In January, Bishop Benjamin Peterson, representing the Russian Orthodox Church of San Francisco and the West, flew to five Native villages in Bristol Bay performing the annual Rite of the Great Blessing of Water. He flew from Nondalton to Newhalen to Igiugig to Dillingham and then to Aleknagik with a special urgency because of the Pebble Limited Partnership’s recently announced plan for a massive open-pit copper-gold-molybdenum mine at the headwaters of the Kvichak and Nushagak Rivers. In each town, sporting a full white beard and mustache, silver-rimmed glasses and long, heavy coat, Peterson cut a small hole in the ice and immersed a handheld cross into the water three times. With that, the body of water beneath that ice was now deemed holy water and was drawn out to bless homes, land and people.
The orthodox church has joined forces with many Native Alaskans, environmental groups, investors, restaurants and even jewelers across the United States and overseas to fight development of the Pebble Mine. They fear that the mining and its waste products will harm fish and other wildlife; adversely affect tourism, hunting and fishing industries; and destroy the subsistence way of life of Native Alaskans. But who are they fighting? What is the Pebble Limited Partnership?
The Pebble That Continues To Grow
John Shively has been chief executive officer of the Pebble Limited Partnership since 2008. He was born in Middletown, New York and grew up on a dairy farm. He attended Taft high school in Watertown, Connecticut then earned a bachelor’s degree in political science at the University of North Carolina at Chapel Hill. In 1965 he moved to Alaska as a VISTA volunteer. From 1969 to 1972 he worked for the Alaska Federation of Natives, Rural Alaska Community Action Program. From 1972 to 1975 Shively was executive vice president, Alaska Federation of Natives. He also worked for Yukon-Kuskokwim Health Corporation and Norton Sound Health Corporation. While at NANA, a regional Alaska Native Corporation formed in 1971 under the Alaska Native Claims Settlement Act (ANCSA), Shively helped develop Red Dog, a mammoth zinc mine in Northwest Alaska. In 2009 the Alaska State Chamber of Commerce named Shively “outstanding Alaskan of the year” for his “remarkable service to the state of Alaska and its people.”
The Pebble Limited Partnership is in the exploration and planning stage for the first mining development in Bristol Bay. From 1988 to 1997, the Pebble property was explored by Cominco (now called Teck), developers of the Red Dog Mine. In 2001 Cominco sold Pebble’s mineral rights to Vancouver, British Columbia–based Northern Dynasty Minerals, Ltd. According to Hunter Dickinson, Inc., founder of Northern Dynasty Minerals, “The company succeeded in expanding known mineral resources by more than 1,000 percent…[and] initiated planning for a large-scale open-pit mine and began comprehensive engineering, environmental and socioeconomic studies.”
According to Northern Dynasty Minerals Ltd., “In 2007, a wholly owned affiliate of Northern Dynasty entered a 50/50 partnership with a wholly owned subsidiary of Anglo American plc to permit, construct and operate a modern, long-life mine at Pebble. Based on Anglo American’s investment of $1.425 billion to $1.5 billion, both companies share equal ownership, board representation and rights in the Alaska-based Pebble Limited Partnership.”
The way Northern Dynasty Minerals describes the structure of the business, it seems straightforward and simple. But upon closer inspection, it appears quite complex. The structure is “better known as Russian nesting dolls,” says Pamela Thomas, Alaska Division of Corporations, Business & Professional Licensing (DCBPL) in Anchorage.
According to DCBPL, the Pebble Limited Partnership is owned and controlled by Pebble Mines Corporation; that, in turn, is 50 percent owned by Anglo American U.S. (Pebble) LLC and 50 percent by Northern Dynasty Parnership. Pebble Mines Corp. owns Pebble West Claims Corp. (formerly Northern Dynasty Holdings Inc.) and Pebble East Claims Corp. (formerly Northern Dynasty Mines, Inc.). Anglo American U.S. (Pebble) LLC is owned by Anglo American U.S. Holdings Alaska, Inc., which also owns Anglo American Exploration (USA) Inc. However, Thomas says, “There may be a problem because [Anglo American U.S. Holdings Alaska, Inc.] is not really incorporated in Alaska; there is no paperwork.” Anglo American U.S. Holdings Alaska, Inc. is owned by London-based Anglo American plc Northern Dynasty Partnership, which is owned by Northern Dynasty Minerals, Ltd., which reports to Rio Tinto, another London-based mining giant, that owns a 19.8 percent share of their company. Until February, Mitsubishi owned an 11 percent interest in Northern Dynasty Minerals. It appears that by forming numerous affiliated companies to hold and pursue mining claims and interests in Bristol Bay, Anglo American and Northern Dynasty are trying to conceal the extent of their mining plans from the public and governmental regulatory agencies, and to limit their liability if an environmental disaster occurs.
