Here's just a little something on Bristol Bay and the economics of Fishing v. Mining:
I oppose the development
of Pebble and other mining prospects for a couple of complex reasons:
The first and foremost is the perpetual
threat to the naturally occurring resources that are already being exploited by
outside and foreign entities. But what about any actual benefits that the
fisheries actually provide? Let’s take a
look at this passage; “And what of all those jobs that the fisheries provide? According
the Alaska Department of Labor reports Nonresident Seafood Workers make up
75.5% of the workforce. According to New Food Economy, Bristol Bay processors
bring in about 4500 workers annually to staff the fish plants and only about
15% of those workers are from Alaska and much less from Bristol Bay. These jobs
usually pay about $10 per hour and workers usually work about 15 hours per
day... further reducing the potential economic benefit of the fisheries by
about $20Million. The fact that most of the processors are outside and foreign
corporations also has a great impact on where the value of the fisheries
actually ends up.
The overwhelming majority of drift fishing permits are also
owned by out of region fishermen with over 50% being owned by non-Alaskans. In
2014, Bristol Bay residents only accounted for 11.7% of the fishery value.”
Just this
week it became known that the State of Alaska has joined into a federal program
aimed at boosting economic development in which they named 25 ‘Economic
Opportunity Zones’ “as
part of a federal program designed to drive long-term capital to distressed
communities. A total of 60 census tracts were identified by the U.S. Department
of Treasury as low-income communities that were eligible for the designation.
Of these, the State was able to nominate as many as 25 of these tracts as
Opportunity Zones. When selecting from among the eligible tracts, the State
weighed numerous considerations based on available information and public input
from business and community leaders across the state, including:
• Economic hardship
• Geographic representation
• Project feasibility
• Alignment with existing initiatives
• Community support
On the surface after reviewing the
referenced criteria, it would seem that Southwestern Alaska would be prime for
this, but no southwest regions were listed excepting the Aleutians and St.
Paul; Island. Bristol Bay, the Y-K Delta
and Alaska Peninsula were totally excluded. This really makes one curious as to
just what our Representative and Senator in the Alaska State Legislature are
actually doing for Bristol Bay.
Secondly is the fact that
even if developed, the fiscal benefits will not really exist as I explained on
another comment on this thread.
Currently the Mineral taxation structure in Alaska has been the same
since the mid-1950s and recent efforts to change them have been stonewalled in
the Alaska State Legislature. The ‘base
rate’ on mineral extraction is 7% but there are also mechanisms that can be
used to reduce and even negate that as shown below.
“Mining License Tax Up to 7% of net income and royalties
received in connection with mining properties and activities in Alaska. Quarry
rock, sand and gravel, and marketable earth mining operations are exempt from
the mining license tax. New mining operations exempt for 3-1/2 years after
production begins.”
Depending on how PLP sets up their actual business model,
if they ‘sell’ the raw ore at the dock in Amakdedori, they may actually be
exempted from paying any taxes on the billions and billions of dollars’ worth
of minerals expected to be extracted.
They will only be paying whatever taxes that the Lake and Peninsula
Borough levies. Even then at that point
it is plausible that PLP will challenge those taxes using the State model as
legal justification because the claim lies on State of Alaska property.
Moving on to the supposed economic boost through employment issue… under the
new ‘foot in the door’ plan as submitted by PLP, they say that during the
construction phase of the project that there will be about 2000 workers
involved and then about 850 workers during an expected 20 year operations
period. So let’s work with those numbers
for now:
According the Pebble website:
Mining workers average making $108000.00 annually X 850
workers equals $91800000 X .75 (AK
resident workforce participation rate) = $68,850,000.00 in annual wages X 20
Years of expected project life = $1,377,000,000.00
So… in all fairness, I submitted a list of questions to the
Pebble Limited Partnership concerning their plans for employment and economic
development. Here they are with answers provided by Mike Heatwole:
1.
What is
the targeted ‘in-region’ hire rate?
