CRIMINAL CAPITALI$M

Ex-JPMorgan gold trader faces final trial in spoofing saga

Bloomberg News | November 30, 2022 | 

Image courtesy of Flickr Commons.

Christopher Jordan was openly resentful of his colleagues on the JPMorgan Chase & Co. precious-metals desk for getting him fired. Now he’s facing a fraud trial just like them.


The former gold trader is accused of wire fraud and is set to appear in the same Chicago federal court where two former co-workers, Gregg Smith and Michael Nowak, were convicted in August. They were found guilty of manipulating markets with bogus “spoofing” orders at the world’s largest bullion bank. A third defendant, precious-metals salesman Jeffrey Ruffo, was acquitted.

Jordan’s trial starting Wednesday is part of a long crackdown by the US on market manipulation since the 2008 financial crisis. JPMorgan, the largest US bank, agreed to pay $920 million in 2020 to settle Justice Department spoofing allegations, by far the biggest fine by any financial institution.

Jim Benjamin, Jordan’s attorney, said he wasn’t immediately available for comment when contacted by email on Tuesday.

Jordan placed thousands of orders for precious metals futures contracts “with the intent to cancel those orders before execution,” according to the indictment. Those moves allegedly misled others about prices and demand for precious metals, prosecutors said.

From 2006 to 2009, Jordan worked on the JPMorgan precious-metals desk run by Nowak. Jordan was the main spot gold and silver trader, but that changed after the bank acquired Bear Stearns Cos. in 2008, court filings show. Smith joined the desk from Bear Stearns and was given the primary responsibility for trading gold, by far the most important of the precious-metals markets.
Front-running accusation

Jordan was instructed not to trade gold, especially when Smith was in the market, and was relegated to the less important job of trading silver, prosecutors said. Jordan told colleagues he resented the demotion and he continued to trade gold anyway, court records show. Smith later accused Jordan of front-running a silver order ahead of a client’s gold order.

“There were a number of occasions where both Smith and Jordan were in the market at the same time, cross trading with one another and stepping on each other’s feet while trading the same products,” according to the FBI agent’s report of an interview with a government witness.

After an internal investigation by JPMorgan, Jordan was fired and subsequently joined Credit Suisse Group AG in 2010. In chat messages to colleagues and friends, Jordan didn’t hide his animosity.

“i know u guys r close so whatever, but to me hes a snake,” Jordan wrote in April 2010 about Smith in one chat.

“Every dog has his day, he will get his trust me, caught him red handed accusing me of front running blah, that’s how the whole thing went down, but trust me he better stay far away from me, and Ruffo too for that matter,” Jordan wrote.

In another chat, he wrote, Smith “is the worst, worse than the old days, seriously felt ill sitting near him,. i felt dirty”

Nowak and Smith, who have yet to be sentenced, were convicted of fraud, spoofing and market manipulation. They were acquitted of violating the Racketeer Influenced and Corrupt Organizations Act, prompting prosecutors to drop the RICO charge against Jordan. He now faces a single charge of wire fraud affecting a financial institution, which carries a 30-year maximum penalty if convicted.

Jordan is being tried separately for his alleged spoofing in precious-metals markets after a judge determined in April that certain Covid protocols would prevent the court from hosting a trial with more than three defendants.

(By Joe Deaux and Tom Schoenberg)

Rising credit risks pose huge challenge for the worst polluters

Bloomberg News | November 30, 2022 | 

Power plant with smoke and dirty orange air. Stock image.

Credit risks keep creeping higher for the world’s biggest polluters.


In fact, the companies facing perhaps the largest climate crisis-related losses have more than twice as much rated debt as they did when the Paris Agreement was announced almost seven years ago, according to an analysis by Moody’s Investors Service.


To be more specific, the 16 industries considered to have “very high” or “high” environmental credit risks have about $4.3 trillion of rated debt (roughly equal to Germany’s gross domestic product), up from $2 trillion in November 2015, Moody’s reported. That equals about 5.1% of total debt outstanding, up from 3% in 2015.

Whether this upward trend continues “largely depends upon the direction of environmental regulations, policy and corporate actions,” said Ram Sri-Saravanapavaan, senior analyst and lead author of the report.

