mine. Most recently, construction crews completed paving the...