The material isn't toxic waste at all. And it only becomes problematic if it isnt mitigated properly. Are you aware of pebbles mitigation plans?
You mention historic problems with mines, but are you well versed on current technology?
DT Jr. on Meateater
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You mention historic problems with mines, but are you well versed on current technology?
El Jason
Well-known member
My bad. You’re correct.
D
Deleted member 28227
Guest
I work at an Oil and Gas company...
this rain on my neck smells distinctly like asparagus.
I work at an oil company too, albeit downstream. I am not sure what that has to do with anything.
I work at an Oil and Gas company...
this rain on my neck smells distinctly like asparagus.
D
Deleted member 28227
Guest
There is a ton of bs in our industry about how OG development is totally safe, it’s not. Surface casing leaks, faulting isn’t well understood sometimes, natural disasters cause frack ponds to leak, etc etc.
Yes if done correctly and to plan a well is pretty low impact... but stuff happens and working at an operator I’ve seen it happen.
I’m fine working in the Permian, Bakken, Anadarko, etc but I’m not putting a well in the Bob or San Juans.
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D
Deleted member 28227
Guest
@BWALKER77 put it another way, I own 1/328,200,000th undivided interest in the minerals under that mine.
Im not signing the lease you are free to do as you wish.
Im not signing the lease you are free to do as you wish.
As the world turns...
POLITICO: Trump set to block controversial Alaska gold mine
POLITICO: Trump set to block controversial Alaska gold mine.
www.politico.com
POLITICO: Trump set to block controversial Alaska gold mine
POLITICO: Trump set to block controversial Alaska gold mine.
Trump set to block controversial Alaska gold mine
The about-face by the administration likely signals more about issues with this specific mine than a sea change in Trump’s overall support for big development projects.
www.politico.com
As the world turns...
POLITICO: Trump set to block controversial Alaska gold mine
POLITICO: Trump set to block controversial Alaska gold mine.
Trump set to block controversial Alaska gold mine
The about-face by the administration likely signals more about issues with this specific mine than a sea change in Trump’s overall support for big development projects.
It called waiting till after the election to allow it, like everything else that pro extraction that has been allowed from this administration. Political prudence pays off with big dividends.
It will be good news, if that is what gets announced next week. I suspect most are waiting to see what is announced next week and whether it is permanent or temporary.
As for folks being silent or getting excited later, a lot of this reminds me of 2010 and 2011. With Eric Holder, Obama's Attorney General, in hot water for Operation Fast and Furious, a big deal was made when Obama signed the bill that allowed firearms in National Parks. I didn't vote for Obama, and I didn't trust him or his administration on guns. So, I viewed the National Park firearm bill with political suspicion. I shrugged off what some claimed as proof that it represented a supposed change in policy for the Obama administration.
Same with the wolf delisting in April 2011. Obama was historically inclined to defer towards groups not wanting wolf/grizzly delisting. Yet, due to alignment of political planets, he was forced to sign an appropriations bill that delisted wolves in Montana and Idaho.
Do I think he did both of them as a result of political factors existing at the time? Yes, I do.
Do I like the fact that he signed them? Yes, I do.
Do I think those changed his basic positions on firearms or wolves/grizzlies? Nope, I don't.
I could insert Trump for Obama and change the topic to Pebble Mine or GAOA or clean air/water/land. The backdrop of historical support for groups not helpful to conservation, clean air, and clean water, are similar to the backdrop of Obama's historical support for gun control advocates. If I swap the names and topics, I would ask/answer the same three questions.
Do I think he (Trump) did both of them as a result of political factors existing at the time? Yes, I do.
Do I like the fact that he signed them? Yes, I do.
Do I think those change his basic positions on giving industry priority over clean air/water and conservation? Nope, I don't.
Maybe my years involved in these issues and seeing how much political calculus is applied in DC has made me skeptical of any administration/Congress.
For me, I hope that is the result next week. If so, I will give the agencies credit if the administration, as they claim, stays "hands off" on these topics. If the POTUS intervenes, contrary to his spokespeople saying he doesn't intervene, I will give him full credit.
As someone who doesn't give a damn what party someone comes from, I look at most all of these acts that are policy anomalies, from Reagan to Bush to Clinton to Bush to Obama to Trump to whoever is next, as political convenience/circumstances that forces them to take actions that are contrary to their historical positions on the topics. Just part of the reality that comes when doing political calculus needed for reelection or retaining control of Senate/House. And when it happens, the supporters use these events as evidence to claim that the historical narrative no longer exists, while those who didn't vote for that administration shrug it off and point to the historical track record as being more important.
Just the life cycle of politics and reelection realities, no matter who is in charge. Nothing new with regards to supporters/skeptics of any administration or Congress. I suspect the same dynamic existed with Washington, Adams, Jefferson, Madison, Monroe, ............. and every Congress in the history of this country.
