The status of mining in Alaska: new mines coming online, plus, $12 million in exploration this year.

• Author: Borell, Steve
• Position: MINING

While worldwide coal prices remain steady, metal prices have been on a rollercoaster reflecting widespread uneasiness over the global economy. Operating mines continue producing, but impact from the uncertainty is especially severe for junior exploration companies. Commodity prices are the primary driving force for the mining industry everywhere, including Alaska. Alaska's operating mines feel these impacts, as well as the cost of fuel, which is a major component of operating costs at every mine.

Last year, demand was rising so rapidly and supply was so tight that almost any new project seemed attractive and the investment community was very aggressive. This year, however, investors are holding their money close and often selling some investments to gather more cash as a guard against a further downturn in the overall economy.

Costs have continued to increase even as prices and demand have started to wane. In addition to operating costs, mines vary widely depending on location, type of ore, grade of ore, local tax regimes, etc., and investors are seeking projects that will best face the challenges that may arise. It is important to note, however, that the emerging countries are very strong economically and this bodes well for future coal and metal prices.

Alaska now has five large mines in operation, with the new Rock Creek Mine near Nome up and running by the time this is published. The Kensington Mine north of Juneau is constructed and ready to operate, but a lawsuit, now appealed to the U.S. Supreme Court, blocked the approved design for tailings placement. The mine is now working to obtain permits for an alternative design, which should allow the mine to begin operating in mid-2009. At the same time, the Alaska Miners Association and others are filing briefs in the U.S. Supreme Court supporting the original design. And construction continues on the heap-leach facilities at Fort Knox that will significantly extend its mine life by processing low-grade ore that cannot be economically processed through the mill.

The Chuitna Coal project, located across Cook Inlet 50 miles west of Anchorage, is in the final stage of completing a Supplemental Environmental Impact Statement (SEIS)...