Alaska miners face hopeful New Year

In my simple world of cause and effect, when I see things happen I always leap to the conclusion that there will be a related subsequent development. When I see the United States borrow untold billions of dollars from the People's Republic of China (for whatever wonderful reason), I assume that the People's Republic will want to be repaid - and not in deflated dollars. When I see millions of people out of work, I assume they will try very hard to find a way to feed their families.

Tying these loose ends together suggests that there is going to be a significant global tension between creating more jobs, keeping inflation under control and paying down the national debt, i.e., collecting more taxes.

Distilling these factors to a simple essence implies that mining for mineral commodities has a bright future, especially in Alaska.

During the past three years, according to a recent report, the value assigned to the Alaska Mineral Industry has tapered off from US$4.015 billion in 2007 to an estimated US$2.8 billion in 2009, but during that three-year window, in addition to the five major producing mines in the state, three major development projects and two advanced exploration projects have been wending their way through the system.

If it appears that the outlook for Alaska is sunny, it is because of the resources present in the state as well as the talent to bring those resources into production. When these assets are coupled with sufficient capital, opportunities will blossom. It is no secret that much of the exploration money that is spent in Alaska comes from junior mining companies with headquarters in British Columbia. Between January 2008 and July 2009, that money, for the most part, took a vacation in the hip pockets of investors who found it more profitable to watch developments than to participate in the marketplace.

Beginning about last July, the trickle started once again. There is little doubt that the Cordilleran Roundup this year will be an exciting place as Alaskans with property once again seek to connect with perceptive investors. If, as it appears, mineral commodity development will lead us out of the dismal financial swamp that has encumbered the nation as a whole in late 2008 and much of 2009, there can be no doubt that Alaska will have a starring role in that bailout.

Whether, or when, Alaska will regain the exploration energy that was a factor in 2008 remains to be seen. It does seem a wise bet to prepare, however, for foreseeable shortages in the availability of drill rigs and support helicopters. The good news bonus for Alaska, of course, is that our state is on an independent economic cycle when compared to the Lower 48. Alaska did not suffer as much as some places when the recession hit its stride; therefore, we did not experience an unwieldy out-migration that characterized our economic chaos in the mid-1980s.

Concomitantly, if exploration for and development of mineral commodities, in fact, are going to be the bellwethers of domestic recovery, Alaska, rather than having been weakened by the past two years, will merely be rested.

We have seen the political storm associated with the election of 2008 blow its hardest. The National Democratic Party has immersed itself in the traditional circular gunfight. The National Republican Party has found a new home at the bottom of the political pit. Washington is in irons, and that is good for the nation. For those in the mining industry, it is unlikely that federal mining law reform will rear its ugly head until the incumbent Senate majority leader figures out where he will be working in 2011.

Slowly the U.S. will recover and emerge as a new fiscal power. The progressive urges that brought us change in 2008 have palpably turned into fiscal sludge. Industry and investors can greet the New Year with justifiable optimism because, not only will 2010 be a good year, but 2011 will be even better.

Miners are optimistic by nature; they have to be. But for once, it appears that their optimism may be well justified. Happy New Year!