Pebble Mine: “Don’t Look Behind that Curtain!”

Underfunded owner of reckless Bristol Bay mine refuses to address continuing questions about financial viability of current mine plan.

Taking a page from the Wizard of Oz, the Pebble Limited Partnership (aka Northern Dynasty Minerals) (“Pebble”)—the Canadian owner of the embattled Pebble Mine—refused again this week to provide an economic analysis of its massive open pit mining scheme, proposed for construction in the headwaters of Bristol Bay, Alaska. Despite a growing demand for economic transparency, the company is stubbornly maintaining an impenetrable curtain of secrecy around the financial underpinnings of its dangerous and widely-condemned project. At every turn, it has declined to address concerns about the mine plan’s projected costs, potential revenue, and apparent financial infeasibility.

Under repeated questioning both by Bloomberg Environment and E&E News, Pebble deployed a series of spokespeople offering a diversity of excuses—deflecting concerns, impugning the credibility of critics, and weakly asserting that the company has better things to do than assess the financial viability of its preposterous Pebble Mine.  

"An economic analysis is not a required piece of the permitting puzzle,” Pebble Partnership CEO Tom Collier told E&E News, “so we're focused on those things that are.”

Sean Magee, a spokesman at Pebble owner Hunter Dickinson Inc., told Bloomberg Environment that a harsh economic assessment released last month by a former longtime mining industry expert for Rio Tinto was “considerably less than objective or independent” since prepared on behalf of the Natural Resources Defense Council (“NRDC”).

Mike Heatwole, another Pebble spokesperson, simply changed the subject.

In the wake of such dissembling, the inescapable conclusion is that Pebble has no credible response to continuing concerns about the financial viability of the project for which it so urgently seeks a federal permit. More specifically, it has no credible response to negative economic findings of the analysis recently prepared by Richard Borden, a former 23-year Rio Tinto veteran with extensive experience in economic assessment and environmental permitting of mining prospects and operations around the world.

1. Pebble Mine’s Economic Infeasibility

Based on publicly available information and Northern Dynasty’s own assumptions in a 2011 feasibility analysis of potential mine scenarios, Borden concluded in a March 28, 2019 letter to the U.S. Army Corps of Engineers (“Army Corps”) that the proposed mine is “almost certainly not economically feasible,” with an estimated strongly negative net present value of -$3 billion.

According to Borden, “I think they intentionally avoid highlighting this number to the general public, investors, and regulators.”

He urged Pebble to release its own economic assessment but expressed his view that “it is very unlikely to make the project have a positive rate of return on what is likely to be an extremely large and risky capital investment.”

When Pebble attacked Borden’s credibility because NRDC hired him to do the analysis, he informed Bloomberg Environment that he has decided to take no money from NRDC for the work:

“I consider it a public service and don’t want the arguments around being paid a relatively small amount to distract from the bigger issue of the facts and from my honest assessment.”—something he believes is “for the good of the industry.”

According to Borden, based on 23 years with Rio Tinto—one of the world’s largest mining companies—the Pebble project is “the most sensitive environmental siting for a mine that I’ve ever seen in my career.” 

2. Pebble’s Past Refusal to Disclose Cost/Feasibility Information

Pebble’s unabashed intransigence and manifest lack of credibility stand in stunning contrast to Borden’s informed and apparently unimpeachable analysis. But this isn’t the first time:

Pebble has previously declined to reveal cost and revenue projections for the project in response to requests from a range of stakeholders. For example, last year Pebble refused at least two requests by AECOM on behalf of the Army Corps to provide information on “estimated costs” and “cost/feasibility” of the project. Pebble declined, citing a Canadian securities regulation—National Instrument 43-101—whose purpose is to ensure that misleading, erroneous or fraudulent information relating to mineral properties is not published or promoted to investors on the stock exchanges overseen by the Canadian Securities Authority.

Last December in response to a request from the Bristol Bay Native Corporation (“BBNC”), Pebble CEO Collier demurred, saying only that such an analysis “remains on our to-do list.” While Collier didn’t enumerate what other more important items there are on that list, Pebble has yet to release either an analysis or any of the requested cost or economic feasibility information.

Similar requests from a range of Bristol Bay stakeholders and from NRDC have simply been ignored.

3. Importance of Financial Feasibility Analysis

Why does this matter?

Consider, for example, the increased risk that an underfunded company under financial stress will make safety-related compromises in mine operations.

Consider the increased risk that an underfunded company, faced with a significant containment problem at the mine site—or any number of other operational problems inherent in large-scale mining—will have insufficient funds and fewer remedies available to address the problem.

Or consider the increased risk that an underfunded company will declare bankruptcy when the financial going gets tough at any point during construction, operation, or the centuries required for closure of a mine of the size proposed at Pebble.

Ultimately, there is no real question about who will be left holding the bag—who is always left holding the bag when plans, operations, or containment fail at major mining projects around the world. It is the people who live there, and, in the case of the Pebble Mine, it will be the people of Bristol Bay, left to deal with the consequences of reckless, uninformed, hasty decision-making by Pebble or, as the principal federal permitting agency, the Army Corps.

As a condition of proceeding with permitting review, therefore, it is essential that Pebble immediately provide for public review, as part of the DEIS process, an objective financial assessment of its current mine plan. Should Pebble continue to refuse, the Army Corps must require it.