I'll take the progress when it happens and be thankful for the result. Whoever is responsible for progress deserves the credit, regardless of the political context or the party to which they belong.
As for folks being silent or getting excited later, a lot of this reminds me of 2010 and 2011. With Eric Holder, Obama's Attorney General, in hot water for Operation Fast and Furious, a big deal was made when Obama signed the bill that allowed firearms in National Parks. I didn't vote for Obama, and I didn't trust him or his administration on guns. So, I viewed the National Park firearm bill with political suspicion. I shrugged off what some claimed as proof that it represented a supposed change in policy for the Obama administration.
Same with the wolf delisting in April 2011. Obama was historically inclined to defer towards groups not wanting wolf/grizzly delisting. Yet, due to alignment of political planets, he was forced to sign an appropriations bill that delisted wolves in Montana and Idaho.
Do I think he did both of them as a result of political factors existing at the time? Yes, I do.
Do I like the fact that he signed them? Yes, I do.
Do I think those changed his basic positions on firearms or wolves/grizzlies? Nope, I don't.
I could insert Trump for Obama and change the topic to Pebble Mine or GAOA or clean air/water/land. The backdrop of historical support for groups not helpful to conservation, clean air, and clean water, are similar to the backdrop of Obama's historical support for gun control advocates. If I swap the names and topics, I would ask/answer the same three questions.
Do I think he (Trump) did both of them as a result of political factors existing at the time? Yes, I do.
Do I like the fact that he signed them? Yes, I do.
Do I think those change his basic positions on giving industry priority over clean air/water and conservation? Nope, I don't.
Maybe my years involved in these issues and seeing how much political calculus is applied in DC has made me skeptical of any administration/Congress.
For me, I hope that is the result next week. If so, I will give the agencies credit if the administration, as they claim, stays "hands off" on these topics. If the POTUS intervenes, contrary to his spokespeople saying he doesn't intervene, I will give him full credit.
As someone who doesn't give a damn what party someone comes from, I look at most all of these acts that are policy anomalies, from Reagan to Bush to Clinton to Bush to Obama to Trump to whoever is next, as political convenience/circumstances that forces them to take actions that are contrary to their historical positions on the topics. Just part of the reality that comes when doing political calculus needed for reelection or retaining control of Senate/House. And when it happens, the supporters use these events as evidence to claim that the historical narrative no longer exists, while those who didn't vote for that administration shrug it off and point to the historical track record as being more important.
Just the life cycle of politics and reelection realities, no matter who is in charge. Nothing new with regards to supporters/skeptics of any administration or Congress. I suspect the same dynamic existed with Washington, Adams, Jefferson, Madison, Monroe, ............. and every Congress in the history of this country.
I'll take the progress when it happens and be thankful for the result. Whoever is responsible for progress deserves the credit, regardless of the political context or the party to which they belong.
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SAJ-99
Well-known member
@88man, I think this is good. But not sure how to react to the administration making the right decision. Maybe DT Jr had something to do with this? If so, great! I wish he would speak up more. There is another decision on selling O&G rights on ANWR I would like to hear his opinion on. If you want to disagree as to whether it was the "right" decision, all I can say is that mining is a dirty business. People of all political stripes would tell you the creation of the EPA was the greatest thing that happened to American water and air. My take is slightly different. Sure, our air and water got cleaner, but all we really did was transfer that pollution to other countries, principally China, via US $ strength (for background, start with Bretton Woods II, circa 1971). EPA regulation increased costs which resulted in manufacturing moving overseas. Mining is a low-margin, capital-intensive business, so it doesn't take much to affect the economics. The World needs to come together and determine how to extract resources without destroying the planet. That is a tough problem to solve. Like @Big Fin, if you ask me if I think the administration did this because it cares about the environment?, my answer is a resounding 'no'.
Bambistew
Well-known member
Actually you own 0% interest in the minerals at Pebble, its a state owned mineral resource, in an area specifically set aside for resource development (due to potential) at the time of statehood... The only reason AK was granted statehood was due to its mineral and resource potential to sustain an economy. Without it, we'd still be a territory. However we are arguably still a colony for the L48. 75% of the fisherman (and the majority of the permit holders) in BB are from other states.
I would venture guess that 99.99% of the opponents of Pebble haven't read the EIS (or even know its a state resource
) and have made up their mind based on doomsday information that was spoon fed to them by anti-mining and development groups. On top of that there are very few people that understand anything remotely related to engineering or environmental controls related to modern day mining, or what will be employed at the project. Everyone is an expert on tailings dams, and jump in citing recent failures, yet don't have a clue on how they were constructed or failure reasons, let alone could make any sort of argument in a comparison between Pebble and the failed dam. They just jump to the conclusion that all dams will fail. The fact that people think that the mine will destroy the entire fishery is amazing to me. That's like saying the Berkeley pit killed off all the fish in Puget Sound. Its physically impossible for that to happen too much water and too little toxicity even if the worst were to happen, which BTW the risk has be reduced to a very small chance of happening and the ACoE agree. The geochemistry does not support that claim, current science doesn't support the claim, and a 1st grade level understanding of dilution doesn't support the claim.