The numbers are consistent with the amount of funds that banks have served up for fossil-fuel producers via bond sales and loans. Since the start of 2016, banks have arranged about $4.5 trillion of financing for oil, gas and coal companies, data compiled by Bloomberg show.

Companies most susceptible to credit risks are those involved in the coal, chemicals, mining, and oil and gas industries, according to Moody’s. To put that in perspective, only coal mining and coal terminal operators were seen by the firm’s analysts as having “very high” environmental credit risks as recently as 2020.

The growing credit hazards are another sign of the huge global pressures that are building to address the warming planet. And the recently concluded United Nations climate summit in Egypt did little to reduce those concerns as national leaders focused on implementing existing, unfulfilled commitments — rather than adopting stricter global emissions targets.

“Aside from a broadly worded agreement to establish a loss and damage fund for poor countries most vulnerable to climate change, there was a lack of new major pledges,” the Moody’s analysts wrote after the COP27 ended.

For corporations, the realities have only worsened. Climate-related risks are increasing and companies that lack credible net-zero emissions plans will likely see their capital costs rise and demand for their goods and services decline.

Moody’s said the environmental categories considered most material to credit quality center around how companies are making the carbon transition and handling issues related to physical climate risks, water management, natural capital, and waste and pollution.

Analysts assign the “very high” risk label to sectors where the credit impact of environmental risks is already visible or likely to emerge soon, and also to issuers that have limited scope to manage these risks without making major structural, financial and policy adjustments in the near term.

According to Moody’s, three oil and gas sectors, as well as the chemicals, metals and mining groups, moved to “very high” risk this year from “high” risk in 2020. Integrated oil and gas companies, for example, will require substantial investment over the next several years to adapt their business models and transition a low-carbon economy.

For the chemicals industry, many of the companies use or create toxic feedstocks, intermediates and other hazardous materials during the production process. This leaves them vulnerable to legal liabilities and rising expenses from increasingly stringent regulators, Moody’s reported.

All of the data show “that environmental considerations are increasingly pressuring issuers’ credit profiles and will continue to do so,” Sri-Saravanapavaan said.

(By Tim Quinson)

AUSTRALIA
Goro nickel mine faces increased regulation after tailings leak

Bloomberg News | November 30, 2022 | 

Construction of tailings storage area at the Goro nickel mine, Kwe West Bassin, New Caledonia – Image courtesy of Wikimedia Commons.

Authorities in New Caledonia imposed additional regulations that could limit production in the future at the Goro nickel mine — one of the world’s largest deposits — after a recent waste-dam leak.


The company has dealt with the leak and significantly reduced water levels at the tailings dam, but additional measures are needed to prevent a repeat of the situation, according to a statement from the South Province, where the mine is located.

Local authorities issued a decree that imposes limits on production at the mine if the water levels in the waste dam exceed certain thresholds in the future, the province said, without providing further details.

The mine was forced to reduce output due to a “limited release of salt-laden liquid” after heavy rains in August, owner Prony Resources said in mid-November.

The consortium, made up of employees, commodities trader Trafigura, Agio Global, and the New Caledonian government, acquired the mine last year from Brazilian miner Vale SA.

Prony didn’t respond to requests for comment on the province’s latest statement or the current status of production at the mine.

(By Mathieu Dion)

Canada approves Marathon palladium mine environmental plan

Cecilia Jamasmie | December 1, 2022 | 

The Marathon palladium-copper project. Credit: Generation Mining

The government of Canada has approved Generation Mining’s (TSX: GENM) Marathon palladium-copper project’s environmental assessment, as part of a country-wide strategy that seeks to boost production of metals and minerals considered key for the energy transition towards renewables.


The proposed mine, located 10 km from Marathon, Ontario, is expected to produce an average of 245,000 ounces of palladium equivalent production annually over an estimated 13-year mine life.

Platinum group metals, which includes palladium, platinum and rhodium, are key materials used in n the manufacturing of catalytic converters, which remove harmful chemicals from car exhaust emissions.

