Hoping to greenwash reckless Bristol Bay mine as environmentally and socially responsible, Canadian owner Northern Dynasty Minerals’ report fools no one.
Northern Dynasty Minerals and its destructive Pebble Mine have long been a drag on the mining industry, with four global mining companies walking away in the past decade alone. Now, in the wake of the November 2020 permit denial by the Army Corps of Engineers, the beleaguered Canadian company is threatening to extend its discredit more broadly—to the world of corporate environmental and social responsibility (“ESG”).
This week Northern Dynasty issued a document entitled Environmental, Social and Governance Report,” purporting to describe the “basic ESG principles and practices” adopted and applied by the company and its wholly-owned subsidiary Pebble Limited Partnership (“PLP”) (“Pebble”). That’s a tough sell, at best, considering that the company’s sole asset is one of the most widely condemned mining projects anywhere. Considering that its plan is to build that mine—a massive open pit copper and gold mine—at the headwaters of the world’s most productive wild salmon fishery, in the Bristol Bay region of southwest Alaska. Considering that, for over a decade and a half, the people of the region have adamantly and overwhelmingly opposed the mine and actively fought to stop it.
Under the circumstances, Northern Dynasty’s decision to issue an ESG report seems a desperate exercise. Indeed, if this particular company can credibly cloak itself in the mantle of environmental and social responsibility—if it can reasonably claim that its project and its record exemplify the principles that underlie the growing corporate interest in ESG—then those principles are a joke.
Definitions of ESG are easy to find on the internet and on websites of major corporations all over the world. Put simply, environmental criteria measure how a company acts as a steward of nature, social criteria examine how it manages relationships with the communities in which it operates, and governance criteria assess its decision-making, including shareholder rights.
How do Northern Dynasty and its Pebble Mine measure up? They don't.
Consider, for example, these ten indications of the consensus of condemnation that the Pebble Mine has so uniquely earned:
- The Pebble Mine has been opposed consistently by over 80 percent of the people who live in the region, by over 85 percent of commercial fishermen, and, according to the latest polls, by 62 percent of Alaskans—unusually high numbers in a development-friendly state. Despite repeated assertions in Pebble’s ESG report about the priority given to listening and responding to local concerns, the company has done nothing meaningful to change those numbers.
- The Pebble Mine has been dismissed repeatedly “as the wrong mine in the wrong place” by a consensus of public officials, including former Alaska Senator Ted Stevens (R-AK) and current Alaska senior Senator Lisa Murkowski (R-AK); former Environmental Protection Agency (“EPA”) Administrators for Presidents Nixon, Reagan, George H. W. Bush, and George W. Bush; and, on the Democratic side, former Secretary of the Interior to President Clinton.
- Under the Obama Administration, EPA—led by Administrators Lisa Jackson and Gina McCarthy—proposed to veto the Pebble Mine under the agency’s independent but rarely-used Clean Water Act authority to prohibit or restrict projects or activities that threaten unacceptable adverse effects to protected resources.
- Under the Trump Administration, in the most recent death blow to the project, the Army Corps of Engineers denied a federal permit for the Pebble Mine, concluding that “the proposed project will result in significant degradation of the aquatic ecosystem” and that “the proposed project is contrary to the public interest.”
- President Biden, too, has made clear that Bristol Bay “is no place for a mine,” citing the “rigorous, science-based process” undertaken during the Obama Administration. After years of peer-reviewed scientific study, EPA described the Pebble Mine as certain to cause “severe and irreparable harm” and potentially “catastrophic” in its environmental impacts.
- In 2016, by a virtually unanimous vote, the Pebble Mine was condemned by the IUCN World Conservation Congress, which urged the United States government not to permit the project.
- Over the past decade, the Pebble Mine has been abandoned by four global mining companies: Mitsubishi Corporation (2011), Anglo American (2013), Rio Tinto (2014), and First Quantum Minerals (2018).
- Over 60 jewelry companies around the world have endorsed the “No Pebble Pledge,” led by Tiffany & Co., which has concluded that “there are certain places where mining should simply never occur. Alaska’s Bristol Bay is one such place.”
