California Treasurer’s Objection Threatens Alaska Gold Mine

Jan. 29, 2018, 8:10 PM

California’s state treasurer objected Jan. 29 to a giant proposed gold mine in Alaska in which the state has a financial stake, dealing another blow to the mine’s developers.

The opposition on environmental grounds comes days after an EPA action cast doubt on the Pebble Mine project in Alaska and weeks after an announced framework agreement that would ultimately deliver $150 million in funding from Vancouver-based First Quantum Minerals Ltd. The first $37.5 million payment has already been made.

At the time of that announcement, Pebble chief executive Tom Collier hailed it as a win for the project, which has been financially troubled in the past.

‘Disturbing Threats’

Now, however, John Chiang, California’s state treasurer, is calling on First Quantum to “immediately undertake all measures necessary to sever any connections—financial or otherwise” to the project.

The state runs two giant pension funds, one for state employees and another for teachers, that hold almost $100 million in First Quantum stock. The state is the 15th biggest shareholder in the company, giving it significant influence over First Quantum’s investments.

In his letter, Chiang cited “disturbing threats this project poses to the pristine environment, to fishing, to the economy, and to the indigenous peoples of the Bristol Bay region.”

First Quantum couldn’t be immediately reached for comment, but Mike Heatwole, a spokesman for the Pebble, defended the project.

“They have not spoken with us and have no idea what our project is all about,” Heatwole told Bloomberg Environment. “We will be formally extending them an invitation for a full briefing. Further, their characterization of risk is wrong.”

First Quantum: Support Needed

Under the $150 million deal cut last December, First Quantum also holds an option to pay $1.5 billion at the end of permitting in order to earn a 50 percent ownership of the Pebble Partnership.

Earlier this month, Clive Newall, First Quantum’s president, told Bloomberg Environment that the option “will only be exercised if the project is economically, environmentally, and socially sound and has the support of stakeholders.”

Environmentalists hailed Chiang’s letter.

“This condemnation from California State Treasurer Chiang is the latest indication of the absence of investor confidence in this uniquely reckless project,” Joel Reynolds, Western director at the Natural Resources Defense Council, told Bloomberg Environment.

Collier earlier this month told Bloomberg Environment he “can’t imagine” a major mining company like First Quantum failing to exercise its option on Pebble, as long as it gets a permit.

The call for divestment comes at a time when even the Trump Environmental Protection Agency is starting to waver on the troubled project. On Jan. 26, EPA Administrator Scott Pruitt took back an earlier bid to kill an Obama-era proposal that would have limited the mine’s water pollution.

“It is my judgment at this time that any mining projects in the region likely pose a risk to the abundant natural resources that exist there,” Pruitt said in a statement.

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

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