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February 24, 2012
Advisory Warns Investors of Risks of Proposed Copper and Gold Mine in Alaska
    by Robert Kropp

Citing community opposition, unprecedented infrastructure requirements, and environmental risks, Earthworks questions whether the mine, located in the Bristol Bay area, will ever be built.

The world's largest salmon fishery is located in Alaska's remote and unspoiled Bristol Bay. Not only does the salmon population there support the commercial and sport fishing industries; it is central to the traditional subsistence ways of life of the local communities as well.

Such a location might seem to be among the last for a proposed copper and gold mine. Nevertheless, the UK-based Anglo American and Northern Dynasty, its Canadian mining partner, are seeking to develop the largest copper and gold mine in North America at the headwaters of the Bristol Bay watershed.

According to a recently published Investo r Advisory from Earthworks, the Pebble project will require the construction of tailings ponds that will hold up to 10 billion tons of mine waste in perpetuity, and several earthen tailings dams as much as 700 feet in height.

"The infrastructure necessary to develop the Pebble project is unprecedented," the Advisory states. The developers will need to construct a 378 MW power plant, 200 miles of power transmission lines, a deepwater port, a 100-mile road, and four pipelines. "In 2008," Earthworks reports, "The company projected development costs at US $6 billion, an increase of $1 billion from the previous year's estimates."

The proposed mine has encountered substantial opposition from what Earthworks describes as "a diverse and politically sophisticated coalition of local communities, tribal governments, commercial and sport fishing businesses, and other economic interests." The legal and regulatory hurdles suggest that the mine might never be built.

In February, 2011, the US Environmental Protection Agency (EPA) launched a scientific assessment of the impacts of large-scale development in Bristol Bay, and expects to announce the results of its study in April. Last April, a coalition 30 investor organizations, led by Calvert Investments and Trillium Asset Management, requested that EPA "initiate a review process under the Clean Water Act to evaluate the mine waste impacts of the proposed Pebble Mine on Alaska’s Bristol Bay watershed."

"This proposed mine has potentially devastating consequences for the people and the ecosystem of Bristol Bay," Jonas Kron, vice president at Trillium, said at the time. Kron provided review and comments for Earthworks' Investor Advisory.

In addition to legal and regulatory risks, the proposed mine faces reputational risks due to community opposition, operational risks due to the lack of infrastructure, and significant environmental risks.

Anglo-American's involvement in the proposed mine also fails to sustain its commitment, as a member of the International Council on Mining and Metals (ICMM), to secure the support of the community.

Furthermore, a report detailing the sustainability performance of Anglo-American concluded, "Anglo American can hardly be considered a model of good corporate citizenship."

"Investors are increasingly taking into account environmental and reputational risks, particularly associated with mining," the Advisory concludes.


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