- Following ESG-based outreach from Bristol Bay leaders and others, the Pebble Mine was abandoned by BlackRock in 2018 when it zeroed out its Northern Dynasty shares and, most recently, by Morgan Stanley in May 2020 when it sold over 99.3 percent of its Northern Dynasty shares; by the end of 2020, even Cantor Fitzgerald, formerly lead underwriter for project, had discontinued its research coverage for the project.
- Investment analysts Kerrisdale Capital (2017) and J Capital Research (2020) have condemned the project as “doomed,” “not commercially viable,” and a “money-losing” plan based on extensive analysis of the project’s finances.
These diverse and fundamental concerns came to a head in September 2020 when the undercover “Pebble Tapes” provided a window into the duplicity of Northern Dynasty through the videotaped words of its own leadership. In a deeply embarrassing series of recent interviews with presumed potential investors associated with the Chinese government—actually two investigators from the D.C.-based non-profit Environmental Investigation Agency (“EIA”)—Northern Dynasty CEO Ron Thiessen and then-Pebble Partnership CEO Tom Collier are seen boasting about their political connections, demeaning Alaska’s elected officials (including, in particular, its two Senators and Governor) and the White House Chief of Staff, and confirming with virtual “100 percent” certainty that Pebble’s application for a 20 year mine permit is in fact just the first stage of its real plan for a sprawling 180 (to 200 years or more) mining plan. In other words, the executives admitted that their permit application to the Army Corps was not in fact the full project that Northern Dynasty has in mind to build.
Two days later, Tom Collier resigned—and indeed Tom Collier’s name appears nowhere in Northern Dynasty’s ESG report. Ron Thiessen, on the other hand, is still running the company despite his active and equally culpable participation in the EIA interviews, which unsurprisingly are never mentioned in Northern Dynasty’s ESG report.
In fact, most of the report is devoted to a reiteration of Pebble’s familiar, self-serving defense of the project, as well as excerpts from the Final Environmental Impact Statement (“FEIS”). While these can be ignored, there are a number of claims that deserve response:
ESG Report: “Pebble’s U.S. management and leadership team have invested the project with a uniquely Alaskan view about how minerals can be developed safely and profitably . . . .”
Fact: The Pebble Mine has been opposed consistently by over 80 percent of the residents of Bristol Bay and, by latest poll, 62 percent of Alaskans statewide. The Bristol Bay Native Corporation (and its 11,000 shareholders), Bristol Bay Native Association (representing 31Tribes in the region), United Tribes of Bristol Bay (representing 15 Tribes and 80 percent of the region’s residents), Bristol Bay Economic Development Corporation, and Bristol Bay Regional Seafood Development Association all oppose the project.
ESG Report: “NDM and PLP have made since 2004 what we believe to be the single largest investment in environmental science in support of a development project in the history of US mining.”
Fact: Without conceding the larger point, it should be noted that Anglo American invested a substantial majority of funding—over $600 million—and then walked away from the project.
ESG Report: “The responsible mining principles prepared by the International Council on Mining and Metals (ICMM) have been considered in the design and development of the Pebble Project…. In all likelihood, the ownership entity advancing the Pebble mine into its operational phase will be an ICMM member.”
Fact: Northern Dynasty is not a member of the ICMM—and has not given any indication of a potential partner from among the Council’s members—but three members of the ICMM have abandoned the Pebble project since 2011.
ESG Report: “A significant planning and design priority for the Pebble Project was to minimize risk to the natural environment and surrounding communities.”
Fact: As mentioned, the project is overwhelmingly unpopular within the communities that would have to live with the project, based on their concerns about risk to the fishery and waters of Bristol Bay, which is the lifeblood for the people and wildlife of the region. In denying Pebble’s permit application, the Army Corps cited the project’s potential to cause “significant degradation to the aquatic ecosystem” and found that it would be “contrary to the public interest.” EPA has described the project’s impacts as potentially “catastrophic.”
ESG Report: “This proposed footprint is only slightly larger than the smallest hypothetical mine developed by EPA in its BBWA, and which the EPA stated it would have allowed to go into the CWA permit process.”