I do get it, one fish is too many, and that is where the line is drawn.
Bambistew
Well-known member
The US has the most stringent environmental regulations relating to mining than any country in the world. If we can't mine it here with the current regulations, it will never be mined. We can't choose where deposits are located, and unless technology reduces the amount of resources required to live, mining will continue to grow along with the population that climbs out of poverty. The amount of minerals that the typical person from NA consumes vs the rest of the world is staggering, 100x more than someone from interior Africa. Those people want what we have, and it will have to come from somewhere.
Our AK Rep and one of our senators are up for reelection. This allows them to default to the president's concern, and not have to take a stand. IMO. Both are in jeopardy of losing their (R) seats. I could be wrong, but both races will be extremely close.
SAJ-99
Well-known member
Sure. I agree. It’s just a question of cost. The post before this...ehhhh, not so much in agreement.
Hopefully this news is correct though I still worry that something could occur in the lame duck session that we might have come November. Bambi stew is absolutely correct that the raw material usage by the United States in particular is staggering and I’m hopeful that recycling and other technologies evolve that will drastically reduce the amount of materials mined from the ground. As stated above, having strict environmental regulations in our country does not preclude other countries from being lax on both the environment and worker safety...The club type of diplomacy formed in Montreal several decades ago aimed at limiting CFC’s is a model that may need to be implemented again (and again...) to bring the rest of the world along.
Bambi, you're the expert in this mining/engineering topic. I pay attention to your comments on the facts related to risks and likelihood of an on the ground problem. I've got a couple questions you might help with, given this week I am doing a podcast with experts in Free Market Environmentalism and this mine is likely one of our topics.
Maybe your comments apply to the engineering side and not the financial/risk analysis side.
My point with mining/O&G has always been that we should require bonding for the full costs/liability that could exist. No more Pegasus situation where a foreign company gets the bonding lowered to a pittance, effs up the water supply, then files bankruptcy, sticking locals with impaired property values and the state with millions in unbonded cleanup/mitigation. If an operator files BK, there should be a surety/bonding company standing in the shoes of the BK organization that pays for all costs/liability.
Whenever this "bond for full cost/liability" idea is floated as ways to get the politicians out of arbitrary decisions, it is stated that such level of bonding would make resource extraction unfeasible. The bonding costs would be too high. Thus, extraction would move overseas, which currently happens in many instances, where these bonding requirements are far less.
The counter to the "too expensive to bond" argument is that if the risk is low, as operators usually claim in their permit applications, there is not much exposure to the bonding company and thus full bonding would not be a prohibitive cost. If the risk is high, then the risk experts have determined they need a huge annual premium to stand in the shoes of the mining company in the event of a problem.
Low risk, low bonding cost. High risk, high bonding cost. If it can still be profitable while carrying the bonding costs of all costs/liabilities, then it should be permitted. A paraphrase of the basic premise of the Free Marketeers.
Risk costs to be covered/bonded are a function of many things; the engineering risk in the given geographic/geologic area, financial risk, risk related to historical problems of the mining company, level of capitalization of the mining company to absorb their own liabilities, etc.
Q: Is this "let the risk experts decide" idea often floated by Free Market Environmentalists merely a scholastic exercise for Econ classes or does it have practical application to mining, in this case the Pebble Mine?
Mining companies form many of their entities as Parent-Subsidiary Corporations, Limited Partnerships, and Limited Liability Companies to manage risk to the parent enterprise that owns the interest in the LLC/LP.
Q: Do mining companies capitalize their LLCs and JVs at such low levels, relative to total risk associated with operations, that the bonding risk to a surety company would be super high even if the engineering can results in very low likelihood of a problem?
I just went and did a search of the ownership structure of Pebble Mine Limited Partnership on the AK SOS website. It is a Limited Partnership. A Limited Partnership limits liability to any Limited Partner. In this case, Northern Dynasty Partnership, based in Vancouver, owns the Limited Partnership interests, so no future liability can hit them via that LP ownership.
The General Partner is Pebble Mine Corp. Given it is a corporation, it also has limited liability. By the docs from the Secretary of State, you can see the purpose of Pebble Mine Corp. is to be the General Partner of Pebble Mine Limited Partnership. It is 100% owned by Northern Dynasty. So, no liability to them via their General Partnership interest, as it is held in a shell corporation.
There is nothing strange about how this is set up. It is very common in high risk enterprises to use entities that limit liability to the owners, as is accomplished with corporations, LPs, and LLCs.
