Homer Alaska - Business

Story last updated at 1:29 PM on Tuesday, November 22, 2011

Minerals industry spending jumped in 2010, state reports



By Tim Bradner
Morris News Service - Alaska

Alaska miners crowded into the Anchorage Sheraton Hotel the week of Nov. 7 for the annual Alaska Miners Association convention. It was a record-breaking attendance that may have neared 1,000 people in and out of the meeting over three days of the main conference, held Nov. 9 through Nov. 11.

Much of the agenda at the miners' annual conference is traditionally devoted to technical presentations on geology, environmental procedures and new government regulations, but with metals prices at high levels the mood was confident and upbeat.

Presentations were given on many of the state's operating mines, including the Pogo gold mine east of Fairbanks and the Red Dog zinc and lead mine in Northwest Alaska, and proposed mines in advanced stages of development planning, like the big Donlin Creek gold project.

A highlight of the conference is always the state's release of its annual report on exploration and production. The report always lags a year — the one released Nov. 8 was for 2010 — because the tally of industry spending in 2011 won't be completed until 2012.

It was good news, however. Spending on minerals exploration and mine development increased substantially in 2010 compared to 2009, driven mainly by high prices for gold and zinc, the state said in its annual report.

The state departments of Natural Resources and Commerce, Community and Economic Development compiled the data and issued the report.

Alaska exploration spending, an important barometer for the industry, increased 47 percent last year, rising from $180 million in 2009 to $264.4 million in 2010, the report said. This growth helped make 2010 the sixth consecutive year with exploration spending that exceeded $100 million.

Exploration occurred across Alaska, but more than 48 percent of the spending ($127 million) was in Southwest Alaska alone, and 21 percent, or $55 million, was in the Eastern Interior region of the state, according to the report.

Two advanced exploration projects, the Pebble copper/gold and the Donlin Creek gold projects in the western and southwest regions, accounted for more than 43 percent of the exploration spending in 2010, the state report said. Thirty-four projects reported exploration expenditures of $1 million or more, and 47 additional projects reported spending at least $100,000.

Mineral industry employment, another important indicator, rose 18 percent in 2010 to 3,872 full-time-equivalent jobs, an increase of 592 jobs from the 2009 total of 3,280. Full-time-equivalent job numbers are derived from adjusting season job totals to their equals as year-round jobs based on hours worked weekly. The jobs were distributed across Alaska, the state report said.

The value of produced minerals also grew substantially in 2010. The estimated gross wholesale (first market) value of mineral production increased more than 27 percent in 2010, rising from nearly $2.5 billion in 2009 to $3.1 billion.

Zinc topped all mineral product values, with 42 percent of the total, and the Red Dog Mine near Kotzebue, operated by Teck, was the largest contributor to total zinc production, the state report said.

Gold remained a strong second, carrying 35.8 percent of the total production value.

In descending order, the values of remaining production were lead, 9.1 percent; silver, 9 percent; coal and peat, 2.4 percent; and industrial minerals (rock, sand, gravel, and gemstones), 1.7 percent, according to the state report.

Mineral production continued strong at Alaska's six large lode gold mines and more than 225 placer gold operations. Teck Resources Ltd.'s Red Dog Mine, one of the world's largest zinc producers, began mining the Aqqaluk deposit adjacent to the main Red Dog deposit, extending the mine's life to 2031. Red Dog produced 593,043 tons of zinc, 121,144 tons of lead, and more than 6.7 million ounces of silver in 2010.

Coeur Alaska began mining at the Kensington gold mine near Juneau, producing 43,143 ounces of gold by year's end. Hecla Mining Co.'s Greens Creek Mine near Juneau produced more than 7.2 million ounces of silver in 2010, along with 68,838 ounces of gold, 74,496 tons of zinc, and 25,336 tons of lead.

Kinross Gold's Fort Knox Mine near Fairbanks produced 349,729 ounces of gold, and Sumitomo's Pogo Mine near Delta Junction produced 383,434 ounces of gold. Usibelli Coal Mine near Healy produced 2.06 million tons of coal. Total placer gold production, from more than 225 operators, was 69,318 ounces.

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