Pebble employees looking out over the potential mine site, 2010.
On Monday morning, before most Alaskans were out of bed, an announcement half a world away set the agenda for their day and threw into disarray one of the state’s largest and most controversial resource development projects. In London, global mining giant Anglo American announced that it was pulling out of the environmentally problematic Pebble Mine project, the massive copper, gold, and molybdenum deposit that sits near the headwaters of the famed Bristol Bay salmon run, which it had been developing as one half of the Pebble Limited Partnership (PLP), a joint venture with Canadian mining company Northern Dynasty.
“Despite our belief that Pebble is a deposit of rare magnitude and quality,” said Anglo CEO Mark Cutifani in a statement, “we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options. Our focus has been to prioritise capital to projects with the highest value and lowest risks within our portfolio.”
Though Anglo will take a $300 million loss, the move fits with the company’s new strategy, embracing what Cutifani called a “value-driven capital allocation model” and attempting to deploy their capital to greatest effect, which would mean cutting costs associated with long-term, pre-approval development of non-producing deposits like Pebble. By withdrawing, Anglo has left junior partner Northern Dynasty, which has never developed a mine on its own, all alone, but the move was not, the company said, any sort of judgment on the merits of developing the deposit or the “opportunities and benefits that such an investment may bring to Alaska.”
But in Alaska, where a coalition of conservation groups, fishermen, and Native groups have been fighting against Pebble’s development for over a decade, many saw cause for celebration: This was, to their eyes, a huge victory for the local Davids over the mining company Goliath.
“It’s a major, major victory for the people of Bristol Bay,” said Robin Samuelson, chairman of the Bristol Bay Economic Development Corporation and mine opponent, in an interview with local NPR station KDLG. “And more importantly it’s a major, major victory for the resources.”
Chief among those resources: the world’s greatest remaining run of wild sockeye salmon, the fish that is the economic, cultural, and ecological backbone of the region. The threat posed by large-scale mining to the salmon’s pristine spawning grounds at the headwaters of Bristol Bay’s rivers galvanized a broad spectrum of mine opponents, all focused on making themselves an annoying enough thorn in Anglo’s side to cause them to reconsider their plans for Bristol Bay.
And they do deserve some credit. If Anglo’s cuts are an effort to address a pipeline of future mines that Cutifani said in July had become hopelessly
“constipated”, Pebble represents a substantial, uncomfortable, and unprofitable blockage, sucking up more resources year after year, getting no closer to breaking ground while attracting more vocal -- and higher level -- criticism all the time.
The news went out like a dam bursting, and investors took notice: trading floors around the world reacted briskly, and if you happened to have Northern Dynasty (NAK) shares in your portfolio, Monday morning was unpleasant. After closing at $2.22 on Friday, they plummeted through the morning, dropping 40 percent to $1.33 by 11 a.m. - 7 p.m. in Alaska -- before rebounding slightly to end the day down 30 percent. Investors, it seemed, were unconvinced by the assurances in Northern Dynasty’s release that plans for the mine would proceed. “Northern Dynasty and the Pebble Partnership,” said CEO Ronald Thiessen, “have both the expertise and resources necessary to advance the Pebble Project.”
In Anchorage, things were a little confused on Monday. Northern Dynasty had only been alerted of Anglo’s plans on Friday, and those on the ground there seemed somewhat shell-shocked. Local Pebble employees received little warning, and even the email sent out to staff that morning, while promising to press forward, seemed listless. “Pebble remains an important project for Alaska,” it said, “and we will share additional information about the way forward for the project in the days and weeks ahead.”
Whatever happens next, it seems certain that Pebble’s stated goal of releasing a mine plan later this year and applying for mine permits late this year or early next is in serious jeopardy, with Northern Dynasty hobbled, cash-constrained, and getting pummeled in the markets. But while they might be temporarily knocked down, they are far from out, and are certainly in a much better position than they were before Anglo came along. Anglo has invested $541 million in the project, well short of the $1.5 billion it committed when PLP formed in 2007, but enough to fund almost all of the site exploration, deposit mapping, environmental studies, and other work needed to initiate the permitting phase. What’s more, because Anglo apparently failed to meet an undisclosed spending threshold, Northern Dynasty owes them nothing.
So by the end of the day, though still reeling, the folks at Pebble seemed to have found their footing. “I still believe we have a very good project, [and] I believe we have a project that can meet the environmental concerns people have,” said Pebble CEO John Shively in an interview with KDLG, before admitting that, when it comes to the plan going forward, “we don’t know at this point and probably won’t know for a bit.” But nothing, he said, was over. “If you look at projects like this around the world, they’re almost all done with two or more partners, so I think it’s likely that at some point there would be another partner.”
The mine’s opponents agree: for them, this is just a brief pause in a long battle. “We will not back off of our ongoing work as a campaign to oppose development there,” said Bob Waldrop, executive director of the Bristol Bay Regional Seafood Development Association, one of the groups that has actively opposed the mine, in a KDLG interview. “This does not eliminate development of Pebble Mine. This just means we’re back to Northern Dynasty, which is where we were before Anglo came in several years ago. Northern Dynasty will shop it around and will, in all likelihood, find another partner. So we are not going to rest on this news, and we will pursue our ongoing strategies, as well as the long term one of a permanent solution.”
At the top of their permanent solution wish list: convincing the EPA, which has undertaken a thorough assessment of the Bristol Bay watershed, to block the mine by invoking its authority under section 404c of the Clean Water Act. Read more about that, and EPA Administrator Gina McCarthy’s recent trip to Alaska, here.