The future of mining in Alaska: challenging times with tremendous potential.

• Author: Crockett, Deantha
• Position: SPECIAL SECTION: Mining

In my role at Alaska's trade association representing the mining industry, I am frequently approached with inquiries all bearing the same theme: "How are things in the mining industry?" Especially in today's environment of low commodity prices, reduced state and federal government spending, and layoffs in the multi-industry support sector, Alaskans and Americans are interested in learning what the future of mining may look like and how the industry may impact the economy.

In preparation for an upcoming presentation I plan to deliver, I recently polled approximately fifty AMA (Alaska Miners Association) members, ranging from diverse backgrounds within the mining industry, to obtain broad answers to the following three questions:

* How is the mining industry changing globally and in Alaska?

* How is your company responding to any affects felt by the lower price of oil?

* What are the biggest obstacles facing the mining industry in 2016?

I was awed with the extent of similarities from every single response I received. Miners that operate in Alaska, and many of whom represent entities with operations all over the world, described the same challenges and opportunities, ideas and experiences, and predictions for the future of mining in Alaska.

I will be honest with you, readers. It is a particularly challenging time in the mining industry. Globally, the industry is experiencing hurdles and facing even larger ones in coming years, and belt-tightening is occurring at varying levels of operations and businesses. Here at home, every Alaska miner knows the hurdles I speak of. The downturn in worldwide mining activity is being felt in all areas of the industry.

Industry Rocked by Prices

A sharp decline in commodity prices has, well, rocked our industry in the past year. At the time of writing this column, both precious (gold, silver) and base (zinc, lead) metals have seen prices plunge by 25 percent or more. Meanwhile, the operating costs have not dropped. This has squeezed the profitability of existing mining operations, and now many companies are operating under extremely conservative budgets. Some companies have begun to eliminate any excess or discretionary costs (which unfortunately results in reductions in workforce), cutting new project spending almost entirely, performing exploration activity only close to existing operations, and administering financial management to reduce debt and maintain cash flow.

With a discouraging revenue situation...