If Pebble Mine were approved and for some reason Pebble Mine had a huge liability claim not fully covered by the bonded levels, the US and AK taxpayer get the bill. The two legal entities Northern Dynasty has used, a corporation and a LP, limit any liability to the owners of those entities. Thus, none of the liability in the event of an uncovered claim will flow to Northern Dynasty. They would get to walk with only their investment in the mine as recourse to the state/fed. The remainder of the liability (beyond mine liquidation value) would fall to taxpayers (not Canadian taxpayers where Northern Dynasty is based).
I have no idea what the bonding requirements will be or should be to make all parties whole in the event of a huge claim.
I point this out to show how thinly capitalized these operating entities are in many instances, all for the purposes of managing financial risk in the event of a claim not covered by bonding. Even with highly capitalized parent companies, the operating entities are usually thin and set up to limit liability to the parent companies. As a result of these low capitalization levels and no/limited liability to the parent entities, bonding becomes far more expensive, even if the engineering solutions mitigate on the ground risk to a high degree.
No doubt the US is a disproportionate consumer of metals/O&G. I wonder if part of that is due to the fact that we do not require full absorption of the costs/risks by the producers, a cost that if fully absorbed would have to be passed on to consumers, thereby increasing costs to reflect what the true costs are. Higher cost, if economists are correct, results in lower utilization by consumers. We know that extraction of these resources is moved overseas to countries with far lower regulation/bonding. Congress does not have the stones to restrict importation of resources from countries willing to lower regulations and bonding requirements.
We are forced to decide if we want to lower regulation or cap bonding requirements to make our own resource extraction economically more competitive and profitable. To what degree costs/liabilities get absorbed or avoided is the often the crux of these discussions.
Maybe your comments apply to the engineering side and not the financial/risk analysis side.
My point with mining/O&G has always been that we should require bonding for the full costs/liability that could exist. No more Pegasus situation where a foreign company gets the bonding lowered to a pittance, effs up the water supply, then files bankruptcy, sticking locals with impaired property values and the state with millions in unbonded cleanup/mitigation. If an operator files BK, there should be a surety/bonding company standing in the shoes of the BK organization that pays for all costs/liability.
Whenever this "bond for full cost/liability" idea is floated as ways to get the politicians out of arbitrary decisions, it is stated that such level of bonding would make resource extraction unfeasible. The bonding costs would be too high. Thus, extraction would move overseas, which currently happens in many instances, where these bonding requirements are far less.
The counter to the "too expensive to bond" argument is that if the risk is low, as operators usually claim in their permit applications, there is not much exposure to the bonding company and thus full bonding would not be a prohibitive cost. If the risk is high, then the risk experts have determined they need a huge annual premium to stand in the shoes of the mining company in the event of a problem.
Low risk, low bonding cost. High risk, high bonding cost. If it can still be profitable while carrying the bonding costs of all costs/liabilities, then it should be permitted. A paraphrase of the basic premise of the Free Marketeers.
Risk costs to be covered/bonded are a function of many things; the engineering risk in the given geographic/geologic area, financial risk, risk related to historical problems of the mining company, level of capitalization of the mining company to absorb their own liabilities, etc.
Q: Is this "let the risk experts decide" idea often floated by Free Market Environmentalists merely a scholastic exercise for Econ classes or does it have practical application to mining, in this case the Pebble Mine?
Mining companies form many of their entities as Parent-Subsidiary Corporations, Limited Partnerships, and Limited Liability Companies to manage risk to the parent enterprise that owns the interest in the LLC/LP.
Q: Do mining companies capitalize their LLCs and JVs at such low levels, relative to total risk associated with operations, that the bonding risk to a surety company would be super high even if the engineering can results in very low likelihood of a problem?
I just went and did a search of the ownership structure of Pebble Mine Limited Partnership on the AK SOS website. It is a Limited Partnership. A Limited Partnership limits liability to any Limited Partner. In this case, Northern Dynasty Partnership, based in Vancouver, owns the Limited Partnership interests, so no future liability can hit them via that LP ownership.
The General Partner is Pebble Mine Corp. Given it is a corporation, it also has limited liability. By the docs from the Secretary of State, you can see the purpose of Pebble Mine Corp. is to be the General Partner of Pebble Mine Limited Partnership. It is 100% owned by Northern Dynasty. So, no liability to them via their General Partnership interest, as it is held in a shell corporation.
There is nothing strange about how this is set up. It is very common in high risk enterprises to use entities that limit liability to the owners, as is accomplished with corporations, LPs, and LLCs.
If Pebble Mine were approved and for some reason Pebble Mine had a huge liability claim not fully covered by the bonded levels, the US and AK taxpayer get the bill. The two legal entities Northern Dynasty has used, a corporation and a LP, limit any liability to the owners of those entities. Thus, none of the liability in the event of an uncovered claim will flow to Northern Dynasty. They would get to walk with only their investment in the mine as recourse to the state/fed. The remainder of the liability (beyond mine liquidation value) would fall to taxpayers (not Canadian taxpayers where Northern Dynasty is based).
