Mining and exploration review north of the 60th parallel

Robust Resources – Red Dog Mine celebrates milestone anniversary By Melanie Franner

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It’s been 25 years since the opening of the Red Dog zinc and lead mine, created through an operating agreement between Teck Resources Limited (Teck) and NANA Regional Corporation Inc. (NANA), an Alaskan native corporation, to develop mineral resources on its territorial land. That agreement is still in effect today and has resulted in approximately $1 billion in royalties being paid to NANA.

“We have been operating the Red Dog Mine since 1989,” explains Wayne Hall, manager, communications and public relations at Teck’s Red Dog Mine. “There is a long history associated with the mine which began in the early 1980s when NANA began looking for a mining company to partner with that had experience mining in northern latitudes and cold climates.”

That company turned out to be Cominco Limited, which eventually became part of Teck Resources, Canada’s largest diversified resources company.

NANA, owned by the Iñupiat people of Northwest Alaska, is the landowner of a region that measures 38,000 square miles, most of which is above the Arctic Circle. The region includes 11 communities that range in size from 122 to more than 3,500 residents. Of the $1 billion in royalties received to date, NANA has paid $608 million to other Alaska Native corporations under revenue-sharing provisions of the Alaska Native Claims Settlement Act and $199 million in dividends to its own shareholders.

“We are the only tax payer in the Northwest Arctic Borough Region,” states Hall, who adds that Red Dog pays approximately $11 million to the region in lieu of taxes annually. The Red Dog Mine provides 60 per cent of the Borough’s total revenue.

Terms of agreement

NANA places a very high priority on the traditional subsistence way of life for its people. As such, there were several factors inherent in that ground-breaking mining agreement, which was officially signed in 1982. The first of these called for NANA to participate in a net royalty return once the initial capital needed to develop the mine had been recouped. The rate of the net royalty would increase by five per cent every five years to a maximum of 50 per cent. NANA currently receives a 30 per cent net royalty.

“NANA’s primary driver for developing the mine was to provide livelihoods and jobs for the region,” notes Hall, who adds that the agreement put a priority on indigenous NANA shareholder hires. “We currently fluctuate between 55 to 58 per cent of our total employees being NANA shareholders.”

A third factor of the agreement was to provide NANA-owned companies “contractor preference” status. As such, NANA companies currently provide a range of services to the Red Dog Mine, including camp accommodation and food services, engineering services, drilling, construction, hauling, etc.

“Another part of the agreement called for the operation to protect and maintain the subsistence lifestyle of residents in the area,” explains Hall. “Most of our employees work rotational shifts of two weeks on and one week off or four weeks on and two weeks off, depending on their job responsibility. This gives them flexibility to work and also pursue traditional subsistence activities such as hunting and fishing.”

Additionally, an independent Subsistence Advisory Committee, consisting of elders and hunters from the two closest villages, helps to establish policies and procedures to protect subsistence resources. This includes ensuring the traditional seal hunt has been completed before shipping begins on the Chukchi Sea.

16 - IMG_5032 - Version 2Still productive 

The Red Dog Mine is considered to be a world-class ore body and is one of the largest producers of zinc concentrate in the world. According to Hall, the current permitted number of reserves should keep the mine operational until 2031.

The mine itself is an open pit truck and loader operation that uses conventional drill and blast mining methods. The processing facilities use conventional grinding and sulfide flotation methods to produce zinc and lead concentrates.

“We mine approximately 11,000 tonnes of ore a day, which produces 3,000 to 3,500 tonnes of concentrate a day,” explains Hall. “All of the ore is shipped down a 52-mile road to a port facility, where it is stored in two large buildings during the winter and then shipped to customers in Canada, Asia, and Europe between early July and mid-October each year.”

The two storage facilities themselves are among the largest in the state of Alaska, with one measuring 1,500 feet long by 218 feet wide by 130 feet high and the other 1,200 feet long by 218 feet wide and 130 feet high.

The Red Dog Mine operates 365 days a year. It is a remote facility and is therefore responsible for producing its own power, drinking water, and sewer services, as well as its own airport. The mine consumes approximately 18 to 20 million gallons of fuel per year. It requires approximately 40,000 gallons of fuel a day just to power the facility.

In terms of ore output, the Red Dog Mine produces approximately one million tonnes of zinc and lead concentrate annually. It also employs approximately 550 full-time people, of which about 100 are from NANA-Lynden (the contractor which hauls the concentrate) and NANA Management Services (the contractor overseeing the camp’s accommodation and food services). The remainder are direct Red Dog Mine employees.

“We continue to have a very active exploration program in the region,” states Hall, who credits this exploration program with finding the Aqqaluk deposit, which the company started mining in June 2010, and continues mining to this day. “We believe that this is quite a rich area for zinc.”

16 - D1A2667Looking forward

The past 25 years have certainly been beneficial for both Teck Alaska Resources and for NANA. The Red Dog Mine has been a key contributor to Alaska’s economy over the years. Between 1989 and 2009, total direct and indirect economic impacts of the mine to the regional and state economy were $921 million. In 2009 alone, the mine provided $116 million in federal and state taxes.

The Red Dog Mine has further distinguished itself as being one of only a few operating metals mines to receive ISO-14001-2004 certification.

“We are in a very ecologically sensitive area and we want to ensure that we do things properly,” states Hall. “We are also governed by many regulatory requirements and other commitments, from both government and the indigenous people. We recognize that one of the best ways to make sure we’re doing things properly was to create and implement an environmental management system. That’s why we decided to go through the ISO certification process.”

And, according to Hall, work at the Red Dog Mine is far from over.

“This was a very exciting year for us because we were able to celebrate our 25th year of operation,” he states. “Looking forward, our goal is to continue to try to become more efficient from a mining and energy standpoint and to look at ways to increase local indigenous hires. We’re also going to continue to look for new mining opportunities in this area.”

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