State gets good report card, can do better

Permitting, legislation, taxation and education are some of the key issues discussed by the Alaska Minerals Commission in its 2006 report, published in January. The report praises the state's continuing efforts to improve the climate for the mining industry, but also gives a number of recommendations on what else could be done in this period of unusually high activity. The commission has advised Alaska's leaders since its creation in 1986.

"A cloud of uncertainty has been cast over the industry by the U.S. Army Corps of Engineers' decision to suspend a key permit for the Kensington mine," the report said. "This decision by the federal agency is counterproductive to the state's efforts to present itself as a jurisdiction possessing tough but efficient environmental permitting regulations. The state must demand that federal permitting agencies be accountable and provide timely, responsive product review and permit issuance in cooperation with state agencies."

The Murkowski administration's Roads to Resources program stimulates exploration investment and allows development projects to proceed more rapidly, according to the report, although the availability of electrical power is a significant challenge to mineral development in Alaska. The commission recommends that the governor and the Legislature support the development of a long-term electrical generation plan for the existing electrical grid in Alaska that incorporates the use of coal.

Ameref support needed

The governor and Legislature should also give a boost to activities of the Alaska Mineral and Energy Resource Education Fund by appropriating $100,000 to the Department of Education for curriculum development, the report said.

The commission also points out that University of Alaska President Mark Hamilton has committed to funding a president's professor of Mining and Energy Technologies for the next five years - a world-class researcher who would help to "jump start" the University of Alaska Fairbanks's newly merged College of Engineering and Mines - but the position has not yet been filled.

The Legislature should ensure that the university has the funding to support the position, the report said.

The possible formation of boroughs in rural areas of Alaska, with the intent to tax new mines such as Pogo, is an issue that has been hotly debated in the past year. The Alaska Miners Association supported a bill by Sen. Gene Therriault, R-North Pole, that would have established a set property tax for the unorganized borough, but the bill didn't pass.

"While the mining industry does expect to pay its fair share of future municipal government costs, if and when it is appropriate to form these local governments, it should do so by an equitable, broad-based tax such as a property tax, not an industry-specific tax such as a severance tax," the commission said. "Without the mitigating effects of a broad-based tax, the mining industry could then end up facing a very onerous tax structure. Such uncertainty serves as a strong disincentive to the very investment and economic diversification that is so vital to rural development."

Increase in geophysical surveys urged

The commission noted that in 2005 the Alaska Division of Geological and Geophysical surveys completed the ground surficial geological mapping project of the Council mining district and conducted geophysical surveys northeast of Fairbanks, in the Black Mountain area and east of Richardson in the Pogo area. A geological mapping program was conducted in the Liberty Bell area south of Healy and an airborne geophysical survey funded by the Bureau of Land Management was initiated on 1,448 square miles of the southern National Petroleum Reserve of Alaska.

The commission recommended increasing state's annual rate of investment in geophysical surveys by about $400,000 to more than $1 million a year. Another $500,000 should also be provided to complete both surficial and bedrock geology mapping of the Delta Junction-Canadian border pipeline corridor, $150,000 more than the governor has proposed, the report said. Shortly before the start of this year's legislative season in Juneau, Therriault filed a bill that would allocate $5 million to the Department of Natural Resources to map Alaska's mineral resources.

As in 2005, the commission endorsed the state's efforts to assume primacy over the National Pollutant Discharge Elimination System program, which is currently overseen by the U.S. Environmental Protection Agency, and called on the Alaska Legislature to ensure that the NPDES program is appropriately funded during the five-year transition period. Gov. Frank Murkowski signed legislation in 2005 that directs the Department of Environmental Conservation to work towards assumption of NPDES primacy.

The department should develop a general permit for small remote work camps that are used for construction and mining exploration, the commission advised. "These camps are short-term, low-impact facilities with common features," the report said. "However, the camps require several state permits to address waste, wastewater, drinking water, food service and other environmental and health regulations." The commission suggested that a general permit or a simplified permitting method would ease the burden on applicants.

Most of the mineral exploration funding in Alaska comes from Canadian-based sources, and a lesser amount from U.S. companies, the commission noted. Very little Alaska exploration funding originates outside North America. The state could make better use of its foreign trade representatives in Korea, Japan, China and Taiwan to find potential investors, the report said.

"Despite the very positive changes that have been made, it is necessary to follow through and convince mineral exploration and development managers and financiers around the world that Alaska truly is, in a global context, one of the best places in the world to explore and develop minerals deposits," the report said.