PEBBLE WATCH Mineral Independence and the Pebble Mine

PEBBLE WATCH FACT SHEET September 2020

Quick Read • Advocates for development of the Mineral Independence Pebble mine argue the deposit of copper, gold, and molybdenum would contribute to U.S. resource and the Pebble Mine independence. One of the arguments made in favor of development of the • They say that developing the mine proposed Pebble mine is that it would create a domestic supply of would create a domestic supply of minerals for the U.S., thus reducing copper, gold, and molybdenum and would contribute to resource dependence on countries such as independence for the United States.1 China.

• However, developers also plan to ship Northern Dynasty Minerals (NDM) added the critical mineral rhenium to that mineral concentrates directly from a list in August 2020, saying, “As a significant deposit of Rhenium on US soil, port on Cook Inlet to ports in Asia. development of the Pebble resource will materially advance America’s goal of achieving self-sufficiency in the critical minerals needed to support and • Concentrate would be smelted and sustain its economic growth, military security, manufacturing industries and refined outside the U.S. transition to a lower carbon future.”² • Once out of the U.S., concentrates are no longer considered part of the The existence of these minerals on U.S. soil is just the first part of the domestic supply chain. The U.S. would equation, however. The argument ignores a critical aspect of the supply have to buy back the refined product. chain: how concentrate gets turned into a product ready for end users.

• To count toward domestic supply, That’s where the U.S. loses out on any resource independence and resource independence, Pebble advantage from the Pebble deposit. developers would have to smelt and refine copper domestically. Pebble developers have been clear that concentrate shipped from the deposit would head to Asian markets for smelting and refining.3 In a • There are three operating copper November 2017 presentation to investors, NDM CEO Ron Thiessen said, smelters in the U.S., located in Arizona “You can’t find a better spot to build and develop a mine. It’s effectively in and Utah. There are a few copper the middle of nowhere, but it’s very close to tidewater, which gives us good refineries in Texas. These are owned access to the ocean and shipment to Asian smelters.” by large mining corporations, which also export some of their copper That plan has not changed. In the Final Environmental Impact Statement concentrate. developed by the U.S. Army Corps of Engineers, a map in Appendix H • If these corporations had capacity, clearly illustrates the vessel routes “to Asia ports.”4 and if they agreed to process Shipping concentrate to other countries isn’t unusual for mines in Pebble copper concentrate, getting 5 6 it to Arizona or Utah may not be Alaska, which produce 36% of the state’s exports. The Alaska Resource economically viable. It would require Development Council says, “Worldwide interest in Alaska’s mineral potential more expensive transportation by ship continues to grow… Driving interest is the demand for metals, primarily from and then train/truck. Asian countries like China, Japan, and India. The export value from Alaska continued page 2 c s x N I K u E 0 SAINT L AWRENCE N G 0 Alaska n 2 ISLAND a - !( Highway

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May 2020 Concentrate Bulk Vessel Travel Route map, from the Pebble Project Final EIS, Appendix H, indicates concentrate shipments “to Asia ports.”

continued from page 1 know how as to how to process nothing to mitigate risks if the minerals and put them into downstream processing is highly 7 production was $1.7 billion in 2018.” advanced technology...we currently concentrated geographically, Pebble developers envision a port then have to ship the products imported and unreliable.” of those mines to China to be on Cook Inlet that would provide In a 2019 interview with processed into useful materials.” easy access to those markets. If the SmithWeekly, Thiessen discussed U.S. wanted that Alaska-sourced Not controlling the production this lack of U.S. processing capacity copper, gold, molybdenum or aspect of the mineral supply chain as well, noting that the last time a rhenium in the future, it would have leaves the nation at the mercy of copper smelter was permitted in to buy the refined product back countries who may or may not the United States was in 1974. He from another country, likely China 11 choose to sell refined metals, noted it was never built. or Japan, which have the smelting critical minerals and rare earths to Yet the company’s September

and refining capacity that the U.S. the U.S. in the future.

currently lacks. 2020 presentation to investors still In the 2019 USGS Critical Minerals highlights Pebble as a “key domestica Alaska Senator Lisa Murkowksi 10 12 Review , authors note, “It is not source of strategic minerals.” and other legislators have been always the case that the pointing out the flaws in this strategic vulnerability for a supply chain for years.8 9 In 2011 given mineral commodity is testimony on Critical Minerals and a mining and concentrate Materials Legislation, Senator Mark production issue... Udall (D-Colorado) said, “We used Simply establishing to dominate, the United States domestic mining did, the world’s supply chain, not and concentrate just because we had the mines, production does but because we developed the

