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Everything about the Pebble copper-gold-molybdenum prospect in Southwest Alaska is gigantic--the amount of metals contained in the deposit, the spending on exploration and environmental work this year, the size of the operation needed to produce metals, and especially the level of public attention and controversy created.
Years, perhaps even a decade away from possibly pouring the first gold bar and shipping copper and molybdenum from the Iliamna Lake region, Pebble is creating a huge impact on the state.
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And that's not limited to just the state's mining industry. It is Alaska's largest mineral exploration project, with the most surrounding mining claims staked and with a seasonal work force that involved 625 people last year. More than any other single mine operation in Alaska.
The discovery and discussion about development of one of the world's largest unmined mineral deposits is creating an enormous effect in the public debate about resource development in Alaska. Pebble has become a lightening rod for debate between pragmatics who believe that Alaska's past, present and future economy relies heavily on responsible natural resource extraction and environmentalists, including many Outsiders, who view Alaska as the nation's Last Frontier and unsullied wilderness area.
That basic public debate has placed Pebble's developers, Vancouver, B.C.-based Northern Dynasty Minerals Ltd., and its new partner, global mining giant Anglo American plc., in a precarious position.
Project managers are more than a year away from beginning the formal permit-seeking process to build and operate a hard rock mine, seeking approvals from a myriad of state and federal regulators in an expected lengthy, closely monitored and very public environmental review. Detailed development plans have not been released, partially because the scope is being redefined to include a recently discovered, deeply buried mineralized zone.
Spending at Pebble is expected to grow in the near future, as the project advances toward a development decision. Between 2002 and 2006, Northern Dynasty spent a total of $130 million on Pebble. In 2007, spending on the project is expected to total $95 million. Under the agreement announcing the partnership, Anglo American will earn a 50 percent interest in Pebble by making a staged cash investment of $1.425 billion, after which expenses will be shared equally by the two companies.
The Anglo cash contribution plan includes spending at least $125 million to complete a pre-feasibility study targeted by the end of 2008, an additional $325 million for a feasibility study by 2011 and the next $975 million of spending for primary construction.
"The purpose of the strategic partnership is to engineer, permit, construct and operate a modern, long-life mine at the Pebble Project," the two companies said in July, adding that they hope to begin commercial production at Pebble by 2015.
ENVIRONMENTAL OPPOSITION VOCAL, ACTIVE
Yet Pebble is already facing a groundswell of opposition from vocal, well-funded environmental groups that are using a wide variety of techniques to try to stop the potential mine project from being developed, even before the permitting process starts. Glossy print ads and high-profile television ads include short sound bites laced with emotion, which link mining with decimation of the Bristol Bay fishing industry.
Those opposition ads leave out details out about the actual number of Bristol Bay salmon that spawn in the three Pebble area drainages-the North Fork Koktuli, the South Fork Koktuli and the Upper Talarik rivers. Extensive environmental baseline studies show that .5 percent of the sockeye salmon and 4.5 percent of the chinook salmon in Bristol Bay are produced by these drainages, according to Jim Buell, an environmental fisheries consultant at Pebble.
Such 30-second opposition sound bites are surprising at this early stage of the process, according to Northern Dynasty. "The advertising spending is unprecedented for a project that is as many years from a decision point as this," said Sean McGee, vice president of public relations for Northern Dynasty.
In addition to ongoing communication efforts in the region that started several years ago, which include community relations and stakeholder outreach efforts, Northern Dynasty began spending money this year on advertising to counter negative messages being carried out to the general public.
"It's significantly less than our opposition is spending, significantly more than we would like to be spending," McGee said. "We felt we need to do so, just to make sure people hear information from the company, to get more information out about the project ... not to leave the playing field for our critics."
One of the most ardent critics of the Pebble project is Bob Gilliam, president and chief investment officer of Anchor-age-based McKinley Capital Management Inc. Gilliam owns a large luxury log facility on Lake Clark located some 30 miles northeast of the Pebble project, which is located near the primary air route for planes traveling between Anchorage and Iliamna, but not in a drainage of the mineral deposit.
Gilliam has filed lawsuits against the state in its port and road reconnaissance engineering project related to Pebble, and has been involved in the Renewable Resources Coalition, a nonprofit organization with a stated mission to "preserve and protect the ongoing viability of Alaska's abundant fishing and hunting resources and the lands and waters they need to survive." The organization's Web site targets the Pebble project, citing risks from mining as detriments to Bristol Bay's reputation for "pure clean water, healthy habitat and pristine wilderness setting."
Pebble opponents have also submitted a statewide ballot, asking voters to deny any large mines from using state water in Southwestern Alaska, and asked legislators to consider blocking mines from using water that runs into Bristol Bay and to create a new wildlife refuge that would effectively block the Pebble project.
Many of the current environmental arguments against the Pebble project hinge on the deposit being developed as a large-scale open-pit mine. But the likelihood of that being the initial development plan is slim, according to many in the mining industry.
That's because deeply-buried mineralization that was discovered east of the known resource near the end of drilling work in exploratory 2004 is proving to be a much richer grade-containing more of the valuable minerals in each ton of rock, improving the economics of the project.
That mineral resource called Pebble East, which has yet to be fully defined and tested, is more favorable to underground mining, particularly because of the depth of the resource.
DEEPLY-BURIED MINERALIZATION CHANGES DEVELOPMENT SCENARIO
Drill crews working on the property this summer are using five conventional rigs and three specially designed rigs built for the Pebble project, allowing core samples to be taken from as deep as 6,500 feet.
But representatives from both Northern Dynasty and Anglo American won't say publicly that underground mining is more likely than an open pit. Spokesmen for both companies are holding to the current message that exploration work is continuing at Pebble and a specific mine plan of operation will be developed and described in the permitting process.
Making such assumptions about what Pebble operations could be are "... the biggest problems surrounding the whole Pebble project. Information is being uncovered day by day," said Paul Henry, an Anglo American senior manager currently relocating to Alaska to work on Pebble. "We're drilling this year and will be drilling into next year, and it's too early to say what structure the mine will be. That's the problem with speculating too early--we see certainly the danger of confusion about what's happening."
The current reluctance to talk about a specific mine plan may come from a false start in 2004. Back then, Northern Dynasty was completing a major drill program and had announced plans to produce a bank feasibility study and to submit permit applications to state and federal regulators in late 2005.
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In October 2004, officials described tentative plans to mine Pebble as an open-pit operation, then describing the size and scale of an operation that would dwarf Alaska's largest mine operation, Fort Knox.
Higher-grade mineralization east of the existing known deposit was mentioned, but because of the depth and lack of information about the size of the new discovery, project managers were just starting to wrestle with the possibility of including it in the proposed open-pit operation.
Since then, drilling has identified more mineralization spread over a greater area--albeit at a much deeper level. According to geologic estimates released in February, the most current publicly available, Pebble East is believed to contain an "inferred resource" of 3.4 billion tonnes grading one percent copper equivalent, containing 42.6 billion pounds of copper, 39.6 million ounces of gold and 2.7 billion pounds of molybdenum.
Inferred resource is a geological and economic term that is determined by the amount of widespread spacing between drill holes, indicating less certainty about the buried deposit. Drilling work this summer is designed to further expand the resource size and to upgrade the classification, and certainty, of the known mineralization, according to the company.
Comparatively, in the near-surface Pebble West mineralized zone, geologists have through more numerous and closer-spaced drill holes, identified a measured and indicated mineral resource that contains 3.026 billion tonnes grading .56 percent copper equivalent, containing 18.8 billion pounds of copper, 31.3 million ounces of gold and 993 million pounds of molybdenum.
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