Teck Cominco boss impressed with Alaska

In a week when lead and zinc hit record-breaking high prices, it was particularly appropriate for Vancouver-based Teck Cominco's president and CEO, Don Lindsay, to be visiting Alaska for the seventh time. The state is home to the world's largest lead-zinc mine, Red Dog, and the company has further demonstrated its commitment to Alaska with the recent opening of Pogo gold mine, a partnership with Japan's Sumitomo Metal Mining. The Alaska Miners Association presented Teck Cominco with its new mine award this year.

Walter Sampson, vice president of lands and natural resources for NANA, an Alaska Native corporation, introduced Lindsay at the Alaska Miners Association convention Nov. 10. "The partnership that came with the company that NANA has joined has been a fruitful one," Sampson said. "The process that we went through to choose the partner, the relationship that we had with Teck Cominco, I think ought to be a model for the rest of the state of Alaska. ... I want to thank Teck Cominco as a partner who has a willingness to sit down and talk about issues. Yes, we don't agree to everything, but we have a good sit-down talk and put our issues right on the table."

Alaska 20 percent of Teck Cominco's revenues

Alaska accounts for 20 percent of Teck Cominco's total revenues, Lindsay told the convention. "We're proud to operate in Alaska, and we're very proud to be part of one of this state's great mining success stories, and that is the Red Dog mine," he said. "As you know, Red Dog is more than just a success story - it's really a story about the potential of Alaska. It's about working with local people and just what you really can do when you have the right mix of people, of opportunity and of collective resolve. Teck Cominco is bullish on Alaska."

Lindsay had three major points for Alaska's miners to process. Firstly, he said, Alaska has a strong foundation for mineral investment and development that can be built on. Secondly, the industry needs to continue to think long-term about sustainability, including respect for local communities and the environment. Thirdly, the skilled labor shortage must be addressed. "This is a critical challenge that we ignore at our own peril," Lindsay said.

"After many years of relative dormancy, zinc came back to life in 2005," Lindsay said. "Zinc demand is growing because it is a vital metal. From automobiles to toys, from coins to the vending machines themselves, and from vitamins to sunscreen, today's society is using zinc in some form wherever you look." Zinc is an important nutrient for malnourished children in Africa and parts of Asia, he added.

Switzerland-based Xstrata became the world's leading producer of zinc when it acquired Canada's Falconbridge earlier this year, but Teck Cominco is the biggest producer in the Americas, Lindsay pointed out. "At Teck Cominco we take great pride in being on the forefront of the modern age of Alaskan mining, and now the largest zinc mine in the world, Red Dog, is the culmination of a visionary alliance between Teck Cominco and NANA and various levels of government," he said.

ANCSA one of foundations of Red Dog's success

The success of Red Dog is based on three pillars: ANCSA, NANA and AIDEA, according to Lindsay. The Alaska Native Claims Settlement Act of 1971 created 13 regional Native corporations whose shareholders own 44 million acres of land. In contrast, Native land claims are still unresolved in many parts of Canada. NANA is the corporation based in the northwest Arctic, where Red Dog is located. The Alaska Industrial Development and Export Authority is a state agency that provides financing for economic development.

"Without these fundamental building blocks the zinc would simply stay in the ground," Lindsay said. "The most gratifying result of these pillars is how they literally have transformed and improved lives, in particularly the Native population. Northwest Alaska used to have the state's highest unemployment level, but not any more, and not by a long shot." The average number of people employed at Red Dog is 490 and annual wages total around $37 million. Local contractors and suppliers benefit from working with Red Dog too, Lindsay added.

Red Dog has plenty of potential for the future, Lindsay said. Since 1995 more than 14 million tons of zinc has been discovered at the mine, and large areas still remain unexplored. An 8-kilometer gravity anomaly bears the same signature as Red Dog and encompasses the huge Anarraaq deposit, as well as an area where one of the test holes showed 50 percent zinc over 17 feet, which is a higher grade than some concentrates sold in the market.

Teck Cominco hopes that Pogo mine, near Delta Junction, will become the company's second success story in Alaska. "Pogo has reaffirmed to Teck Cominco that you can't build a mine without building support within the community," Lindsay said. "In order to earn that support, and this is very important, you must uphold the principles of transparency, open communication and good science."

The company is generally happy with the political and economic conditions for operating in Alaska. "Today in Alaska there is a stable, broad-based corporate tax regime and there is a statewide, stable and progressive mining license tax that applies to all land status categories, federal, state and private," Lindsay said. "And there is now ... a progressive, stable system of rents and royalties on state land. There is also a well-founded exploration incentives credit program."

Company concerned about targeted taxes

On the other hand, Teck Cominco is concerned about the possibility of local governments imposing targeted taxes on mining companies, and also about the lack of a fiscal plan for Alaska's unorganized areas. Pogo is in the unorganized borough, but it managed to negotiate a payment in lieu of property taxes to the city of Delta Junction. The biggest barrier to investment in Alaska, though, is the lack of infrastructure, according to Lindsay. "In the case of Red Dog the government really stepped up. In the case of Pogo we resolved our infrastructure challenges, but it took a long time and was very expensive. I would hope that the new Legislature focuses hard on this question," he said.

Canada will need 81,000 new employees in the mining industry to meet its current and future needs, and Alaska must also find ways to deal with the labor shortage, Lindsay stressed. "Sourcing, training and retaining skilled workers are significant challenges here, and for quite some time Alaska has seen mining workers siphoned off by the oil and gas sectors, the results of the nagging perception that ours is not a safe industry, even though our safety performance indicates that we have been consistently improving," he said. The Delta Mine Training Center is helping tremendously to supply workers for Pogo, but this only scratches the surface of the problem, Lindsay added.

"We need to share the message that the mining industry offers a rare opportunity for good private sector jobs in diverse areas of Alaska, both urban and rural," Lindsay said. "And if we are trying to attract young people to our industry, we also have to ensure that they receive the training they need. We need to prepare and motivate students at the high school level and boost the number of geological and metallurgical engineering programs on offer at colleges and universities, and we need to get on this today, we simply can't delay."

This year Teck Cominco donated $7.5 million to establish the N.B. Keevil Institute of Mining Engineering at the University of British Columbia.