Mining Industry Advances Despite Low Metal Prices.

• Author: BORELL, STEVE
• Position: Overview of minding industry in Alaska - Brief Article - Industry Overview - Statistical Data Included

Prices for precious gold, silver and most base metals have been low, but strong interest in exploring for minerals in Alaska continues. This summer's exploration activity was characterized by companies spending their limited funds very judiciously on a few of their many promising targets. Alaska continues to be the destination of choice for many large and junior mining companies.

In times of low prices, exploration dollars are scarce and companies are very cautious with the limited funds at their disposal. They focus on states and countries having high geologic potential, which also have political and tax stability. State and Native lands in Alaska fit these criteria and continue to be the focus of the industry.

Alaska has the geologic potential and is known both historically and currently for some of the best deposits in the world. In their day, the Alaska-Juneau, Treadwell, Kennecott and Alaska placer mines were world-renowned. Today Greens Creek is the largest silver mine in the U.S. and Red Dog is the largest zinc mine in the world. Furthermore, when compared with other states and countries, Alaska is essentially unexplored; so the potential for new discoveries is tremendous.

Regarding political stability, Alaska also receives good marks. Recent legislatures and governors have been supportive of mining and have sought to encourage mineral investment and reduce the uncertainty of doing business in the state. Several relatively small but important changes have been made to statutes and regulations and these have continued to improve the business climate while maintaining stability.

For the past dozen years there has also been tax stability. Mining can never provide the level of direct tax and royalty revenues to the state that Prudhoe Bay has--nothing can. But, mining can provide quality jobs and economic opportunities for all areas of the state. This was shown dramatically by a 1999 McDowell Group study titled "Economic Impact of the Fort Knox Mine on the Fairbanks North Star Borough," prepared for the borough. Even though low gold prices mean that Fort Knox is not making a profit, it is providing 260 of the best jobs in the area. Fort Knox also spends over $35 million annually on local goods and services, generates $4.4 million annually in mine-related revenues to the borough ($16,900 per mine employee), and since the start of production has resulted in a 7 percent decrease in electric rates for residents of the borough.

Land ownership...