Exploration off 38 percent, but producing mines strong

JUNEAU — Mining is good for Alaska’s economy, but while the state’s six producing mines are holding up well, and some even expanding, a sharp 38 percent drop in exploration spending last year is having ripple effects.

Overall, mining employed 4,600 Alaskans directly last year and the overall employment impact totaled 9,100 including indirect jobs created by the spending. Direct payrolls of mining companies totaled $630 million in 2013.

The 2013 total employment and payroll numbers are down a bit from employment in 2012, however, which is likely due to the falloff in exploration. Minerals companies spent about $180 million in exploration in 2013 compared with $275 million in 2012.

The data was gathered by McDowell Group, a Juneau-based consulting firm, for the Alaska Miners Association and the Council of Alaska Producers, two minerals industry trade associations.

The information was presented to the House and Senate Resources committees in Juneau Feb. 5, by Karen Matthias, director of the producers’ council, and Deantha Crockett, executive director of the Alaska Miners Association. McDowell Group’s 2013 figures were released that day.

On an upbeat note, one of Alaska’s producing mines, the Fort Knox Mine near Fairbanks, achieved another milestone in December 2013, when the mine produced its six millionth ounce of gold, Matthias said.

Fort Knox is a large surface mine northwest of Fairbanks that began production in 1996.

In another development, the Greens Creek Mine in Southeast Alaska secured federal approval for an expansion of the mine tailings storage facility, Matthias said. It will be in construction this year and, when completed, will give the mine the capacity to store tailings if new resources are added to the mine, she said.

Greens Creek is an underground silver mine on Admiralty Island near Juneau.

Some more sobering news for the industry, however, was the decision by Anglo American, a large mining company, to withdraw as a partner in the large Pebble copper/gold project near Iliamna, southwest of Anchorage.

Pebble’s owner, Northern Dynasty Minerals, is now looking for another partner to develop the mine.

As for exploration, lower gold prices explain most of the drop, Matthias said. Prices for that metal have dropped from almost $1,800 per ounce in September 2012 to about $1,200 a year later, she said, and haven’t changed much since. Silver also has declined.

Base metals like copper, zinc and lead have been more stable, at least in recent months, but it is gold that drives much of the Alaska exploration.

Alaska isn’t alone in experiencing the drop in exploration. The trend is global, Matthias said, with world exploration spending at $15.2 billion in 2013 compared with $21.5 billion in 2012, a 29 percent decline.

While metals prices are weak, costs for mining and mining equipment continue to climb. Crockett cited some examples: A 40-ton underground haul truck, of the type used in Alaska underground mines, climbed in cost from $560,000 in 2003 to $1.3 million in 2013, she said. 

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