Letter from Treasurer Chiang Asks First Quantum Minerals to Terminate all Negotiations and Payments
The California State Treasurer—in a move to protect its assets—today requested that Canadian mining company First Quantum Minerals “sever any connections—financial or otherwise” with the Pebble Mine, the massive open pit gold and copper mine proposed by a Canadian company to be built in the headwaters of Bristol Bay, Alaska -- the greatest wild salmon fishery on Earth. The mine has been long opposed by a diverse group of interests in Alaska, including the residents of the region, Alaskan tribes, the commercial and recreational fishing industries, and a majority of Alaskans.
“I am deeply familiar with the disturbing threats this project poses to the pristine environment, to fishing, to the economy, and to the indigenous peoples of the Bristol Bay region,” wrote California Treasurer John Chiang.
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.
First Quantum Minerals is currently debating whether to stake a 50% claim in the Pebble Mine. (Spoiler alert: it shouldn’t.)
It announced a “framework agreement” last month with Northern Dynasty Minerals (currently the sole proponent of the Pebble Project) that, if confirmed in an option agreement, will give First Quantum Minerals the option to buy a 50% interest in Pebble Mine for $1.5 billion. The agreement is contingent upon further due diligence, among other things, and is expected to be finalized (or not) early in the Second Quarter of 2018.
In the meantime, First Quantum Minerals has agreed to pay Northern Dynasty Minerals $150 million over four years to help fund the permitting process for the project.
But not if the State of California and Treasurer Chiang have anything to say about it:
“I am concerned that the Pebble Mine operation will trigger unavoidable significant environmental and social damage, infringe on the rights of indigenous peoples and raise a host of regulatory, operational, legal, and reputational risks for any company that pursues the endeavor.
“The California pension funds believe that sustainable business practices – particularly responsible environmental, labor, and human rights practices – are fundamental to protecting and creating long-term shareowner value. As a fiduciary of these funds, I cannot ignore the far-reaching economic implications and sustainability risks at play here. In my view, investment in the Pebble Project presents undue risk not only to the long-term sustainability of the Bristol Bay region, but also to the value of our long-term investments in First Quantum Minerals, Ltd.”
This isn’t the first time California has flexed its economic muscle to defend Bristol Bay.
In 2013, then-CA Controller Chiang, acting in concert with City of New York Controllers John Liu and Scott Stringer, urged mining giant Rio Tinto to divest all its interest in the Pebble Mine “because of the financial and reputational risks Rio’s participation posed to [its] shareholders and beneficiaries, both present and future.”
In April 2014, Rio Tinto did just that, donating 100 percent of its interest in the mine to two Alaskan non-profit organizations.
Today, Treasurer Chiang made a similar request that First Quantum Minerals “immediately undertake all measures necessary to sever any connections – financial or otherwise – with the Pebble Project or its owner Northern Dynasty Minerals, including termination of negotiations on a potential option agreement and any further financial payments to the Pebble Project.”
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.