Pebble spending hits $140 million in 2008: drilling, environmental, engineering studies and public relations work to continue next year.

• Author: Liles, Patricia
• Position: MINING

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Pebble, Alaska's largest mineral exploration project, grew substantially in 2008 in terms of the size and value of the untapped natural resource, in the financial investment by its owners and in the amount of environmental data being gathered in its surrounding region in Southwest Alaska.

Located on State land 19 miles northwest of Iliamna Lake, Pebble contains billions of pounds of copper and molybdenum and millions of ounces of gold, that makes it arguably one of the world's largest undeveloped mineral resources. But Pebble also has become an ignition source for a heated public debate between pro-development and anti-mining factions in Alaska. That argument came to a head in late August with a statewide ballot initiative that would have changed State mining water and waste regulations, but was rejected by Alaska voters.

While that debate raged throughout much of 2008, spending on exploration, environmental, engineering and community relations programs at Pebble continued at an advanced pace compared to prior years.

MUCH MONEY SPENT FOR BASIC INFORMATION

In April, a $140.1 million budget for 2008 was announced by partners Anglo American PLC, a global mining giant that is acquiring a 50 percent interest in Pebble, and Northern Dynasty Minerals Ltd., a junior exploration company that acquired the Pebble property from Teck Cominco in 2002.

This year's spending plan grew by almost 50 percent over last year's $95 million budget. Since 2002, about $220 million has been invested in Pebble's development, not including this year's $140 million spending plan.

By the end of 2008, The Pebble Partnership will have invested about $360 million in the advanced exploration project, without capturing a single ounce of gold or pound of copper as any payback or return on its investment. In fact, the project's owners have not yet decided whether they will advance the project to the permitting stage that would seek regulatory authority to build a mine.

Comparatively, construction costs at the Fort Knox open-pit gold mine near Fairbanks, completed in late 1996, were about $350 million.

"With any of these projects, there are huge risks," said John Shively, a long-time Alaska businessman named in April as president and CEO of The Pebble Partnership. "In the predevelopment stage there is permitting risk, where you can lose hundreds of millions of dollars. In construction of a multi-billion project, there's potential for construction costs risks. And there's all sorts of potential...