Fact: Pebble’s permit application seeks permission for a mine plan almost six times larger than the smallest scenario previously evaluated by EPA in its BBWA.
ESG Report: “NDM and PLP recognize transparency and reporting as two of the most important underpinnings of ESG.”
Fact: As the Pebble Tapes show, Pebble and its leadership have failed to be transparent in their dealings with the local community, the public generally, legislators, and regulators. While this contributed to the sudden departure of former CEO Collier, the fact that Ron Thiessen remains CEO of Northern Dynasty speaks volumes about the company’s future intentions. Requests by a wide range of stakeholders for additional time during Pebble’s accelerated permit review—requests made for legitimate reasons like needing adequate time to review and comment on project documents—were uniformly opposed by Pebble, even during the global pandemic. Notably, although it is premature to predict the results, Northern Dynasty is currently facing several shareholder lawsuits alleging misrepresentation.
ESG Report: “It is worth noting that the copper produced by the proposed Pebble mine will make an important contribution to reducing GHG’s globally . . . .”
Fact: This claim has become a major talking point for Pebble, but it is not endorsed by the mining industry generally. Over the past decade, the Pebble project has been abandoned by four global copper mining companies in favor of better opportunities to produce copper elsewhere. Despite repeated requests for an economic feasibility analysis to support its permit application, Pebble has refused. An independent analysis by mining expert and former Rio Tinto Head of Environment Richard Borden predicts that the Pebble Mine as proposed to the Army Corps has a negative NPV of $3 billion, which raises a substantial question about whether, under that proposal, any copper would be forthcoming from Pebble.
ESG Report: “[I]ts most profound economic contributions would be felt in the villages and boroughs of southwest Alaska.”
Fact: Agreed, but for different reasons. The opposition to this project has always been led by local Tribes and other regional stakeholders, because they understand the unavoidable risk this project poses to their economic livelihood—the Bristol Bay fishery, which, according to a recent McKinley Research Study, generates $2.2 billion in revenue each year as well as 15,000 jobs. By contrast, although Pebble has promised sustainable jobs for the people of the region, it has never committed to a percentage of hiring from that specific pool, and its economic contributions thus far have been few and far between. Sadly, if and when the mine containment fails, the greatest potential for Pebble-related local hiring may be in environmental remediation.
ESG Report: “[T]he probability of a full breach of the . . . tailings embankments at Pebble was assessed to be extremely low, and therefore was not reasonably foreseeable.”
Fact: “The failure to consider the impacts of a large-scale catastrophic dam failure,” said Rio Tinto’s Borden, “ignores one of the largest environmental risks posed by the project,” “cannot be justified,” and threatens “profound, permanent negative impact on downstream aquatic ecosystems and fisheries.”
ESG Report: “[F]or at least 15 years, millions of dollars have been expended annually by activist groups [ENGO’s] to oppose Pebble, and to fan the fears and concerns of local people—particularly with respect to the project’s potential effect on fish and aquatic habitat. . . . [Q]uestions [about project design to address concerns] too often go unasked and unanswered—overwhelmed by the rhetoric of opposition groups, and their cataclysmic claims about project risks.”
Fact: The success against the Pebble Mine has been led and sustained for a decade and a half or more by the overwhelming opposition of local Tribal and other Alaska Native voices. In a development-friendly state like Alaska, it is impossible to overstate the importance of this single factor. It is predictable that Pebble would seek to blame outside interests, but there is no truth to it. NRDC and many others have offered their support to elevate and enable those local voices.
These examples in Northern Dynasty’s ESG report—and many more—highlight the company’s profound failure to understand either what the doctrine stands for or what kinds of priorities it is intended to encourage. ESG is driven not solely by legal, scientific, or moral preferences but by a growing recognition among corporate leaders that a company’s financial sustainability over the long term is enhanced by service to a social purpose and by genuine attention to the environmental and social impacts of its activities.
Ultimately, given the project’s unacceptable location and its troubled past, Northern Dynasty’s ESG report is a futile gesture. It is futile because the company’s record of financial failure is and always has been driven by the near-total disconnect between its sole asset—the Pebble Mine—and the very idea of ESG.