Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
I know an engineer who says anything is possible if you throw enough money at it. The costs associated with the development of the Pebble copper-gold-molybdenum project in Alaska come to mind when thinking in this vein.
The Pebble Partnership, a joint venture of Vancouver’s Northern Dynasty Minerals and Anglo American plc of London, UK, is shepherding the US$5-billion project toward production. The deposit is estimated to contain 80.6 billion lb of copper, 107.4 million oz of gold, and 5.6 billion lb of molybdenum.
Pebble is a deposit worth going after even if it takes and investment of $400 million and more to conduct work programs, research and comparative studies so far. Move than $100 million has been spent on environmental and socio-economic studies, resulting in a 27,000-page environmental baseline document.
This year’s budget is $107 million to be spent on engineering studies to complete a project description. (The pre-feasibility study is due in 2013.) Environmental monitoring will continue with a focus on surface and groundwater hydrology, water quality and fisheries resources. Exploration, geotechnical and metallurgical drilling will be conducted. The partnership also has a full schedule of stakeholder engagement and public affairs interactions, including public consultations that will begin in the fall of 2012.
Those are big numbers: more than $600 million spent and permitting yet to begin, let alone construction.
This writer is old enough to remember when $600 million would be enough to develop two or three new mines in Canada. In the late-1970s, gold was trading from $175 to $225 an ounce and copper was less than $1 a pound. Over the last 10 years, metal prices have risen to new heights, and (for the most part) stayed there.
Higher prices make it economic to spend more on development of a new producer. I suppose the multi-billion-dollar price tags of today’s new mines should not raise too many eyebrows.