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The Promise of Power Potential Economic Development in S.E. Alaska 1972
9 oh lawn THE PROMISE OF F POWER Potential Economic Development in S.E. Alaska TABLE OF CONTENTS Chapter Page Teo ENTRODUCT.LON o ncbigsias ao + 600%: 0p vin eo 8 di pletaioiw sie binioins SUC alain Save hinieclens ] PART I DEVELOPMENTAL GOALS II, THE NATURAL ENVIRONME BLEMS AND ECONOMIC GOALS... 4 POWER DEVELOPMENT POTENTIALS III. POWER PRODUCTION AND POTENTIALS IN SOUTHEAST ALASKA......-+++. 14 IV. THE cCUOMS F ROMER INTGISTYE ATR ay isis oc aus aaa 29 PART III MINERAL DEVELOPMENT POTENTIALS V. THE MINERAL INDUSTRY 0 ae MMR Se eager es 43 VI. THE aa eee ae 71 VII. CONCLUSIONS 4 +s+sesesssesesensssageererseesens ee eae 78 SELECTED stun uti ae Bie est iaas fet ed rh ae CHAPTER I INTRODUCTION OBJECTIVE The Promise of Power, Potential Economic Development in Southeast Alaska, is a descriptive analysis concerning the development potential of the region's power and mineral resources in the light of developmental goals. Southeast Alaska's hydroelectric potential is estimated to total over two million kilowatts exclusive of the proposed International Yukon- Taiya Hydroelectric Project, but power is still marketed throughout the area from small isolated diesel and hydroelectric plants. Although it is reasonable to assume that the region's mineral wealth 1s no greater nor less than anywhere else along the Pacific Mountain Cordillera that reaches from Alaska to South America, the Southeas t's mineral industry operates on a small scale and its major production is in barite, sand and gravel. The objective of this ahedy is to determine whether the production of reasonably priced electrical power through incremental power facility improvements and the eventual development of the proposed International Yukon-Taiya Hydroelectric Project would improve the prospects for mining and power intensive mineral industry location in Southeast Alaska. METHODOLOGY AND OVERVIEW PART I - DEVELOPMENTAL GOALS Part I is based on the problem-solution methodology and discusses the problem of protecting the natural environment of Southeast Alaska, the region's seasonal and perpetual unemployment problems and the projected social and economic solution offered by mining and industrial mineral development. PART II - POWER DEVELOPMENT POTENTIALS The methodology of Part II rests on a before and after analysis. Present power developments are described and viewed in comparison with potential power developments for Southeast Alaska. The definition, history and economics of power intensive industries are separately compared and analyzed. PART III - MINERAL DEVELOPMENT POTENTIALS Part III provides a before and after analysis of past mineral production in the Southeast, the present state of the industry, known mineral resources and potential for mineral resource development. Governmental exploration activities are analyzed in terms of how these might contribute to the location development and mining of mineral products. PART I DEVELOPMENTAL GOALS CHAPTER II THE NATURAL ENVIRONMENT, SOCIAL PROBLEMS AND ECONOMIC GOALS INTRODUCTION The environment refers to the total relationship of land, water, air, other earth resources and people. In this context, the author contends that economic development can take place in such a manner so as to create conditions whereby man and nature can exist in productive harmony. This chapter suggests economic development, with full consideration of the natural environment, is a solution to perpetual and seasonal unemployment problems in Southeast Alaska. THE NATURAL ENVIRONMENT Southeast Alaska, an area encompassing 40,000 square miles of land and water almost the size of New York State, extends along the North Pacific Coast from the St. Elias Mountains on the north to Dixon Entrance on the south. The region is bordered on the north by the Yukon Territory and British Columbia, on the south and east by British Columbia, and on the west by the Pacific Ocean. Including more than 1,000 islands, the main body of the region is 400 miles long and 100 to 150 miles wide. A narrow strip northwest of Mount Fairweather is 100 miles long and 25 to 50 miles wide. Southeastern Alaska is somewhat reminiscent of the fabled fjords of Norway; the area is made up of rugged and heavily forested mountains, ranging in elevation from 5,000 to 10,000 feet and rising almost directly from the water. In the Fairweather Range, Mt. Fairweather rises to a height of 15,300 eet. Mountain massifs hold vast ice fields from which glaciers and 4 CHAPTER II THE NATURAL ENVIRONMENT, SOCIAL PROBLEMS AND ECONOMIC GOALS INTRODUCTION The environment refers to the total relationship of land, water, air, other earth resources and people. In this context, the author contends that economic development can take place in such a manner so as to create conditions whereby man and nature can exist in productive harmony. This chapter suggests economic development, with full consideration of the natural environment, is a solution to perpetual and seasonal unemployment problems in Southeast Alaska. THE NATURAL ENVIRONMENT Southeast Alaska, an area encompassing 40,000 square miles of land and water almost the size of New York State, extends along the North Pacific Coast from the St. Elias Mountains on the north to Dixon Entrance on the south. The region is bordered on the north by the Yukon Territory and British Columbia, on the south and east by British Columbia, and on the west by the Pacific Ocean. Including more than 1,000 islands ,- the main body of the region is 400 miles long and 100 to 150 miles wide. A narrow strip northwest of Mount Fairweather is 100 miles long and 25 to 50 miles wide. Southeastern Alaska is somewhat reminiscent of the fabled fjords of Norway; the area is made up of rugged and heavily forested mountains, ranging in elevation from 5,000 to 10,000 feet and rising almost directly from the water, In the Fairweather Range, Mt. Fairweather rises to a height of 15,300 eet. Mountain massifs hold vast ice fields from which glaciers and 4 hitehorse YUKON NRITISH COLUMBIA DIXON ENTRANCE °/7 50 ° 50 100 | rr Prince Ruper Scale in miles * S Modified from USGS map MAP I Index map of Southeastern Alaska. waterways cut sharply throughout the area. The region enjoys a mild climate with high rainfall. Dense spruce, hemlock and cedar forests blanket the slopes to timberline at about 3,000 feet, while many species of fauna populate the forests and waters. The scenic grandeur of this country is perhaps the most spectacular of any area in North America. In protecting this natural environment, the policy of the United States is "to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans ."