Mining – a growing economic force in Alaska

Alaska Miners Association April 10 released "The economic benefits of Alaska's mining industry," a report put together by the McDowell Group that details roughly $1.26 billion in direct economic benefits from Alaska's mining sector during 2018.

Healthy paychecks being brought home to more than 60 communities across Alaska is mining's biggest single economic contributor to the state.

Alaska's mines, development and mineral exploration projects paid roughly $459 million to some 4,500 workers. This works out to be an average wage of $102,100 per year for people working directly in the sector, nearly twice the statewide average across all industries.

When you add in the indirect jobs, or workers who provide services to the mining companies but are not directly employed by them, the number of jobs jumps to 9,200 and the payroll climbs to $715 million.

"Mining is a growing force in Alaska's economy, providing jobs for thousands of Alaskans and millions of dollars of personal income throughout Alaska," according to the report.

While jobs are the largest single economic benefit mining brings to the state, mining proceeds to Alaska Native corporations has an even wider reach, in terms of geography and populace.

NANA Corp., the Alaska Native Claims Settlement Act (ANCSA) regional corporation for Northwest Alaska, received $355 million in net proceeds from the Red Dog Mine on its lands.

Most of this money, however, does not stay in Northwest Alaska but is distributed to every corner of the state, due to the Section 7(i) and 7(j) provision of ANCSA.

Section 7(i) requires regional corporations to distribute 70 percent of net revenues from resource development on ANCSA lands among all 12 regional corporations. In turn, Section 7(j) requires that half of the 7(i) payments to be distributed to the respective village corporations within each of the ANCSA regions.

This means that $221.5 million of the 2018 net proceeds from Red Dog were distributed to the other 11 ANCSA Regional corporations, half of which made its way to more than 200 villages across the state.

In total, NANA has received approximately $1.9 billion in proceeds from Red Dog since the start of mining at this world-class zinc deposit, of which about $1.2 billion in 7(i) payments has been distributed to the other ANCSA corporations.

Mining also paid $148.6 million into Alaska coffers during 2018. Here is where those funds come from:

• $58.8 million in mining licenses, taxes, rents and royalties;

• $34.6 million in corporate income taxes;

• $28.2 million to the Alaska Industrial Development and Export Authority;

• $15.9 million to the Alaska Railroad Corporation; and

• $1.6 million to the Alaska Mental Health Trust.

While the smallest piece of the economic pie, mining's $34.2 million in contributions to local governments is crucially important to cities and boroughs across the state. This includes:

• $14.9 million in payments in lieu of taxes by Red Dog to the Northwest Arctic Borough, plus $8 million paid to the regions' village improvement fund;

• $8.2 million in property taxes paid by Fort Knox to the Fairbanks North Star Borough;

• $1.7 million in property taxes paid by Greens Creek to the City and Borough of Juneau; and

• $1.4 million in property taxes paid by Kensington to the City and Borough of Juneau.

This does not include the local sales and property taxes paid by mine employees, who make on average six-figure wages.

With two large gold and copper projects on the horizon – Donlin Gold and Pebble – and several other advanced stage mineral projects nearly ready for permitting – Arctic, Graphite Creek, Livengood and Palmer – Alaska is poised to realize even more of the high-paying jobs and other geographically diverse economic benefits mining has to offer.

"From Nome to the Ketchikan, mining opportunities in Alaska are as vast as the Last Frontier itself," the Alaska Miners Association penned in a statement on mining benefits. "Through direct and indirect jobs, state and local tax revenues, and royalties transferred to Native corporations, the mining of gold, silver, copper, zinc, lead, and coal mineral mining plays a vital role in sustaining Alaska's economy."

The full report is available on the Alaska Miners Association website at https://alaskaminers.org/wp-content/uploads/2019/04/2019-AMA-Econ-Report.pdf

–SHANE LASLEY