Copper, the other metal to be produced at the mine, is a critical in the manufacturing of electric vehicles (EVs) and associated charging infrastructure. An EV battery requires 2.5 times more copper than a standard internal combustion engine vehicle.

Generation Mining said it would now proceed with obtaining any additional permits from federal offices, including Fisheries and Oceans as well as the department of Natural Resources.

“The minerals mined through this project, mainly palladium and copper, will play an important role in Canada’s transition to a low-carbon economy,” Environment and Climate Change Minister Steven Guilbeault said in a statement.

It is also expected to help build the supply chain for critical minerals and the automotive manufacturing industry in Ontario, the province said in a separate statement.
Hundreds of jobs

Building the Marathon mine will require the construction, operation, decommissioning and remediation of three open pits. It would also need an on-site ore processing facility, a 115 kV transmission line, an access road and a water management system among other infrastructure.

The processing plant will operate at about 9.2 million tonnes a year of ore to produce about 87,000 tonnes of copper concentrate annually. The concentrate will be delivered to a third-party facility for further downstream processing into refined critical minerals.

Site construction is anticipated to take 18 to 24 months and will employ around 900 workers. The operating workforce is estimated at 375 people, Ontario’s Minister of Mines George Pirie said.

Marathon is said to be North America’s largest undeveloped palladium project. 

(Image courtesy of Generation Mining.)

Based on current mineral reserves, Marathon is expected to deliver 1.91 million ounces of palladium, 467 million pounds of copper, 537,000 ounces of platinum, 151,000 ounces of gold and 2.82 million ounces of silver in payable metals.

Guilbeault, who is also responsible for the Impact Assessment Agency of Canada, noted that approving the Marathon project will also result in important benefits for members of Biigtigong Nishnaabeg First Nation.

Ontario’s mining industry generates more than C$11 billion in annual mineral production and supports 75,000 direct and indirect jobs.

The sector is the largest private employer of Indigenous peoples in Canada. In Ontario, First Nation workers made up 11% of the province’s direct mining jobs.

ESG

Investors with $30 trillion to push companies on human rights, social issues
Reuters | December 1, 2022 | 

El Soldado copper mine. (Image courtesy of Anglo American | Facebook.)

More than 220 investors managing $30 trillion have signed up to a plan to push companies over social issues and human rights, with an initial focus on firms in the mining, metals and renewables sectors.


Dubbed ‘Advance’, the coalition is the largest such stewardship initiative, said the organizer, the UN-backed Principles for Responsible Investment (PRI), in a statement on Thursday.

Each member of the group has signed a public statement “acknowledging the urgency and systemic nature of human rights issues” and the need to meet their own responsibilities under international standards, it added.

“From tackling global inequalities to preventing damage to the environment which can impact the health of people for generations, we hope Advance will drive positive outcomes for workers, communities, and society at large,” said PRI Chief Executive David Atkin.

Of those to sign up, 120 will take active roles leading or supporting engagement with an initial 40 companies, the PRI said. Unusually for such coalitions, details on which investor is speaking to which company will be transparent.

Among them, British firm Schroders and US investor Morgan Stanley Investment Management will engage with Anglo American; while Nomura Asset Management and Man Group will speak with Nippon Steel.

Further engagement with companies in other sectors, as well as policymakers, will take place across the next five years, the PRI said, adding that it would also sync up with other investor initiatives on the theme to avoid duplication of efforts.

Advance is a “highly effective means of mobilizing investors to encourage corporations to respect human rights and collaboratively work toward addressing social issues”, said Nomura AM’s Chief Investment Officer for Equities, Yuichi Murao.

(By Simon Jessop; Editing by Gareth Jones)

Rare earths ‘spill the tea’ on how deep magma eruptions initiate

Staff Writer | December 1, 2022 | 

The flood basalts in Dronning Maud Land, Antarctica, originate from exceptionally deep mantle source. (Image by Arto Luttinen, courtesy of the University of Helsinki).

Huge magma eruptions can initiate deeper below the earth’s surface than previously believed.


In a paper published in the Journal of Petrology, University of Helsinki and Aarhus University researchers explain that large magma eruptions have produced great floods of basalt lava on the continents during our planet’s history.

