British company pulls out of Pebble Mine project
09/16/2013 12:20 PM
12/23/2013 2:12 PM
British mining giant Anglo American is abandoning its effort to develop Alaska’s Pebble Mine, leaving Canadian explorer Northern Dynasty Minerals alone in its attempt to push through the massive and controversial project.
Anglo American’s decision to withdraw comes as scrutiny grows over the impact the mine would have on the world’s best-remaining run of wild salmon.
Northern Dynasty is vowing to press forward on the mine. But it’s questionable how far the company can go without the finances of a big partner like Anglo American.
Northern Dynasty spokesman Sean McGee said the company has the financial ability to get the project through the next step of seeking state and federal permits.
“In the near to medium term, we have the resources and expertise to move the project forward,” he said Monday.
But Northern Dynasty is expected to need another partner or to sell its stake in the project to a different developer if Pebble is ever to start producing.
“In my view, it is unlikely this project will go forward to construction and operations with Northern Dynasty as the sole owner,” McGee said in an interview.
Northern Dynasty’s stock fell 33 percent on Monday at the news Anglo American was pulling out of the project. Pebble is the principal asset for Northern Dynasty.
Northern Dynasty acquired the prospect in 2001 and entered the partnership with Anglo American six years later. Each company owned half the Pebble Partnership, an Anchorage-based company set up to design, permit and operate the mine. Anglo American will take a $300 million write-down for withdrawing.
Anglo American CEO Mark Cutifani said Monday that his company wants to focus on lower-risk projects.
“Despite our belief that Pebble is a deposit of rare magnitude and quality, we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options,” he said in a written statement. “Our focus has been to prioritize capital to projects with the highest value and lowest risks within our portfolio.”
The Pebble Partnership still hopes to start seeking permits for the mine this year. Northern Dynasty’s McGee said Monday the timeline could change.
“Over the next couple of weeks we’ll be reviewing and reassessing the Pebble Partnership’s plans and timelines for advancing the project,” McGee said.
Anglo American’s decision to drop out of the project comes as the company seeks to reshape its operations. Cutifani took over as CEO this year following the resignation of Cynthia Carroll and promised to be more discriminating about which projects the company was going to put its money into.
Anglo American has a backlog of too many projects in early development, Cutifani said in a July presentation.
“When we apply a tough financial hurdle rate to those projects, we’re knocking things out that probably shouldn’t be there,” he said in the presentation.
The Pebble Mine is a potential $300 billion deposit near the headwaters of tributaries of the Kvichak and Nushagak rivers. It ranks among the largest undeveloped copper deposits in the world and has the potential to be the biggest open pit mine in North America.
The Environmental Protection Agency is considering blocking the mine to protect Alaska’s Bristol Bay salmon. It’s the most valuable fishery in the world, producing about half the globe’s supply of wild red salmon.
A draft EPA study released in April concluded that even without a major accident the mine could wipe out nearly 100 miles of streams and 4,800 acres of wetlands in the Bristol Bay region. In addition, failures of a pipeline carrying the copper concentrate or a tailings dam holding the mine waste could poison salmon with acid producing compounds or copper.
The Pebble Partnership maintains the EPA report is based on inaccurate guesswork about what the mine will look like.
The final design for the mine has not been released. But Northern Dynasty CEO Ron Thiessen told investors in a call Monday that it is 99 percent complete.
Anglo American put $541 million into the project, which helped to finance the expensive design work and pre-permitting efforts, Thiessen said.
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