22 Argument resonates with supporters Pebble is located in the U.S., so it’s a The idea of Pebble as a domestic domestic supply, right? source of strategic minerals The United States Geological Survey keeps track continues to resonate with some of mineral supplies15 and copper concentrates supporters of the project. Public don’t count toward domestic supply numbers comments on the U.S. Army Corps unless they are smelted and refined domestically. of Engineers Pebble Project EIS site show concern over resource When determining the amount of domestic supply of independence as a reason for refined copper in the U.S., any concentrates shipped and developing the Pebble deposit 13: refined overseas don’t factor in. In calculating the supply of domestically mined copper, concentrates extracted here “This project will also help the would be considered, but any amount shipped overseas United States become more will be subtracted out in the calculation, and only those dependent on our own natural concentrates that remain in the country will be accounted resources for rare Earth’s for as being supplied domestically. minerals such as Rhenium and Molybdenum instead of relying For copper producers like Pebble that aren’t in the on places like China.” smelting/refining business, there can be tolling agreements where Company A produces concentrates, Company “I am afraid of the Chinese B smelts/refines the concentrates and returns them to and their dominance of critical Company A. Then Company A is in charge of the sale and minerals needed to defend our distribution of the refined copper cathodes. In a scenario country.” where there’s a toll agreement to process concentrates into “I am concerned about our cathode, the resulting refined production would count as reliance on China for scarce domestic supply. That scenario has never been described as resources...We need this mine to part of Pebble’s plan. ensure our safety.” Unless Pebble developers change plans to seek out toll agreements or direct concentrate to facilities in the U.S., The irony of this argument is that, once developed, Pebble might Alaska-sourced copper will not count toward the nation’s be sending minerals from the domestic supply. U.S. directly to China. Or Japan, South Korea, or Chile. Any place with capacity to process the concentrate. At that point, it is out Source: USGS Mineral Commodities of U.S. hands. U.S.EXPORTS Summaries 2020 In September 2020, Axios wrote about the global need for copper, From 2015 to 2019, the U.S. exported and quoted Pebble Limited an estimated 1,543,000 metric tons of Partnership spokesperson Mike Heatwole: “While we can’t say for copper ore and concentrate. certain where Pebble copper will end up, U.S. and global demand for clean and renewable power, electrical vehicles and the grid In 2019, roasted and unroasted infrastructure that supports these molybdenum concentrate exports ... will clearly be important drivers increased by 26% and 13%, for the development of new respectively, compared with those copper producers.” 14 during the same period in 2018.

www.pebblewatch.comwww.pebblewatch.com -- Impartial,Impartial, educational,educational, fact-basedfact-based 3 Couldn’t Pebble send concentrate to Q U.S. smelters to keep these minerals for domestic supply?

A: It would be very unlikely, and expensive.

There is no economic benefit for The few U.S.-based smelters and then by truck or train to smelters Pebble to do so, even if it could find refineries in existence are already in Utah or Arizona and refineries in capacity. associated with, or owned by, Texas.19 large mining companies such as Multiple U.S. copper producers Shipping from Alaska to another Freeport, Asarco, and Rio Tinto. state in their financial reports that U.S. port is considerably more (Even they send some of their 100% of their copper concentrates expensive than shipping to Asia own concentrate to Asia through are sold to foreign companies. markets due to the Jones Act, which Guaymas.) 17 18 For example, in 2019 Capstone requires goods shipped between Mining Corporation’s Pinto Valley Those companies would have U.S. ports to be transported on mine exported 100% of copper to agree to take on Pebble ships that are built, owned, and concentrate production to Asia, concentrates for processing, when operated by United States citizens specifically Japan, Korea, and they already have limited capacity or permanent residents.20 the Philippines. The copper for their own concentrate. There are even fewer options in concentrate was hauled using a Additional costs would be incurred the U.S. for rhenium production. modular truck system and shipped to ship Pebble concentrate from Rhenium is produced as a by- out of the port of Guaymas, Cook Inlet to a port in the U.S. and Mexico.16 continued page 5