Conventionally, the largest flood basalt eruptions are thought to be possible only in regions where the continental tectonic plates are unusually thin, so that deep mantle material is able to rise close to the earth’s surface. In such low-pressure environments, the melting of hot mantle can generate very large amounts of magma.

But this notion is now being challenged.

“The idea that flood basalt eruptions generally require melting of mantle under low-pressure conditions is largely based on the trace element compositions of the erupted magmas,” Jussi Heinonen, lead author of the paper, said in a media statement.

According to Heinonen, the relative amounts of rare earth elements in many flood basalts point to magma formation in the presence of low-pressure mantle minerals.

But he and his colleagues became curious about the occurrence of most flood basalts in regions where the African and Antarctic tectonic plates are thick rather than thin.

“We found that many flood basalts that have rare earth element compositions — suggesting high-pressure formation conditions — are actually located in thick regions of the tectonic plates,” Arto Luttinen, co-author of the study, said.

The idea of an alternative hypothesis started forming after the team’s discovery of a type of flood basalt in Mozambique that shows compositional evidence for exceptionally high eruption temperatures.

These flood basalts made them consider the possibility that melting of exceptionally hot mantle could lead to the formation of high-pressure magmas with trace element features similar to those of low-pressure magmas.

Realistic simulation of mineral behaviour

The researchers decided to test their hypothesis using the geochemical modelling tool REEBOX PRO, which enables realistic simulation of the behaviour of minerals, melts and their trace element contents during mantle melting.

The simulations supported their hypothesis by predicting the total consumption of garnet, a diagnostic mineral of high-pressure conditions, when mantle melting occurred at the high temperatures indicated by the flood basalts.

Magmas formed at high pressure can thus chemically resemble low-pressure magmas when the mantle source is very hot. Furthermore, the results indicated the survival of garnet at relatively low pressures when a different kind of mantle source was selected for the modelling.

“Our results help us to understand the apparent controversy between the occurrences of southern African and Antarctic flood basalts and their trace element characteristics,” the authors pointed out.

“Most importantly, we show that voluminous flood basalts can form in regions of thick tectonic plates and that the trace element compositions of flood basalts are unreliable messengers of magma generation depths unless the influences of mantle temperature and composition are accounted for.”

In Peru’s hills, an artisanal miner boom frustrates Big Copper’s plans

Reuters | December 1, 2022 | 

Las Bambas is considered the world’s ninth-largest copper mine with an output of about 400,000 tonnes of the industrial metal per year. (Image courtesy of MMG.)

In the hills of Tapairihua in Peru’s Andes, Samuel Retamozo and other artisanal miners have found a rich seam of copper on their indigenous community’s land. Armed with temporary government permits, they started exploiting it earlier this year.


There’s just one problem – the seam is within the site of Southern Copper Corp’s planned $2.6 billion Los Chancas mine. One of the world’s biggest copper miners, it also has a permit to dig in the same area.

Grupo Mexico’s Southern Copper aims to start producing here in 2027 after decades of studies. The planned mine is crucial to the company’s goal of producing 1.8 million tonnes of copper annually by 2030.

But the rise of artisanal copper mining – driven by high global metal prices and sustained by a messy government permitting system – is threatening billions in new investments by Southern Copper and others in Peru, according to Reuters reviews of internal company reports, interviews with executives and a visit to Tapairihua to meet the miners.

Small-scale copper miners are now challenging Big Copper for territorial control of rich deposits of the red metal. Artisanal copper mining is creating much-needed income for impoverished Andean Peruvians even as it brings them into conflict with major miners, a rare and previously unreported trend in the world’s No. 2 copper producer.

“This used to happen with silver and gold, but now it’s affecting copper,” said Raul Jacob, Southern Copper’s chief financial officer, bemoaning what the company sees as the government’s poor handling of artisanal mining permits.

In Peru, artisanal mining permits have doubled to 80,000 since 2020, government records show. And copper is the new focus.

Southern Copper is not the only mining company in a stand-off with the miners. Chinese-owned MMG Ltd’s nearby Las Bambas copper mine is struggling to develop two new open pits because of artisanal miners who have settled on the same land. The company says its current pit is running out.

