Mining News: Pebble battle frontline erupts in D.C.

With the U.S. Environmental Protection Agency seemingly positioning itself to
exercise unprecedented powers to halt the Pebble project without giving
developers the opportunity to have their plans vetted under the current
permitting process, the stage is set for a mêlée that could shape environmental
policy in the United States.

“The decibel level is rising,” Peter Robertson, senior vice president for
corporate affairs with the Pebble Partnership, told The Hill. “It’s gaining more
attention all the time — and appropriately so because of the momentous decision
the EPA might make in a relatively short timeframe.”

On one side, a group of environmentalists, fishermen and West Coast Democrats
contend that Bristol Bay’s world-class salmon run is too vital a resource to
allow a large-scale mine like Pebble to be allowed there. Many belonging to this
anti-Pebble contingent have urged the EPA to employ its full arsenal to stop the
potential development of this large-scale mining project, including a presumed
provision under Section 404(c) of the Clean Water Act to pre-emptively deny the
issuance of permits needed to develop and operate a mine at the colossal
deposit.

Although the U.S. Army Corps of Engineers has been relegated the authority
over CWA Section 404 permits, a provision grants the EPA the power to prohibit,
restrict, or deny such permits that pose an unacceptable adverse impact to
fisheries or other water uses.

While this authority has never been used to deny a project the right to apply
for permits, the EPA claims it has the power to do so.

Pebble proponents, including a group of Republican senators, argue that the
EPA does not and should not wield the power to strike down Pebble before
developers have the opportunity to apply for permits.

Even The Washington Post has opined that Pebble developers, Northern Dynasty
Minerals and Anglo American, should be given the opportunity to have their
mining plans vetted by the full permitting process.

“If complete federal reviews find that the companies can’t protect the
fishery, regulators can reject the project. But, given the potential economic
value of the mine, they should hear the companies out,” the newspaper concluded
in a June 23 editorial on Pebble.

Republicans grill EPA

The latest volley on the Washington D.C.
front of the Pebble battle was launched by group of five Republican senators
concerned that the Bristol Bay Assessment – a study being carried out by EPA to
determine the effects large-scale mining would have on the fish resources in the
area where Pebble is found – is intended to build a case for denying the Pebble
Partnership the ability to apply for permits.

Sens. John Barrasso, R-Wyo.; John Boozman, R-Ark.; Mike Crapo, R-Idaho; David
Vitter, R-La.; and Roger Wicker, R-Miss., questioned the motivations of the
assessment in a June 11 letter to Ken Kopocis, nominee for assistant
administrator for EPA Office of Water.

“What harm would result from EPA allowing Pebble Mine proponents to actually
apply for a Clean Water Act permit before commenting on potential mining
impacts, instead of the agency speculatively opining on hypothetical scenarios?”
the senators asked.

The hypothetical mining scenarios EPA?used as a basis of the Bristol Bay
Assessment have been a point of contention for Pebble proponents.

“The Bristol Bay Watershed Assessment process has truly become the theatre of
the absurd,” Northern Dynasty President and CEO Ronald Thiessen said. “Rather
than waiting for the Pebble Partnership to submit a proposed development plan
for consideration by federal and state regulatory agencies under the National
Environmental Policy Act, something that is expected to occur this year, EPA has
invented its own hypothetical mine, it has continued to ignore modern mine
engineering practices and regulatory requirements, it has shunned the best
available scientific and environmental data at its disposal, and it has created
a public and peer review process designed to minimize scientific scrutiny of its
work.

The Republican senators claim the EPA has been evasive when it comes to the
impetus for conducting the Bristol Bay Assessment, leading the lawmakers to
surmise “that the agency feels the assessment is a necessary predicate for a
future ‘pre-emptive veto’ of the Pebble Mine project.”

“This is a dangerous and unprecedented tactic that would allow EPA to
jeopardize the project even before a CWA permit application has been submitted,”
the lawmakers wrote.

The senators closed their letter with two final questions for Kopocis to
ponder, “Has EPA identified a specific harm that will occur if Pebble Mine is
allowed to submit a CWA permit application? If no specific harm has been
identified, why is EPA dedicating precious and scarce resources to speculation
on potential mining impacts to the Bristol Bay watershed?”

Vitter, the top Republican on the Environment and Public Works Committee,
said, “EPA is playing a dangerous game, using hypothetical situations to shut
down job creation.”

This sentiment is shared by the world’s largest business federation.

“EPA’s decision to choose a poor-performing hypothetical mine plan to base
their study on is problematic and is stacking the deck against the project
before it has even been proposed. At a minimum, this exercise by EPA prejudices
the fair and unbiased consideration of a mine proposal that would actually
provide much needed jobs — thousands of them — for America’s economy,” the U.S.
Chamber of Commerce wrote in a Bristol Bay Assessment public comment letter to
EPA.

Democrats petition Obama

While Republicans are pressing EPA for
answers, a group of West Coast Democrats are urging the Obama Administration to
remain vigilant in protecting Bristol Bay from large-scale mines, and Pebble in
particular.

The lawmakers – Sens. Maria Cantwell and Patty Murray, D-Wash.; Sens. Barbara
Boxer and Dianne Feinstein, D-California; and Sen. Jeff Merkley, D-Oregon –
worry that developing the mammoth copper-gold-molybdenum project could harm the
salmon runs in the Bristol Bay region of Southwest Alaska and by extension
threatens thousands of fishing-related jobs in their states.

