Tim Bradner on Red Dog Mine Permit

It's May, the month Teck Alaska said it must decide whether to start shutting down production at the big Red Dog mine in Northwest Alaska.

Teck needs to know this month whether it will receive a key federal permit that will allow the company to begin work on a new pit that will allow the mine to stay in production.

There's still no word, however, on how long the U.S. Environmental Protection Agency will take in deciding an appeal issued by environmental groups of the needed wastewater discharge permit.

Red Dog is one of the world's largest lead and zinc mines.

Jim Kulas, Teck's environmental manager for Red Dog, said company officials have met with senior EPA officials in Washington twice, most recently in the last two weeks, but received no assurances on how soon a decision will be made.

"We hope we'll get an answer within the next few weeks," Kulas said. "There's no firm date in May as to when we have to make the decision (on beginning the shutdown procedure)," but the sooner the company knows how EPA will rule on the appeal the better, he said.

Teck said it needs the issue to be resolved by May or else it must begin shutdown procedures.

Ore reserves in the pit now being mined will be exhausted by 2011. The new mining pit contains about 51.6 million tons of ore reserves, which are sufficient to keep Red Dog producing until 2031.

Plans to develop the new pit, adjacent to the area now being mined, have been under way for several years.

If the shutdown is initiated, production would cease in October and would not be resumed until the issue is settled, Teck said in briefing documents. Once production is stopped it would take 18 months to restart the mine.

EPA, the lead agency on an environmental impact statement for the new pit, completed work on the document and a new wastewater discharge permit for the mine in January.

In February, environmental groups and groups from the nearby villages of Kivalina and Point Hope, appealed the permit to EPA's Environmental Appeals Panel.

The groups argue EPA exceeded its authority in approving a dilution zone in a stream for wastewater from the mine. Trustees for Alaska, an Anchorage-based environmental law firm, and San Francisco-based Center on Race, Poverty and the Environment, filed the appeals on behalf of the two village groups, the Northern Alaska Environmental Center and the Alaska Community Action on Toxins.

Other Alaska Native groups have lined up in support of the mine, however. Because of its economic importance in the region, 20 statewide or Northwest Alaska tribal organizations have passed resolutions or submitted petitions in support of the new permit for the mine.

The economic consequences for communities in Northwest Alaska are substantial. In March 2010, the mine employed 550 people, with 57 percent of the jobs held by shareholders of NANA Regional Corp., which is also the landowner. Red Dog operations resulted in $52.1 million in payroll and payments of $217 million to Alaska-based suppliers in 2009.

As landowner, NANA receives 25 percent of net revenues of lead and zinc sales from the mine, which resulted in payments of $38.8 million in royalties in 2009, some 62 percent of which was shared with other Alaska Native corporations in the state under revenue-sharing provisions of the 1971 Alaska Native Claims Settlement Act.

Red Dog has paid $428 million in royalties since 2006, with most of it shared with other Alaska Native corporations.

Red Dog also is the sole private taxpayer supporting the Northwest Arctic Borough and its schools, paying $6.62 million to the borough in 2009 and $34 million since 2006, as well as $250 million in taxes to the state over the same period.

State agencies are affected too. The Alaska Industrial Development and Export Authority, the state development corporation that owns the road and Chukchi Sea port facilities that serve the mine, would also be affected by any curtailment of ore shipments.

"We're very concerned. If this issue is not resolved in a positive manner, there is obviously a detrimental and serious impact not only the Northwest Arctic Borough but the entire state," AIDEA spokesman Karsten Rodvik said. "The lost revenues to the borough and NANA Regional Corp. will have a ripple affect across Alaska. We're hoping for a positive resolution."

Article quoted from The Alaska Journal of Commerce