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Alaska Metals Mining

Last Modified: 25th July 2014

Metal mining in Alaska is dominated by gold, silver, zinc, and lead.   Most of Alaska's mines are in remote areas, which confers both challenges and advantages, in terms of land access, power generation, transportation, logistics, and community relations.  

Metal mines play a strong but minority role in the state economy, creating several thousand jobs, producing metals and ore concentrate for export, and generating tax revenue via a modest excise tax.  Alaska’s major mines are mostly owned out-of-state, so actual company profits are exported and have minimal influence on the state economy.

Metal mining is economically and environmentally controversial in Alaska.  Mined metal is a valuable export and source of cash income for workers, but opinion is divided about its impact on local economies and well-being of most Alaskans.  Environmentally, several existing mines have caused water contamination problems, which can cascade into waterways, wild ecosystem health, and fisheries.

The state additionally has large deposits of metal ore, including copper, gold, silver, and zinc, which have never been mined.

Major Mines

Alaska has 5 major metal mines and numerous smaller mines in operation.  Currently proposed mines could dramatically expand the industry (see map).  Alaska's mines and proposed mines are almost exclusively owned by outside companies, and are minor in their contribution to the world supply of metals.  

The exception to both these rules is the Red Dog zinc-lead mine in Northwest Alaska, on the Chukchi Sea.  Red Dog supplies a major fraction of the world's zinc from its exceptionally rich ore, and is half-owned by NANA regional native corporation.  Likewise, the proposed Pebble Mine, if built, would be one of the largest open pit mines in North America, and would be a major source of gold and copper on the world stage - though it would be totally outside-owned.

General Controversy

Metals mining is controversial in Alaska.  There is currently intense political maneuvering around the Pebble Mine, and multimillion dollar lawsuits in-progress over impacts from existing mines such as Red Dog.  Much of the concern focuses on impacts (real or potential) to water, fish, and wildlife.  Fisheries and tourism are also important industries in the state, and many remote communities are dependent on fish for food, making the environmental impacts of mines a social and economic concern.  

Mines are also a subject of economic controversy.  Mines can create well-paying non-subsistence jobs in rural areas, where  work is often extremely scarce.  This income can come at the cost of environmental and resource damage and can transform local economies, causing effects ranging from new infrastructure development, to the influx of new goods and opportunities, to inflated price.  The benefits may fall unevenly across the population.  Finally, jobs may be created for local residents, but may also be filled by skilled "outsiders" from elsewhere in Alaska or the Lower 48 states, who relocate to the area for the work, but do not necessarily live or spend there.

Regardless of whether mines are built, exploration alone can sometimes provide local influxes of cash - as is seen in the town of Iliamna, the jumping off point for the massive, multi-year exploration of the nearby Pebble prospect.  Strong divisions of local opinion may be seen in such cases.  For instance, in the case of Pebble, Iliamna has reaped economic benefits from exploration and support for the mine is strong in the village, at least among some residents.  In contrast, many other local villages oppose the mine, and have not been socially or financially benefited by exploration.

Environmental Concerns

Hardrock metals mining can cause severe environmental contamination.  The primary form of damage is water contamination, usually caused by acid and toxic heavy metals entering waterways and groundwater.  The physical footprint of mines, waste impoundments, rock piles, and other facilities can be visually impressive, but is relatively small in scale compared to water damages, which can damage entire drainage systems.  Other associated damages can come from fugitive dust (sometimes toxic) coating the nearby landscape from blasting, rock mills, and waste facilities, habitat loss, and industrial accidents related to the mining operation, such as fuel spills.  Many existing and abandoned mines will require active treatment and maintenance forever to mitigate the impacts of the resource extraction, since some mining wastes remain hazardous indefinitely.

Alaska Gold Mining: The relative size of past, present, and possible future gold production in Alaska

FULL FIGURE

Metal mining has a history of causing severe and long-term environmental contamination outside Alaska.  According to the Environmental Protection Agency, mining has contaminated portions of the headwaters of over 40 percent of watersheds in the western continental U.S., and reclamation of 500,000 abandoned mines in 32 states will cost tens of billions of dollars.  Within Alaska, most mines and mining prospects have faced similar environmental problems, most notably water contamination, impacts of open-pit mining, and acid mine drainage.  

