Pebble Partner Withdrawal Is Major Blow: Who Could The Next Partner Be?

Leading miner Anglo American PLC’s (LON:AAL) decision on Monday to withdraw from the $4.7 billion proposed copper and gold Pebble mine in Alaska has energized Pebble critics, who hailed the move as a crippling blow to developers.

But the news leaves open the real question of who, if anyone, will emerge as a replacement Pebble partner for 2014.

“It’s a serious setback for the project,” Natural Resources Defense Council attorney Joel Reynolds, who leads the anti-Pebble mine campaign for the environmental group, told International Business Times.

“Northern Dynasty Minerals has never been the money for the project,” he continued. “Their job was to characterize the site and then sell it to one of the major partners – Mitsubishi, Rio Tinto, or Anglo American.”

“Rio Tinto hasn’t shown any interest in expanding its interest in this project,” he said. “Anglo’s withdrawal is going to cause them to think even harder about whether this is the kind of investment they want to make.”

Mining giant Rio Tinto Limited (ASX:RIO) is touted by some as one potential business partner, since the Australian company has already invested $200 million in the project, and holds 19 percent of Northern Dynasty’s shares.

Mitsubishi Corp. (TYO:8058) withdrew in February 2011, after buying an initial 11 percent stake, said Reynolds.

Pebble Partnership CEO John Shively declined to comment on Anglo American’s withdrawal or the damage to the Pebble mine’s prospects to IBTimes. He said it was too early to gauge how the Pebble mine’s permitting timetable might be affected.

Northern Dynasty Minerals Ltd. (TOR:NDM) CEO Ron Thiessen told the Wall Street Journal, however, that development permits for the Pebble project will likely be filed by the end of 2013.

One scenario could be that Northern Dynasty files development permits, a move sorely anticipated for years by advocates and critics alike, without a business partner, and then announces a new business partner in 2014.

Since 2007, Anglo American has spent about $540 million on Pebble, which it won’t get back. That doesn’t include a $300 million impairment charge it will suffer for the withdrawal, according to a statement from the company.

Anglo American CEO Mark Cutifani said: “Despite our belief that Pebble is a deposit of rare magnitude and quality, we have taken the decision to withdraw following a thorough assessment of Anglo American’s extensive pipeline of long-dated project options. Our focus has been to prioritize capital to projects with the highest value and lowest risks within our portfolio.”

Anglo American has promised to cut or shelve about half of its $17 billion project pipeline, reported Reuters, to boost its profits and measure up to mining rivals.

Shively told IBTimes that the Canadian Northern Dynasty paid for much of the exploration costs, while London-based Anglo American agreed to contribute more capital once the project moved beyond the pre-approval phase.

Anglo had earlier committed $1.5 billion in total to the project, according to the Journal.

A Northern Dynasty fact sheet puts spending by the partnership at $680 million as of February 2013, meaning that Anglo American has contributed well over two-thirds of the project’s research, exploration, and public relations costs over the past six years.

Bristol Bay, Alaska, fishermen, whose livelihoods would be affected by the mine, said Monday that three quarters of almost 900,000 public comments submitted to the Environmental Protection Agency backed a critical EPA assessment of mining in the region.

“Even without incident, the mine’s footprint would destroy the spawning habitat for the nearly 40 million salmon who return to Bristol Bay each year,” said a statement from Commercial Fishermen for Bristol Bay.

They estimate that the Bristol Bay region supplies about 50 percent of the world’s sockeye salmon, and sustains 14,000 jobs in a $1.5 billion industry. They say all that is under threat from the Pebble mine.

Broader national interest in the project has also skyrocketed, as indicated by the 900,000 public comments, hundreds of thousands of which were from non-Alaskan residents. Celebrities like Robert Redford have penned editorials and the EPA’s new chief visited the mine site last month.

Lawmakers have also taken an interest lately. Sen. David Vitter, R-La., accused the EPA of biased regulatory procedures on Monday, a charge that has been made before.

The key EPA draft assessment is expected to be finalized by the end of this year. That looks to be the next milestone in this environmental and political saga, barring a quick announcement of a new business partner in 2013.

Here’s a link to conference call by Northern Dynasty executives on their decision from this morning.