A bright spot among Alaska’s resource development industries is mineral exploration. The mining industry is poised to grow, if we can continue to support policies that encourage responsible resource development.
Mineral exploration is ramping up across Alaska. In 2011, $300 million was spent on Alaska mineral exploration, about a third of total U.S. exploration, a 13% increase from the prior year. In 2011, there were 30 mineral exploration projects that invested over $1 million, and I expect the 2012 numbers will show another banner year supported by a continuation of strong commodity prices, and the highly prospective nature of Alaska’s mineral endowment.
The Donlin Gold Project, with over 42 million ounces of gold reserves, recently announced it is soon commencing permitting after completion of a favorable feasibility study. Other advanced exploration projects in the state include Money Knob at Livengood north of Fairbanks, the polymetallic Niblack prospect on Prince of Wales Island in Southeast, and the Southwestern Alaska Pebble prospect. Recognition of the strategic importance of rare earth elements has bolstered enthusiasm for several occurrences, including the Bokan mountain prospect in Southeast.
The Donlin project alone would provide an estimated 3,000 jobs over the three-year construction period. The capital costs to develop this mine and associated infrastructure is estimated at close to 7 billion dollars. Once operating, 600 to 800 high-paying jobs are anticipated.
If any one or more of these advancing prospects mature to development, they will provide significant benefits to the rural areas where they are located, as well as our urban support centers. Mining benefits both rural and urban Alaska, with 2011 data showing close to even job distribution between the two. These new mines can add to the existing 4,500 direct jobs with an average annual wage of over $100,000, and the tens of millions of dollars existing mines already contribute to state and local government revenues.
Three of RDC’s top legislative priorities are focused on setting an appropriate stage to advance projects in all resource industries that can meet the many environmental standards required to move to development.
First, RDC encourages the state to promote and defend the integrity of Alaska’s permitting process and advocate for predictable, timely, and efficient state and federal permitting processes based on sound science and economic feasibility. There is no surer way to drive investment out of Alaska than by prejudging projects based on media campaigns and fear mongering before they are objectively evaluated in the design and permitting phase. Alaskans must demand vigorous and credible processes to ensure public resources are not adversely impacted from development. RDC is committed to supporting and improving these systems and making sure our state and federal permitting agencies have the needed capacity to do their jobs.
Second, RDC supports efforts to bring more accountability to the appeals and litigation processes for community and resource development projects. While we all recognize the need for the public to challenge decisions of their government when necessary, litigation to delay resource projects has become endemic. There must be more accountability to help curb the abuse of these appeal rights that are often used to frivolously frustrate legitimate development.
Litigation causes delays, lost wages, and other hardships to industry, and while often cases are ultimately thrown out, they are done so only after they have invoked considerable damage. Shouldn’t plaintiffs have some skin in the game, and provide bonding to cover lost wages and legal fees when their claims are not justified? While it will not address litigation in federal courts, HB168, introduced by House Resource Co-Chair Representative Eric Feige, will help increase accountability for cases in state courts. Last session this bill passed the House with bipartisan, rural and urban support and is awaiting hearings in the Senate committees of referral.
Finally, in addition to supporting needed revisions to the punitive oil and gas tax “ACES” that is contributing to an accelerating decline in North Slope oil production, RDC advocates for tax policies and incentives that enhance the State of Alaska’s competitiveness for all of our resource industries. Any resource development project has economic limitations, and whether it is oil and gas, mining, or fish harvesting and processing, expecting resource industries to pay taxes that are far in excess of those in other jurisdictions will simply drive capital investment out of Alaska.
We have the natural resources that are the envy of the world and we have the markets. With focused leadership in Juneau and Washington, 2012 and the ensuing years can be a time of growth for Alaska’s resource industries.
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