Economics

Alaska's mining history began with gold.  Russian exploration for placer gold began in the early 1800's.  The subsequent gold rushes in the 1890's were responsible for a population and settlement boom in Alaska.  Since that time a large number of mines have opened and closed throughout the state.  Today, hand-prospecting of placer deposits is limited to small tourist and recreational mining.  The vast majority of metal today is extracted from large scale open-pit and underground mines targeting massive metal sulfide ore bodies.  

Today, metals mining is a strong industry in Alaska, but is small compared to the oil industry and government sector.  The total value of metal production and exploration in Alaska was just over $3.4 billion in 2012, representing around 7% of the gross state product.  Over half of this was produced by the Red Dog zinc mine and much of the rest by the Greens Creek , Pogo, and Fort Knox gold mines.  Mining returns around 3% of its total market value to the state treasury, whereas oil/gas return around 20% of their market value, making mines a very minor source of state government revenues.  From the perspective of those who gain directly from mine profitability or adhere to a classic free-market economic view that low taxes stimulate development and lead to efficient allocation of resources, low mining taxes are a good thing.  To those who support a stronger permanent fund or support greater socialization of resource wealth, low mining taxes are problematic.

The mining industry provides around 4,000 direct jobs(2010) and several thousand additional indirect jobs.  The seafood industry generates roughly 80,000 jobs and $5.8 billion in total market value, and tourism 36,000 jobs and $2.4 billion.  Alaska's biggest job engines by far are the oil and gas industry ($6.9 billion in 2014) and the federal government, each supporting well over 100,000 jobs.  

The total Alaska metal mining industry valuation is roughly $3.4 billion.  Due to the high value of mined metals, this is disproportionately high per worker, compared to many other sectors of the Alaska economy.  However, it is unclear how much mine-created value is actually experienced by the internal Alaska economy, and how much is immediately exported out-of-state in the form of payments to out-of-state mine vendors, and profits to the various non-Alaskan mine owners.  Little mining equipment or supplies are produced within Alaska, and the remote location of most mines means that workers on-site do not spend their paychecks in local businesses while at work.  Much of the contribution of mines to state economy likely relies on how many local services (such as transportation) are contracted by the mine, and on the spending habits of mine workers.

Estimating mining's contribution to Alaska's economic health is complicated by the question "who is an Alaskan?"  Alaskans has diverse stakeholder groups, and these groups have differing interests in the state economy.  Many Alaskans are resident in the state for industrial work opportunities, and the structure of local economies is not a high priority.  These workers are often only part-time state residents.  In contrast, other Alaskans are oriented towards local but conventional economies, and have an interest in value staying in-state.  On a third extreme, village residents living a semi-subsistence way of life often combine outside goods (fuel, firearms, snow machines, etc.) with an intense reliance on local resources (fish, game, ecosystem services).  

Alaska's economy itself is heavily reliant on and interwoven with more robust manufacturing and service economies elsewhere.  The Alaska economy can be seen as continuous with outside economies, and Alaska has a large transient workforce.   As result, the question of "what is good for the Alaska economy?" is bedeviled by the question of "what are the Alaska economy's boundaries?"

Exploration

Prospectors are actively pursuing new mineral resources in Alaska.  Mining companies spent almost $331 million on exploration in 2012, a significant part of the industry's job contribution.  Most of these exploration efforts are being undertaken by foreign corporations.  90% of the exploration costs were incurred by Canadian corporations and a further 7% from overseas corporations.  The majority of exploration efforts occurred at the Pebble Mine, Donlin Creek, and Livengood prospects but work on smaller projects is also proceeding, such as on the Niblack Prospect in the southeast, and the Upper Kobuk Mineral Project in the Interior.

Alaska Hardrock Metal Mines Through Time: A timeline of metal mining in Alaska, from the known output of historical mines to the estimated reserve size of current mines and proposed future mines

FULL FIGURE

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By David CoilErin McKittrickBretwood HigmanAndrew MattoxGround Truth Trekking

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Date Created: 4th May 2010