New Pebble tapes highlight plan for State subsidy
Investigators posing as potential Pebble investigators embarrassed Northern Dynasty Minerals (NDM) in September by revealing candid conversations with NDM’s President and CEO Ron Thiessen and Pebble Limited Partnership’s (PLP) CEO Tom Collier.
Collier resigned in the wake of the revelations. Thiessen didn’t.
Now the company behind the investigation, EIA Global, has released additional tapes of Thiessen’s conversations, saying he’s the one “calling the shots.”
The new recordings focus on NDM’s business plan, financing and Thiessen’s views on American politics. We’ve transcribed the recordings and appended our document that pulls together all the transcriptions for reader convenience.
Of note in the new “tapes”:
Pebble will look to Alaska for $1.5 billion
NDM expects the State of Alaska to subsidize more than a quarter of the anticipated cost to build Pebble, said Thiessen. “The total CapEx on this in round numbers is going to be about 5.5 billion. We believe the State of Alaska and other entities in Alaska will fund most of the infrastructure for about 1.5, so the net is $4 billion, a combination of equity and bank financing.”
This ties in with comments from Thiessen in Pebble Tape #2, when he described a potential partnering with Donlin Mine. “Both parties are looking to the government to underwrite the financial cost of the infrastructure and each mine has a total separate infrastructure requirement,” he said.
He further explained that the Alaska Industrial Development and Export Authority (AIDEA) is an agency that “will look at funding the infrastructure requirements” for “anything to do with exporting their resources.” When the Pebble Tapes came out, Donlin Mine stated that it “continues to advance on a stand-alone basis and is not engaged with any other projects.”
According to a statement published in the LA Times, “there are no plans for the state to contribute to the development costs of any mine project, including Pebble.” However, AIDEA’s Governor-appointed board of directors voted in March to set aside $35 million to fund the controversial Ambler Road amid public outcry against the project. Ambler Road would allow access to an envisioned mining district in northwest Alaska.
The Pebble project has long been criticized for not releasing a feasibility study to prove how it will be profitable.
Economic numbers that PLP shared with the Corps of Engineers date back to a 2011 Preliminary Economic Assessment (PEA), and are likely out of date. At that point the initial capital expenditure (CapEx) was estimated at just under $4.7 billion, with additional capital of $3.2-11.7 billion needed to sustain operations. The 2011 report assessed a larger mine footprint than what it is now trying to permit. However, the major infrastructure needs are the same: the port, road, power plant, and pipeline under Cook Inlet are all necessary for the 20-year plan under consideration.
Experts in the mining industry question the economic viability of the project. Among them are Richard Borden, who has two decades of experience calculating capital costs for mining giant Rio Tinto. In October 2019 he testified to Congress that, “Based upon a careful review of the available financial data, it is my professional opinion that the mine plan… is almost certainly not economically feasible, with an estimated negative net present value of three billion dollars.”
“As is presently designed as a large open pit, there’s not an economic ounce of gold or pound of copper in this deposit,” said geologist Mickey Fulp during an August 2020 interview with Mining Stock Daily. “People should not put money, in my opinion, in any project where the net present value is less than the initial CapEx of the deposit. It makes no sense at all.”
An independent feasibility study would show Alaskans clearly what the final net benefit would be if the State were to invest heavily in building the project’s infrastructure.
China is a potential investor in Pebble, and a more-than-likely recipient of its mineral resource
NDM has long argued that mining the Pebble deposit is a way for the U.S. to become resource independent, especially for a long-term domestic supply of copper. Lately it has been touting Pebble’s supply of rhenium, which is on the USGS list of critical minerals. In describing his company’s expertise, Thiessen notes in Pebble Tape #14 that, “we operate the second largest copper mine in Canada…It produces about 135 million pounds of copper a year in concentrate. Most of that concentrate is shipped to China.”
According to EIA Global, Thiessen and Collier believed they were speaking with potential investors from China. As we noted in our recent fact sheet on Mineral Independence and the Pebble mine, NDM plans to ship Pebble concentrate to Asia as well. The Pebble tapes make it clear that Asian investors are being courted by the company. Neither of these facts support the argument that the Pebble deposit will contribute to resource independence for the United States.
Between us guys: relationships are key to Pebble’s success
Throughout the Pebble Tapes, Thiessen and Collier describe close relationships and influence on decision makers at the state and national levels. Taken as a whole, it describes a process that is heavily dependent on knowing “a guy”:
- The guy that runs HDR in Alaska is an ex-Army corps of Engineers colonel and he used to run the Army Corps of Engineers in Alaska in the 1990s.
- The guy who was my predecessor, John Shively, rents an apartment in Alaska from his, from Sullivan’s state director. And the two of them have worked together for 20 years so John knows her well and talks to her regularly.
- We finally got the guy who runs the Corps of Engineers in Washington, DC – his name is Ryan Fisher – and Ryan Fisher is the Deputy Assistant Secretary of the Army for Civil Works…
- Dave is the guy who is the director of regulatory affairs in the Alaska District Corps of Engineers office. And he’s the decision maker.
- The guy that signed it is Dave Hobbie, that’s who Tom knows and meets with…
- I made a phone call to the guy who runs the permitting process here in Anchorage who has become somewhat of a friend. I’ve known him for 25 years, and said to him, “what the hell is going on?” and he just kinda laughed.
- I’m gonna tell you guys a couple things that are…that we’re sharing with our major investors that we don’t want to be completely public at this point…
- Just between us guys, I had a two-hour one-on-one meeting with the governor when all of this came up about a month ago to walk him through this, to get his commitment that they would be there…
- The governor has to be out there playing politics and kissing babies, where the chief of staff [Ben Stevens] is sitting at his desk running the state government. And that’s a guy who was on the Pebble Advisory Committee.
Going about business quietly
In Pebble Tape #13, Thiessen opines about the death of Supreme Court Justice Ruth Bader Ginsberg, noting that it would give people something to focus on and take attention off of Pebble, which could “go about our business quietly.”
Unfortunately for NDM, the release of the Pebble Tapes occurred shortly after this conversation, precipitating a laser focus on the company and its inner workings. With more people than ever are paying attention to the company, its relationships with the State and the Corps of Engineers, and its overall plans to try and attain funding and federal and state permits.
They are also paying attention to Alaska’s Senators, after Collier’s remarks in Pebble Tape #6 that they were “sitting over in a corner and being quiet.” To that, Thiessen replied, “Perfect for permitting!”
Senate candidate Al Gross used the “quiet in a corner” theme repeatedly as part of his effort to unseat Sullivan. As a result the tape, both Senators Murkowski and Sullivan have been very clear – for the first time – about their opposition to the project. During an interview on Talk of Alaska, Sullivan said that his “No Pebble” stance cannot be shaken. While the results of that race aren’t in, Thiessen’s outlook on those kind of campaign promises is clear. In Pebble Tape #13, he says of the “silly season” just before a presidential election: “….it’s the kind of season that once it’s over, everybody forgets what everybody promised to do. You aren’t held to your promises.”
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