Pebble seen as opportunity, not problem

Partnership's new CEO shares views on challenges that giant copper-gold-moly deposit likely will face on road to development

ohn Shively, the new chief executive officer of Pebble Limited Partnership, told Mining News in an April 11 interview that the Pebble Project in Southwest Alaska is a huge opportunity for both the people who live in the area and for all Alaskans. Shively said it is inappropriate for Pebble's opponents to try to stop the project before it reaches the permitting process, and irresponsible of them to be willing to take down Alaska's entire mining industry in their efforts to stop a copper-gold-molybdenum mine in southwest Alaska.

Shively, commissioner of the Alaska Department of Natural Resources under former Gov. Tony Knowles, offered the following answers to questions from Mining News.

MN: In Pebble Partnership's announcement about your accepting the position of CEO you said, "Our challenge now is to see if we can find a way to work together to develop the resource that's consistent with the values and priorities of local communities, of Alaska Natives and the citizens of the state."

What steps do you plan to take to meet this challenge?

Shively: I don't think the project is getting a fair hearing. People are trying to stop Pebble before we have a project to explain. Our first step is to get a project that meets the high criteria that we have set for ourselves and that we can explain to the public.

We can't just sit around while that is happening. We will expand our staff as well as our business development efforts. We will do a variety of things to increase the presence up here.

One of the problems for the project is that it was run primarily out of Vancouver, B.C., and hiring me was the beginning of setting up a fairly significant presence here in Alaska.

MN: How do you plan to keep the public informed of the partnership's plans as the Pebble Project moves forward?

Shively: We will do some of the standard public information things: We will do some television ads; we will speak publicly in the region itself; we continue to have ongoing public meetings. I am sure we will be involved in debates where the Renewable Resources Coalition is on one side and we are on the other. I plan to expand the public relations staff here in the office to help us with our public education program.

MN: While you were commissioner of DNR you set up discussion groups around sensitive subjects, bringing all stakeholders to the table. According to my sources, these meetings were very successful. Do you plan to conduct similar meetings for Pebble?

Shively: Yes. A commitment had actually been made before I came on to bring on a national group called the Keystone Center. They are in the process of doing their analysis of what that (stakeholder engagement) might look like. We expect a report from them sometime in May.

There is an option here for them to say- it is hopeless; we don't think there is anything we can do to bring people together. I don't think that's likely but it's possible. If that were the case, I would have to use some other mechanism for the stakeholder process.

MN: Art Hackney, spokesman for the Renewable Resources Coalition, recently spoke positively about your appointment as CEO at Pebble. Do you have any meetings scheduled with the coalition?

Shively: I don't have any scheduled. I intend to meet with the environmental community, and if the Renewable Resources Coalition wants to be part of that, I am happy to meet with them.

In my role as (DNR) commissioner, I was in a number of situations where we had very diverse opinions about projects and lease programs and things like that so I am used to it. There are certain people who have already made up their minds on the project. The odds of changing that I don't know.

One of the things that does concern me is that if the situation were reversed and the state government took a look at this project and said-this is a huge project; it is on state land we are going to basically avoid the permitting process; we are just going to go to the Legislature and get this thing going because it is so important-the people in the environmental community would be rightfully out of their mind for avoiding the process that we have to go through. That wouldn't be an appropriate approach. To my mind it is not any more of an inappropriate approach than to say-stop this thing before it even gets into the permitting process.

There is a due process for these types of things in our state and we should be able to get there if we think we have a project that meets the criteria. We have a commitment not to just meet the criteria; we have a commitment to exceed the criteria because we think we have to do that to persuade people it won't be a problem with the fish.

MN: Hackney was also quoted as saying, "support would only be given (by the Renewable Resources Coalition) if it can be developed without harming fish or clean water." Will it be possible through dialogue to move forward a project that the coalition would support?

Shively: If the coalition supported it I don't think there would be any question! That is a very high hurdle at this point. If we got there, I think we would be home free. For a project this large and this controversial, I would never expect 100 percent support. I think that is a nice offer on their behalf and I hope that we can persuade them.

MN: During your time with the NANA Regional Native Corp. you were involved with the Red Dog Mine. The most recent ad campaign against the Pebble Mine claims that if the Red Dog Mine were operating in Bristol Bay it would be an environmental disaster. Is this a fair assessment of Red Dog's environmental track record?

Shively: Absolutely not. The ad that shows dead fish is just wrong. The little cutline they have underneath that says "the biggest polluter in the country"-that is all because of the way EPA forces mines to report. All of the waste rock, all of the tailings are reported as pollutants as part of the toxic release inventory, except they are not released.

As a matter of fact I was on Red Dog Creek before anyone had turned a shovel of dirt for the Red Dog Mine, and there were no fish in Red Dog Creek because of the natural (acid) runoff from that deposit. Today, there are fish in that creek, so I think that it is just wrong.

I think that if you look at what the mine has done for the NANA region in terms of jobs for shareholders and what it has done statewide for Native corporations because of revenue sharing, and when you look at their environmental record, I am very proud of my relationship with Red Dog.

MN: The primary concern that has been raised by those opposed to the Pebble Mine is that it could have an effect on the water and as a result affect the Bristol Bay fishery. What measures will the partnership take to ensure a mine developed at Pebble does not affect the fishery?

