Kensington ruling hits Coeur Alaska, Goldbelt

The decision was taken months ago, but now the reasons for it have been explained. Nothing the 9th Circuit Court of Appeals has said in its May 22 ruling on Kensington mine is likely to bring encouragement to the project's developers or employees whose livelihoods have been put at risk, but at least now Idaho-based Coeur d'Alene Mines can start to analyze the judges' objections. Juneau Native corporation Goldbelt also suffers from the ruling, which vacated its permit to construct a marine terminal for the transportation of mine workers.

Judges Procter Hug Jr., A. Wallace Tashima and Susan P. Graber heard the appeal by the Southeast Alaska Conservation Council, the Sierra Club and Lynn Canal Conservation against an August 2006 ruling by the U.S. District Court in Anchorage. Judge Hug wrote the opinion, which states that the disposal of Kensington's tailings into Lower Slate Lake would be a violation of the Clean Water Act, and that the U.S. Army Corps of Engineers was wrong to issue a 404 permit for that purpose.

Goldbelt's permit to construct the Cascade Point marine facility in Berners Bay, as well as the U.S. Forest Service's Record of Decision approving Goldbelt's plan, were vacated by the court "because they are dependent on the validity of the permit issued by the U.S. Army Corps of Engineers to Coeur Alaska," Judge Hug wrote. The court did not discuss the question of whether the marine facility was environmentally sound. Goldbelt had intervened in the lawsuit in support of the Corps of Engineers, as had Coeur Alaska and the State of Alaska.

1997 plan included dry stack tailings

The original mine plan that included a dry stack tailings facility was permitted in 1997. Coeur Alaska subsequently abandoned that plan because the price of gold dropped to $400 an ounce and dry stack tailings were considered uneconomic. "The price of gold has been rising steadily and is currently over $680 an ounce, thus the original motivation for the change in waste disposal from the mine no longer exists," Judge Hug wrote.

"Coeur Alaska and the Corps admit that the discharge and settling of the tailings into the lake would kill all the fish and nearly all the aquatic life," Judge Hug continued. "The effluent would have a pH factor of over 10, which is considerably higher than the lake's current pH factor, and would contain concentrations of several potentially hazardous materials, including aluminum, copper, lead and mercury. The toxicity of the discharge may have lasting effects on the lake and may negatively affect its ability to sustain aquatic life in the future."

The Corps of Engineers was wrong to classify the tailings as "fill material" to be regulated by the 404 permit, because although the regulations are somewhat contradictory, their intent is clear, Judge Hug wrote. Any material that is subject to effluent limitations cannot be considered fill material, he explained. The Environmental Protection Agency's zero-discharge performance standard for froth-flotation mills governs this situation, according to the court's opinion.

Even the Corps of Engineers itself has said in the past that it doesn't have authority to permit the discharge of mine tailings, Judge Hug noted. "The Corps has neither special expertise or jurisdiction by law to evaluate the impacts of the tailings discharge. ... The tailings do not meet the Corps' definition of fill material," Glen E. Justis from the Corps of Engineers wrote in regard to Kensington in 1991. The Corps reiterated this in communications with Coeur Alaska in 1998 and 2005.

Coeur reviewing options

Coeur d'Alene Mines is continuing to review its options for Kensington, including possible appeals to a 15-judge panel of the 9th Circuit and the Supreme Court of the United States, the company said in a release May 22. Coeur d'Alene recently turned its attentions to projects in Mexico, with the announcement that it would purchase Bolnisi Gold and Palmarejo Silver and Gold Corp. in a transaction valued at approximately $1.1 billion.

Goldbelt has supported the development of Kensington for years, the company's vice president for operations, Bob Martin, told Mining News. "We're obviously very disappointed because (the ruling) affects one of our permits as well. We thought it was a pretty good plan," he said. A breakwater that Goldbelt had been constructing is already 20-25 percent complete, Martin added. The breakwater was to consist of 30,000 cubic yards of rock projecting out from the shore to protect the proposed dock from northerly winds and waves. Work has already stopped there temporarily to allow for herring spawning.

About a dozen people have worked for Goldbelt at Kensington, some involved in clearing uplands to make way for a watchman's cabin, lighting, generator sites and parking facilities. A similar number of people would have been involved in operations, Martin said. The Kensington contract is worth millions of dollars to Goldbelt, a director of the company, Randy Wanamaker, told Mining News. "Our aboriginal rights and our rights under ANCSA (the Alaska Native Claims Settlement Act) have been violated here," Wanamaker said. "These are our ancestral lands."

SEACC's conservation director and staff attorney, Buck Lindekugel, acknowledged that the main focus of the lawsuit was on the tailings facility, but added that his organization also opposed the construction of the marine terminal at Cascade Point, because of the potential threat to the herring from hydrocarbons. Yankee Cove, just south of Echo Cove, would be a better site, Lindekugel told Mining News.