! During the last decade, considerable attention has focused on the Taiya Valley stretching north of Skagway to the Chilkoot Pass. Recognizing the historic importance of the Gold Rush Trail, the southeastern agency of the Division of Lands has re-established the trail, produced annual improvements, and constructed shelter cabins at strategic locations along the trail. The State activity precipitated considerable public interest and inspired the U.S. Park Service to attempt to take over the land and establish an International Klondike Historic Park. Secondly, the Taiya Valley offers considerable potential in a proposed International Power Project. Low cost power, in quantities exceeding that produced at Grand Coulee, could be produced by tapping the Upper Yukon watershed, into the Valley. This potential power development is popularly referred to as the Yukon-Taiya project. Ise National Environmental Policy Act of 1969, Title I, Sec. 101 (a). The proposed International Yukon-Taiya Hydroelectric Project could be a major incentive for the industrial development of the region. The National Park Service has found, by preliminary studies, that the proposed International Klondike Gold Rush Historic Park could be compatible with the proposed International Yukon-Taiya Hydroelectric Project, despite overlap of the project areas. The National Park Service pronouncement reads as follows: The Yukon-Taiya Project would not drastically affect the historical park concept and with the exchange of planning and programing data, the Alaska Power Administration and the National Park Service can assure that the Taiya Valley can be utilized for historic preservation and its recreational potential and its benefit as a power project realized. It is understood that during the construction of the Yukon- Taiya Project, there will be disturbance of the scene. However, restoration of the scene can be accomplished as part of the power project. The need for channelizing the lower Taiya River and the establishment of transmission facilities is recognized and would not drastically affect the historic or recreational resources, SOCIAL PROBLEMS Perpetual unemployment and the high rate of seasonal unemployment are two of Southeast Alaska's major social problems. Table I illustrates the extremely high rates o* unemployment in Southeast Alaska on a seasonal basis. As shown, the unemployment rate fell from a high of 12.0 percent in January to a low of 4.6 percent in September during 1970. Historically, the region's new industrial developments in the 2u, S., Department of the Interior, National Park Service, Klondike Gold Rush, National Historic Park, Alaska, 1971, p. 12. TABLE I SOUTHEAST ALASKAN ANNUAL AND MONTHLY UNEMPLOYMENT STATISTICS, 19703 Month Unemployment Rate January 12.0% February 11.6 March 9.8 April 7.9 May Ta June 7.4 July 6.1 August 4.9 September 4.6 October 6.6 November 8.6 December 10.6 Annual 7.9 3state of Alaska, Department of Labor, Workforce Estimates, Alaska, by Industry and Area, 1970. forest products industry have not solved chronic unemployment problems through direct employment. If new industrial developments are to solve the perpetual unemployment problem, efforts must be made to train and hire those he etofore unemployed, particularly the Alaskan native population. A common misconception concerning the economy cf Southeast Alaska i+ that seasonality of employment is inherently rooted in climatol: gical change. An examination of weather data indicates the conjunct on of events may be coincidental rather than causal. Table II reports average temperatures during January and July for Southeast Alaskan cities (Juneau and Ketchikan) and five northern U.S. cities (New York, Minneapolis, Great Falls, Chicago and Seattle). The statistics show that the Alaskan cities were cooler in the summer and about the same temperature in the winter as the five northern U.S. cities. Seasonality of employment, not inherently rooted in the climate, stems from some of the basic types of industry around which the Alaskan economy revolves: construction, logging, fishing and tourism. A leveling out of the seasonal employment differential will require the broadening of the region's industrial base to include new industries that can operate on an annual basis. ECONOMIC GOALS A growing mining and power intensive mineral industry in Southeast Alaska, encouraged by reasonably priced power, could aid in solving the region's perpetual and seasonal unemployment problems. TABLE II COMPARATIVE CLIMATIC CONDITIONS SELECTED CITIES BY TEMPERATURE AND RANK? City Ketchiken Juneau New York City Minneapolis Great Falls Chicago Seattle AVERAGE TEMPERATURES - DEGREES January July Temperature an emperature an 34.4 25.1 33.2 12.4 22.1 26.0 38.3 (2) (5) (3) (7) (6) (4) (1) 57.8 55.3 76.7 133 69.4 7856 64.9 (6) (7) (1) (3) (4) (2) (5) 4y, S., Department of Commerce, National Weather Service, Climatalogical Data, Annual Summary, 1969. 10 Mitsubishi International Corporation, represented by the Iron Ore Company of Alaska, has shown new interest in developing the iron ore at Klukwan near Haines. Another proposal has come from Marcona, Inc., to develop the iron deposits at Port Snettisham, 28 air miles southeast of Juneau. Mitsubishi estimates that its proposal would mean a capital investment of $123 million and as many as 900 employees. The life of the project, based on developing only the alluvial fan deposit at Klukwan, has been estimated at 20 years .° This development would mear an annual increase of $6,40 :,000 in personal income, $3,000,000 in annual retail sales, the creation of new housing possibly valued as high as $28,800,000 and an annual increase of personal state and local tax receipts of $1,100,000 in the Haines-Klukwan area. This and similar developments of industrial mining and power intensive mineral industries would help alleviate the region's perpetual and seasonal unemployment problem. SMitsubishi International Corporation, Application for Alaska Industrial Tax Credit, May 22, 1970, (updated as appropriate). 1 SUMMARY Southeastern Alaska's natural environment, including its world famous Inside Passage and its scenic grandeur make it among the most spectacularly beautiful areas in North America. The region's hydroelectric potential is estimated to total over two million kilowatts, exclusive of the proposed International Yukon-Taiya Hydroelectric Project. The construction of this project can be compatible with the proposed Klondike Gold Rush National Historic Park. Commercial or potentially commercial deposits of antimony, barite, copper, iron, lead, molybdenum, nickel, uranium and zinc are found in the region. The development of these resources through industrial mining and power intensive mineral industries would help alleviate the region's persistent and seasonal unemployment problems. National policy now requires balanced developmental goals so that the protection of the natural environment is weighed against the solution of social and economic problems. Through striking a policy balance, man and nature can seek to exist in productive harmony. The proposed International Yukon-Taiya Project should be compatibly constructed with the proposed Klondike Gold Rush National Historic Park and the joint development of these projects can represent the highest and best use of their overlapping project areas. With this power, industrial mining operations and power intensive mineral industry developments should be planned, constructed and operated with balanced concern for the natural environment. Industry assurances should also be sought that industrial developments will alleviate perpetual and seasonal unemployment problems. 12 CHAPTER III POWER PRODUCTION AND POTENTIALS IN SOUTHEAST ALASKA INTRODUCTION Power is presently marketed throughout Southeast Alaska from small diesel and hydroelectric plants. Average Alaskan power costs are high, but they are declining at a time when average power costs are increasing nationally. A suggested pattern of probable power development in Southeast Alaska includes the completion of the Snettisham project, a series of interties and the eventual development of the proposed Inter- national Yukon-Taiya Hydroelectric Project. Such a pattern of development could reduce power costs throughout the region and encourage the location of mining and power intensive mineral industries. PRESENT POWER INSTALLATIONS Southeast Alaska is served by many small isolated diesel and hydroelectric plants. The thermal plants are generally a base load operation with the hydroelectric plants providing peaking power. Older plants are placed in reserve. Utility installations have an installed capacity of 31,600 kilowatts in hydroelectric power and 39,175 kilowatts in diesel power or a total installed capacity of 70,775 kilowatts as shown by Table III. Many of the hydroelectric plants are downgraded during the winter months because of reduced runoff. 14 Industrial power rates in the major cities range from 12.5 to 50 mills depending on the city and energy required as shown by Table IV. The region's high power rates have caused some major new industrial developments to install their own more economical non-utility power plants as shown by Table V. Pulp mills enjoy a unique advantage by producing power at about 6 mills per kilowatt-hour incident to the steam from the pulp producing process. The following summaries describe individual community installations: HAINES The Haines Power and Light Company operates a 1,100 kilowatt diesel plant. JUNEAU-D9OUGLAS The Alaska Electric Light and Power Company (AEL&P) and the Glacier Highway Electric Association serve the Juneau-Douglas area. Presently, the Glacier Highway Electric Association is a wholesale customer of the AEL&P Company. (It will become a preference customer of the Alaska Power Administration upon completion of the Snettisham Project.) The AEL&P Company provides the Juneau-Douglas area with about 1,600 kilowatts of hydroelectric power and 13,272 kilowatts of internal combustion power. At the same time, AEL&P purchases an additional 8,400 kilowatts of hydroelectric power from the Alaska-Juneau Mining Company. In 1962 the Army Corp of Engineers was authorized by Congress to construct the Snettisham Power Project on the tide flat of the Speel Arm at Stevens Passage, approximately 28 air miles southeast of Juneau. Scheduled to be completed in December 1972, the $53 million Snettisham Project is the first federal hydroelectric project in Southeast Alaska. It will reduce rates in the Juneau-Douglas area by providing wholesale power 15 at 11-14 mills per kilowatt-hour. At peak development, the installed capacity of the plant will be 70,000 kilowatts . The project will be operated by the Alaska Power Administration when completed and will eventually furnish the Juneau-Douglas area with 328,000,000 kilowatt-hours annually, over twice the entire present annual power output for the Southeast region. KETCHIKAN The Ketchikan Public Utilities currently operates two hydro plants: the Beaver Falls Plant and the Ketchikan Lakes Plant. The current name plate capacity is 10,200 kilowatts of hydroelectric power and 11,873 kilowatts of internal combustion power. METLAKATLA The community of Metlakatla the Coast Guard Station, the Annette Island Airport and adjacent residential areas are served by the Metlakatla Power and Light Company, a Rural Electric Association borrower. A 3,000 kilowatt hydroelectric plant and a 1,500 kilowatt diesel plant are operated by the company. PETERSBURG The Petersburg Light and Power Municipality, which operates a diesel electric plant within the city of Petersburg and a remote controlled hydroelectric plant 16 miles from the city at Crystal Lake, serves Petersburg 6u.s., Department of the Interior, Alaska Power Administration, First Annual Report 1968, (1969), pp. 10-11, updated. 16 and its surrounding area. The installed capacity of the plants are 2,500 kilowatts and 1,600 kilowatts respectively. SITKA The Sitka Public Utilities serves the city of Sitka, the Alaska Native Service at Mt. Edgecumbe and surrounding rural areas. The two plants in operation are a hydroelectric plant at Blue Lake with a total installed capacity of 6,000 kilowatts and a diesel plant with an installed capacity of 3,100 kilowatts. SKAGWAY Skagway is served by the Alaska Power and Telephone Company. It operates units with a total installed capacity of 1,295 kilowatts from diesel generation and 300 kilowatts from hydroelectric generation. WRANGELL The Wrangell Municipal Light Department, operates a five unit e’ectric plant with an installed diesel capacity of 2,750 kilowatts. Four acditional generators are scheduled to be installed to bring total capacity to 7,750 kw in late 1972. 17 TABLE III UTILITY INSTALLATIONS IN SOUTHEAST ALASKA? Installed Kilowatts Power Company and Location Hydro@ Diesel Total A.J. Industries , Juneau? 8,400 8,400 Alaska Elec. Lgt. & Pwr. Co., Juneau 1,600 l3,e72 14,872 Alaska Pwr. & Telephone Co., Craig 210 210 Alaska Pwr. & Telephone Co., Hydaburg 100 100 Alaska Pwr. & Telephone Co., Skagway 300 1,295 1,595 Haines Lgt. & Pwr. Co., Haines 1,100 1,100 Pelican Utilities Co., Pelican 500 300 800 Tongass Pwr. & Light Co., Hyderd 0 Yakutat Power Co., Yakutat 625 625 Private Total 10,800 16,902 27,702 Hoonah, City of, Hoonah 550 550 Ketchikan Public Util., Ketchikan 10,200 11,873 22,073 Metlakatla Indian Com., Metlakatla 3,000 1,500 4,500 Petersburg, City of Petersburg 1,600 2,500 4,100 Sitka Public Utilities, Sitka 6,000 3,100 9,100 Wrangell, City of, Wrangell 25750 25750 Municipal Total 20,800 225273 43,073 Total Southeast Region 31,600 39,175 70,775 7U.S, Federal Power Commission, Alaska Power Survey, 1969, p. 77. (Updated by Alaska Power Administration statistics and direct contact with power producers ) amMany of the hydroelectric plants are downgraded during the winter months. ba.J. Industries, an industrial establishment, sells output of his hydroelectric plants to Alaska Electric Light and Power Co. CThe Glacier Highway Electric Assn. Cooperative purchases its requirements from Alaska Electric Light & Power. : dpurchases all requirements from British Columbia Electric Co., at Steward, B.C., Canada. 18 TABLE IV INDUSTRIAL POWER RATES, SOUTHEAST ALAS KA® Juneau (Alaska Electric Light and Power Company) Rate: 27.5 mills per kilowatt-hour (kwh) Surcharge: 3% in Juneau Ketchikan Public Utilities Rate: 50 mills per kwh first 60 kwh per kw demand 20 mills per kwh next 20,000 kwh 12.5 mills per kwh all additional kwh Petersburg Municipal Light & Power Company Rate: 50 mills per kwh first 1,000 kwh 30 mills per kwh next 8,000 kwh 25 mills per kwh all additional kwh Sitka Public Utilities Rate: (For customers having measured demands of not less than 30 kwh) Demand Charge: $1.75 per kwh demand Energy Charge: 30 mills per kwh first 30 kwh per kwh demand 20 mills per kwh next 250 kwh per kwh demand 17.5 mills per kwh all additional kwh Wrangell Municipal Light Plant Rate: Demand Charge: $1.65 per kw demand or major fraction thereof Energy Charge: 44 mills per kwh first 500 kwh 33 mills per kwh next 500 kwh 24 mills per kwh all additional kwh 8u.s., Federal Power Commission, National Electric Rate Book, 1970, pp. 1-7. 19 TABLE V SOUTHEAST REGION NON-UTILITY INSTALLATIONS? Organization Location National Defense FAA, AIR Various remote sites ACR, ACS, ACW eee Subtotal Other BIA uu EDU,JOM Alaska Lumber Sitka & Pulp Ketchikan Spruce Ketchikan Mills Ketchikan Pulp Co. Ketchikan Subtotal Total Non-Utilities Southeast 9Alaska Power Survey, op. cit., Alaska Power Administration Statistics). 20 Installed Kilowatts Hydro Steam 24,750.0 900.0 20 ,000.0 45 650.0 45 ,650.0 Diesel 1,619.7 750.0 1,674.0 5,748.7 Total 1,619.7 924.0 0. 24,750.0 900.0 20 ,750.0 47 ,324.0 51,398.7 (partially updated, July, 1971, by a POTENTIAL POWER DEVELOPMENTS Alaska covers one-fifth of the nation's land, but possesses 36 percent of the nation's undeveloped water power. Hydroelectric power can be supplied to the Southeast region at a lower cost than power generated through alternative means of production and the comparative cost advantage of hydroelectric power is expected to improve. !9 Projections indicate that in 15-20 years the proposed Inter- national Yukon-Taiya Hydroelectric Project could supply on site reasonably priced power at 4.5 - 6 mills per kilowatt-hour. The project could thereby become an effective aid in the economic development of Southeast Alaska. The Southeastern Alaska hydroelectric potential (for units in excess of 5,000 kilowatts installed capacity) is estimated to total over two million kilowatts. Most sites are small, involving \0,000 to 70,000 kilowatts. The installed hydroelectric capacity of Southeastern Alaska is presently about 31,600 kilowatts,!! l0philip Sporn, Developments In Nuclear Power Economics, Januar 1968 - December 1969, A report prepared forthe Joint Cownittes or Atawo Energy, Congress of the United States, 1969. Nus., Congress , Senate, Subcommittee on Irrigation and Reclamation, Hearings, Hydroelectric Power Requirements and Water Resource Development in Taste’ seth Congress, 2nd Session, 1961, p. 280. 21 In addition to the proposed International Yukon-Taiya Hydro- electric Project, other favorable potential hydroelectric projects have been identified in Southeast Alaska: Chilkat, Lake Dorothy, Snettisham (Speel Division) , Sweetheart Falls Creek, Houghton, Scenery Creek, Thomas Bay (Cascade Creek), Tyee Creek, Spur, Rudyerd, Punchbowl Creek, Red, Lake Grace, Swan Lake (Lower Swan Lake), Maksoutof River and Takatz Creek, !2 The rough topography of Southeast Alaska, which increases intertie costs, and the lack of a large market demand has tended to prevent the creation of large unit hydroelectric plants. Overhead power lines are possible, but difficult to construct and maintain in this topography. A DEVELOPMENT PATTERN In creating a development pattern for Southeast power, two factors should be taken into consideration: (1) future power demands and (2) intertie networks. Future power demands are projected on Graph I. The projected demand in 1990 is based on normal utility loads exclusive of major new industrial demands. The difference between the present power production and energy demands in 1990 could be satisfied in whole or in part from the 12yes:, Department of the Interior, Alaska Natural Resources and the Rampart Project, 1967, Table 23. 22 International Yukon-Taiya Hydroelectric Project. Secondly, the advantage of power pooling transmission in Southeastern Alaska can best be accomplished through interties. It will be some years before a single area can support the substantial kilowatt output of a large unit hydroelectric project, but power demand in individual areas is expected to grow rapidly. Full utilization of large unit hydroelectric development, within a short period of time can therefore be achieved through interties. 23 Demands (1,000 Kilowatts) Power Peak 2000 ut ae yews x 1960 GRAPH I UPPER YUKON RIVER STUDY SOUTHEAST ALASKA PEAK POWER DEMANDS !3 NOTE: rojected peo demands are formal utility loads exclusive of mayor new [industrial dempnds. ‘otal Southeas| HISTORIGAL PROJECTE! 1965 1970 1915 1980 13y.5., Department of the Interior, Alaska Power Administration, Alask Statistics 1960-1969, February 1971, p. through 1967. 1985 TS. Alaska: juneau-Douglas Ketchikan Area Sitka. Areo. Metlakaila Area. Ares Fang Ares jaines- Skagupy 1990 1995 2000 2005 2010 (The chart is a reproduction based on historica 205 a Electric Power ata 2000 £000 400 Too 60d soo &w 2 ar 09d A pattern of probable development to meet predicted power demands in Southeastern Alaska could comprise the following phases: PHASE I (1) Completion and operation of the Snettisham Project. PHASE II (1) Interconnection of Juneau-Sitka, Petersburg-Wrangell-Kake, and Ketchikan-Metlakatla between 1975 and 1985. (2) Possible interconnection with Canada. PHASE III Interconnection with the Yukon-Taiya Project to the Haines-Skagway area before 1990. PHASE I Interconnection with a U.S. nationwide power system and/or the British Columbia Hydro system. The development pattern will be considered in che light of four areas: (1) Juneau-Sitka, (2) Petersburg-Wrangell-Kake, (3) Ketchikan- Metlakatla, and (4) Haines-Skagway. JUNEAU-SITKA In the early years of the Snettisham Project, which is scheduled to begin operation in December 1972, a Juneau-Sitka intertie could be constructed. The Alaska Power Administration has indicated that Snettisham will have considerable excess power in the early years. PETERSBURG-WRANGELL -KAKE Due to the high investment cost of small hydroelectric projects 25 in Alaska, it is unlikely that the Petersburg-Wrangell-Kake areas can be intertied through small hydro projects in the immediate future. Instead, the immediate program is likely to utilize diesel or gas turbine generation. A viable system for Petersburg and Wrangell might be an intertie with Snettisham, Ketchikan or Canada. KETCHIKAN-METLAKATLA A power source for the Ketchikan-Metlakatla areas could come through an intertie with the B.C. Hydro system in Canada. B.C. Hydro extends from the Bennett Dam on the Peace River in British Columbia to the lower mainland. Additional lines are being constructed which tap this system at Prince George and extend it westward 105 miles to Prince Rupert. The lines will later be extended northward to Alice Arm. Through approximately 120 miles of overhead lines, or a 90 mile direct current submarine cable, either of these terminals could be interconnected with Ketchikan. !4 HAINES-SKAGWAY The proposed International Yukon-Taiya Hydroelectric Project, which would lie at a point where British Columbia, Yukon and Alaska meet, could serve the Haines-Skagway area. Transmission of about 700,000 kilowatts to Alaskan areas would be attractively economical for use in satisfying projected utility loads exclusive of major new industrial demands by 1990 assuming the project receives the green light in the next five years. l4njaska Power Survey, op. cit., pp. 76-78. (Parts of the data — have been substantially revised by the author and Alaska Power Administration Statistics.) 26 Additionally, if Yukon-Taiya power is interconnected witt the B.C. Hydro transmission system, surplus power might be sold to the U.S. west coast power system. On December 19, 1968 the United States and Canada exchanged notes that provided for "an exchange of data and views in respect of the storage of waters of the Upper Yukon Watershed, and diversion thereof in the region for the mutual benefit of Canada and the United States." A study relating to the potential market for power has been completed and discussions are proceeding as to further studies. The Yukon-Taiya Project has been described as follows: The Yukon-Taiya project proposes a slight raising of the lakes on the 2,000-2,500-foot Yukon Plateau by construc- tion of a dam at Miles Canyon just upstream from Whitehorse. This plan would back water into Lindeman Lake and then through the Coast Range, which marks the Alaska-Canada boundary. The 17-mile tunnel would deliver the water into Alaska for the 2,000-foot drop into the Yukon-Taiya under- ground powerhouse which would discharge into the, dower reaches of the Taiya River near Skagway, Alaska. Present diesel and hydroelectric plants produce energy at an industrial cost range of 12.5 to 50 mills per kilowatt hour in the larger Southeast Alaskan cities. Under the Yukon-Taiya proposal, energy would be produced at a cost of 4.5-6 mills per kilowatt-hour, exclusive of transmission costs, The project could begin operation with an initial strength of 700,000 kilowatts and eventually reach 4,000,000 kilowatts. With a greater power production than the Grand Coulee Dam Complex, the project By.s:, Department of the Interior, Alaska Pow:r Administration, 3rd Annual Report, 1970, p. 11. 27 would ultimately reach a total output of 25 billion kilowatt-hours per year, !6 SUMMARY Many major industrial developments in Southeast Alaska have heretofore created their own nonutility generating systems. These private nonutility systems have resulted either because of a lack of sufficient power or because of the high cost of power produced by small isolated diesel and hydroelectric public utility systems. The marketing of reasonably priced power (4-15 mills per kilowatt-hour) to the region could enhance the prospects for industrial developments without the individual company burden of developing nonutility generating systems. In this regard the development of a grid system and eventual ly the proposed International Yukon-Taiya Hydroelectric Project could be an encouragement toward establishing mining and power intensive mineral industry throughout the region. loys. , Department of the Interior, Alaska Pow2r Administration, First Annual Report, 1968, p. 16. 28 CHAPTER IV THE ECONOMICS OF POWER INTENSIVE INDUSTRY INTRODUCTION The purpose of examining electroprocess economics is to explore the influence of reasonably priced hydroelectric power on the location decisions of mining and power intensive mineral industries. This inquiry is applicable to Southeast Alaska, an area enriched with a hydroelectric potential of two million kilowatts and the prospects of reasonably priced hydroelectric power from the proposed International Yukon-Taiya Project. Past experiences and previous studies indicate that reasonably priced hydroelectric power can be an important factor in the location decisions of power intensive mineral industries. A significant proposal that could encourage industrial mineral development, the proposed Inter- national Yukon-Taiya Hydroelectric Project, would be located near the deep water ports of Skagway and Haines with access to the mineralized areas of the Yukon and Southeast Alaska. With little or no transmission cost, the Yukon-Taiya Project could serve the processing of ores in the Haines-Skagway area. This chapter describes (1) the nature of the power intensive industry, (2) the historical influence of low and reasonably priced hydroelectric power on the location decisions of power intensive industry and (3) the degree to which power is a critical factor in the power intensive production of metals. 29 POWER INTENSIVE INDUSTRY An industry which utilizes a large quantity of electric power in the production of its product is defined by the term "electroprocess." Many materials could not be produced without the use of the power intensive electric furnace, the electrolytic cell and the electron beam furnace. There are three major types of power intensive electroprocesses utilized in the production of the minerals: (1) electrothermic, (2) electrolytic and (3) electrostatic or electromagnetic separation. Electrothermic processes are those in which the electrocurrent used for producing metallurgical reactions is used solely for its heating effect. Electrolytic deposition refers to the processes whereby a metal is produced from a solution containing its salts by the passage of an electric current through the solution. In electrorefining, the operation is carried out in an electrolytic cell in which metal is deposited upon the cathode or starting sheet. Electrostatic or electromagnetic separation is a method of separating materials by dropping feed material between two electrodes, positive and negative, rotating in opposite directions. Non-repel led materials drop in a vertical plane; susceptible materials are deposited in a forward position somewhat removed from the vertical plane. !7 Tse, Department of the Interior, A Dictionary of Mining, Mineral, and Related Terms, 1967, pp. 378-381. 30 HISTORICAL PERSPECTIVE Low cost and reasonably priced hydroelectric power has historically influenced the locational decisions of power intensive indus- tries. Developments within the United States of reasonably priced power by the Tennessee Valley Authority, in the Southeast, and low cost power by the Bonneville Power Administration, in the Northwest, have led to the attraction of power intensive industries to areas which lacked both local raw materials or nearby markets. Similar developments have occurred in Canada, Norway and other countries. UNITED STATES In the Tennessee Valley, aluminum smelting consumes more than five billion kilowatt-hours of energy per year, ferroalloy industries consume over one billion kilowatt-hours annually and all other electro- chemical plants consume about five billion kilowatt-hours per year, '8 Together these plants use about three-fourths of the industrial power of the TVA region. Additionally, the United States Atomic Energy Commission, which maintains processing plants in the area, utilizes as much energy as the total demand of all other TVA customers combined, however, this ratio has been declining. !9 18h van Bloch and Samuel Moment, The Aluminum Industry of the Pacific Northwest, Bonneville Power Administration, Portland, Oregon, » lable 28, uy 1s., Congress , Senate, Committee on Public dorks, The Market for Rampart Power, Yukon River, Alaska, 87th Congress, 2nd Session, 1962, p. . 31 The Bonneville Power Administration supplies electric energy to a number of power intensive industries. Bonneville energy now supplies aluminum smelters which produce one-third of the U. S. capacity, phosphorous plants which produce twenty-six percent of the U. S. capacity, ferroalloy plants which produce six and one-half percent of the total U. S. production, and silicon carbide plants which produce over fifty percent of the U. S. capacity.29» 21, 22 Similar statistics exist for a number of other products which require large quantities of electric energy for their production processes. CANADA Large Canadian hydroelectric power projects, supplying low-cost power, have had an influence on the location decisions of industry in that country. Of all the Canadian electroprocess industries, Canada's aluminum industry is by far the most important. On a world basis, Canada ranks second as a producer of primary aluminum. All of her aluminum plants, which are located at tidewater, have easy access to raw materials supplies, shipping and distant markets .23 20tvan Bloch and Samuel Moment, op. cit., Table 2. 21 Norman S. Peterson, The Phosphate Rock Industry of the Pacific Northwest, Bonneville Power Administration, Portland, Oregon, 1964, Table 19. 22¢ury A. Kingston and Robert A. Miller, Alloy Metals Outlook in the Pacific Northwest States, Bonneville Power Administration, Portland, Oregon, 1966, Table 4. 23canada, Dominion of Statistics, Canada Yearbook, 1967, Ottawa, p. 565. 32 <- Canada is the fourth largest producer of magnesium in the world. Canadian plants account for 65 percent and 90 percent, res- pectively, of the total combined U. S.-Canadian production of silicon carbide and fused aluminum oxide. Additionally, Canada is a significant producer of phosphate fertilizers, ferroalloys, electrolytic zinc and other electro-metals and chemicals. NORWAY Norway is rich in low cost hydroelectric resources, but lacks native industrial raw materials. Yet in 1960, forty-four percent of the country's thirty-one billion kilowatt-hours of electrical energy were consumed by electroprocess industries 24 Primarily, the raw materials were imported and their refined products were exported. Norway is the world's fourth largest producer of aluminum and the country ranks second 25 Other electro- only to Germany in the production of silicon carbide. Process industries, based on low cost hydro power, include copper, nickel and zinc refining, pig iron, steel production, and magne: ium refining. Norway also produces nitrates by nitrogen fixation. 24y s., Department of the Interior, Rampart Project, Alaska, Report, Juneau, Alaska, Jan. 1965, p. 505. 251 van Bloch and Samuel Moment, op. cit., Table 5. 33 POWER AS A CRITICAL PRODUCTION FACTOR Present day industry could not survive without electricity. Industry requires communication systems, electronics equipment, lighting fixtures, heating facilities, production machinery and electroprocesses. Despite its universal use the cost of electricity in relation to other costs of production is usually quite small. Table VI, a study compiled in neighboring Canada, lists major industries and the percentage of the value of their product that is expended on power. An analysis of the table indicates that only four industrial groups - paper and allied products, primary metal, nonmetallic minerals and chemical products - have expenditures for power as high as from two to a little over six percent of the value of their product. Energy costs can have a significant effect on profits. In Table VI] a comparison of column two, pre-tax profits as a percentage of sales, and column three, costs of fuel and electricity as a percentage of value of output, indicates that a reduction in power costs can significantly increase profits even for industries with modest energy requirements. In order to complete a meaningful cost analysis, it is necessary to isolate the particular mineral industries in which power plays a major role. For the purpose of this study those minerals most likely to be produced in Southeastern Alaska have been included in the analysis. Table VI, which illustrates the importance of power for quantitative production, presents a range of kilowatts per ton of output for a number of minerals. The range extends from a higt for ferronickel, 34 TABLE VI COSTS OF FUEL AND ELECTRICITY AS A PERCENTAGE OF THE VALUE OF SHIPMENTS OF GOODS Industry Foods & Beverages Tobacco Products Rubber Leather Textiles Knitting Clothing Wood Furniture & Fixtures Paper & Allied Ind. Printing & Publishing Primary Metals Metal Fabricating Machinery Transportation Equipment Electrical Products Non-metallic minerals Petroleum & Coal Prod. Chemical & Chem. Prod. Miscellaneous Mfg. 26 canada, Dominion Bureau of Statistics, Canada Tables 8 & 9, pp. 681-695. 27, CANADA, 1964 Pre-tax Profits as a Percentage of Sales2/ 5.20 5.71 2.16 4.28 97 20 «75 -07 -02 A 95 30 APNMwWNOOO 7.59 5.85 3 OWN MANUFACTURE, Cost of Fuel and Electricity as a Percentage of Value of Output 1 ] 1 34% 37 -48 -76 -48 76 333 -98 97 -50 72 ol7 14 -83 -69 81 -06 -88 54 -96 Yearbook 1967, Canada, Dominion Bureau of Statistics, Business Finance Division, Corporate Profits, 4th Quarter, 1967, Cat. No. 61-003. Data refer to 1964 totals. 35 ELECTRIC ENERGY REQUIREMENTS PER TON 9B OUTPUT TABLE VII AND VALUE OF OUTPUT BY PRODUCT Load Product Factor Electric Steel 65-70% Iron Metal 85+% Ferronickel 85+% Electric Copper 90+% 28rvan Bloch, 600 KWH 2,200 KWH 24,000 KWH 660 KWH Electric Energy Required Per Ton of Output Value of Output Per Ton 80.00 66.00 927-75 720.00 Northern Electric Power Developments for Ind i Portland, Oregon, 1967, ndustries, Mining and Electroprocess pp. 3-5. 36 which requires 24,000 kilowatts of power for each ton produced, to electric- furnace steel which requires only 600 kilowatts per ton. Graph II, however, illustrates the point which is most important - the relationship of the cost of energy to the value of the finished product. Input-output relationships on Graph II show the percentage of the value of output expended on power for a range of two to eight mills per kilowatt-hours. The int»rpretation of the graph is relatively easy; the graph becomes steeper as the production process becomes more vulnerable to power costs. Historically, 1-3 mills per kilowatt-hour was the range of low cost power. However, reasonably priced power is considered 4-15 mills per kilowatt-hour, a range that might be achieved in Southeast Alaska. One note of caution, the values illustrated by the graph are subject to changes in technology. Each product must be individually analyzed to determine the influence of energy costs as a factor influencing plant locations. FERROALL.OYS Usually ferroalloys are produced as by-products of metal smelting and chemical manufacturing operations and quantities produced in individual plants are small. A recent survey of U. S. plants indicates that most ferroalloys are produced in the eastern part of the United States where power costs are moderately high. At 8 mills, ferronickel uses energy which accounts for about 23 percent of the value of the metal. Given the mineral resources of the Southeast Alaska region, ferronickel appears to be a bright possibility. 37 GRAPH II ELECTRIC ENERGY COSTS AS A PERCENT OF OUTPUT VALUE29 32 Percentage Share 39 28 26 24 22 20 18 16 14 12 10 Electric Steel Electric Cooper Mills/kwh COPPER Of all the metals mentioned, the copper industry is the least sensitive to power cost variations. Even at 8 mills, energy costs account for only 0.8 percent of the value of the finished metal. IRON Two qualities characterize the Southeast iron ore: (1) titanium content and (2) good beneficiation. Historically, the two percent titanium content of Southeast Alaskan iron deposits has dampened interest in the ore. The processes of the past could neither cope with titanium nor remove it from the ore economically. However, recent technological advances, particularly in Japan, have lessened the titanium problem and it is possible to produce concentrates with the titanium in the iron, Secondly, the iron ore appears to have favorable beneficiating characteristics. In order to produce metal from the raw ore it is necessary to provide a 60 percent concentrate of iron. The concentrate is electro-magnetically separated from the ore after it is ground and passed through a mesh screen. Hypothetically, due to differences in the chemical structure of different iron ores, it is possible that a 60 percent iron concentrate could be produced more economically from ore containing 20 percent iron than from ore with a higher percentage of iron content. Metallurgical tests have demonstrated that the Southeast iron ore has the favorable beneficiation qualities which allow it to separate easily. 29Gunter Schramm, The Effects of Low Cost Hydro Power on Industrial Location, A report to the Second Annual Meeting of the Canadian Economics Association, Calgary, Alberta, June 7, 1968, p. 22. 39 As illustrated by Graph II, iron metal processing is very sensitive to the cost of power whereas electric-furnace steel processing is considerably less sensitive. Production from the Snettisham iron deposit will require crushing, passing the ore through a 60 to 80 mesh screen (60% passing a 325 mesh) and a final magnetic separation to produce a 65 percent concentrate. At Snettisham, where the raw ore contains 15-20 percent iron, it will take eleven million tons of ore to produce two million tons at 65 percent concentrate. The Klukwan ore can be initially magnetically separated after crushing and passing through a 35 mesh screen. Then the separated ore passes a 60 to 80 mesh screen (66% passing a 200 mesh) and further magnetic separation provides a 65 percent concentrate. It is estimated that a crushing, grinding and concentrating complex at Klukwan would require about 100 megawatts of power. A thermal nonutility system could produce power at that site for about 8.8 mills per kilowatt-hour. SUMMARY Power is a basic requisite of industrial development and is required at all stages of industrialization. It is unlikely, even in terms of long range planning, that low cost power (1-3 mills per kilowatt-hour) will be supplied to the region nor is Southeast Alaska likely to enjoy a power intensive mineral industry that would import its raw materials and export its refined products. Nevertheless, the availability of reasonably priced power (4-15 mills per kilowatt-hour) from a project such as Yukon-Taiya would be 40 helpful and perhaps in some cases crucial in attracting mining and power intensive mineral industries to the region. With little or no transmission cost Yukon-Taiya could serve mining and power intensive mineral industries in the Haines-Skagway area at a cost of 4.5 to 6 mills per kilowatt- hour. Among these industries is included the electromagnetic separation process that would be utilized in the event the Klukwan or Port Snettisham iron deposits were placed under production. Although Yukon-Taiya power would be reasonably priced, rather than low cost, it is likely that it could be a factor in industrial feasibility decisions. Historical precedent shows that the location of power itself tends to influence industrial decisions so long as the power is available within a reasonable price range. In the United States the development of the Tennessee Valley Authority and subsequent industrial location serves as an example of historical precedent. 