Pebble's foes float tax idea for mines

INCREASE: State's miners now pay about 7 percent of oil industry rate.
By ELIZABETH BLUEMINK
Anchorage Daily News
Published: January 4, 2007
http://www.adn.com/money/industries/mining/story/8537561p-8431378c.html

The massive Pebble copper and gold prospect in Southwest Alaska faces a potential new battle front that could also hit existing Alaska mines in their pocketbooks.

Some of Pebble's foes are contemplating a petition to put a mining tax on the state ballot.

Art Hackney, a director of the Renewable Resources Coalition, which opposes Pebble development, said Wednesday that the idea of a new mining tax is one of the possible ways to
fight the project.

For now, he called the tax idea "cocktail conversation."

It's probably not the "ultimate strategy" to block Pebble development, he added.

Pebble is one of the world's largest copper and gold prospects, and a Canadian company is exploring the site with an eye toward developing it into a mine.

But Pebble lies near Iliamna Lake amid headwaters of rivers that support major Bristol Bay salmon fisheries as well as a sport-fishing industry and subsistence harvests.

Its location and potential size have aroused opposition and launched advertising, political and other campaigns against development.

Rep. Jay Ramras, R-Fairbanks, warned a breakfast crowd of miners in Fairbanks in mid-December of the tax idea.

He urged the miners to try to make peace with Pebble nemesis Bob Gillam.

Gillam is president of McKinley Capital Management in Anchorage. He owns a lodge near Pebble and helped organize and fund the Renewable Resources Coalition, though he has
since resigned from the board.

Ramras learned about Gillam's interest in a new mining tax initiative after the end of last year's
legislative session, he said.

Gillam did not return a phone call for comment Wednesday.

The idea of asking voters to approve a new mining tax indicates a new
front in the fight over Pebble -- one that is not so much about environmental risks as it is about money and the state treasury.

The industry would have to spend millions to fight a tax initiative, Ramras said, adding, "The industry would be in a chill."

Ramras counts both Gillam and Hackney as friends.

That's how he learned about it, he said.

Ramras opposes increasing mining taxes through an initiative. But he also opposes developing Pebble.
In recent months, environmental concerns over developing the Pebble prospect into a mine have spurred renewed attempts to form a state fisheries refuge in the Bristol Bay watershed.

As a founding board member of the Renewable Resources Coalition -- an Anchorage nonprofit -- Hackney said a mining tax voter initiative is one way to get the
industry's attention.

Last year, Rep. Paul Seaton, R-Homer, proposed increasing state mining taxes.

Seaton said he plans to introduce new mining tax legislation this year.

If the issue is brought as an initiative, Seaton believes Alaska voters would support increasing mining taxes.

Voters already showed they wanted the cruise-ship industry to "pay its fair share" when they approved new taxes for that industry last summer, Seaton said.

The mining industry did support some legislation last year for a new mining tax in areas with no
borough government.

But the industry strenuously opposed Seaton's legislation in five hearings in Juneau, Seaton said.
Alaska has a handful of very large mines and many mom-and-pop operations.

The industry provided about $25.4 million in state revenue in 2005, said Dave Szumigala, vice
chairman of the Fairbanks branch of the Alaska Miners Association.

Szumigala, a state geologist, said a stable tax regime is very important for mining companies to help them better plan the massive investments needed to develop a mine.

When Seaton filed his legislation last year, he said state and local tax revenue from the mining industry amounted to only 1.7 percent of the industry's production value.

The oil industry pays the state and local governments 22 percent of its production value, Seaton said at the time.

The mining industry needs to know that "it's pretty easy to get an initiative before the voters," Ramras said Wednesday.

Ramras should know.

He worked with Hackney on the recent successful voter initiative to limit annual legislative sessions to 90 days.

Hackney also worked to defeat the ballot initiative for a gas reserves tax in November.

Ramras said his idea got a cool reception from the Fairbanks mining crowd.

"I think they shucked it off," Ramras said, adding, "They were more disappointed (to learn) my point of view."

"I think they are underestimating their adversary," he said Wednesday.

Daily News reporter Elizabeth Bluemink can be reached at ebluemink@adn.com
or 257-4317.

For more information, contact :

Renewable Resources Coalition, Inc.
500 L Street, Suite 502
Anchorage, AK 99501

Telephone: (907) 632-9933
Fax: (907) 272-9319
Email: info@renewableresourcescoalition.org