“Informal mining is entering lands granted to formal (mining) companies and threatening the development of large-scale projects,” a source close to MMG told Reuters.

While companies often call small-scale miners “informal” or “illegal,” what complicates the matter are two dueling authorizations – one for artisanal mining and another to hold the mining rights to a given area. Mining companies own the latter, known as concessions.

But since 2012 Peru has been granting artisanal mining permits on lands that overlap with concessions, giving the small-scale miners some legal protection, Reuters found after checking the geolocations of the permits and reviewing an internal document in which Peru’s mining ministry did the same.
Potential for more disputes

Disputes between mining firms and artisanal miners may only increase over time. Peru’s leftist administration presented a new framework for artisanal mining last week that declared artisanal mining is “as important” as big mining.

Southern Copper has asked the government to revoke all artisanal mining permits on its concession. About half have now been canceled, causing resentment in Tapairihua.

“We are going to defend ourselves. At the end of the day we are at home, and from home there is nowhere to go,” Retamozo, a mining engineer and president of the Tapairihua Mining Association, told Reuters.

While artisanal permits have existed since 2012, lower copper prices that decade meant they were not in demand. But copper has risen more than 60% since 2020 due to demand for electric vehicles.

The surge in artisanal copper mining is forcing the government to review its artisanal permitting system, a mechanism that was meant to be a temporary bridge toward formalization and intended mostly for gold miners.

“Our country is a mining country but we haven’t had until now a mining framework that gives a long-term view about small-scale mining,” Alberto Rojas, Peru’s top mining formalization official, told Reuters.

Rojas, however, suggested artisanal miners would lose in a dispute against concession holders.

“Where we have concessions we can’t have (artisanal mining permits),” Rojas said. “We can’t disavow the concessions that have already been granted.”
Diggers, trucks

On a recent day in Tapairihua, Reuters visited the artisanal mining operations, where dozens of wood and blue tarpaulin homes were erected, and tunnels supported with wooden beams burrowed into the steep rocky hillside.

In Peru’s Andes many feel the copper under the ground is a right, with mining dating back to the Incas and other cultures that existed before Spain’s colonization. Tapairihua looks down onto the river Antabamba, meaning “copper plain” in the Andean Quechua language.

Many of the miners are also local subsistence farmers who took up mining in search of income. Many declined to be named because they have been sued by Southern Copper over their mining activities.

To extract copper, they use dynamite to explode rock that they bring out in wheelbarrows and bags. Miners earn 80 soles ($20.61) a day, extracting enough rock to fill a handful of trucks a week, usually containing around 5% copper, though this level can rise as high as 18%.

Gherson Quintanilla arrived in Tapairihua earlier this year with a background in artisanal gold mining. He came because he heard copper was abundant and expertise was low.

“My goal is to extract up to two truckloads a day,” he told Reuters.

But artisanal copper mining is not always as small scale.

An internal Las Bambas presentation seen by Reuters estimated informal miners were blasting some 1,950 tonnes of rock per day, almost double their output a year ago.


The report said artisanal miners were using heavy machinery and diggers as well as pneumatic tools.

Overall, it estimated the government has issued 700 permits that overlap with Las Bambas’s concession,

But removing those miners is not straightforward. While Las Bambas and Southern Copper hold mining rights – which grants them access to the mineral underground – in most cases they have yet to buy the property rights to the surface terrain.

That limits their options because they cannot file an eviction claim on land they do not own.

The source close to Las Bambas said MMG recognized this difficulty and anticipated it would have to buy out the miners if it wants them to leave the site of its third pit, set to open in 2027 – if there are no delays.

At the site of its second pit, which was supposed to open this year, Las Bambas has filed eviction claims against the miners there because it already owns that particular parcel of land. The company estimates almost a dozen mining sites in the area. Reuters was unable to determine the number of miners working in them.
‘Fuel to the fire’

In May, Southern Copper sued Retamozo and other Tapairihua miners, saying their mining permits were non-compliant.