4] CHAPTER V THE MINERAL INDUSTRY OF SOUTHEAST ALASKA INDUSTRIAL DEVELOPMENT 1867 - 1905 The record of mining in Southeastern Alaska began in 1867. Charles V. Baranovich, a Russian trader, recorded a copper deposit near New Kasaan, Prince of Wales Island, and gold was also discovered in the Windham Bay-Powers Creek area in that year. Placer gold valued at $40 ,000 came from mining in the Windham vicinity in 1870-1871. The next mining activity followed the 1880 discovery of gold at Juneau by Joseph Juneau and Richard Harris. Placer mining and hardrock prospecting followed quickly and the Treadwell mine, across the channel from Juneau, at Douglas, began operations in 1882. Years later the Alaska Juneau Mining Company successfully consolidated the small mining properties on the Juneau side of the channel and developed the Alaska Juneau mine. Gold placer deposits in the Porcupine area near Haines in 1898, lode gold in the Sitka vicinity in 1872 and Chichagof district lode gold in 1905 were additional early gold discoveries. Copper was discovered near Ketchikan in 1881; and in 1905, 30,400 tons of three percent copper ore were shipped from the area. A small shipment of marble in 1902 represents the recorded non- metallic mineral production in the southeast for this early period.39 30s outheastern Alaska's Mineral Industry, op. cit., pp. 6-7. 43 1906 - 1918 Copper production between 1906 and 1918 included almost 6,500 tons from the Kasaan Peninsula area, 2,500 tons from the Salt Chuck Mine and about 5,000 tons from mines in the Copper Mountain vicinity. Since the conclusion of World War I, however, copper production in Southeastern Alaska has been almost atl! The Treadwell mine also closed in 1917 after yielding more than $67.5 million in gold and silver in its thirty-five years of operation since 1882. Total 1906-1918 mineral production in Southeastern Alaska included 2,543,690 fine ounces of gold, 865,671 fine ounces of silver, 224 fine ounces of platinum group metals, 14,960 tons of copper and 2,226 tons of lead. 34 1919 - 1944 The depression years of the 1930's and the early years of World War II saw a decline in mining activity that has continued into the 1970's. A limestone quarry on Dall Island began and ended operations in this period. The Pacific Coast Cement Company operated the quarry from 1928 to 1940. The placer mines in the Porcupine area closed in 1930, after i ce Djs. Congress, Senate, Committee on Interior and Insular Affairs, Mineral and Water Resources of Alaska, 88th Cong., 2nd Sess., 1964, p. 103. 32southeastern Alaska's Mineral Industry, op. cit., pp. 6-8. 44 producing over $1 million in gold from almost continuous operation since 1898, and lode gold mining on Chichagof Island ceased in 1938 despite the increased price of gold and a temporary increase in areawide total gold production during the 1930's 33 The Alaska Juneau Mine ceased operating in 1944, Its production, since 1893, totaled $80.8 million in gold, silver and lead. Southeastern Alaskan mine production between 1919 and 1944 included 3,303,775 fine ounces of gold, 2,334,499 fine ounces of silver, 14,064 fine ounces of platinum group metals, 3,493 tons of copper and 20,729 tons of lead .34 1945 - PRESENT DAY Following the close of World War II, the mineral industry of Southeast Alaska completed its decline and for over a quarter of a century activity in the region has been low. Mineral production in Alaska as a whole totaled $338,271,000 in 1970. Recent increases in the value of Alaskan mineral production are due almost entirely to the production of petroleum and natural gas. Excluding those two commodities, Alaskan mineral production totaled $59,139,000 in 1970, of which $41,092,000 of that production value came from sand and gravel. 33Mineral and Water Resources of Alaska, op. cit., pp. 14, 17. 34southeas tern Alaska's Mineral Industry, op. cit., p. 8. state of Alaska, Department of Natural Resources, Division of Geological Survey, Annual Report 1970, p. 3-3. 45 Mineral production in 1969, for Southeast Alaska, totaled $4,333,000 in sand and gravel, barite, stone, gold and silver.°° This represents a substantial increase from the 1960 Southeast mineral production figure of $1,676 ,000.° Sand, gravel, uranium, and barite production accounts for almost all new mining activity in recent years. The 1969 sand and gravel production statistics for the Southeast region total $2,129,000 including both commercial and non-commercial operations. The barite statistics for the same area and period total $1,152,000. Hence, the value of sand, gravel, and barite produced in Southeast Alaska amounted to $3,281,000 or 76% of the total mineral value during 1969.28 Price rise is another factor that helps explain the rise in the region's mineral production valuation. As an example, the price of barite has risen from $12 to $16 per ton in 1970 to $17 to $20 a ton in 1971.29 Sand and gravel is now mined in the Southeast by over twenty commercial and non-commercial establishments. Preliminary Southeast Alaska production statistics for 1970 show 1,794,000 tons, valued at $2,517,000. The Alaska Department of Highways is one of the principal producers, and — 36y5., Department of the Interior, Bureau of Mines, Preprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, p. 2. 37state of Alaska, Department of Natural Resources, Division of Mines and Minerals, Annual Report, 1961. 38 annual Report 1970, op. cit., p. 3-3. 39state of Alaska, Department of Natural Resources, Division of Geological Survey, Mines Bulletin, July, 1971, p. 5. 46 much of the sand and gravel production is by the government or their contractors. Barite had been produced on Castle Island, twenty-five miles west of Petersburg, for a number of years when in 1969 Inlet Oi] Corporation and Associates purchased the assets of Alaska Barite Company in a reported $2 million transaction. Inlet 0i1 Corporation is now operating one of the few undersea lode mining operations in the world, 40 Production figures for 1970 show the production of 134,000 tons of barite, valued at $1,835,000. The barite is shipped to the mining firm's grinding and bagging plant at Kenai. Barite is utilized for oil well drilling muds and various chemical uses. The discovery of the Ross-Adams uranium deposit on Bokan Mountain, Prince of Wales Island in 1956 lead to intermittent production from the location until 1964. Published reports indicate that the Kendrick Bay Mining Company produced more than 39 ,000 tons of one percent uranium ore between 1957 and 1964. In 1969, Newmont Exploration Ltd., performed diamond drilling on the deposit and spent about $750,000 in developing ore containing one million pounds of uranium oxide. The mining was completed during the 1971 summer season. Any possible continued production will depend upon finding additional ore. 41 Table VIII shows production of major metals from Southeastern Alaska for the periods discussed and Table IX shows total mineral 40Preprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, op. cit., p. 19. 4) annual Report 1970, op. cit., p. 3-2. 47 production for Southeast Alaska during the years 1945-1970. Table X breaks down Southeast Alaskan mineral production by significant commodities for 1969 and 1970. Table XI and XII provide an analysis of known mineral occurrences in Southeast Alaska in comparison to active mining claims. Table XI shows known mineral occurrences in Southeast Alaska, by U.S. Geological Survey Topographic Map Quadrangle. Table XII shows the number of active claims by major mineral and quadrangle in Southeast Alaska. The Table is adapted from data compiled by the University of Alaska, Mineral Industry Research Laboratory. 48 Years 1867-1905 1906-19182 1919-19444 1945-1970 SOUTHEAST ALASKA MINER TABLE VIII Ab, PRODUCTION, 1906 - 1970 Fine Ounces Short Tons Platinum - Gold Silver Group Metals Copper Lead Zinc N/A N/A N/A N/A N/A N/A 2,543,690 865,671 224 14,960 2,226 --- 3 ,3038;3775 2,334,499 14,064 3 493 20 ,729 --- N/A N/A N/A N/A N/A N/A a 42coutheastern Alaska's Mineral Industry, op. cit., p. 8. 