Mining companies fighting for employees

Competition for mining employees is intensifying in Alaska, with mines from the Lower 48 advertising their signing bonuses in Fairbanks, while the Pogo project tries to counter their offers with even bigger ones. State legislators heard about this and other mining issues at the "Gold and Gas in the Interior" meeting at the Fairbanks North Star Borough Assembly Chambers Aug. 22.

Two Nevada companies advertised $2,000 signing bonuses in the Fairbanks newspaper in July, and a mine in Montana is offering a $4,000 signing bonus, Teck-Pogo's Alaska Regional Manager Karl Hanneman told the legislators. In an effort to attract people from outside Alaska to come here, Teck-Pogo is offering up to $10,000 in moving expenses for all non-exempt employees. The signing bonuses "surprised the heck out of us," Hanneman said. "We've barely got an underground industry here, we're trying to nurture it in the workforce, and now they're coming up, trying to pinch them. But we'll fight them off."

So far eight professionals have relocated to Alaska to work at Pogo, which will be an underground gold mine, Hanneman said. Some employees have come to Pogo from other Alaska mines, such as Greens Creek near Juneau. People who lived in the Delta Junction area and commuted to Greens Creek can now work closer to home. The company offers transportation from Tok through Delta Junction to Pogo and from Fairbanks to Pogo. The plan for Pogo was to use a four-days-on, three-days-off schedule exclusively, but a two-week-on, one-week-off schedule has now been added so that skilled underground employees who still live in the Lower 48 can work at the mine.

Alaska hire 69 percent

The Pogo project has a 69-percent Alaska hire rate at the moment, and local people with aptitude but not necessarily experienced in mining are being encouraged to take a three week course at the Delta Mine Training Center. There should be 230 people on staff at Pogo by the end of the year, Hanneman said.

Rep. Jay Ramras, R-Fairbanks, co-chair of the House Resources Committee, asked Hanneman what the state could do to alleviate the employee shortage. "I think the effort that Senator Wagoner was involved in to focus and coordinate the training efforts is a good thing," Hanneman said. "There's a large number of training resources in the state that are quite compartmentalized, and as a result it may be more efficient... to try to look at what's really out there in terms of dollars and resources, tangible assets, training assets. So I'd encourage that effort to reach some closure."

The average salary at Pogo is $66,000, Hanneman said, which doesn't compete with the wages for summertime construction work. If people are only thinking about the short term then they are better off in construction than mining, he added. But mining is more of a long-term prospect.

Teck-Pogo is very concerned about the increase in capital costs for the project - they have gone up from an estimated $284 million in November 2003 to $320 million today because of higher prices for steel and fuel and higher contractor wages, Hanneman said.

However, the price of gold is now more than $450 an ounce and rising, compared to about $325 when Hanneman joined the project in 1998.

Pogo's objective was a 10-percent return based on a gold price of $275 an ounce.

"We haven't re-projected our financial outlook at this point, we've got to wait until the dust settles and kind of complete the construction, because unfortunately our cost escalation risk is not yet over," Hanneman said.

Borell: uncertainty drove placer miners out

The legislators also heard presentations from Bob Loeffler, director of the state Department of Natural Resource's Division of Mining, Land and Water; David Szumigala of the state's Division of Geological and Geophysical Surveys; John Wild from Fort Knox mine and Steve Borell from the Alaska Miners Association.

Borell talked about the problems faced by small placer miners.

"Over the past 12 years the placer mining industry basically has gone from an almost non-regulated industry to an industry that is extremely highly regulated," he said.

The uncertainty over permitting drove many placer miners out of business, but if they had known what the regulations would be, they might have continued, Borell added.

In an interview with Mining News, Rep. Ramras said that the University of Alaska needs to try harder to attract more students to its mining engineering program, which only graduated six people last year. "The university could be more assertive and more aggressive in trying to cultivate students to go to these programs," he said, adding that the university already does this with its nursing and education programs. But he acknowledged that many people will still prefer to look for jobs in sectors that are less subject to economic ups and downs than the mining industry.