Weeks later a fire destroyed Southern Copper’s local headquarters, which is made up of tents, just minutes downhill from where the small-scale miners are operating. Burned-out cars remain there today.

Nobody was hurt in the fire and no arrests have been made. Peruvian authorities say the matter remains under investigation.

The miners have distanced themselves from the arson, though Retamozo acknowledged the lawsuits have angered them and that some individual members may have acted out of “resentment.”

The number of valid artisanal mining permits in Tapairihua has fallen from 100 to 32 since May, according to government records. An internal mining ministry document seen by Reuters shows that the process is under way to revoke the remaining permits.

Retamozo cautioned about what would happen if those were canceled.

“Canceling them would add fuel to the fire,” he said.

($1 = 3.8811 soles)

(By Marco Aquino and Marcelo Rochabrun; Editing by Adam Jourdan and Ross Colvin)

JPMorgan joins HSBC as vault custodian for top gold ETF

Bloomberg News | December 1, 2022 | 

Gold bullion. (Image by National Bank Of Ukraine, Flickr).

JPMorgan Chase & Co. will store gold held by the world’s biggest exchange-traded fund in its vaults, a major coup for the bank’s bullion business.


The lender will now act as an additional custodian for the SPDR Gold Trust, according to a statement from the World Gold Council, which launched the fund. Previously HSBC Holdings Plc had sole responsibility for holding the bullion.

It’s a major win for JPMorgan, which will now be paid to guard part of the fund’s more than $50 billion of bullion. Better known as GLD, it accounts for just under a third of all gold held by ETFs globally, according to an initial tally by Bloomberg.

JPMorgan and HSBC are the world’s top two bullion banks, with businesses spanning everything from trading futures with hedge funds to sending physical gold across the globe. Their vaults are key to underpinning the London and New York markets, and also act as custodians for the biggest ETFs.

The boom in demand for precious metals over the coronavirus pandemic saw both banks reap a windfall from storing metal for growing ETFs. The surge in their holdings even prompted JPMorgan to open a new silver vault in London. Vaulting typically accounts for about a tenth of the profits that banks earn in precious metals, according to Coalition Greenwich.

This year, Federal Reserve tightening triggered outflows from ETFs, a major driver of gold’s drop from near a record level in March. Much of it was flown to Asia to meet huge demand there, though holdings remain elevated compared with pre-pandemic levels.

Gold held by GLD will be stored in vaults located in London, New York and Zurich, according to the World Gold Council’s statement. Before gold was only held in HSBC’s London vault.

(By Eddie Spence, with assistance from Jack Farchy)

Orezone Gold’s Bomboré mine in Burkina Faso enters commercial production

Staff Writer | December 1, 2022 | 

Construction of the Bomboré gold mine as of July 2022. Credit: Orezone Gold

Orezone Gold (TSX: ORE) announced Thursday that its Bomboré gold mine in Burkina Faso has now entered commercial production, having achieved 30 consecutive days of mill throughput exceeding 70% of nominal nameplate capacity of 14,250 tonnes per day and recovery reaching design levels of 90%.


“Commercial production at Bomboré is a significant milestone and transforms the company to producer status. We congratulate the Bomboré team for their excellent execution in achieving this goal,” Orezone CEO Patrick Downey said in a news release.

With this announcement, Bomboré now becomes the 16th mine to go into production in Burkina Faso. Management plans to provide an annual guidance for Bomboré in January 2023.

Located 85 km east of the capital city of Ouagadougou, the Bomboré property is host to a large free-digging oxide resources underlain by higher-grade sulphide resources. Orezone owns a 90% interest in the mine project, with the government of Burkina Faso retaining a 10% carried interest.

A feasibility study published in 2019 outlined a long-life, low-cost open-pit gold mine for Bomboré, highlighted by an after-tax net present value (at 5% discount rate) of $361 million and internal rate of return of 43.8% with a 2.5-year payback.

Orezone has only been focused on mining the Phase I near-surface oxides and processing them as a carbon-in-leach operation at a planned annual throughput of 5.2 million tonnes. However, the company believes that Bomboré’s underlying sulphide resource could support a substantially larger Phase II expansion.