I have no idea what the bonding requirements will be or should be to make all parties whole in the event of a huge claim.
I point this out to show how thinly capitalized these operating entities are in many instances, all for the purposes of managing financial risk in the event of a claim not covered by bonding. Even with highly capitalized parent companies, the operating entities are usually thin and set up to limit liability to the parent companies. As a result of these low capitalization levels and no/limited liability to the parent entities, bonding becomes far more expensive, even if the engineering solutions mitigate on the ground risk to a high degree.
No doubt the US is a disproportionate consumer of metals/O&G. I wonder if part of that is due to the fact that we do not require full absorption of the costs/risks by the producers, a cost that if fully absorbed would have to be passed on to consumers, thereby increasing costs to reflect what the true costs are. Higher cost, if economists are correct, results in lower utilization by consumers. We know that extraction of these resources is moved overseas to countries with far lower regulation/bonding. Congress does not have the stones to restrict importation of resources from countries willing to lower regulations and bonding requirements.
We are forced to decide if we want to lower regulation or cap bonding requirements to make our own resource extraction economically more competitive and profitable. To what degree costs/liabilities get absorbed or avoided is the often the crux of these discussions.
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Bambistew
Well-known member
@Bigfin Lots of questions on the business side that I don't really track as far as liability is concerned. The bond for the mine doesn’t care who owns the property, the state would be the beneficiary.
This may be difficult to read, my brain is fried, too much report writing recently.
To answer the question on bonding. In Alaska, all mines are required to have a bond to cover all reclamation activity costs up to the largest liability/disturbance they will incur within the next 5 year mining period. Taxpayers have zero responsibility, or that is the goal of the State. Mines are not required to bond for a bull buildout until they get to that point. As the mine grows, so does the bond. There are instances where the full buildout may not be the largest liability. For example at the end of mine a pit may be backfilled, thus reducing acid mine drainage generation and thus long term water treatment costs. There are 100 other reasons why it could be more or less at some point in the mine life and the bond will reflect that. Water treatment costs and those associated with managing water can be large long-term and operational cost, however a good mine plan can reduce those liabilities and reduce long term costs at actual closure vs closing the mine mid-life. Good planning will limit the exposure throughout the life of the mine, but in some instances its not possible, hence the reason a mid-term mine plan could be the highest liability. There are many, many things to consider.
The bond covers all physical reclamation and long-term costs which would occur should the mine close within the permit cycle (which is 5-7 years). Bonds are calculated assuming a third-party contractor comes in with rental equipment and pays Davis/Bacon wages. These rates are far higher than an actual contractor would pay because they own their equipment (which they can operate at about 70%), and they wouldn't pay DB wages and benefits. So right out of the gate we are 30%+ over actual costs for equipment and labor. We look at the mine plan and determine what is the likely highest cost/disturbance/water treatment liability in the next 5 years, and then develop a concept reclamation and closure plan around that, then cost it all out. It takes about a year to pull it all together, and another 3-6 months to get it approved. There are numerous engineering studies that must be completed to feed information into the plan and estimate. Water balances, pit water management plans, acid-based loading analysis, growth media balances, waste rock and tailings cover designs, etc. I worked on industrial civil engineering projects in my past life, and a mine reclamation plan is 100 more complicated than any civil project, fact. Things aren't just dreamed up as they go, the amount of planning and engineering is unfathomable to most people.
Generally costs are broken into 3 phases. The first phase (temporary closure) is immediately after default when the State takes ownership and receives the bond. There are costs associated with holding the property and maintaining the environmental integrity property and permit compliance. It also includes development of final reclamation plans, procurement, etc. These costs can be in the $2-20 million range per year. This is generally calculated as a 2 year period, but can be longer. The reality is, there would be substantial planning already done, and moving into the physical reclamation period (phase 2) should be fairly straightforward because its planned out already. The second phase includes all the remediation and reclamation activities. This is usually a 2-3 year event, and includes all costs required to stabilize the site forever, generally with the lowest long term risk and liability/cost. The third phase covers all costs associated with long term management and maintenance. We calculate costs for in perpetuity water treatment, and any other holding and maintenance costs (dam maintenance, cover and vegetation, channel armoring replacement, etc) environmental studies, capital replacement and construction, etc. The phase 3 costs are discounted, generally. In AK the discount rate is based on the performance of the Alaska Permanent fund performance and inflation. The reason why discounting is allowed is because in terms of a default, the state would receive the entire bond, and would park it somewhere that would make money. If they for instance received a $500 million dollar bond, and the first 2 phases of the project were only $100M, that money is going to grow and start growing immediately upon receipt, 5 years of growth on $400M is a heck of a lot of money. That money also grows faster than inflation.
