Finishing plan ‘top priority,’ says Pebble official

Developers of a potential large copper and gold mine at the Pebble prospect say they are focused on completing their plan for the project and applying for permits by the end of the year.

“It’s our top priority,” said Mike Heatwole, spokesman for the Pebble Limited Partnership, a joint-venture of Anglo American PLC and Northern Dynasty Minerals Ltd.

Pebble is one of the world’s largest undeveloped copper and gold deposits. Molyebdenum is also present. The mine plan, once it is known, may involve a combination of surface, or open-pit, and underground mining.

Heatwole said developing the mine plan is complex and it will be the basis for applications for federal and state permits.

“It’s not something we can rush. We’ve got to get it right,” he said.

Alaska U.S. Sen. Lisa Murkowski recently wrote to the company expressing concern over the length of time it is taking for the company to produce its plan for a mine at the mineral deposit, which is near Iliamna southwest of Anchorage.

“The mine plan basically has three parts, one the engineering and technical feasibility, secondly the environmental effects, and third the overall economics of the project,” Heatwole said.

The challenges are those confronting any large Alaska resource development project: the remoteness, high costs and a supply of power. Developing the infrastructure — power, a road and a port — is another challenge.

“It’s not just how you will mine it, but how you will move it,” Heatwole said. “If you increase or decrease the ore production and mill throughput you change the power requirement. If you make one change (in the plan) it affects other parts of it, too.”

The power requirement is a major unknown because that will depend on the final mine design.

“It will be several hundred megawatts,” Heatwole said.

The company’s base case for fuel is imported liquefied natural gas, but by the time a mine is actually developed there may be other options for energy, such as gas brought by pipeline from the North Slope.

Pebble will also design its gas supply system to have enough capacity for communities in the region, although the mine will not get into the utility business,
Heatwole said.

“We’ve always said that if there is low-cost energy available at the mine, we will work to make that available to the region,” he said.

Securing more affordable energy has long been a priority for the commercial fishing industry in Bristol Bay. Processors must now use power generated mostly with costly diesel.

One wrinkle Pebble faces, among many challenges, is a Lake and Peninsula Borough ordinance narrowly passed in a voter initiative in 2011 that requires the company to secure a borough permit before applying for state and federal permits.

The ordinance is being challenged in court by the State of Alaska and the Pebble Partnership. Heatwole said the company likely will go ahead and file its permit applications because of the legal uncertainties over the borough ordinance.

“The first permit we must apply for is to the U.S. Army Corps of Engineers for a federal Section 404 dredge and fill permit,” Heatwole said.

Meanwhile, activity at the project site has ebbed this summer as the company’s activity shifts from exploration to engineering, although environmental work will continue. The bulk of drilling to define the geologic resource is done.

One rig is active this summer working on geotechnical drilling to assess possible sites for mine facilities, Heatwole said. That is down from three rigs operating last summer.

The “camp count” of people at the site has been at about 60 recently, down from about 100 that has been typical in recent summers. The budget is also down to $80 million for 2013, down from $112 million last year, Heatwole said.

Environmental data gathering continues and is a strong focus of activity this year, he said.

Once permits are applied for, another round of data gathering activity will begin as agencies request more information to support the permits, Heatwole said.

If a mine is developed at Pebble, it will become a major employer in the region. Long-term employment in production operations has been estimated at about 2,700 workers. Operating expenditures would total about $1 billion per year, and the economic life of the mine has been estimated at 80 years or more.

Tim Bradner is a reporter for the Alaska Journal of Commerce.