A 77,000-metre infill and expansion drill program is currently underway, and once completed, an updated mineral resource and feasibility study will be issued as part of this Phase II expansion. Orezone expects these studies to be completed during the first half of 2023, and a production decision will follow.

Shares of Orezone Gold jumped 6.3% by 12:15 p.m. in Toronto, placing its market capitalization at C$451.5 million ($335m).

Biden moves to bar mining waste in Alaska, blocking Pebble mine

Bloomberg News | December 1, 2022 | 

Bristol Bay, Alaska. Credit: Wikimedia Commons

The Biden administration proposed a ban on waste disposal that would thwart a long-planned gold and copper mine in Alaska, citing the potential harm to the area’s thriving sockeye salmon industry.


The Environmental Protection Agency issued a formal recommendation Thursday to bar the disposal of mining waste in Bristol Bay, which hosts the world’s largest harvest of the fish. If finalized, that would effectively block efforts by Pebble Limited Partnership to extract gold, copper and molybdenum from southwestern Alaska.

Pebble, a subsidiary of publicly-traded Northern Dynasty Minerals Ltd., has been seeking to mine in the area for more than two decades.

The move represents the penultimate step in a Clean Water Act process that EPA Region 10 Administrator Casey Sixkiller said would “help protect salmon fishery areas that support world-class commercial and recreational fisheries and that have sustained Alaska Native communities for thousands of years.”

The proposed Pebble Mine has been a source of contention for years. Under former President Barack Obama, the EPA proposed restrictions that would rule out the project. But the agency later withdrew the proposed controls after a legal challenge. A federal judge last year sent the issue back to the EPA for reconsideration.

“The Biden administration has the opportunity to follow through on its commitments by finalizing comprehensive, durable protections for our region as soon as possible,” said Alannah Hurley, executive director for the United Tribes of Bristol Bay, in an emailed statement.

Conservationists have lobbied the Biden administration to definitively kill the mine by wielding the EPA’s broad authority under the Clean Water Act to veto projects involving the discharge of dredged material.

Under the recommended determination advanced Thursday, the EPA is proposing to prohibit certain waters in the Bristol Bay region as disposal sites for the discharge of dredged or fill material associated with Pebble Limited Partnership’s mine plan as well as any future proposals to construct and operate a mine tapping the same deposit.

Each year about 30 million sockeye salmon are caught in Bristol Bay. They sell at higher prices than other salmon, supporting local fisheries, processors and sports fishing companies.

(By Jennifer A. Dlouhy)

Pebble CEO criticizes US EPA veto suggestion

Reuters | December 2, 2022 | 

The area where Pebble mine would be built, 320 km southwest of Anchorage, within the Bristol Bay watershed. (Image courtesy of Northern Dynasty Minerals)

The top boss of a proposed Alaskan mine, which has been through a roller coaster of regulations for the past 15 years, called the recommendation that the US environmental agency should veto the project a “massive regulatory overreach”.


Mining waste from the Pebble Mine project, which has one of the world’s largest copper and gold deposits, would threaten Alaska’s Bristol Bay watershed, home to important salmon species including the world’s largest sockeye salmon fisheries that have supported critical wildlife and a multibillion-dollar industry, according to the Environmental Protection Agency (EPA).


Late Thursday, the EPA’s Pacific Northwest region, which includes Alaska, recommended the project should be vetoed.

In response, Pebble Limited Partnership chief executive John Shively on Friday called the EPA’s suggestion “wildly speculative” and “not supported by any defensible data”, adding the agency was acting outside the authority given to it by Congress.

The EPA did not immediately respond to a Reuters request for comment.

Pebble Limited Partnership is the main subsidiary of Canada-based Northern Dynasty Minerals Ltd.

(By Ruhi Soni; Editing by Krishna Chandra Eluri)

Will Big Oil Jump At The Opportunity To Drill More In Alaska?

By Haley Zaremba - Dec 03, 2022

• In May, the Biden administration canceled three major oil and gas auctions in the Cook Inlet.
• 
  
• This week, the Interior Department announced the planned auction of more than 958,000 acres in Alaska’s Cook Inlet.
• 
  
• It seems uncertain whether the Cook Inlet leases included in the December 30th auction will ever actually result in drilling.
• 
  
• Environmental groups: drilling in the allotted waters would harm a number of species.

