December 2, 2024

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Mining adds a $2.5 billion boost to Alaska

Mining adds a .5 billion boost to Alaska

A new study carried out by Alaska-based McKinley Research Group found that mining and minerals exploration contributed over $2.5 billion to Alaska’s economy during 2023.

“The mining industry continues its role as a powerhouse of Alaska’s economy, partnering with local communities to drive significant economic benefits and support thousands of Alaska jobs in 2023 while adhering to the highest safety and environmental standards,” according to the Alaska Miners Association (AMA), which commissioned the study alongside Alaska Metals Mines (AMM).

McKinley Research Group’s economic benefits report shows that Alaska’s mining sector is continuing a trend of growth that can trace its roots back to the formation of the AMA 85 years ago on Aug. 4.

“We are proud of the impact the mining industry has on Alaska, not just last year but going back 85 years to when AMA was founded,” said Deantha Skibinski, AMA’s executive director. “The data shows mining continues to pack an economic punch, providing good jobs for Alaskans and investing in communities statewide.”

This economic punch includes more than $1 billion in wages to residents from over 90 Alaska communities, more than $1 billion of goods and services from Alaskan businesses, approximately $235 million paid to Alaska Native corporations, nearly $190 million paid into state and local government coffers, and $5.7 million donated to Alaskan charities during 2023.

Given the global push for more reliable and sustainable sources of minerals and metals found across the breadth of Alaska, the mining sector’s growth as an economic powerhouse in the state is poised to continue well into the 21st century.

A growing sector in Alaska

The U.S. Geological Survey calculates that Alaska mines produced roughly $4.1 billion worth of gold, silver, zinc, lead, sand, gravel, and rock during 2023.

When you add in the coal produced for in-state power plants, the total value of all the materials extracted from the six large mines and numerous family-owned placer gold mines operating in Alaska during 2023 comes in at around $4.25 billion.

Considering that Alaska is home to several deposits enriched with the cobalt, copper, gallium, graphite, nickel, platinum group metals, silver, and other minerals and metals critical to the global energy transition, the importance of mining to not only Alaska’s economy but global supply chains is expected to grow in the coming years.

The future growth is indicated by the $742 million invested in mineral exploration and mine development during 2023. While this spending itself contributes to Alaska’s economy, the payoff in terms of jobs, taxes, and other economic benefits is much higher when this work leads to operating mines.

Manh Choh, Alaska’s newest mine, poured its first bar of gold on July 8. This milestone event lifted the total number of large producing mines in the state to seven.

Manh Choh is being followed by six advance-staged mineral exploration projects poised to further bolster Alaska’s economy while providing the minerals and metals critical to America’s economy and security.

Mining adds a .5 billion boost to Alaska

McKinley Research Group

$2.2 billion in paychecks and business

Mining’s benefits to Alaska’s economy begin with the healthy paychecks that workers bring home to more than 90 villages, towns, and cities spanning the breadth of the Far North State.

During 2023, the 5,900 employees at mines and mineral exploration projects in Alaska brought home roughly $695 million in wages. This works out to be an average wage of $122,568 per year for people working directly in the sector, nearly twice the $68,278 average wage across all Alaska industries last year.

These six-figure wages have a multiplier effect when they are spent on goods and services from businesses in the villages, towns, and cities across the state.

When you add in the indirect jobs, or workers who provide services to the mining companies but are not directly employed by them, the number of jobs supported by Alaska mines and mineral exploration projects jumps to 11,800, and the payroll totals $1.1 billion.

At the same time, Alaska mining projects spent approximately $1.1 billion on purchasing goods and services from more than 450 Alaska businesses last year.

“Alaska’s mines work hard to buy local and hire local,” said Alaska Metal Mines Executive Director Karen Matthias. “They also invest in university and vocational programs to train Alaskans for these high-paying jobs both now and in the future.”