The actual cost of the bond the mine has to put up is dependent upon the size of the company and their assets requesting the bond. They are generally put up by large banks, or insurance companies. There is a risk, but as you can see by the % the risk is apparently low. Some of the large companies can pick up a bond for about 1.5-2% of the total reclamation estimate, while others are in the 3-5+% range. Bonds can have any time frame, but most are year to year, and are adjusted annually. The total reclamation estimate amount is also increased annualy based on inflation (Anchorage CPI). The bond can be reduced if the operator performs reclamation and reduces their liability.
AK also has the option to set up a trust fund for reclamation that would mature at the end of the mine life. The fund would be used for reclamation and closure. This is in addition to the bond they are required to provide, however they can lower their liability (bond amount) by the amount in the trust fund as they add money to it. Some of the larger, long-term operations have considered doing this, and to be honest I wish it was required vs the bonding. It requires more capital upfront, but reduces it long term. It further reduces risk, but it doesn’t mesh well with the bean counters. The issue is that capital up front, makes projects less attractive in terms of ROR, especially when you can discount the reclamation costs at the end of the mine life. $500M discounted 20 years reduces that capital a considerable amount. (I think the answer to your second question).
During the feasibility stage of a project, reclamation activities must be taken into account with all capital costs associated with development, operation and closure of a project. The reclamation costs are usually calculated as being done by the mine, with their equipment and people. (Huge trucks haul rock way cheaper than rental trucks.) To add another level to this, the estimates associated with capitalizing a project (though shareholders), are beholden to federal investment regulations, which changed recently...
There is a lot to explain, but like most mining related items, people are stuck in the past and have no idea what is actually required for permitting a mine. Once someones mind is made up you can’t change it. As you probably recall a few years ago Trump “abolished” mine reclamation requirements. This was 100% false, but made good headlines, and those that wanted to believe it lapped it up. What he did was toss out the new regulations that the Obama administration enacted on the way out the door. Those regulations were redundant to state requirements for reclamation, they were essentially federal requirements that mandated the exact same thing as the state. The reason it was killed, was because the people that put the regulations together were third graders, with zero mining experience. It was laughable the way they implemented their cost estimates. It was based on average costs on a per acre basis of reclamation estimates. Every mine has different requirements. Using their methods, some mines would have been over bonded by 2-3x while others with HUGE liabilities were underfunded 3-5x. Then there was the issue of jurisdiction. Environmental groups lost their minds over the regulations being rescinded, mostly because they were clueless as to how inadequate the changes where. Mining companies were vilified, but where right.
It takes roughly 100 permits to start a mine, along with millions of dollars in environmental and engineer studies. It literally takes decades to go from discovery to production. The rhetoric that the mine was "fast tracked" is laughable. The EIS permitting phase shouldn't take more than 2-3 years once all the studies are done. They have been doing studies in support of the EIS for decades, and the mine has been in the spotlight for just as long. Should we move the goal posts out and make it longer for everything, or just Pebble because we don’t like it?
If you have an hour or three, read a few sections of the EIS, mainly the fishery section, and dam construction failure scenarios/results. They are fairly easy to read and understand. As I mentioned before 99.99% of people don’t know anything about dam construction. They only understand that dams fail and believe that everything related to mining is “toxic.” The tailings will basically be benign as they intend to remove all sulfides from them, and deposit them in the pit under water at closure. In water they cannot go acid. A pit full of water does not create acid, air is what makes acid. The tailings facility will have very little water, and the tailings will be well drained. They can’t flow far without water, and if they did… they are fairly benign, not some all ocean killing toxic waste. This EIS is probably one of the largest ever written/studied … if you ask NGO’s it’s not good enough and was fast tracked. Easy to say when it’s not your money but is your gravy train. The end game is to require studying it to death or until you get the answer they want.
https://pebbleprojecteis.com/documents/finaleis
This may be difficult to read, my brain is fried, too much report writing recently.
To answer the question on bonding. In Alaska, all mines are required to have a bond to cover all reclamation activity costs up to the largest liability/disturbance they will incur within the next 5 year mining period. Taxpayers have zero responsibility, or that is the goal of the State. Mines are not required to bond for a bull buildout until they get to that point. As the mine grows, so does the bond. There are instances where the full buildout may not be the largest liability. For example at the end of mine a pit may be backfilled, thus reducing acid mine drainage generation and thus long term water treatment costs. There are 100 other reasons why it could be more or less at some point in the mine life and the bond will reflect that. Water treatment costs and those associated with managing water can be large long-term and operational cost, however a good mine plan can reduce those liabilities and reduce long term costs at actual closure vs closing the mine mid-life. Good planning will limit the exposure throughout the life of the mine, but in some instances its not possible, hence the reason a mid-term mine plan could be the highest liability. There are many, many things to consider.
