Now that they've settled their case with the Environmental Protection Agency, Pebble mine developers say they plan to scale back their proposal for the Bristol Bay watershed, though they haven't yet revealed what that will look like.
The EPA, though, already considered a smaller mine when it started its process to block Pebble several years ago. The agency said because of the low-grade quality of the massive deposit, even a small mine would require huge amounts of earth and rock moving, disturbing large swaths of the Bristol Bay region's salmon habitat.
The question of just what mine size Pebble Limited Partnership will propose was back on the table Friday after the regulatory agency and Pebble agreed to settle a court dispute that has dragged on more than two years.
As part of the deal, EPA plans to soon start the process of withdrawing its proposed regulation, issued in 2014, that recommended sharp restrictions on the scale of the mine.
[Reversing Obama, Trump EPA reaches deal with Pebble mine developer]
The proposed determination found a mine a fraction of the size planned by Pebble would damage the fishery. The proposed determination was an extraordinary step, with restrictions Pebble said were meant to stop the project, though a final EPA decision never came.
Instead, Pebble quickly sued the agency, and U.S. District Judge Russel Holland issued a preliminary injunction in late 2014, halting the EPA from taking action that could stop the mine.
Pebble officials on Friday said they were pleased with the settlement. In exchange for dropping their lawsuit, they can now apply for federal approval in an environmental process to be led by the U.S. Army Corps of Engineers, without fearing tthe EPA would unilaterally kill the project.
The state, which is the landowner, will also have a role in the permitting process.
In prepared statements issued Friday, EPA and the state said they will listen to all sides if Pebble launches the permitting process with a proposal.
Andy Mack, Alaska Department of Natural Resources commissioner, said mining is important to the state's economy. But he said the settlement does not greenlight the development.
"The state will carefully and thoroughly review every application it receives, and our review will consider the impacts to other resources including salmon, which also provides thousands of jobs and a way of life for Alaskans," Mack said in an emailed statement.
Officials with Northern Dynasty Minerals, Pebble's parent company, said Friday they were not ready to release details about the proposal. But in a conference call with investors, they described plans for a smaller project with strong environmental protections.
Mike Heatwole, spokesman for the project, said the company would soon release details about its new plan.
Dennis McLerran, the former EPA regional administrator who led the 2014 Bristol Bay Watershed Assessment, said on Friday he believes the mine will never be developed.
One problem is the huge development costs, in part because the site is so remote, while the capital cost of removing precious metals from the low-grade ore is high.
But following news of the settlement Friday, McLerran also said he was concerned that under a Trump administration, Pebble has a chance of advancing toward development by "gaming" the permitting review process with a small-mine concept.
"Then the foot is in the door and the long-term expansion potential is there," said McLerran, an Obama presidential appointee who resigned from the EPA in December.
McLerran said if the company manages to win approval by starting small, it could lead to development not only at Pebble but at other mining prospects in the ecologically sensitive watershed.
"You have the potential for death by a thousand cuts in the heart of the watershed," said McLerran, reached in Washington state where he lives.
In a call with investors Friday, Northern Dynasty touted Pebble as the largest undeveloped gold and copper resource in the world, estimated to hold 57 billion pounds of copper and 70 million ounces of gold, and potentially even more than that.
But accessing those precious metals in low-grade ore would produce head-spinning amounts of waste rock and tailings, the EPA found in 2014.
The assessment based its views largely on a 2011 report issued by Pebble and filed with the Securities and Exchange Commission. Pebble proposed a range of development, from 2 billion tons of ore processed to 6.5 billion tons, the EPA said.
According to the agency, those options would:
- Produce enough mine tailings and waste rock to fill a professional football stadium between about 880 and 3,900 times, depending on the amount of ore processed.
- Likely result in the largest open-pit ever built in North America, covering 7 square miles and about 3/4 of a mile deep, shy of the Grand Canyon’s 1-mile maximum depth.
- Produce a mine pit, waste rock piles, and tailings impoundment area that could cover an area larger than Manhattan.
In 2014, EPA concluded the mining of 250 million tons — one-eighth of the company's smallest-known plans — would have a devastating effect on fish habitat and stream flow. Habitat would be lost in more than 40 miles of streams and related tributaries, and in wetlands equal to more than 900 football fields.
Heatwole said on Friday it's "speculation" to examine possible development scenarios until Pebble can present a proposal in the coming weeks.
"This is exactly the process that EPA engaged in with its pre-emptive actions against the project," he said.
"Today's focus is on the settlement and getting the project back on the established path for evaluating resource projects," he said.
Mine opponents from the Bristol Bay region have said even a small mine will devastate the salmon fishery commercial and subsistence fishermen rely on.
"We are not fooled by them and no one should be," said Alannah Hurley, with United Tribes of Bristol Bay.
Another question is how the company will raise the money it needs to develop.
Mining companies that were funding partners in the project left a few years ago. Northern Dynasty, a Canadian company, is the project's sole sponsor.
Northern Dynasty's stock price enjoyed a strong run for a few months after the election of President Donald Trump in November, with investors expecting his administration and EPA Administrator Scott Pruitt to limit the EPA's role in the project.
The stock price slid sharply in February when Kerrisdale Capital, a private investment manager betting against the company, called the stock worthless and encouraged Pebble shareholders to drop it.
Northern Dynasty stock plunged 14 percent on Friday, to $1.86 a share. The company had reported a loss of $4.1 million for the year's first three months, according to The Associated Press. But the shares are sharply up from 36 cents, where they were one year ago.
The project may be on track to secure new funding partners, according to a March 31 letter signed by John Shively, the project's chairman, asking a longtime Pebble opponent to serve on an advisory board the company is assembling to help advance the project.
The letter said major national and international mining companies, encouraged by the smaller, progressive plans, are considering a "substantial investment."