Shares have fallen almost 60% this week after a key permit decision for the Alaska Pebble mine was delayed by US federal authorities
Shares in Northern Dynasty Minerals – the company seeking to develop the controversial Pebble mine project in Alaska – have nosedived this week on news that a key permit decision has been delayed.
In a letter dated 20 August, the US Army Corps of Engineers (USACE) – a federal body that has been assessing the project ahead of a determination – gave Northern Dynasty 90 days to explain how it would offset “unavoidable adverse impacts to aquatic resources” in the surrounding area.
“As currently proposed, the project could have substantial environmental impacts within the unique Bristol Bay watershed and lacks adequate compensatory mitigation,” the US Army added in a separate statement, saying it could not currently be permitted under section 404 of the Clean Water Act.
It follows the USACE’s release of a final environmental impact statement on the Pebble project on 24 July, in which its said a record of decision on the permit would be issued “no sooner than 30 days” from the date of publication.
Northern Dynasty shares down 60% in matter of days
Concerns have long been raised about how the Pebble mine’s development might affect the highly-valued Bristol Bay salmon-fishing grounds on south-west Alaska, close to which the Pebble project is proposed to be developed.
The USACE has asked Northern Dynasty to outline how it will mitigate direct and indirect discharges into aquatic resources comprising 2,825 acres of wetlands, 132.5 acres of open waters, and 129.5 miles of streams.
In the days after the letter was made public on Monday (24 August), the firm’s share price dropped 60% to CAD$0.77 per share – reflecting investor uncertainty over the effects of the intervention on the venture’s long-term prospects.
The project developers have downplayed the significance of USACE’s request, saying the letter is a “normal” step in a lengthy project-review process and is “in line with what we anticipated”.
“We are well into an effort to present a mitigation plan to the USACE that complies with the requirements of their letter,” said the Pebble Partnership’s chief executive Tom Collier. “Nothing in the letter is a surprise to us or them.”
The 90-day response period would likely postpone any formal permit decision until after the US presidential election on 3 November, and if Democratic candidate Joe Biden were to win office, he has indicated he is likely to halt the project altogether.
Twists and turns to Pebble mine permit decision
Pebble is claimed to be the world’s largest undeveloped resource of copper, gold, molybdenum and silver, and late last week it was revealed “substantial quantities” of rhenium, a strategic metal with military applications, had been discovered too.
But Northern Dynasty’s attempts to develop the project have been hampered for almost two decades by environmental opposition, culminating in President Obama’s decision to block it in 2014.
The election of President Trump breathed new life into the venture, after he sought to reverse his predecessor’s decision and allow a permit application as part of efforts to boost the country’s domestic supply of critical minerals and reinvigorate the mining industry.
Last month, the USACE published the findings of a two-year environmental impact survey, in which it suggested the project would pose “no measurable effect” on fish populations.
Responding at the time, Northern Dynasty chief executive Ron Thiessen said he was “ecstatic” about the report, which was a “a clear validation that Pebble can be developed in an environmentally-sound and socially-responsible way”. He added that a record of decision was expected to be issued “this summer”.
In recent weeks, however, prominent Republicans close to President Trump, including his son, Donald Jr., have pressed for the mine to be blocked on the basis of protecting the prized Bristol Bay fishing area, to which they are regular visitors.
As a sportsman who has spent plenty of time in the area I agree 100%. The headwaters of Bristol Bay and the surrounding fishery are too unique and fragile to take any chances with. #PebbleMine https://t.co/4ffLdF4Qqe
— Donald Trump Jr. (@DonaldJTrumpJr) August 4, 2020
“The White House had nothing to do with the letter, nor is it the show-stopper described by several in the news media over the weekend,” said Collier.
Republican senators for Alaska Lisa Murkowski and Dan Sullivan have this week issued statements backing USACE’s decision, invoking President Trump’s “fair but thorough” evaluation of the proposed Pebble mine.
“I understand, respect, and support this decision. I agree that a permit should not be issued,” said Senator Murkowski. Senator Sullivan added: “I support this conclusion – based on the best available science and a rigorous, fair process – that a federal permit cannot be issued.”