The bond covers all physical reclamation and long-term costs which would occur should the mine close within the permit cycle (which is 5-7 years). Bonds are calculated assuming a third-party contractor comes in with rental equipment and pays Davis/Bacon wages. These rates are far higher than an actual contractor would pay because they own their equipment (which they can operate at about 70%), and they wouldn't pay DB wages and benefits. So right out of the gate we are 30%+ over actual costs for equipment and labor. We look at the mine plan and determine what is the likely highest cost/disturbance/water treatment liability in the next 5 years, and then develop a concept reclamation and closure plan around that, then cost it all out. It takes about a year to pull it all together, and another 3-6 months to get it approved. There are numerous engineering studies that must be completed to feed information into the plan and estimate. Water balances, pit water management plans, acid-based loading analysis, growth media balances, waste rock and tailings cover designs, etc. I worked on industrial civil engineering projects in my past life, and a mine reclamation plan is 100 more complicated than any civil project, fact. Things aren't just dreamed up as they go, the amount of planning and engineering is unfathomable to most people.
Generally costs are broken into 3 phases. The first phase (temporary closure) is immediately after default when the State takes ownership and receives the bond. There are costs associated with holding the property and maintaining the environmental integrity property and permit compliance. It also includes development of final reclamation plans, procurement, etc. These costs can be in the $2-20 million range per year. This is generally calculated as a 2 year period, but can be longer. The reality is, there would be substantial planning already done, and moving into the physical reclamation period (phase 2) should be fairly straightforward because its planned out already. The second phase includes all the remediation and reclamation activities. This is usually a 2-3 year event, and includes all costs required to stabilize the site forever, generally with the lowest long term risk and liability/cost. The third phase covers all costs associated with long term management and maintenance. We calculate costs for in perpetuity water treatment, and any other holding and maintenance costs (dam maintenance, cover and vegetation, channel armoring replacement, etc) environmental studies, capital replacement and construction, etc. The phase 3 costs are discounted, generally. In AK the discount rate is based on the performance of the Alaska Permanent fund performance and inflation. The reason why discounting is allowed is because in terms of a default, the state would receive the entire bond, and would park it somewhere that would make money. If they for instance received a $500 million dollar bond, and the first 2 phases of the project were only $100M, that money is going to grow and start growing immediately upon receipt, 5 years of growth on $400M is a heck of a lot of money. That money also grows faster than inflation.
The actual cost of the bond the mine has to put up is dependent upon the size of the company and their assets requesting the bond. They are generally put up by large banks, or insurance companies. There is a risk, but as you can see by the % the risk is apparently low. Some of the large companies can pick up a bond for about 1.5-2% of the total reclamation estimate, while others are in the 3-5+% range. Bonds can have any time frame, but most are year to year, and are adjusted annually. The total reclamation estimate amount is also increased annualy based on inflation (Anchorage CPI). The bond can be reduced if the operator performs reclamation and reduces their liability.
AK also has the option to set up a trust fund for reclamation that would mature at the end of the mine life. The fund would be used for reclamation and closure. This is in addition to the bond they are required to provide, however they can lower their liability (bond amount) by the amount in the trust fund as they add money to it. Some of the larger, long-term operations have considered doing this, and to be honest I wish it was required vs the bonding. It requires more capital upfront, but reduces it long term. It further reduces risk, but it doesn’t mesh well with the bean counters. The issue is that capital up front, makes projects less attractive in terms of ROR, especially when you can discount the reclamation costs at the end of the mine life. $500M discounted 20 years reduces that capital a considerable amount. (I think the answer to your second question).
During the feasibility stage of a project, reclamation activities must be taken into account with all capital costs associated with development, operation and closure of a project. The reclamation costs are usually calculated as being done by the mine, with their equipment and people. (Huge trucks haul rock way cheaper than rental trucks.) To add another level to this, the estimates associated with capitalizing a project (though shareholders), are beholden to federal investment regulations, which changed recently...
There is a lot to explain, but like most mining related items, people are stuck in the past and have no idea what is actually required for permitting a mine. Once someones mind is made up you can’t change it. As you probably recall a few years ago Trump “abolished” mine reclamation requirements. This was 100% false, but made good headlines, and those that wanted to believe it lapped it up. What he did was toss out the new regulations that the Obama administration enacted on the way out the door. Those regulations were redundant to state requirements for reclamation, they were essentially federal requirements that mandated the exact same thing as the state. The reason it was killed, was because the people that put the regulations together were third graders, with zero mining experience. It was laughable the way they implemented their cost estimates. It was based on average costs on a per acre basis of reclamation estimates. Every mine has different requirements. Using their methods, some mines would have been over bonded by 2-3x while others with HUGE liabilities were underfunded 3-5x. Then there was the issue of jurisdiction. Environmental groups lost their minds over the regulations being rescinded, mostly because they were clueless as to how inadequate the changes where. Mining companies were vilified, but where right.