Union Pacific Copper Concentrate Shippers

This Union Pacific map illustrates Glencore copper concentrate Vancouver, WA Montana Resources transport routes, along with ports, smelters and

Nevada Robinson Copper refineries. Newmont AZ Stockton (NVGM) Kennecott NM Capstone (Top-Of-The-World) Freeport McMoran Resolution Copper FMI Capstone (Superior) Asarco Miami Resolution Copper Hayden Chino (Hurley) Asarco Hudbay Morenci Minerals Ray (Clifton)

Minera Sierrita Tyrone Mexico Asarco UP Main Lines Mission El Paso Company Hudbay Minerals Guaymas Major Ports (Vail) Smelter Sahuarita Refineries Future Mine Projects Minera Mexico (El Tajo, SO)

MEXICO 4 Statistics for Pebble’s contribution to resource continued from page 4 independence are misleading product of molybdenum. The USGS Critical Minerals report on rhenium Even if Pebble concentrate were by some chance to remain in the states that, in 2012, there were three domestic supply chain, Pebble exaggerates its contribution to molybdenum mines in the U.S. with resource independence by citing estimates from the full Pebble associated roasters. Only one of the A: It would be very unlikely, and expensive. deposit: roasters – Sierrita in Arizona – was equipped to recover rhenium.21 “The 80 billion pounds of copper estimated in the Pebble A 2018 USGS dataset reports that, deposit has the potential to meet approximately 33% of U.S. 1 “the United States has insufficient annual needs for many years.” – Pebble website processing capacity to meet domestic “New Pebble mineral resource estimate increases US need for rhenium. The United States strategic Rhenium sources by 84%” – NDM press release on ships molybdenum concentrates to rhenium, August 20, 2020 2 Chile for recovery and then imports the refined rhenium.”22 But the project under consideration would produce a fraction of that Finally, NDM is an exploration amount. An expansion of the mine plan beyond that would require company, not a mining company. additional permitting. Its main goal is to bring on partners Under the 20-year plan, NDM proposes to mine 318 million pounds to develop the mine, or to sell of copper annually. Over 20 years, this is 6.3 billion pounds recovered outright, for the ultimate benefit of out of an estimated 83 billion pounds (approximately 7.7% ).12 its investors. Would future partners put a high value on U.S. resource NDM has not provided a breakdown of how much rhenium would be independence as part of their recovered under its existing 20-year plan. The NDM technical report calculus when determining the on rhenium is expected to be made public in early October 2020 and economics of Pebble? Would they may include this information. seek out toll agreements or costly However, since rhenium is produced as a by-product of molybdenum and convoluted shipping modes just smelting, we can get a general idea of how much rhenium could to keep concentrate within the U.S.? be produced based on the percentage of molybdenum recovered under the 20-year plan. Under that plan, NDM estimates an average The promise of the Pebble molybdenum concentration production of 14 million pounds. Over deposit is exciting for many. 20 years, this is 280 million pounds recovered out of an estimated 5.6 There would be jobs and billion pounds (approximately 5%). economic benefits. There would be more Overall estimate Estimated Percentage of copper, gold, molybdenum, in all categories amount to overall resource silver and rhenium extracted produce under to be produced in from Alaska bedrock. existing 20 20 years year mine plan But if Pebble developers proposal continue to claim these minerals as a domestic COPPER 83 billion lb 6.3 billion lb 7.7% source of strategic minerals, MOLYBDENUM 5.6 billion lb 280 million lb 5% more details are needed that describe exactly how RHENIUM 4.2 million kg NDM has not published this data. The percentage of overall resource is likely those minerals will be similar to that for molybdenum (5%), as mined, smelted, refined and rhenium is produced as a by-product of retained within the U.S. for molybdenum. its benefit.

