Small mines struggle to survive.

• Author: Martin, Ingrid
• Position: Alaska's mining industry - Special Section: Slow Bore: A Tale of Obstacle Courses, Bright Prospects & High Hopes - Cover Story

Small mining operations may not qualify as the workhorse of the industry in terms of production in Alaska; dollar for dollar, larger mines easily outpace them. "But in terms of numbers of people employed, the small mine is probably right up there," says Dick Swainbank, an economic development specialist with the Alaska Department of Commerce and Economic Development.

Of concern to industry analysts, the state's small-mine operators are finding it increasingly difficult to pursue their livelihoods these days. Many areas once open for exploration now are off-limits. Further, regulations governing water quality, land reclamation and other environmental standards have increased operating costs and can make permitting a seemingly endless, frustrating task.

Also, the nation's 120-year-old mining law is under fire, leaving miners feeling that the industry itself is under attack.

Some industry analysts suggest small-time mining is fated to become extinct. The laundry list of changes in restrictions, regulations and fees that have gone into effect or that are under consideration, at both the state and federal levels, suggest that at best, their survival is threatened.

In the past year, bonding, which is intended to ensure that miners restore lands, has been a topic of much controversy. Although a moratorium on new regulations at the federal level this summer meant U.S. Bureau of Land Management bonding proposals were put on hold, those proposals are expected to become law.

Regulations likely will require bonding of $1,000 per acre during exploration, $5,000 for each notice-level (five acres or less) operation, and $2,000 per acre for a plan-level (affecting more than five acres) operation. A state law already in effect requires bonding of miners on state lands. Regulations being drafted would make miners on private lands similarly liable, affecting even operations on Native corporation property.

Fortunately, the state statute includes provisions for a bonding pool, an option that, at least initially, would significantly reduce the economic impact on individual miners. The pool was designed to help affected miners comply with state bonding requirements, but provisions in the act left the door open for participation by other miners as well. The bonding pool would serve as a kind of self-insurance among miners, to whom traditional surety bonds are no longer available.

The pool would assume a certain level of non-compliance, and contributions would be...