A – Our goal
remains to hire as many regional residents as we can. We recognize this
will take some work and have worked for many years on a workforce development
strategy – much of it modeled on what our colleagues are proposing at Donlin
Gold. One key aspect is our plan to use construction as a technical
training ground for operational jobs. Additionally, there will be
programs in place to encourage upward mobility. Sharing a story from a
colleague from a mine in Nunavut: http://nunavutnews.com/nunavut-news/baker-lake-woman-fulfills-goals-at-meadowbank/ . We get a lot of criticism that all of the
jobs will go to people outside the region and take advantage of every
opportunity to explain why that’s not the case. We do recognize that some
of the higher wage jobs require specialized skill sets and that’s why we need a
workforce plan so we can work with people so they know what’s required and to
find ways we can help. Back to Donlin, their booklet does a great job
showing the skills needed for each job. Here’s a link: https://www.donlingold.com/careers/potential-jobs-at-donlin-gold/ . I’m hopeful we can publish something
similar for Pebble later this year.
2.
What is
the mineral severance tax rate that will be applicable to your project, both
State and Lake & Peninsula Borough?
A – Like all
mining projects in Alaska, Pebble will be subject to the Alaska Mining License
Tax and the state corporate income tax. Additionally, since we are on
state land we’ll be subject to a royalty too. I believe the MLT is 7% on
net income and the royalty is 3% on net income. Our internal estimate is
that we’ll pay about $60 million/year
to the state on the current plan. For the LPB, they have a 1.5%
severance tax on gross and our internal calculation places it at about $20 million/year.
We are working on a preliminary economic assessment (PEA) that will be released
later this year that will add more detail on the financial questions.
3.
Is PLP
looking to contract with regional ANCSA entities other than IDC & APC for
construction and maintenance operations?
A – Short
answer is yes. Ideally, we’d like to establish a long term business
relationship with BBNC. For example, we’re very interested in having a
third party entity build and operate our power plant. As you’ve probably
read, we are including extra capacity in our energy infrastructure to be in
position to share gas and/or electricity with interested communities and will
work with regional interests and the state about how they can get the
infrastructure in place to make this a reality. There will be a lot of
dialog about this in the months and years ahead. Thus, the opportunity
for a regional interest to own the power plant would go a long way toward
helping with this. There are other opportunities regarding infrastructure
that we’d be interested in pursuing similar relationships – e.g. the
port. We also want to work with other interested village corporations –
esp. for operations contracting opportunities. This is one reason we
undertook the relationship last year with ASRC – to start the process of
ensuring the Lake Area VC’s can fully participate in the long term contracting
opportunities with Pebble Additionally, this is where the in-region hire
opportunity really exists.
4.
Is PLP
also looking to help nearby communities develop infrastructure and commerce
opportunities that will benefit from the projected long-term workforce?
A – Again,
short answer is yes. We want to be a good neighbor with the communities
around us. Regarding infrastructure, we have indicated that our
transportation corridor will be private. Our view is that this is where
the conversation will begin with the communities. We can then talk about
controlled access – primarily to ensure safety along the road.
Unrestricted access could present significant safety concerns. A private
road also allows for subsistence protections. We know that there is
interest among the proximal communities about access to the road, port, and
ferry. It’s also our intention to work out a way to get goods to nearby
communities to take advantage of lower transportation costs.”
In closing, I want to point out that until the powers that be in
Bristol Bay actually make a concerted effort at reconciliation towards true
unity and sustainability, Our communities will remain vulnerable for future
exploitation by outside and foreign resource development. This doesn’t just apply to minerals and
carbon fuels but obviously also to the fisheries. We live in a region suffering from high rates
of unemployment, welfare dependence, substance abuse, crime and domestic
violence. These faltering socio-economic
trends do not seem to be abating either.
This is absolutely unacceptable on so many levels… something has to be
done sooner than later.
RESOURCE REFERENCES:
