Golden hopes: new gold mines in Alaska continue to wade through regulatory issues.

• Author: Liles, Patricia
• Position: MINING

Alaska's mining industry anticipated an increase in gold production of about 240,000 ounces in 2009 from the start-up of two new medium-sized gold mines in the state.

But regulatory issues continue to mire down those two gold mine operations -Kensington, in Southeast near Juneau, and Rock Creek, in Northwest Alaska near Nome. Whether gold production will start at either of those operations later this year was uncertain as of early December 2008.

What is certain is that the statewide value of Alaska's mining industry is decreasing, thanks to the global economic meltdown that dramatically impacted base and precious metal mining operations around the world in 2008.

"Alaska's minerals industry will have a greatly reduced value in 2008 by about $1 billion," said Rich Hughes, development specialist in the state's Office of Economic Development and Minerals. "2009 will be even more affected ... not sure of the number at this time due to too many unknowns."

The state's mineral industry value had been growing in recent years, jumping from $1.06 billion in 2003 to $4.01 billion in 2007--an all-time record for Alaska's miners.

Mine production values improved in 2007, thanks to increased volume and elevated metal prices, contributing to that growing industry in Alaska, according to the State's annual Mineral Industry Report.

But that growing trend in Alaska's mining industry began to reverse in 2008, particularly at mine operations suffering from rapidly declining metal prices. In the midst of the ongoing economic and financial uncertainty, two of Alaska's gold mines continue to be plagued by unresolved regulatory issues keeping those operations from producing the precious metal.

COEUR WILL WAIT FOR SUPREME COURT RULING

Kensington's regulatory problems arose shortly after its developer, Idaho-based Coeur d'Alene Mines, began construction in mid-2005 on the underground mine and surface milling facilities located about 45 miles north of Junean.

Back then, Coeur had just completed the third environmental review process for the gold mine project since 1990. In 2005, the mining company received all required permits to construct Kensington from State and federal regulators. But environmental groups continued to argue against the development's tailing (rock left over after gold extraction) disposal plan and appealed the permits issued after regulators had given the mine developer the go-ahead. That conflict ultimately resulted in federal regulators suspending...