It seems like the Inflation Reduction Act does just about everything – everything, that is, but curbing inflation. In order to pass the Act the Biden administration had to appeal to a broad base of supporters, from staunch climate advocates to hardcore coal country representatives. In particular, the Act had to appeal to holdout West Virginia Senator Joe Manchin. Though Manchin is a democrat he represents a constituency that depends on fossil fuels for their livelihoods and prioritizes coal country jobs over climate measures. So while the Act includes huge incentives for clean technologies, it also promised a massive oil and gas drilling auction. Now, the time has come for the federal government to make good on that promise. This week, the Interior Department announced the planned auction of more than 958,000 acres  – an area larger than the entire state of Rhode Island – in Alaska’s Cook Inlet next month. The sale includes a stretch of federal waters starting around Kalgin Island all the way to Augustine Island in the south. Department estimates say that the area being auctioned has the potential to produce nearly 200 million barrels of crude and 300 billion cubic feet of natural gas over the lifetime of the lease sales. 

Set to be held on December 30, the lease sale is actually the renewal of one of several previously canceled auctions. In May, the Biden administration canceled three major oil and gas auctions in the Cook Inlet ("due to lack of industry interest in leasing in the area") and the Gulf of Mexico (due to "conflicting court rulings"). Such leases have been the subject of serious legal battles, with some rulings forcing cancellations due to insufficient consideration of the auctions’ impact on climate change, and other rulings ordering the resumption of such auctions.

While citing “lack of industry interest in leasing in the area" as a reason to cancel Cook Inlet auctions might be a convenient simplification of a larger context of political and geopolitical complications, there is also a core truth to the federal government’s statements. A controversial sale of oil and gas leases in the Arctic National Wildlife Refuge under the Trump administration fell far short of its revenue goals. 

After huge publicity leading up to the highly contested sale, the auction was a dud. Not one major energy company made a bid. The government sold only half of the tracts on offer – 11 tracts of 22 – and the vast majority of the winning bids were submitted by a development corporation owned by the state of Alaska. That corporation, The Alaska Industrial Development and Export Authority, bought their 400,000 acres at the minimum bid, and has never drilled a well in its history. According to reporting from the Anchorage Daily News, the results of the sale were a “bad start” to reach anticipated revenues. “It had estimated the lease sales would bring in $1.8 billion over a decade, to be split between the Alaska and federal governments,” the report stated. “The money raised [in the auction] fell far short.”

The message seems to be that while oil and gas leases still hold major political sway, they have lost their luster in the eyes of the private sector. An opinion piece written for the Houston Chronicle at the time of last year’s “failed auction,” argued that the shocking lack of interest from anyone other than a state-owned economic development corporation signaled that the oil itself was no longer needed, but oil jobs are desperately missed. 

That may no longer be the case. The context could not be more different this time around. Last year energy demand was low and reports of peak oil were high in the wake of global Covid-19 quarantines. This year, we’re in the midst of a “global energy crisis of unprecedented depth and complexity,” in the words of the International Energy Agency (IEA). The huge cutback of Russian oil and gas on the global market has left a huge vacuum and governments and consumers alike are paying the price, while Big Oil receives the windfall. 

While there may be some fresh incentive for new oil and gas drilling, however, Big Oil doesn’t think that this fossil fuel renaissance is here to stay. In fact, OPEC is anticipating major decreases in demand in the coming year(s) and has responded with major production cuts to buoy oil prices. Indeed, even now it seems uncertain whether the Cook Inlet leases included in the December 30th auction will ever actually result in drilling. Already, the announcement of the sale has drawn vocal scorn from environmental groups. One such group, the Center for Biological Diversity, told Bloomberg that drilling in the allotted waters would harm a number of species, including the Cook Inlet beluga whale, one of the most endangered whale populations in the world. 

It’s up in the air the way that the lease will play out, and the results will be very telling about private sector attitudes over which way the winds are blowing for Big Oil.