Source: February 13, 2002 Southeast Alaska Conservation
Council Press
Release
Juneau, AK < A study released today shows that the
economies of so-called
mining-dependent communities in Alaska receive little
benefit from metal
mining. Economist Dr. Thomas Power of the University
of Montana released
the surprising findings in a report entitled The Role
of Metal Mining in
the Alaska Economy. Power¹s data shows that almost
half of the industry¹s
profits leave the state while Alaska both subsidizes
the industry and
assumes much of the risk of paying for environmental
damage should the
mining companies go bankrupt.
Click http://www.seacc.org/Publications/MetalMiningReport.doc
to view full
report.
³Alaska¹s metal mines are an asset that could
spur long-term economic
vitality for the state, but that potential has not yet
been realized with
most of the benefits leaving the state,² Dr. Power
said. Power pointed out
that the Fort Knox Mine, at the time it poured its millionth
ounce of gold
in September of 1999, had not yet had to pay any royalties
to the State of
Alaska because its deductions of ³costs² allowed
it to show no taxable ³net
income.²
³Mining companies are basically getting a free
ride in Alaska,² said Sarah
Keeney, Water Quality/Mining Organizer for the Southeast
Alaska
Conservation Council. ³It¹s time for the mining
industry to pay its fair
share.²
³Dr. Power¹s report shows that we need better
safeguards in place that
directly benefit the State of Alaska, such as requiring
mining companies to
immediately pay more royalties for the minerals they
claim. There must
also be more corporate responsibility for the environmental
impacts caused
by mining, including stronger reclamation bonds should
the companies go
bankrupt and leave the State cleaning up the mining industry¹s
mess,² Keeney added.
The findings in Dr. Power¹s study support SEACC¹s
current efforts to
advocate for stronger reclamation bonding for the Kennecott
Greens Creek
Mine on Admiralty Island National Monument. The bond
is under review by
the Alaska Department of Environmental Conservation and
will be the first
in the state that considers the costs of long-term acid
mine drainage and
water treatment. The Kennecott Greens Creek Mine is a
subsidiary of giant
multinational mining company Rio Tinto, Ltd. that reported
record earnings
last year totaling more than $1.6 billion.
A radio actuality is available by calling tel. 703-418-2060.
Key findings from Professor
Thomas Power¹s study:
1. Metal mining is directly
responsible for only about one-half of one
percent of Alaskan jobs and personal income: about 2,000
of Alaska¹s
400,000 jobs and $87 million of Alaska¹s $1.9 billion
of personal income in
the year 2000. Even after applying any reasonable ³multiplier² to
these
numbers, metal mining would continue to provide only
a small sliver of
total Alaskan jobs and income. (pp. 3-4)
2. In the so-called ³mining dependent² cities
of Fairbanks and Juneau,
metal mining is directly responsible for only about one
and two percent of
total jobs, respectively. (p. 5)
3. The very modest role of metal
mining to Alaska¹s
economy is often
obscured by exaggerated estimates of metal mining¹s
benefits built around
double and triple counting or counting value that is
not created in
Alaska. Such exaggerated estimates of impacts ignore
basic economic
accounting rules established almost a century ago. (p.
6-7)
4. Because of its capital and land intensive nature
and relatively modest
use of labor, the payroll associated with Alaska metal
mining represents
only about 8 percent of the $1.1 billion value of metal
mine production.
(p. 7)
5. During the 1990s, while the real value of metal production
in Alaska
rose 83 percent, from about $600 million to $1.1 billion,
metal mine
payroll rose only 5 percent. (p. 8)
6. Although metal mining, because
of its capital intensity, contributes
significantly to local governments¹ property tax
bases, its contribution to
total local government revenues, including all revenue
sources, is much
smaller. The Fort Knox Mine contributes about one percent
of the total
revenues received by local governments in the Fairbanks-North
Star
Borough. The Greens Creek Mine contributes about one-half
of one percent
of the revenues received by local governments in the
City and Borough of
Juneau. (pp. 10-12)
7. Mine license taxes and production royalties on state-owned
minerals
yield only a few million dollars each to total state
revenues that total
almost $6 billion even without counting the revenue flows
into the
Permanent Fund. Together these two sources of revenue
from metal mining
contribute less than one-tenth of one percent of total
Alaskan government
revenues. (pp. 12-13)
8. Despite the high wages paid in metal mining, that
industry is not
usually associated with prosperous communities across
the nation because a)
metal commodity prices are unstable, causing instability
in employment and
payroll; b) the life of a contemporary metal mine tends
to be relatively
short, 5 to 15 years; c) the labor needs of metal mining
operations are
constantly falling as technological change displaces
workers; and d)
environmental damage associated with metal mining discourages
people and
businesses from locating near mining operations. (pp.
13-19)
9. Inadequate reclamation laws and reclamation bonding
requirements can
leave state governments with large reclamation financial
obligations and
near permanent damage to the natural environment. Both
have negative
economic impacts. (pp. 20-23)
10. The popular economic base approach to thinking about
the Alaskan
economy that focuses on the assumed special role of oil
production and
transportation, mining, other natural resource industries,
manufacturing,
and the federal government as key economic drivers is
incomplete and
inadequate. It cannot explain the ways in which the Alaskan
economy has
been changing. For instance, during the 1990s while employment
in these
key sectors declined 25 percent, employment in other
sectors expanded 25
percent. While real income from these sectors declined
7 percent, income
from other sectors expanded by 31 percent. The Alaskan
economy is more
diverse and resilient that the popular economic base
view suggests. (pp.
23-26)
11. In Alaska, across the western
United States, and in many regions of
the nation, high quality natural landscapes have become
an increasingly
important source of local economic vitality. Because
people care where
they live and act on those preferences and economic activity
follows those
residential choices, the attractiveness of communities
and landscapes has
become an increasingly important part of a local area¹s
economic base. To
the extent that metal mining activities threaten this,
they can undermine
rather than enhance the local economic base. (pp. 26-30) |
