EPA stands by claim that Pebble mine would harm Bristol Bay wildlife, economy

Bristol Bay salmon

Bristol Bay salmon | Photo from EPA report

The US Environmental Protection Agency (EPA) has released its final assessment on how mining would impact the Bristol Bay area of Alaska, where miner Northern Dynasty (TSX:NDM) is keen on digging.

The report details the potential impacts on salmon and other ecological resources from the proposed open-pit mine; the site is believed to hold about 55 billion pounds of copper and 67 million ounces of gold. If built, it will be one of the world's largest gold and copper mines.

The agency found that "large-scale mining in the Bristol Bay watershed poses risks to salmon and Alaska Native cultures."

This conclusion doesn't come as much of a surprise: The EPA said essentially the same thing in its 2012 peer review report.

"Over three years, EPA compiled the best, most current science on the Bristol Bay watershed to understand how large-scale mining could impact salmon and water in this unique area of unparalleled natural resources," Dennis McLerran, Regional Administrator for EPA Region 10 said in a news release on Wednesday.

"Our report concludes that large-scale mining poses risks to salmon and the tribal communities that have depended on them for thousands of years. The assessment is a technical resource for governments, tribes and the public as we consider how to address the challenges of large-scale mining and ecological protection in the Bristol Bay watershed."

'Pre-emptive veto'?

brown bear

Brown bear in the Kvichak River watershed | Photo from EPA report

Proponents of the Pebble Project have long argued that the EPA's review is 'pre-emptive,' considering that the agency has not yet received a mine proposal.

The EPA says that it initiated the assessment in response to nine federally recognized tribes and other stakeholders who expressed concerned for salmon populations.

In 2010, several native tribes in the region called on the EPA to use its power under the Clean Water Act to prevent Pebble mine. Meanwhile, other tribes asked the agency to hold off until the mine permitting process begins.

The EPA says its assessment will help inform the public and governments when considering mining activities in the area.

Others argue that Northern Dynasty has simply taken too long to submit plans. The company says it expects to be in a position to initiate federal and state permitting under the National Environmental Policy Act as early as the first quarter of 2014," but that it will need a new partner before making a decision on timing.

Pebble mine proponents and republican legislators have also criticized the EPA for how much money it put toward reviewing the yet-to-be-proposed mine. As of July 2013, the agency had spent $2.4 million on its assessment.

Impacts

Without an official proposal to base its assessment on, the EPA has relied on a preliminary plan that Northern Dynasty submitted to the Securities and Exchange Commission. The EPA says it also consulted mining experts.

According to the report, mining in Bristol Bay would wipe out anywhere between 24 to 94 miles of salmon-supporting streams and 1,300 to 5,350 acres of wetlands, ponds and lakes.

The EPA also considered the possibility of long-term water collection and treatment failures.

"Depending on the size of the mine, EPA estimates adverse direct and indirect effects on fish in 48 to 62 miles of streams under a wastewater treatment failure scenario."

In terms of economic impacts, the agency found that the Bristol Bay ecosystem generated close to half a billion dollars in economic activity in 2009 and provided employment for about 14,000 full and part-time workers.

Waning support

But the EPA isn't the Pebble Project's only problem. Though known as the 'Pebble Partnership,' the project no longer has any characteristics of a 'partnership.'

The project is wholly owned by Northern Dynasty after Anglo American walked away from its half last September. Rio Tinto said last month that it's considering dropping its 19% stake in Northern Dynasty.

About $700 million has already gone into the project, though the bulk of this came from former partner Anglo American.

Rebuttal

Soon after the EPA's report came out, Northern Dynasty issued its own announcement, calling the assessment's methodology and findings "flawed."

"Publication of the final watershed assessment is really the final chapter in a very sad story," Northern Dynasty CEO Ron Thiessen said in a statement. "We believe EPA set out to do a flawed analysis of the Pebble Project, and they certainly succeeded with both their first and second drafts of the BBWA [Bristol Bay Watershed Assessment]. We have every expectation that the final report released today is more of the same."

Theissen assures that the report does not include any recommendation or regulatory actions that would prevent the company from moving forward with its plans.

"We have every expectation that the Environmental Impact Statement (EIS) process required by NEPA, to be administered by the US Army Corps of Engineers, will ultimately provide a much more rigorous, fair and transparent review of the science surrounding this important project," the CEO added.

Northern Dynasty estimates that the mine would support 15,000 jobs and contribute more than $2.5 billion annually to the country's GDP.

The company's share price declined by less than one percentage point on Wednesday, trading at $1.51 per share. Over the past 12 months, Northern Dynasty has dropped more than 60% on the Toronto exchange.