Shively: That is what we are doing right now. In general, there are three types of issues we have to manage to ensure that the Pebble Project does not affect the water and fisheries resources of Bristol Bay. First, we have to ensure that project facilities are sited properly, away from environmentally sensitive areas or those with high habitat values. Secondly, we have to ensure that any water that leaves the mine site during operations or after closure meets the extremely strict federal and state water quality standards. And thirdly, we have to ensure adequate water flows in nearby streams to maintain fish productivity.

There are scientific ways of doing that. There are a variety of different things we are looking at. There is also the long-term issue of the tailings disposal area and how that will be monitored in the long term after the mine is shut down. We have to address all those, and we are not there yet.

MN: I understand that the Pebble Partnership is stepping back and taking a fresh look at how to develop the project. What are some possible changes in strategy?

Shively: I don't know if we are necessarily stepping back. This is part of an ongoing process. Our understanding of the mineral resource keeps changing.

When Northern Dynasty started, most people did not think that there was much of a resource there. Then they found more and that looked good, and then they started to drill deeper and found an even more significant resource. We are now assessing how those pieces fit together and what it might look like. That is part of an ongoing process. It is not necessarily stepping back.

Everybody recognizes what the challenge is here. No matter what size or type of mine it is, you have to ensure clean water and fish protection. Our challenge is how to accomplish that, not really the size of the mine.

MN: Rio Tinto CEO Tom Albanese said he has suggested to both Northern Dynasty and Anglo American that the underground higher-grade resources of Pebble East be developed first. What does the Pebble partnership think of this approach?

Shively: We are looking at that as one of the possibilities. That is one of the options, but it is not the only option.

Issue at hand

MN: The proposed Pebble Mine Project has become a subject of public debate in Alaska. Many of the residents I talk to envision a huge open-pit mine that will forever leave a scar on Alaska with 700-foot-tall earthen dams holding back toxic waste. Is this a realistic vision of what the developers have in mind? If not, how is reality different from this picture?

Shively: We don't have the reality. It is going to be a big mine. It is a big resource. I don't believe we will ever get all of the resource out. Part of it will be open-pit. Part of it will be underground.

You don't leave a scar! When you are done you have to reclaim.

Another issue is the management of the tailings area-what that looks like and how that is managed over time is an issue we are still dealing with.

We do not yet have a plan established as to how big the mine is going to be, how much of it is open-pit, how much of it is underground, how big and where the tailings area is going to be. Then you have issues like roads and power. All those are pieces of a mine and will have to be addressed.

MN: The campaign against the proposed mine at Pebble is being conducted in the Alaska Legislature, the judicial system and the court of public opinion. The net result of all these actions will not only have an effect on the Pebble project but could affect the entire mining industry. It also could affect investment in other resource development projects in the state. Will this have any bearing on how the partnership moves forward with the Pebble Project?

Shively: It would be unfortunate if we let that aspect of it drive our decision-making.

I think it irresponsible of those who oppose Pebble to try to bring down the whole industry. I understand there are people who don't like Pebble, and I understand some of the reasons why. Whether you are the owner of a big sports lodge or a commercial fisherman- those are legitimate reasons to have big concerns, but to go out and try to bring down a whole industry is harming the state. It is harming people in rural areas where some of these other mines might go. I find it irresponsible.

I can't understand how anybody who considers themselves an Alaskan and understands how our economy runs would think that is an appropriate thing to do. If you are against Pebble, I am willing to tolerate that, but what they have done beyond that is irresponsible.

MN. At what point will the partnership be ready to propose a mine plan for Pebble?

Shively: We don't know that yet. We have spent a fair amount of money. We recently announced that this year we will be spending between $130 million and $140 million. When you spend that amount of money up front, you want to get to the permitting process relatively soon. We still have unanswered questions. When you have unanswered questions, you have to keep working until you get answers.

MN: What motivated you to accept the responsibilities of the CEO position and all of the challenges that go with it?

Shively: If you come right down to it, this is a huge opportunity.

It is an opportunity for the people who live in the area.

Not only will it bring jobs where we don't have very many jobs, we have the issue of power.

If we bring in power, what will it do for the region and the high cost of living to the people who live out there? The power used at Pebble will probably be generated in Southcentral Alaska and could be part of many of the solutions that Southcentral Alaska is looking at for future power generation given the current situation with declining gas reserves in Cook Inlet.  This could include both renewable resources and new gas supplies from the North Slope or imported LNG.  The volume of our project could help make new options economic.

There are also the effects the project will have on the Alaska Permanent Fund. Pebble is located on state land so there will be royalties. So not only will it impact the local economy, but it also will impact the state's economy. Those are all positives.

Even getting the project to the development stage is having a positive impact. The money we are spending on exploration and environmental studies, there are a lot of people in rural Alaska who would not otherwise have jobs who have them now.

A lot of my career in this state has been how to make things better in rural Alaska. The biggest attraction to me is: How can we do this in a way that has a significant and positive impact on rural Alaska and the entire state?

The second thing is, as I said earlier, I don't think this project has been given a fair hearing. There is a way to address these types of projects, and it is not to kill them before they ever get started; I think it is wrong for the project, and I think it is wrong for Alaska. So, I am willing to take some of my declining years and put them into that effort.