Treasurer Chiang’s Second Letter to First Quantum Minerals Questions Pebble Mine’s Economic Feasibility, Highlights the Overwhelming Opposition to the Project, and Demands First Quantum’s “Considered” Response
“This is not the kind of investment that our pension funds and First Quantum's shareholders aspire to support,” wrote the California State Treasurer in a letter to First Quantum’s Chairman and CEO. It is Treasurer John Chiang’s second letter to First Quantum questioning its investment in the Pebble Mine, a giant open pit gold and copper mine proposed at the headwaters of the world’s greatest wild salmon fishery in Bristol Bay, Alaska.
Treasurer Chiang wrote an initial letter to First Quantum in January 2018 communicating “significant concerns about First Quantum's potential partnership in development of the Pebble Mine.” He wrote again to “express my disappointment in [First Quantum’s] perfunctory and uninformative response, which failed to meaningfully address any of the issues of environmental, financial, social, and reputational risk enumerated in detail” in his letter.
The Pebble Mine has been long opposed by a diverse group of interests in Alaska. First Quantum’s investment in the project is equally reviled.
First Quantum has dismissed the opposition as “passionate.”
Treasurer Chiang, however, was “dismayed” by First Quantum’s “disregard for the intense opposition that this project has generated based on the unique risks it poses to the health of the region, its resources, and the people and communities that depend on them.”
This is not a project opposed by anti-mining zealots or others with a questionable or tenuous stake in the outcome. Pebble Mine has been opposed for years in unprecedented numbers by the people who live in the region and by the people of Alaska precisely because the mine would be located in the heart of the greatest wild salmon ecosystem in the world - an ecosystem that is the economic and cultural heart of the region as well as the source of a globally irreplaceable food source. This is not the kind of investment that our pension funds and First Quantum's shareholders aspire to support.
Treasurer Chiang is the trustee of the two largest public pension funds in the United States, the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS), which wield combined assets of $570 billion. He is also the fiduciary of substantial, long-term First Quantum Minerals shareholders.
New York State Comptroller Thomas DiNapoli has also raised concerns, calling First Quantum’s
investment in the Pebble Mine the “antithesis of sustainable business practices.”
First Quantum is currently deciding whether to become a partner in the Pebble Mine. It is expected to sign—or not—within the next week an agreement that would give First Quantum the future option to buy a 50% interest in the Pebble Mine for $1.5 billion.
In the meantime, First Quantum threw the Pebble Mine a financial lifeline by funding $150 million towards permitting.
The Army Corps of Engineers officially kickstarted the permitting process yesterday, amid vocal opposition from Bristol Bay leaders and state and local officials.
Part of the outcry lies with the fact that Pebble did not submit any new environmental baseline data to support its permit application, and all the publicly available data is now over a decade old (from field studies conducted in 2004 through 2008). In addition, Pebble did not submit any data to support its new transportation corridor, pipeline, powerplant or port site. Finally, and most remarkably, Pebble has not yet assessed the economics of its proposal.
Treasurer Chiang finds the lack of economics suspect: “I am further concerned that the Pebble project is currently unsupported by even the most basic economic and feasibility analysis and documentation needed to support a mining project of any significance, not to mention one of Pebble's scale and longstanding controversy.”
Under all the circumstances, I continue to question the wisdom of the Pebble Mine partnership that First Quantum is currently considering, and your response thus far does nothing to allay my concern. I therefore request once again that you provide a more thorough and considered response, in writing or in person, to the questions that I have posed. If for any reason you are unable or unwilling to do so, I will conclude that other measures are necessary to protect the substantial investment interests of the funds and shareholders that I represent.
This isn’t an empty threat. All of the Pebble Mine’s major investors have withdrawn from the project:
- Mitsubishi in 2011;
- Anglo American in 2013; and,
- Rio Tinto in 2014.
First Quantum Minerals should listen to its shareholders and do the same.