coeur alaskan mine

Despite uncertainty, Kensington moves forward

By Tim Bradner
Alaska Journal of Commerce
Web posted Sunday, April 15, 2007

Coeur Alaska Inc. is continuing construction at the $238 million Kensington gold mine project 45 miles north of Juneau despite its loss at the Ninth Circuit Court of Appeals on a lawsuit brought by Southeast Alaska conservation groups.

Meanwhile, neither the company nor Southeast Alaska Conservation Council, the lead plaintiff in the litigation, would comment on the status of talks on a possible resolution to the dispute. In a March 17 press release, Coeur chairman and chief executive officer Dennis Wheeler said, “the plaintiffs expressed the hope of working with Coeur on possible solutions to this issue, and separate and apart from any possible appeal of the court order we intend to take them up on that offer.”

Coeur spokesman Scott Lamb said April 6 he could not say anything more than what Wheeler said March 17. Russell Heath, SEACC's executive director, said he also could not comment on any talks between his organization and Coeur.

Heath did say SEACC is willing to work with the company. “The court has said that the tailings disposal system they propose is illegal, so they have to go to a different method of disposal, one that is legal. We would like to work with Coeur to find a site for this facility that is least damaging to the environment,” Heath said.

Meanwhile, construction activity at the mine is continuing. “The March 16 ruling did not affect the work ongoing at the mine except in the area of the tailings facility,” which was contested in the lawsuit, Lamb said. About 400 construction workers are now employed on the Kensington project, he said.

Coeur will continue drilling and development of mine tunnels and will complete the mill and other facilities, Lamb said.

On March 16, the Ninth Circuit ruled against Coeur on a request to allow construction of a diversion ditch to protect a temporary dam built at Lower Slate Lake, the site of the tailings facility.

In the ruling, the appeals court also indicated its intention to rule against the U.S. Army Corps of Engineers and Coeur on the main Kensington issue before it, an appeal by the conservation groups of an Alaska U.S. District Court decision that upheld a federal permit allowing discharge of tailings from the mine into Lower Slate Lake.

The appeals court decision is a big setback for Coeur because the company will now have to redesign the mine to place tailings in a storage facility built on land, as the company had once proposed in a 1997 plan that was approved by government agencies and not contested by conservation groups.

Coeur abandoned the on-land disposal site due to cost considerations after gold prices dropped in the late 1990s. The dry-stack tailings storage system proposed then would have made the mine uneconomic, Coeur said at the time. A less costly alternative was developed that involved use of a small natural lake near the mine, Lower Slate Lake, to store tailings.

After a new round of environmental studies, federal and state agencies approved the alternative disposal method. Previously, EPA rules had prohibited discharges from mines into public waters, requiring mines to develop their operations as “zero-discharge.” A 1982 EPA regulation set out new source performance standards for metals mines using the froth-flotation mill process, which is also proposed for use at Kensington.

A 2002 rule change by the federal agency, however, changed the definition of “fill”, in rules it uses to administer the Clean Water Act to conform with the definition used by the Corps of Engineers in its Section 404 dredge and fill permit program. The change was enacted to eliminate confusion between the agencies.

The permit for Kensington, however, stretched the new definition to include mine tailings, according to Tom Waldo, attorney for Earth Justice, an environmental law firm working with SEACC on the Kensington suit.

SEACC contested the federal permits, arguing that mine tailings, which are toxic, should not be defined as fill and placed in public waters. Kensington's discharges have high levels of suspended solids, a pH content equal to that of ammonia and also contain some amounts of heavy metals.

Waldo said the lawsuit was a test case because if the Corps and Coeur had been able to prevail with the Kensington permit, it would have allowed many other mines to have their tailings classified as fill and discharged into water bodies.

The proper place for the tailings are in well-designed, dry-stack onshore storage facilities, Waldo said.

Tim Bradner can be reached at [email protected]