Kerwin Krause, geologist–mineral property manager, Alaska Division of Mining, Land and Water, confirms that the business structure and ownership interest of the mining claims is not as it appears to be. He says, “The Pebble Limited Partnership’s mining claims are actually owned by Pebble East Corp. and Pebble West Corp.”
To further complicate the organizational structure, numerous officers, directors and managers work for more than one of the companies. There also appears to be a tangled web of affiliated companies that owns mining rights in and around the Pebble Prospect and other parts of Alaska, some of which the Pebble Limited Partnership appears to have rights to acquire via agreements between the companies.
What is known is that Anglo American plc’s operating profits for 2010 were $9.8 billion, up from $5 billion in 2009. In contrast, Northern Dynasty Minerals, Ltd. claimed a 2010 loss from operating activities of approximately $15,218,000, and a loss of $13,628,000 in 2009.
Northern Dynasty Minerals’s website says the Pebble Project is unique “because all the financial and human resources necessary to successfully design and permit the project are in place today. To retain its 50 percent interest, Anglo American plc must fund about $1.5 billion in project costs—taking Pebble through permitting and into construction. The global mining giant has also devoted many of its senior engineers and technical specialists to the project, providing the Pebble Limited Partnership with a world-class mine-development team. The Pebble Limited Partnership is led by some of Alaska’s most respected resource-development professionals—including Shively, a former commissioner of the Alaska Department of Natural Resources. In total, some 20 senior engineers and technical specialists, as well as 58 leading engineering firms and specialized consultancies from the U.S. and around the world, are dedicated to the Pebble study team. All of these resources (financial and human) are driving the Pebble Project toward development at no cost to Northern Dynasty.”
“Pebble is a game-changer” for companies wishing to replace “dwindling reserves to their production pipelines,” said Robert Dickinson, executive chairman, Northern Dynasty Minerals.
“Over the next decade or two, the industrialization and urbanization of China and India will lift millions of people out of poverty, fueling demand for industrial commodities,” Cynthia Carroll, CEO Anglo American plc, told attendees at a breakfast meeting in Anchorage on March 3. Carroll said in 2009 China already consumed close to 35 percent of the world’s copper production. The Wall Street Journal reported April 30, demand in China and India are causing prices for copper and gold to soar.
Proponents of Pebble Mine say investors will reap high returns while Alaskans will profit from job opportunities and higher tax revenues.
How to Buy Friends and Influence Voters
“Construction of the initial Pebble Project is projected to take four years, with a peak labor force of 2,080,” according to a technical report on the preliminary assessment of the pebble copper-gold-molybdenum project by Waldrop Engineering, Inc. “The operations workforce is projected to average 1,120 over the initial 25-year life of the mine.”
Alaskan Native companies are being hired as well. One company that has grown substantially as a result of the Pebble Project is the Iliamna Development Corporation (IDC), an Alaska Native Corporation formed in January 2004 as a wholly owned for-profit subsidiary of Iliamna Natives Limited. IDC specializes in fuel and freight services; heavy equipment leasing; construction and contracting; sand and gravel sales; catering services; employee leasing and remote-site services; and remediation services including cleanup of contaminated sites, oil spills, land contouring and re-vegetation. The company also operates and maintains a solid, nonhazardous waste combustor and incinerator at their Iliamna site and has the ability to manage and operate similar incinerators at other Alaska locations.
The Pebble Limited Partnership also spawned Clear Stream, LLC, an Alaskan joint venture between Pedro Bay Corporation (the village corporation established in 1973
under ANCSA) and Fairweather, LLC (a company that “provides a wide range of services to the oil and gas industry”). Clear Stream LLC started operations by providing medical support to the Pebble Limited Partnership in February 2009. David Marinucci, Clear Stream operations manager, says without Pebble “there’s not much to do.”
In addition to creating opportunities for work, in 2005 the Pebble Limited Partnership established a “$5 million sustainable community-development plan” for the Bristol Bay region. A company press release says that through November 11, 2010 the Pebble Fund distributed nearly $2.5 million in grant monies that supported 73 projects throughout Southwest Alaska and the Fund helped to leverage more than $12 million in matching funds from other organizations. According to the partnership, grants ranging from $7,500 to $25,000 per program have been given to numerous groups, including the Bristol Bay Elders Action Group, to develop and construct a food bank receiving-distribution center to provide food for elders in Naknek, South Naknek and King Salmon; Togiak Public Library and Cultural Center for building and refurbishments; Dillingham City Schools to make shop facility upgrades to OSHA standards; the Bristol Bay Borough for a community recreation room addition; Chignik Lagoon Village Council for LED street lighting; Boys & Girls Clubs of South-Central Alaska, Dillingham for club facility and safety enhancements; Lake and Peninsula School District, King Salmon, for self-study academics; and Dillingham High School for a music festival.
