Alaska Mining Projects Spend Almost $1 Billion With State Vendors
provide services to the mining companies but are not directly employed by them, the number of jobs jumps to 9,600 and the payroll totals $890 million. Compared to 2019, this comes to 200 more total jobs and $150 million in additional wages during a year when Alaskans needed a boost. “There were no significant production disruptions or worker layoffs; millions of dollars in payroll continued to be infused throughout many Alaska communities,” according to the report. Keeping mining operations running safely through the pandemic also helped inject critical cash into Alaska’s hospitality sector, which was hit hard by travel restrictions and lockdowns that left hotel beds and restaurant tables empty during 2020. Mining and mineral exploration projects in Alaska utilized facilities in Juneau, Fairbanks, and Anchorage to quarantine workers en route to their shifts in remote camps across the state. All told, it is estimated that Alaska mining projects spent roughly $880 million purchasing goods and services from Alaska vendors last year. ANCSA payments While six-figure paychecks and doing business with Alaskans were by far mining’s largest contributions to the state’s economy last year, the industry’s payments to Alaska Native corporations had a wider reach, in terms of geography and populace. According to data collected by McKinley Research, Alaska Native Claims Settlement Act corporations received $175 million from mining during 2020. NANA Corp., the ANCSA regional corporation for Northwest Alaska, was the recipient of $173.5 million of these funds due to the net proceeds from zinc and other metals recovered from the Red Dog Mine on its lands. Most of this money paid to NANA, however, does not stay in Northwest Alaska but is distributed to every corner of the state, due to the Section 7(i) and 7(j) provision of ANCSA. Section 7(i) requires regional corporations to distribute 70% of net revenues from resource development on ANCSA lands among all 12 regional corporations. In turn, Section 7(j) requires that half of the 7(i) payments to be distributed to the respective village corporations within each of the ANCSA regions. This means that $104.1 million of NANA’s 2020 proceeds from Red Dog were distributed to the other 11 ANCSA Regional corporations, half of which made its way to more than 200 villages across Alaska. The “leveling effect” of sections 7(i) and 7(j) creates economic activity that otherwise would not occur in
recipient regions and provides village corporations with vital funding. In total, NANA has received approximately $2.3 billion in proceeds from Red Dog since the start of mining at this world-class zinc deposit, of which about $1.5 billion in 7(i) payments has been distributed to the other ANCSA corporations. Donlin, a 39-million-ounce gold mine project on Native land in the Calista Corp. region, is expected to be a second major mining contributor to ANCSA corporations once production is reached at this near-development project in Southwest Alaska. Government coffers Mining companies are also a significant source of state government revenue and a major financial contributor to local governments across the state. During 2020 Alaska paid nearly $117 million into state coffers. This includes: n $62.1 million in mining licenses, taxes, rents and royalties. n $28.4 million to the Alaska Industrial Development and Export Authority for the use of state-owned facilities such as the DeLong Mountain Regional Transportation System for delivering metal concentrates from the Red Dog Mine, and Skagway Ore Terminal in Southeast Alaska. n $15.2 million to the Alaska Railroad Corporation for moving coal, sand, and gravel. n $11 million in mining lease, royalty, and construction material sales from Alaska Mental Health Trust lands. n $9.7 million in other fees such as income from material sales, and payments made for the large mine permit coordination program. While less than what is paid to the state, the nearly $49 million paid to local governments last year is much more impactful. In addition to the payments made to NANA, the Red Dog Mine is the sole “taxpayer” in the Northwest Arctic Borough, a municipality that blankets the same 40,750 square miles of Northwest Alaska. Red Dog, which is operated by Teck Resources Ltd., contributed $26.2 million in payment in lieu of taxes to the borough during 2020. In addition to the PILT payment, Red Dog contributed $8 million to the Village Improvement Fund. Administered by the borough, with input from the 11 villages it encompasses, this fund is earmarked for community programs, services, and infrastructure. — Shane Lasley, North of 60 Mining News
www.alaskaminers.org I The Alaska Miner I Spring 2021
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