In latest blow to Northern Dynasty Minerals, the people of Bristol Bay hail the failure of its negotiations with First Quantum Minerals
On May 25, 2018, the 100% owner of the reckless Pebble Mine—proposed for the headwaters of the greatest wild salmon fishery on Earth, in Alaska’s Bristol Bay—announced that its negotiations with a significant new funder and potential 50% owner of the project had been terminated.
Northern Dynasty Minerals gave no reason for the failure of negotiations with Canadian mining company First Quantum Minerals, but the 32% decline that morning in Northern Dynasty’s share value left no doubt that this outcome was unexpected—the latest major disappointment for Northern Dynasty and its embattled shareholders.
The people of Bristol Bay rejoiced, along with NRDC and a broad coalition of state, national, and even international supporters. Once again, a leading international mining company had walked away, despite significant cost, from a project that, after over a decade of intense, sustained opposition from the people of the region and their allies around the world, has distinguished itself as one of the most widely condemned projects on Earth—an international pariah for its unavoidable environmental, social, and, ultimately, financial risks.
Mitsubishi Corporation left in 2011. Anglo American left in 2013, stranding an investment of over $600 million. Rio Tinto left in 2014, donating its shares in Northern Dynasty to two Alaskan non-profits. And now, in May 2018, after providing $37.5 million to the project in December 2017, First Quantum Minerals has joined the exodus.
There is no question that each of these companies had compelling financial reasons to leave the Pebble Mine behind. Given the fiduciary responsibility of corporate managers to their shareholders, it’s certain that economic risk was their overriding consideration. That said, the environmental and social impacts of any project—and the sustained opposition that such considerations generate—can bear directly on the economic prospects of the venture. In the case of Pebble, the intensity and breadth of that opposition has made the project a very bad investment indeed.
Just ask Northern Dynasty.
Pebble Mine: Northern Dynasty’s Financial Nightmare
In 2010, Northern Dynasty’s shares were worth over $21.00 a share. By 2014, the value of those shares had dropped almost 100 fold, to a low of $0.24 a share. When Donald Trump got elected and then appointed Scott Pruitt to run his Environmental Protection Agency (“EPA”), the company’s shares briefly reversed course. But with the passage of time and a recognition that it would take more than a change in Administration to save the Pebble Mine—Northern Dynasty’s sole asset—its share value has fallen once again, with the latest major drop to $0.47 a share following the failure of its much-publicized negotiations with First Quantum.
It’s no secret that for years Northern Dynasty has itself been aggressively looking to sell. Most recently, in an interview last December, Northern Dynasty’s CEO optimistically predicted that “somebody will come along and take us over . . . when a Draft EIS is published.” Obviously, hope (and its evil twin “desperation”) spring eternal for Northern Dynasty and its beleaguered shareholders.
And the project’s representatives seem willing to give virtually any assurance to sell it, with the Pebble Partnership’s CEO recently endorsing on national television the absurd proposition that “you are going to be able to put a clean mine up there that’s going to have no effect.” The people of Bristol Bay know better—and so, apparently, does First Quantum Minerals.
Responsible v. Irresponsible Mining
First Quantum has given no public explanation for its departure from the Pebble Mine. But the fact that it suddenly chose to back away from the brink of an option agreement with Northern Dynasty, as residents of the Bristol Bay region had repeatedly urged, deserves the applause not just of project opponents but of anyone who believes in responsible mining—including within the mining industry itself. Large-scale mining has become a fact of life; we need the minerals that miners produce. But that necessity can’t justify mining everywhere, and the kind of irresponsible, rapacious, and potentially catastrophic destruction of critical natural resources contemplated by Northern Dynasty at the Pebble Mine is one such example.
Saying no to the Pebble Mine doesn’t mean we don’t need copper. Mining can be allowed responsibly in many locations around the world without allowing it in all locations—not in a location like the headwaters of Bristol Bay, where the people don’t want it, the environmental costs don’t allow it, and the opposition will never give up.
Whatever First Quantum’s rationale for leaving the Pebble Mine behind, NRDC has extended thanks to its leadership for their action. They provided a hearing to the people of Bristol Bay—tribes, communities, fishermen, and businesses—whose representatives travelled to the First Quantum shareholder meeting to communicate their concerns directly to the CEO and the company’s shareholders.
NRDC has been proud to join with them, as have many others—from commercial and recreational fishing industry representatives to major investors to trustees of this country’s largest pension funds, both significant investors in First Quantum. In January, in a clear demonstration of commitment to their shareholders and to corporate social responsibility in action, California State Treasurer John Chiang and New York State Comptroller Tom DiNapoli contacted First Quantum’s CEO to let him know their financial concerns about the company’s involvement in the Pebble Mine.
First Quantum listened and then made the right choice—in its own financial interest and, in so doing, in a significant step forward for responsible mining industry-wide.
And that brings us back to Northern Dynasty Minerals.
What’s Next For the Pebble Mine
By contrast, Northern Dynasty has responded to First Quantum’s departure by reiterating that Pebble will continue. Since its federal permit application remains pending with the U.S. Army Corps of Engineers—at least until the company’s funding runs out—there is no reason to doubt the sincerity of that response. No doubt they will re-initiate their search for a new funder—presumably one capable of taking the financially disastrous Pebble Mine off their hands for good. Whether or not it will acknowledge the fact, Northern Dynasty’s funding situation once again appears dire—or at best uncertain.
But one thing remains undeniable:
With each departing major investor, with each departing partner in the failed Pebble Partnership, opposition to the Pebble Mine has only grown—and, with it, the financial, regulatory, and legal risk to any potential investor. The people of Bristol Bay—supported by local, state, national, and international allies—will never relent in defending their communities and their way of life.
By leaving the Pebble Mine behind, Mitsubishi Corporation, Anglo American, Rio Tinto, and First Quantum have all made the right choice. Northern Dynasty has lost its dangerous gamble in Bristol Bay, and it is time for that company, too, to walk away.