The Pebble Limited Partnership has also passed out funds to benefit individuals in the area. In 2008, The New York Times quoted former state Senate president Rick Halford, a Republican with a home in the region, as saying, “The mine is on a continuous mission to buy the body politic.”
According to The New York Times, “The Palin administration declined to investigate ethics concerns raised by a Republican lawmaker who says mining officials have tried to buy the loyalty of Native leaders, not least by paying $25,000 per month to house workers in the homes of influential locals. One of those houses is owned by Ethel and John Adcox, the parents of a close friend of Todd Palin, the [former] governor’s husband. The Adcoxes say that the $25,000 vastly exceeds the typical rate for their modest guesthouse in the tiny village of Iliamna.”
Another example of questionable payments is cited by Arthur Hackney, a consultant whose firm Hackney & Hackney, a Native Alaskan–owned business, represents Alaskans for Bristol Bay and Alaska Wild Salmon Protection, Inc. In a Bristol Bay Times editorial the first week of April 2011 Hackney says Lake and Peninsula Borough residents should ask Mayor Glen Alsworth, a business owner and pastor who flies people throughout the Bristol Bay region in his airplanes, “how much money he has received from Pebble Mine proponents.” Hackney says “Mayor Alsworth has never willingly revealed the sources of his income in his annual financial disclosures” despite state of Alaska requirements to do so. After a complaint was filed and the state investigated, Hackney says two disturbing facts were unearthed. “First, that he had received over $500,000 from the Lake and Peninsula School District, and the borough, entities whose budget he votes on. Second, that in 2008 and 2009 he received over $200,000 in income from the Pebble Limited Partnership, the developers of the controversial Pebble Mine Project.” Hackney says, “State investigators concluded that this information was wrongfully withheld and that Mayor Alsworth had therefore violated the law. Alsworth signed a settlement agreeing with these conclusions and promising to correctly report his income in the future.” Despite the settlement Hackney says, Alsworth refuses to share how much he made from anyone in 2010.
Despite the opportunities for work and distribution of funds to individuals, a report published December 3, 2010 by the Craciun Research Group, Inc. reveals that of 601 randomly selected households in Bristol Bay (including the villages of lakes Iliamna and Clark, Nushagak Bay, Nushagak River, Togiak area, Kwichak Bay and the Alaska Peninsula), 71 percent oppose the Pebble Mine and only nine percent favor or somewhat favor it. The remaining 20 percent remain undecided.
The Pebble Limited Partnership and its affiliates are trying to overcome resistance to the Pebble Project via advertising. The partnership has produced 22 video advertisements to promote the Pebble Project. The ads attempt to address concerns about the mining venture. Among statements made in the ads are: “[The partnership] is being honest and open;” “Pebble must coexist with healthy fish, wildlife and sustainable communities;” “science is our guide;” and “the partnership listens before they act.”
In the past year, Nunamta Aulukestai (“Caretakers of the Land”) spent about $15,000 in media efforts to try to educate the public about Pebble. Most of the money went to informational pamphlets and a couple of newspaper ads.
Alaska Wild Salmon Protection produced a television advertisement depicting the collapse of an earthen dam at a copper mine in Kolontar, Hungary. The ad points out that the dam was only one-tenth the height of the dam proposed by the Pebble Limited Partnership, yet nine people lost their lives and all fish in nearby streams were killed.
Ten video advertisements have been sponsored by the Renewable Resources Foundation in an effort to educate the public about the scope and consequences of the Pebble Project.
But We Need Those Minerals, Right?
Mark Reed, professor of geology at the University of Oregon, says recycling is an attractive alternative to mining. He says recycling requires less energy. For this reason, companies are looking at recycling copper wire on the ocean floor that was made obsolete by advancements in communications technology. Recycling is becoming more important Reed says, because some minerals in the U.S. “have been mined out. We’re not discovering new copper deposits at a high rate now. We’re getting in a position Europe was…relying on imports.” While other countries in central Asia have large discoveries under way, Reed says the U.K. has been dependent upon other nations for 30 or 40 years to obtain needed minerals. But he believes it is not a bad thing to be interdependent with other countries; it may even help to bring about understanding and peace.
“All mining requires destruction of the environment,” Reed says. “The question is whether to destroy it now or decide later.”