“Our states have a strong maritime history of which our commercial fishing
industries are a key part. In order to maintain these direct fishing and
processing jobs, and the jobs supported by associated businesses like gear
manufacturers, shipbuilders, suppliers and other maritime businesses, we must
maintain healthy, sustainable fishery resources,” the senators penned in a June
10 letter to President Obama.

The policymaking quintet referred to a recent study by the University of
Alaska, Institute of Social and Economic Research that shows the Bristol Bay
salmon fishery generates some 6,000 full-time jobs in Washington, Oregon and
California.

The letter to Obama claims the Bristol Bay fishing and processing industry
“fuels approximately 12,000 seasonal jobs and another 10,000 salmon-related
industry jobs across the United States, from Alaska to Maine.”

This assertion, though, was a misread of the Bristol Bay salmon industry
study by ISER.

The report reads, “In 2010, the Bristol Bay sockeye salmon fishery supported
12,000 fishing and processing jobs during the summer salmon fishing season.
Measuring these as year-round jobs, and adding jobs created in other industries,
the Bristol Bay salmon fishery created the equivalent of almost 10,000
year-round American jobs across the country, and brought Americans $500 million
in income.”

The University of Alaska research group did find that the West Coast states
are large beneficiaries of the economic activity created by the Bristol Bay
fishery.

According to the ISER report, “About one-third of Bristol Bay fishermen and
two-thirds of Bristol Bay processing workers live in West Coast states
(Washington, Oregon and California).”

“Today, the state’s (California) fishing industry remains closely tied to the
health of Bristol Bay; Californians hold over 140 Bristol Bay fishing permits,
the second highest number for any state after Alaska and Washington; and these
permits enable over 550 jobs related to salmon fishing,” the lawmakers wrote.

The letter urges Obama “to protect Bristol Bay from any large-scale mining
that would threaten our nation’s vibrant fishing economy.”

To further this discussion, the West Coast lawmakers requested staff meetings
with the Obama Administration’s Council on Environmental Quality and Department
of Commerce.

Economic engine

The Pebble Limited Partnership – a 50-50 alliance
forged between Vancouver, B.C.-based Northern Dynasty and London-based Anglo
American – contend that West Coast fishermen could enjoy their annual bounty
while mining the massive Pebble deposit could add several thousand jobs and
billions of dollars in economic activity that centers on Bristol Bay and ripples
outward across the country.

In late May, the Pebble Partnership released “The Economic and Employment
Contributions of a Conceptual Pebble Mine to the Alaska and United States
Economies,” a 69-page report commissioned by the developer that forecasts a mine
at Pebble could contribute US$1.1-US$1.4 billion annually to gross state product
during the initial 25 years of operation.

“Pebble is a substantial multibillion-dollar state asset as shown by this
report, which provides great insight regarding the long-term positive economic
impacts the project could have for the region, state and the Lower 48,” said
Pebble Partnership CEO John Shively. “For perspective, the report indicates
Pebble development alone would pay more in annual taxes to the state than the
entire fishing industry combined. This clearly shows Pebble development could be
an important economic driver for Alaska’s future.”

Compiled by IHS Global Insight, which is considered among the leading
economic analysis and forecasting firms in the world, the economic report
estimates that some US$4 billion in taxes and royalties from mining the ore at
Pebble is projected to be deposited into Alaska coffers over the first 25 years
of production. The federal government would collect another US$4.4 billion in
taxes during the same time-span.

Construction of the mine will require a capital investment of more than
US$1.2 billion annually in direct spending over a five-year timeframe.

During the construction phase, the Pebble project would support some 16,000
jobs across the United States, nearly a third of which are projected to be held
by Alaskans. Roughly half of the some 5,000 in-state jobs would be directly
involved with developing the mine; the balance of the swell in employment would
be with suppliers or result from jobs induced by the added economic activity
spurred by the development of Pebble.

Once the mine is built, it is projected to provide roughly 2,900 operating
jobs, of which 915 will be at the mine. The average annual wage for on-site
workers at Pebble is expected to be roughly US$109,500, according to the report,
and about 75 percent of these high-paying jobs are expected to be filled by
Alaska residents.

“What is critical for us is that Pebble does provide a major positive impact
in the region and in Alaska,” Shively said. “At the local level, Pebble could
provide a dramatic increase in potential revenues to the borough. This sort of
project can create an economic transformation in a region that currently faces
economic challenges, due largely to a serious lack of year-round jobs.”

In addition to jobs and entrepreneurship opportunities available to the
residents of the Bristol Bay region of Southwest Alaska, the report estimates
the mine would contribute some US$30 million in taxes to the Lake &
Peninsula Borough where the massive copper deposit is located.

The IHS Global Insight study is based on a conceptual mine plan using an
iteration of the ongoing engineering work undertaken by the Pebble Partnership.
The study estimated the state and national economic benefits associated with a
five-year construction phase, followed by a 25-year production phase, and the
potential for three subsequent 20-year development phases.

Pebble engineers are hammering out the final details of a mine-plan that is
expected to be released to the public later this year.

“While we are still finalizing our initial development plan for Pebble, this
starts to give us some context about the project from an economic perspective.
We are continuing our work on the environmental package for the mine which is
one of its most critical design elements. We look forward to sharing our plan
with Alaskans later this year,” Shively added.

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