Friday Focus:  Pebble Project Could Provide 6.4B lbs Copper for Energy Transition

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PEA affirms Pebble’s world-class status
Shane Lasley, North of 60 Mining News, September 8, 2023

SW Alaska project could provide US with 6.4 billion lb copper plus other metals critical to energy transition.

A mine at Pebble project in Southwest Alaska could provide a secure domestic supply of 6.4 billion pounds of copper needed for the clean energy future, 300 million lb molybdenum needed for infrastructure, 200,000 kilograms of rhenium for aerospace, 37 million ounces of silver for solar panels, and 7.4 million oz of gold for the economy over 20 years, according to a new independent preliminary economic assessment completed for Northern Dynasty Minerals Ltd.

In addition to supplying metals critical to America’s clean energy future and prosperity, the mine would offer significant economic benefits at the local, state, and federal levels.

“The proposed mine for the Pebble Project would provide good-paying, year-round employment for thousands of Alaskans, something desperately needed in Southwest Alaska,” said Northern Dynasty Minerals President and CEO Ron Thiessen.” “The mine would mean substantial tax revenues for Alaska, including contributions to the Alaska Permanent Fund, which will be important for the future economic sustainability of the region.’

While the summary of the updated PEA released yesterday did not provide details on the economic benefits, a 2021 assessment for a similar operation estimated the Pebble Mine would pay US$1.74 billion in fees, royalties, and taxes to the state of Alaska; US$490 million in taxes to the Lake & Peninsula Borough; and US$1.4 billion in federal taxes.

While the basic mining parameters of the 2021 and current PEAs are the same, the new scoping level study reflects current economic volatility, as well as the status of the Environmental Protection Agency’s decision to exercise its authority under Section 404(c) of the Clean Water Act to prohibit mining at Pebble and the United States Army Corps of Engineers’ reassessment of its permit denial for mine permits following an appeal by the Pebble Limited Partnership.

$6.77 billion price tag

Both the 2021 and current PEAs outline plans for a 180,000-ton-per-day open-pit mining operation that would produce an average 320 million lb copper, 368,000 oz gold, 15 million lb molybdenum, 1.8 million oz silver, and 10,000 kg rhenium annually over 20 years of mining.

With Pedro Bay Corp. selling a portion of their land to a fund that created a conservation easement that blocks the proposed northern infrastructure corridor, the Pebble Partnership anticipates the use of the southern route, which involves a ferry across Iliamna Lake, as the likely scenario for connecting a mine at Pebble to a deep-sea port on Cook Inlet.

The total initial capital cost for the design, construction, installation, and commissioning of the proposed project is estimated to be US$6.77 billion, which includes all direct and indirect costs, as well as a contingency.

This is roughly 13% higher than the US$6 billion price tag estimated for developing a mine at Pebble in 2021.

There are, however, a couple of mechanisms that could lower the out-of-pocket costs for Pebble Mine developers.

Northern Dynasty anticipate that, if Pebble is approved, partners would step up to develop the marine terminal, access road, ferry, natural gas pipeline, mine site power plant, and other infrastructure in return for lease payments or tolls that provide a return on investment. This would shave roughly US$2.64 billion off the mine development costs. The PEA also includes anticipated metal streaming, which would provide the developer with US$1.2 billion that would by applied to the initial capital cost.

While the economic parameters of the new PEA were not included in Northern Dynasty’s initial release – the full assessment is slated to be published to SEDAR and EDGAR in the coming days – the 2021 PEA forecasts Pebble to generate a post-tax internal rate of return of 15.8% and a net present value (7% discount) of US$2.3 billion.

Realizing the economic and other benefits Pebble has to offer, however, will require successful appeals of both the EPA and Army Corps of Engineers decisions.

State appeals EPA veto

In July, Alaska’s attorney general filed a motion asking the U.S. Supreme Court to take up the state’s claims that EPA’s veto of the Pebble project is a breach of contract between Alaska and the United States.

“The EPA action usurps the State’s ability and responsibility to protect its own natural resources,” the Alaska Department of Law penned in a release announcing the motion.

This appeal to the Supreme Court is in response to EPA’s January issuance of a final determination for the Bristol Bay watershed that prohibits development of a mine at Pebble and restricts any similar development across a 309-square-mile area the encompasses the world-class Pebble copper deposit.

The state contends that this unprecedented action effectively confiscates and creates a de facto national park over lands Alaska obtained specifically for their mineral potential.

Alaska Gov. Mike Dunleavy says EPA’s actions is an affront to the state’s constitutional mandate to both protect the state’s environment and develop its resources for the prosperity of Alaskans.

“Our constitution is clear: Alaska is responsible for utilizing, developing, and conserving all of the State’s natural resources for the maximum benefit of its people,” he said. “Bureaucrats in Washington D.C. are exercising unbridled and unlawful power to choke off any further discussion on this important decision affecting so many Alaskans.”

Alaska bypassed the normal lower courts appeals process and took its complaint against EPA directly to the Supreme Court, which has yet to signal whether or not it will take up the case.