Alaska hard rock mining: producing mines look to extend mine-life.

• Author: Liles, Patricia
• Position: MINING - Cover story

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Alaska's largest hard-rock mines continued to advance mine-life-extending programs in 2009, even though continued lower base metal prices are expected to contribute to a second year in a row of decreasing production values in the state.

Extensive exploration drilling programs were completed this year at Fort Knox and Greens Creek mines, while Red Dog mine managers continued permitting work in 2009 on a new mineralized deposit that, if allowed by regulators, will add about two decades of mine life to the hard-rock operation in northwestern Alaska.

"We're working hard to make sure people understand the importance of the Aqqaluk deposit and the beneficial side of Red Dog," said James Kulas, manager of environmental and public affairs of Teck Alaska Inc., the mining company operating Red Dog.

That permitting effort at Red Dog has continued in earnest this year, even through market prices for the base metals produced at the remote hard-rock mine have remained lower than past years. Without permits in hand to start mining the new deposit, Red Dog will run out of ore in mid-2011.

And its impact on Alaska's mining industry is significant.

"Red Dog dominates Alaska's mineral production value, accounting for approximately 54.9 percent of the total value of Alaska's mineral production in 2008," said the authors of the 2008 Alaska Mineral Industry Report summary.

In fact, because of continued low zinc and lead prices--the metals produced at Red Dog--State officials estimate gross sales for all minerals produced in Alaska will be about $500 million lower than the $2.4 billion reported in 2008.

The decline is due to "lower metal prices on the average--mostly lead and zinc influence," said Rich Hughes, development specialist in the State's Office of Economic Development/Minerals and co-author of the annually produced Alaska Mineral Industry report. "The gold price is holding firmly, but does not replace the declines for zinc."

Production values for 2008 were nearly a 30 percent decrease compared to 2007, when Alaska's miners produced a record $3.36 billion worth of minerals, contributing to the industry's statewide total that eclipsed $4 billion that year.

Since then, base metal prices have declined, while at the same time, gold prices have increased, contributing to growing values from that sector of the Alaska mining industry.

As recently as September, gold surged over $1,000 an ounce, coming close to the all-time record price of $1,032 per ounce set in March 2008.

Additionally, the amount of gold produced in Alaska has grown in recent years, thanks in large part to increasing...