Mining:

Pebble CEO Shively makes case for Bristol Bay watershed project

How would the Pebble Limited Partnership's proposal for a gold and copper mine in the Bristol Bay watershed affect the salmon fishery and surrounding community? During today's OnPoint, John Shively, CEO of Pebble, explains why he believes the Pebble Mine would revitalize the economy of the community surrounding Bristol Bay. He discusses his organization's efforts to address environmental concerns about the project and responds to critics of the proposal.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is John Shively, CEO of Pebble Limited Partnership. John, it's great to have you here.

John Shively: Thank you for having me.

Monica Trauzzi: John, you're heading up the proposed Pebble Mine project, which would put a gold and copper mine in Bristol Bay, in the Bristol Bay watershed in Alaska. Why the Bristol Bay watershed for this project?

John Shively: Well, minerals are where they are. We don't get to choose that and it is a world-class prospect. There's about 10 billion times potentially of ore. It's maybe the third or fourth largest undeveloped copper prospect in the world. It's, by volume, mostly copper, over 95 percent copper. Copper is important to the economy. If you have anything that's electric you've got to have copper. If you want a 3 megawatt wind turbine you need 5 tons of copper, so even for things like renewable resources, copper is important. Also it's located in an area that although there is a robust commercial fishery, these days a lot of the local people are not involved in that fishery. The area is economically depressed and this offers some opportunity for them in terms of jobs and for some of their smaller companies for some business.

Monica Trauzzi: But there's still been a lot of controversy and protesting relating to the proposal. Considering the number of environmental disasters that we've seen over the last couple of years related to mining and drilling, why would you even attempt something of this magnitude? I mean isn't just the nature of it dead on arrival in some respects?

John Shively: Well, I don't think so and, first of all, I'm not a mining person. My degree is in political science. Most of my work in Alaska has been with Alaska natives. I've also served a governor as Chief of Staff and another as Commissioner of Natural Resources. One of the native corporations I worked for, we developed a large zinc lead mine north of the Arctic Circle. I saw the opportunity it gave people. The workforce there has always been over 50 percent Alaska native. So it's an opportunity issue for me. Now, also we have to meet the very highest environmental standards, there's no question about that. We've spent over $100 million so far just on environmental studies, way more than I think any mine in the history of the world, because we need that science. And, you know, all we're asking for right now really is for people to give us a chance to present the project that we think works, assuming we can get there. And once we present that project, then people can say, well, we don't think it works because of this or it doesn't work because of that and whether we can fix it or not fix it is something that will happen during the permitting process.

Monica Trauzzi: In March 2010 you were quoted as saying, "I don't know that we can do this project. I don't have a project right now to present to the public that I can say meets the high environmental standards that I know we have to meet and is economic, the two challenges that we have." Have you reconciled those two challenges at this point? How much further do you need to go?

John Shively: Well, I think in terms of the environmental side I'm relatively convinced that the technology is there for us to do what we need to do in terms of water management, in terms of developing a tailings impoundment facility that will withstand potential seismic events as we've seen them already do in Chile where there have been large earthquakes and the impoundment facility has held. So the technology, I think, is there, but combining the technology with the economics, we haven't gotten that far yet. And we're not finished designing. I mean we need to take what we know about technology, put it into our final design, which we hope to have some time next year and then if that works, we'll take that into permitting.

Monica Trauzzi: Many who oppose the mine say the fate of this great salmon fishery is in your hands. What level of responsibility do you feel to the fishery and the people in the surrounding community?

John Shively: Well, I feel total responsibility. Most of my work has been with Alaska natives. I've worked on subsistence issues for Alaska natives. I worked on land issues. You know, I've spent a lot of time in rural Alaska and I don't want my legacy to be that, you know, I ruined the salmon fishery. So I have a very high degree of responsibility and it rests on me and, in a lot of ways, I think that's why I'm a more appropriate person to be CEO of this project than perhaps someone with a lot more mining skills, because that is my interest. I want those villages to survive, but what we're seeing now out there is a declining population, 7 percent in the region between the last two censuses. Pedro Bay, which is a village on our road route lost their school is because they didn't have the 10 kids necessary to keep it open last year. Other schools are in similar circumstances, so there's an economic problem out there. Is Pebble the solution? We don't know yet, but it could be.

Monica Trauzzi: So break this down for me a little further. How do fish and mining coexist? I mean don't the two work against each other?

John Shively: I don't think so. If you go to the Fraser River in British Columbia, there are three major mines that have been in operation for, I think some of them, over 50 years. The largest copper mine in Canada is located in that watershed. Like other salmon fisheries, the Fraser River has been up and down, but last year they had their biggest salmon run in over 100 years. It's a matter of management. I mean commercial fishing can destroy commercial fisheries, I mean if you over fish. So you can argue is commercial fishing, can that coexist with a healthy fishery? Well, if it's well-managed it can. And I think the same thing can be said of mining and of mine development. If it's managed appropriately, if the technology is used correctly, they can coexist.

Monica Trauzzi: What's the timeline for having a final proposal to present?

John Shively: Well, we hope to have something to present sometime next year, although this is not about a timeline, for me anyway. This is about getting it right. I mean I need to be and I need to have other people who work for me, particularly on the environmental side, we need to be very confident that what we present is going to work. And we're not going to present it until we get there and then we have to combine that with the economics to make sure that both the environment and economics work together.

Monica Trauzzi: But you're hoping to start the permitting process later this year?

John Shively: Oh, no, no, we won't be in permitting probably until late 2012 or early 2013.

Monica Trauzzi: Well, what's your assessment of how EPA has been approaching all of this? Do you feel that they have the authority to dead stop the project? Should this be left to the state?

John Shively: Well, EPA has a role to play. Our opposition has asked them to come in and stop us before we even get into the permitting process. I think that's wrong. I mean I think they should play their role in the permitting process and then they can test what our project is. Right now they're looking at a major watershed study of the two watersheds we might affect. Those watersheds are the size of Maryland and New Jersey combined. Whether they can really do that when all the information in the watershed is ours and we only cover a very small area, I don't know. Our opposition has asked them to shut us down before we get started. Do they have that authority? I really don't think so, but, you know, we may get to test that later on.

Monica Trauzzi: So, is EPA approaching this fairly and effectively?

John Shively: Well, I think they're trying to be fair in the watershed assessment, but effectively, I don't know. I don't think they can do the watershed assessment in watersheds this big without huge resources. We've spent over $100 million just on a very small area in those two watersheds. Now, are they going to spend hundreds of millions of dollars collecting the same kind of information that we are? I don't think so.

Monica Trauzzi: So, if this were to reach commercial production, this mine, what are the long-term benefits, the long-term prospects?

John Shively: Well, I mean we've got 80 to 100 years of resource and I think there might be more resource out there. I mean there are certainly jobs and training for local people. As I said, that's one of the reasons I'm interested, and there's job opportunities even nationwide. I mean we build something this big, we're going to need, you know, all sorts of equipment and things that we'll get from the national economy. We'll bring cheap energy to some of those villages. I mean right now they pay $0.80 a kilowatt hour or more. We'll drive that down to around 10 or 12. And there's taxes for the local government. There's taxes for the state government, so there's a potential for, I think, a lot of opportunity for people.

Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show, nice to see you.

John Shively: OK, thank you.

Monica Trauzzi: And thanks watching. We'll see you back here tomorrow.

[End of Audio]

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