Shively claims that environmental groups opposing mining in Bristol Bay don’t want to see economic development in the area. According to the Alaska Journal of Commerce, Shively said, “What are they doing to help people that need jobs? It’s easy to stop something, but how do you grow something?”
Luki Akelkok, chairman of Nunamta Aulukestai, says Bristol Bay Economic Development Corporation. is expanding job opportunities by helping local community members buy back fishing permits that were sold in order to pay off debts in the 1980s, when salmon prices were down. He says many businesses could be developed in the fishing industry, but in the meantime “during low commercial fishing and tourist seasons, and in blight, people could survive on long-term subsistence [fishing and hunting].”
H. Robin Samuelsen, president and CEO of Bristol Bay Economic Development Corp., says the Pebble Project will not help residents reach their goals of preserving their cultural heritage and way of life; more jobs could be created that would be symbiotic with Native Alaskan lifestyles. He says with assistance from the state of Alaska, Bristol Bay could increase fish processing capacity, improve Internet systems and other marketing channels for local handicrafts, and expand and promote sport and tourism businesses owned and operated by local residents. In addition, he says instead of taxes going into the state’s general fund, more could be directed to the borough where they are assessed.
Apparently, there is a lot more that could be directed to Bristol Bay—at least in the short-term. According to The New York Times, “Compared with many states, Alaska is in fine shape in the short run. It is sitting on a $12 billion revenue surplus, a sum driven directly by the high price of oil.”
On December 20, 2010 The Wall Street Transcript asked Ronald Thiessen, president and CEO of Hunter Dickinson and Northern Dynasty Minerals, “Realistically speaking, what do you really expect out of the Pebble Project in terms of future prospects?” Thiessen replied, “We foresee the involvement of two major mining companies, perhaps a base metal company like Anglo and one of the big international precious metal–gold companies, and a smelter group involved in the development. Really what that means is that Northern Dynasty will not be part of that picture because we think that ultimately Northern Dynasty will be taken over.” Mining News, March 27, 2011, reported, “Northern Dynasty Minerals Ltd. has hung a for sale sign on its 50 percent stake in the enormous Pebble copper-gold-molybdenum project.”
Thiessen was cited by Mining News as telling investors at the BMO Capital Markets 2011 Global Metals & Mining Conference, “Our original premise on this project is that we felt Northern Dynasty would be at the project until we felt we were at a position that we weren’t adding any more value to the project with our input. And that we would be able to demonstrate the true value of this so that the major mining companies would probably look at this in some sort of a corporate transaction.”
On April 21, 2011 the Alaska Journal of Commerce quoted Shively saying he didn’t expect any sale of Northern Dynasty’s stake to impact the project. “Anybody that would buy would be interested in development,” he said. “I wouldn’t anticipate a major change in our strategy if there was a purchase.” Shively said he hasn’t seen any change in attitude about Pebble by Anglo American, noting the company will spend about $20 million more in 2011 than it did in 2010.
It appears the mammoth Pebble Mine is just the beginning of what the Pebble Partners are planning. The Pebble Limited Partnership, Northern Dynasty Minerals, Anglo American and their affiliates have been securing mining opportunities well beyond the boundary of the initial Bristol Bay Pebble Project.
On June 29, 2010, U5 Resources, Inc. entered into a letter agreement to purchase mineral claims (approximately 23.4 square miles) adjacent to the Pebble Project for $1 million and a loan advance of $3 million. On September 9, 2010, the Pebble Limited Partnership signed another option agreement to gain a 60 percent interest in the 135.5-square-mile Pebble South Property that borders three sides of the partnership’s claims that include the Pebble Deposit. Additionally, the partnership secured the right to “purchase claims outside of specified exclusion areas (the highest priority exploration areas) by paying Full Metal [Minerals Ltd.] $25 per acre, with total acreage not to exceed 20,000 acres following appropriate condemnation work.”
Mining Your Own Business
Apayo Moore, Nunamta Aulukestai outreach coordinator, says, “It seems that a lot of our politicians want ‘the process’ to decide [whether or not mining is allowed in the Bristol Bay Borough]. But I think that’s a cop-out attitude in terms of standing up for the Native people that have been here for thousands of years. At some point, the Native people need to be given some credit for being the first scientists of this land, and what they have always said is, respect the land.”
A unanimous resolution was passed by the diocese of Alaska of the orthodox church in America opposing any developments in the Bristol Bay region that may be harmful to the people or land. Peterson said, “We want to remind the people that the choices they make today are going to affect their children and their children’s children and a way of life and culture that has been here for 10,000 years.”