It takes roughly 100 permits to start a mine, along with millions of dollars in environmental and engineer studies. It literally takes decades to go from discovery to production. The rhetoric that the mine was "fast tracked" is laughable. The EIS permitting phase shouldn't take more than 2-3 years once all the studies are done. They have been doing studies in support of the EIS for decades, and the mine has been in the spotlight for just as long. Should we move the goal posts out and make it longer for everything, or just Pebble because we don’t like it?
If you have an hour or three, read a few sections of the EIS, mainly the fishery section, and dam construction failure scenarios/results. They are fairly easy to read and understand. As I mentioned before 99.99% of people don’t know anything about dam construction. They only understand that dams fail and believe that everything related to mining is “toxic.” The tailings will basically be benign as they intend to remove all sulfides from them, and deposit them in the pit under water at closure. In water they cannot go acid. A pit full of water does not create acid, air is what makes acid. The tailings facility will have very little water, and the tailings will be well drained. They can’t flow far without water, and if they did… they are fairly benign, not some all ocean killing toxic waste. This EIS is probably one of the largest ever written/studied … if you ask NGO’s it’s not good enough and was fast tracked. Easy to say when it’s not your money but is your gravy train. The end game is to require studying it to death or until you get the answer they want.
https://pebbleprojecteis.com/documents/finaleis
Bambistew
Well-known member
So what don't you agree with. Care to cite any studies, or just opinion? Permits are not issues on popularity contests.
SAJ-99
Well-known member
Let's start with what I think we can agree on. 1) it's going to be an open pit mine, which means they are going to blow up the mountain and grind it up until there is a hole. 2) the primary content will be copper and gold 3) all new engineering plans are built on the lessons learned from the past failures of previous engineering plans, 4) the EIS has a LOT of assumptions and the assumptions are used in the modeling, so nothing is certain, just a best educated guess. I agree permits should not be issued on popularity contests, but the analysis has so many assumptions it kind of ends up that way by default (political/popularity).
No, I didn't read the whole thing, but the executive summary is over 100 pages and no one is paying me to read it so I just "skimmed" it. All alternatives reviewed by USCOE said there will be an impact on various drainages. to quote:
Potential impacts to fish values at the mine site include: direct loss of aquatic habitat in the NFK and SFK drainages; fish displacement, injury and mortality; changes in surface water and groundwater flows that could impact fish spawning, rearing, and off-channel habitat; increased sedimentation and turbidity instreams; impacts to fish migration; changes in surface water temperatures; and changes to surface water chemistry. In summary, development of the mine sitewould permanently remove approximately 99 miles of streambed habitat in the NFK and SFK drainages.
None of the impacts can be quantified in time or magnitude. Again, best educated guess says this is going to have a negative environmental impact. I don't need to cite any studies to refute anything because the summary lays it out. It's all there.
Another quote:
The EPA assumed that if the infrastructure for one mine is built, it would likely facilitate the development of other mines, and for the purposes of their study assumed that six additional mines would be developed
There is no guarantee this does or doesn't happen, but it was in the EPA's research because it was reasonable. So it's not just the Pebble project, it the potential for more development once the infrastructure is in place.
We are talking about whether the benefit outweighs the costs (here is where we disagree, I'm sure of that). We don’t need any more gold. The US isn’t on the gold standard anymore and we just printed a few trillions of dollars in the blink of an eye and the World didn't care. Copper is an industrial metal and the price has been stable. It has been between $2 and $3 for years and China's use really determines pricing in the metal. This mine doesn't have a need from a US strategic point of view. Consequently, my view is let someone else mine it; Chile, Peru, Mexico, etc. You say "They only understand that dams fail and believe that everything related to mining is “toxic.” " I agree that dams rarely fail in catastrophic fashion, but they leak- a lot. The area is also active for earthquakes and volcanic activity (which is why the copper is there), which increase the chance of problems. And mining is toxic. To extract copper from the ore you have to pass sulfuric acid over it so the copper dissolves. Sounds "toxic" by my definition. I presume this mine is going to do the same thing, but correct me if I'm wrong.
My conclusion is purely from my personal point of view. I don't live in Alaska and I don't work on the project, so I don't care how much money they might make on the mining lease or payroll taxes. Selfish? yes. I would rather we leave it and enjoy the natural resources and generate revenue that way.
Regarding bonding, every mine isn't a problem but it has to be pricing like it will become a problem. A google search of superfund sites will list a lot of mines. People can complain about the cost of EPA regulations but I like clean air and water and as a citizen, don't want to pay every time some engineering assumption goes wrong. Like I said earlier, the high cost of the the regulation has pushed our pollution to other countries and we get cheaper prices too. I would rather we come up with cleaner ways to do this, but Americans love a good deal and they don't like recycling. How this mine could possibly be cheaper than collecting copper from all the broken down equipment sitting on ranches in Montana is beyond my comprehension.
Point Creep
Well-known member
Is this the thread to post Biden public speaking videos and Jerry Falwell voyeurism memes?
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