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McKinley Research Group

More than $1.1 billion was paid in wages to employees directly or indirectly working in Alaska’s mining industry during 2023.

$235 million to Alaska Native corps

While six-figure paychecks and doing business with Alaskans were by far mining’s largest contributions to the state’s economy last year, the industry’s payments to Alaska Native corporations have an even wider reach in terms of geography and populace.

According to data collected by McKinley Research, Alaska Native Claims Settlement Act (ANCSA) corporations received $235 million in royalty or similar payments from mining during 2023.

NANA Corp., the ANCSA regional corporation for Northwest Alaska, was the recipient of approximately $195 million of these funds due to the net proceeds from zinc and other metals recovered from the Red Dog Mine on its lands.

Most of the money NANA receives from Red Dog royalties, however, does not stay in Northwest Alaska but is distributed to every corner of the state due to the Section 7(i) and 7(j) provisions of ANCSA.

Section 7(i) requires regional corporations to distribute 70% of net revenues from resource development on ANCSA lands among all 12 regional corporations. In turn, Section 7(j) requires that half of the 7(i) payments be distributed to village corporations within each of the ANCSA regions.

This means that roughly $117 million of NANA’s 2023 proceeds from Red Dog were distributed to the other 11 ANCSA Regional corporations, half of which reached more than 200 village corporations across the entire depth and breadth of Alaska.

The “leveling effect” of sections 7(i) and 7(j) creates economic activity that otherwise would not occur in recipient regions and provides village corporations with vital funding.

In total, the mining industry has paid approximately $3.2 billion to ANCSA corporations since 1989.

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McKinley Research Group

Alaska’s mining industry makes significant annual payments to Alaska Native corporations.

$186 million in state, local taxes

Mining companies are also a significant source of state revenue and a major financial contributor to local governments.

During 2023, Alaska’s mining industry paid nearly $136 million into state coffers. This includes:

$69 million in mining licenses, taxes, rents, and royalties.

$30 million to the Alaska Industrial Development and Export Authority for the use of state-owned facilities, such as the DeLong Mountain Regional Transportation System, for delivering metal concentrates from the Red Dog Mine.

$15 million to the Alaska Railroad Corporation for moving coal, sand, and gravel.

$6 million in corporate income tax.

$17 million in material sales, other fees, and taxes.

While less than what is paid to the state, the $49.8 million in mining-related taxes paid to local governments last year is much more impactful to the bottom line of these municipalities.

In addition to the royalty payments made to NANA, the Red Dog Mine is the sole “taxpayer” in the Northwest Arctic Borough, a municipality that blankets the same 40,750 square miles of Northwest Alaska.

Teck Resources Ltd., operator of the Red Dog Mine, contributed $34.8 million in payment-in-lieu-of-taxes (PILT) to the borough during 2023.

In Interior Alaska, Kinross Gold Corp.’s Fort Knox Mine paid $10.6 million in property taxes to the Fairbanks North Star Borough. This makes the gold operation the single largest taxpayer in the borough.

The City and Borough of Juneau in Southeast Alaska, which hosts Hecla Mining Company’s Greens Creek silver mine and Coeur Mining Inc.’s Kensington gold mine, received $4.2 million in taxes from mining last year.

In addition to contributing to the local governments, Alaska’s mining industry donated $5.7 million to 250 nonprofit charitable organizations, plus $1.1 million to civic and trade organizations last year in the communities where they operate.

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McKinley Research Group

Alaska’s mining donated $6.8 million to charitable, civic, and trade organizations last year.

All told, Alaska’s mines and mineral exploration project contributed approximately $2.6 billion to support governments, businesses, charities, and families across the Great Land.

“Alaska’s mining sector is a driving force for local economies throughout the state,” said Matthias.

The Economic Benefits of Alaska’s Mining Industry 2023 report can be found on the Alaska Miners Association and Alaska Metal Mines websites.

Author Bio

Shane Lasley, Publisher

Author photo

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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