The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Alaska studies two proposals that could pave way for major deposits in remote West; private partners may repay public investment
Alaska is considered one of the most mineralized provinces on Earth, but a vast amount of this wealth is locked up in a more than 350,000-square-mile, or 906,000-square-kilometer, area west of Alaska's contiguous road system. Surface transportation is considered key to unlocking the immense mineral potential of this area, which is roughly twice the land mass of California.
In the Survey of Mining Companies: 2010/2011, conducted by the Fraser Institute, top executives from 494 mining and mineral exploration company's ranked Alaska as having the highest mineral potential out of 79 jurisdictions worldwide. The same group of miners placed the state a dismal 57th when it comes to infrastructure.
The Alaska Minerals Commission, created by the Alaska Legislature in 1986 to make recommendations on ways to mitigate constraints on the development of minerals in the state, is encouraging lawmakers to push ahead with westward expansion of Alaska roads while metals prices remain strong.
The commission wrote in its 2011 report, "Transportation infrastructure related to mineral development has played a critical role in rural areas of the state, supporting lower cost energy and a lower cost of living. With the current upswing in commodity prices and interest in minerals development, Alaska can capitalize on leveraging private sector development with statewide goals and rural needs in public-private partnerships."
Two massive highway projects currently under study by the Alaska Department of Transportation and Public Facilities - a road to Ambler and a road to Nome - would extend more affordable ground transportation into this vast region.
Alaska Gov. Sean Parnell has included US$1.25 million in his fiscal 2012 budget for continued investigation of these two potential transportation corridors. The highly-contested US$3 billion budget stalled in the Senate as time expired on the Legislature's regular session April 17. The fate of funding for the Nome and Ambler road studies is being determined in a special session called by the governor.
Ambler road partnership
The road to the Ambler Mining District - located on the southern slopes of the Brooks Range about 200 miles, or 320 kilometers, west of the state's contiguous road system - shows the best promise for a public-private partnership in which the state would be directly reimbursed for its investment.
NovaGold Resources Inc., - a junior explorer investigating the potential development of the copper-rich Arctic deposit in the Ambler district - said it is in talks with the state on such a partnership.
Though Arctic - with an estimated 28.9 million metric tons averaging about 4 percent copper and more than 5 percent zinc - is considered among the richest deposits of its type in the world, the deposit remains undeveloped due to its isolated location.
Studying the economics of building a mine at the Arctic deposit, SRK Consulting (U.S.), Inc. determined that a 211-mile, or 340-kilometer, road stretching west from the Dalton Highway to the village of Kobuk, would be the best route for linking the copper-rich deposit to Alaska's road-system.
For the purposes of the study, SRK assumed that the road would be designed and constructed by the State of Alaska, and NovaGold would then reimburse the state on an agreed-upon basis over the operating life of the mine. A similar arrangement exists between the state and the Red Dog mine in Northwest Alaska for its road and port facility.
The Delong Mountain Transportation System - consisting of a 52-mile, or 84-kilometer, long road, storage and port facilities - was built by state-owned Alaska Industrial Development and Export Agency to facilitate the shipment of zinc and lead concentrates from Red Dog. The agency is being reimbursed for its US$267 million investment through fees paid by Teck Resources Ltd. and NANA Regional Corp., co-owners of the mine.
NANA, whose region encompasses the Ambler Mining District, is warming up to the idea of having a road extending westward into the traditional homeland of its Inupiat owners.
"When we first started having discussions about roads 15 to 20 years ago our region did not support roads, but 15-20 years later that has changed because of our economy, our high cost of energy and the need for more employment," NANA President and CEO Maria Greene told Mining News.
In January, Alaska DOT completed a round of public meetings in the villages of Ambler, Shungnak and Kobuk in the region where the road is expected to end.
Greene said the meetings went well, and residents are largely in favor of the road as long as their concerns about potential risks to the environment, cultural values and caribou migration are addressed.
Alaska's governor and legislature approved US$4 million for scoping of the project in 2010; the US$1.25 million proposed in the current budget would continue this work.
Parnell has said he would like to see a road to the resources of the Ambler Mining District completed in five years.
Yukon highway
A 500-mile, or 800-kilometer, road to Nome that roughly parallels the Yukon River also is being considered under the state-funded Western Alaska Access Planning Study.
Dowl HKM, an Anchorage-based engineering firm contracted to carry out the study, originally evaluated four routes to the Seward Peninsula mining town, including a course that would skirt the Ambler Mining District.
Of the alternatives considered, the engineering firm determined that the Yukon River Corridor has the best balance of resource and community development benefits with the least adverse impact to the environment as well as land ownership and management.
Dowl estimates the road would cost between US$2.3 billion and US$2.7 billion to build, a sum that would be divided into stages as the road wends its way to Nome. While by far the most expensive highway project the state has undertaken, its price tag is less than the US$3 billion FY 2012 budget currently deadlocked in the Legislature.
Benefits for mining were among the considerations of the study. Though not specifically targeting any particular projects, this Yukon highway is expected to lower the costs of exploration, development and operations of mining projects throughout western Alaska.
Communities along the route are expected to be among the largest beneficiaries of the proposed road.
The Tanana Chiefs Conference, a unified group of 42 Interior Alaska Native communities, has endorsed the Yukon route. Its board of directors cites the current high transportation and fuel costs as reasons for its support for building the road.
"The transportation costs make everything more expensive around the community. A road system would alleviate that somewhat," board President Jerry Isaac said.
According to the Dowl study, the road would save communities along the way an estimated US$19.1 million annually in fuel, freight and mail transport expenses. Other communities near the road also would benefit, but to a lesser degree.
While many residents along the Yukon route look forward to the potential cost benefits of road access to Alaska's urban centers, others worry about the social effects the corridor might have on their rural communities.
In March, DOTPF wrapped up a series of public meetings throughout western and Interior Alaska and the agency is compiling a report on its findings.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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