Source: NDM corporate presentation, September 2020, NDM rhenium press release, August 20, 2020

www.pebblewatch.com - Impartial, educational, fact-based 5 References

1 Pebble Partnership website: Why to process the minerals and put pitting clean energy against the We Mine, pebblepartnership.com/ them into advanced technology. wilderness, Jacob Knutson, Axios, why-we-mine We sold that technology, however. September 2020, www.axios.com/ The intellectual property rights copper-renewable-energy-mining- 2 NDM press release regarding went to countries like China and environment-8f2bf6b4-8557-4937- Rhenium, August 20, 2020, www. Japan and now we no longer have 8020-7b6f39dc3fc2.html northerndynastyminerals.com/site/ the manufacturing capabilities nor 15 assets/files/4851/august_20-_2020_ a skilled work force at the level USGS Commodities Statistics final.pdf that we need to have it or want in and Information, www.usgs.gov/ centers/nmic/commodity-statistics- 3 this country. So even if we were to NDM CEO Ron Thiessen and-information Cambridge House presentation open and I know we will, more rare to investors, youtu.be/ Earth mines in the United States, 16 Capstone Mining Corp, 2020 kHmQVHBsYj4?t=610 we currently then have to ship the Annual Report, p 14, www. products of those mines to China to annualreports.com/HostedData/ 4 Pebble Final EIS, App H, www. be processed into useful materials.” AnnualReports/PDF/TSX_CS_2019. pebbleprojecteis.com –former U.S. Sen Mark Udall, pdf (D-Colorado), www.govinfo.gov/ 5 Alaska Resource Development content/pkg/CHRG-112shrg70660/ 17 Arizona State Freight Plan, 2015, Council, “Worldwide interest in html/CHRG-112shrg70660.htm pp 27-35, https://azdot.gov/sites/ Alaska’s mineral potential continues default/files/2019/08/mining.pdf to grow… Driving interest is the 9 2019 Hearing to Examine the demand for metals, primarily from Minerals Need for Clean Energy, 18 Around 75% of exports shipped Asian countries like China, Japan, “Chinese companies...are even from Guayanas are minerals like and India. The export value from taking the small amounts of copper concentrate headed for Alaska production was $1.7 billion rare earths that are produced in China and Japan. Arizona Public in 2018.” https://www.akrdc.org/ California, and then processing Media, March 2017, youtu.be/ mining them in China, and then they export DRCBag_kN_k?t=148; Arizona it back to the U.S. because we don’t , March 2020, www. 6 Economy Out of the mine, into the smelter, have domestic capability to do it azeconomy.org/2020/03/border- Brad Joyal, Alaska Business, ourselves.” Senator Lisa Murkowski economy/copper-ore-arizonas-old- September 2019, www.akbizmag. (R-Alaska), www.energy.senate. treasure-todays-top-export/ com/industry/mining/out-of-the- gov/services/files/90200473-B75C- 19 mine-and-into-the-smelter/ 4D51-9014-55E57E84B937 Union Pacific Copper , www. 7 Concentrate Shippers map References to Alaska mineral 10 USGS Critical Minerals Review, up.com/customers/ind-prod/ exports to foreign countries, in May 2020, MiningEngineering metals/copper-concentrate/index. Planning for Alaska’s Regional Magazine.com, tinyurl.com/ htm Ports and Harbors Final Report, criticalmineral2019 2011, prepared by Northern 20 Revitalizing Coastal Shipping Economics for U.S. Army Corps of 11 SmithWeekly discussion with for Domestic Commerce, 2017, Engineers, pp. 35-41, www.poa.usace. NDM CEO Ron Thiessen, Part 1, Congressional Research Service, army.mil/Portals/34/docs/AKports/ 2017, youtu.be/a0OtPU2QKRc fas.org/sgp/crs/misc/R44831.pdf Planning%20for%20Alaska’s%20 12 21 Ports%20&%20Harbors%20Jan%20 NDM Corporate Presentation, Rhenium chapter of Critical 11.pdf September 2020, p. 4, 7, 20, Mineral Resources of the United www.pebblewatch.com/wp-content/ States, 2017, pubs.usgs.gov/ 8 2011 testimony on Critical uploads/2020/09/ndm_corporate_ pp/1802/p/pp1802p.pdf sept_11_2020_final_web.pdf Minerals and Materials 22 , “We used to dominate, Burger, M.H., and Long, K.R., 2018, Legislation 13 the United States did, the world’s USACE Pebble Project EIS Rhenium occurrences in the supply chain, not just because we site, pebbleprojecteis.com/ United States: U.S. Geological had the mines, but because we publiccomments/finaleiscomments Survey data release, doi. org/10.5066/F7KP81F2. developed the know how as to how 14 Global need for copper is

About Pebble Watch • www.pebblewatch.com Pebble Watch is an impartial, educational and fact-based resource for sharing information about the proposed Pebble project. It is a program of the Bristol Bay Native Corporation Land Department. Questions? Write [email protected].