49 AIncludes production from lode mines only. TABLE IX VALUE OF MINERAL PRODUCTION IN SOUTHEAST ALASKA‘? Value Year ($000) Minerals produced in order of value 1945-1952 N/A 1953 578 Sand & gravel, stone, gold, lead, silver 1954 663 Sand & gravel, stone, gold, copper, silver 1955 230 Sand & gravel, stone, gem stones, copper, silver, lead 1956 580 Stone, sand & gravel, gold, gem stones, silver, lead 1957 698 Sand & gravel, uranium, stone, gold, gem stones, silver 1958 1,966 Sand & gravel, uranium, stone, gem stones, gold, silver 1959 1,928 Sand & gravel, uranium, stone, gem stones, gold, silver 1960 932 Sand & gravel, uranium, stone, lead, gem stones, silver, gold, copper 1961 737. Sand & gravel, stone, uranium, gem stones, lead, gold, silver 1962 1,128 Uranium, stone, sand & gravel, gem stones, gold, silver 1963 1,697 Sand & gravel, uranium, stone, gold, silver 1964 2,197 Sand & gravel, stone, uranium 1965 4,159 Sand & gravel, stone, uranium, gold, silver 1966 36747, Stone, sand & gravel, barite, gold, silver 1967 4,710 Sand & gravel, stone, barite, gold, silver 1968 5,320 Sand & gravel, stone, barite, gold, silver 1969 4,333 Sand & gravel, barite, stone, gold, silver 1970 5,461 Sand & gravel, stone, barite 43y15., Department of the Interior, Bureau of Mines, Minerals Yearbook, Vol III, 1945-1969. 50 TABLE X MINERAL PRODUCTION IN SOUTHEAST ALASKA, 1969 - 197044 4&8 1969 1970 Quantity Quantity Minerals (Short Tons) Value (Short Tons) Value Total production: sand and gravel, barite, stone, gold and silver N/A $4,333 ,000 N/A N/A Barite 96,000 1,152,000 134,000 $1,835,000 Sand and gravel 1,783,000 2,129 ,000 1,794,000 2,517,000 M4 reprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, op. cit., p. 2. 45annual Report 1970, op. cit., p. 3-3. 46y s., Department of the Interior, Bureau of Mines, Unpublished Material. | 98) 108) Li 110 111) a 113 114) MAP II U.S.G.S. QUADRANGLES IN SOUTHEASTERN ALASKA 183.1 Mt. St. Elias Yakutat Skagway Atlin Mt. Fairweather Juneau Taku River Sitka 113 +t Mo Wie m4) sss ul 179 121 418 120 115) 116) ny 118 119) 120) 121) 122) Sumdum Port Alexander Petersburg Bradfield Canal Craig Ketchikan Dixon Entrance Prince Rupert Numbered according to State of Alaska, Department of Natural Resources state-wide numbering system 52 TABLE XI KNOWN OCCURRENCES OF METALLIC MINERAL, BY IN SOUTHEASTERN ALASKA (1970) QUADRANGLE, 4 eat i cs oO et an 4 al fa A|N a eq oI IN oF MAN V4 uy nid i—~ — a |4 ul} al jolo aa qi an) Voc IN} OP @} co] a) |B] A Aye} s} iaieiy A OLO|AY al aN G OAM] a] o OG AAO} a4 us} 4] a] og lo Hla. bh ASM al ec Said) sl gisicis 23 00 |] HIM Pla] od] SI jai} d| ale a e) 2B) DS ed ao }.o] vw iy te 9 Hy] oO] o @} ) a Bl<] O] 4] be a 4 nv S| Ra) ol og 3 HI] Oc} a}o 0 3] bo-q] |} 5} Mig} y| alo] solola a eo] M1 Olay +] G) A) YB) ] ] 8] | Kd BD plo jy] y) 5] ol-d] S| ol ol sl ula fd lu OAM S/5] ] ) fau lato | [A [a Mineral Antimony 1x 11 x x x4 Barium | |x x| x|x Beryllium | x Bismuth x x| x x Cadmium x Chromite x| x] |x x|x x|x Cobalt x|_ |x| x x Copper x} [x/x| |x| x] x|x|x[x [x|x Gold bien ed. X| X|x/|x|x| x |x |x Iron sa x| |x x|x|x| [x Lead s pI || x |x |x |x |x Molybdenum x|_ |x|x| |x X |X |x |x Nickel x(x} |x| [xix] |x a a1 Platinum : | Pe) peer sae Rhenium x x |x Xx Silver ie x] [x[ x] 1x1 x Ix lx [x |x [x Tin bq 4b. 4 : Titanium pe x Tungsten 4d x{X[x|xX] |x [x Uranium x | x Zinc es x(x] |x |x |x [x |x |x k [x Not Available RE eh * * 47y.s8., Department of the Interior, Geological Survey, Metallic Mineral Resources Map of Southeastern Alaska Quadrangles, Edward H. Cobb, 1968. 53 TABLE XII SOUTHEASTERN ALASKA ACTIVE CLAIMS BY QUADRANGLE AND MINERAL, 197078 Mt. Fairweather (111) Juneau (112) Port Alexander (116) Skagway (109) Atlin (110) Petersburg (117) Bradfield Canal _ (118) Craig (119) Ketchikan (120) Dixon Entrance (121) Prince Rupert (122) Sitka (114) Quadrangle Sumdum (115) Mineral Antimony a Barium 4l 10117) Beryllium fu ih | Bismuth | a fe Cadmium |_| Chromite Cobalt Copper 4 Gold 8 Iron ool | 7|_ | [shod b Lead 4 Molybdenum bel | 2! Nickel 7 3 Platinum } | 21 Rhenium Silver 4| | 526] 376 1761 3346) Tin Titanium Tungsten cr as x Bh 241 bo Uranium 8 Zinc 7\71 Not Applicable eT *T L* os 48 Based on computer data developed by the Mineral Industry Research Laboratory, University of Alaska, College, Alaska, 1971. 54 KNOWN MINERAL RESOURCES Although there is a colorful and lengthy history of mining and mineral exploration in Southeast Alaska, knowledge of mineral potentials is still fragmentary and inconclusive. It is reasonable to assume, however, that Alaska mineral resources are neither richer nor poorer than anywhere else along "the Pacific Mountain Cordillera" that extends from South America to Alaska. Increased mineral exploration in recent years has revived hope of substantial industrial development of mineral resources in Southeast Alaska see Table XIII. Five years ago, in 1966, only $300,000 was spent on mineral exploration, approximately 63 persons were employed in mining or mineral exploration and 577 new claims were staked. In 1970, $2,275,000 was expended on mineral exploration in the region and approximately 214 persons were employed in mining and exploration. The following summaries concern- ing the metallics, non-metallics and petroleum potentials of the region are based on the literature of reported mineral occurrences: ANTIMONY Antimony sulfide (stibnite) is found at several locations in Southeastern Alaska. A fissure vein and disseminations in limestone have been found at Caamano Point, northeast of Ketchikan, at the south end of 49 Cleveland Peninsula. Interest has also been shown at the Klemm mine in 49uy5., Congress , Senate, Committee on Interior and Insular Affairs, Mineral and Water Resources of Alaska, 88th Cong., 2nd Sess., 1964, p. 96-' 55 TABLE XIII SOUTHEAST ALASKA EXPLORATION ACTIVITY, 1961 - 197050 Exploration Mining and Exploration Number of New Year Expenditure Employment Claims Staked 1961 N/A TL 270 1962 N/A 62 530 1963 N/A 72 200 1964 $ 30,000 42 270 1965 222,000 34 330 1966 300 ,000 63 577 1967 N/A 73 670 1968 1,549 ,000 116 1,540 1969 3,910,000 185 N/A 1970 2,275,000 214 N/A 50state of Alaska, Department of Natural Resources, Division of Geological Survey, Annual Reports, 1961-1970. 56 in the Petersburg district by Tillicum Mining Company. At Sunset Cove, southeast of Juneau, a gold quartz vein also contains native antimony .°! COPPER Significant copper deposits occur in the Ketchikan mining district, in the Alexander Archipelago, on Prince of Wales Island, and in the Sumdum district. Historically, the bulk of copper production in the southeast (14,000 tons) took place on the Prince of Wales Island prior to 1918. Copper reserves on the Kasaan Peninsula are estimated to total some 1,500,000 short tons of two percent copper ore 22 After many years of restricting copper import, in 1970 the U.S. Department of Commerce softened the embargo on copper by issuing a permit to ship 1,000 tons of copper concentrates to Japan from a mine near Hyder, south of Ketchikan, Alaska.°2 Mining companies currently prospecting for copper in Southeastern Alaska include El Paso Natural Gas Company, Humble Oil and Refining Company, American Smelting and Refining Company, Newmont Mining Corporation, Paramount Mining Company, Dynasty Exploration Incorporated, Phelps Dodge Corporation, Utah Construction and Mining Company, Falconbridge Nickel Mines, Copper Range Company and Mobil Oi] Company .°4 Newmont Mining Company has indicated the presence of an important copper-nickel deposit as a result of its drilling operation in Glacier Bay National Monument. preprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, op. cit., p. 15. S@mineral and Water Resources of Alaska, op. cit., pp. 100-104. 53pnnual Report 1970, op. cit., p. 3-2. 4b reprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, op. cit. S/. GOLD Gold has been the historic objective of most Alaskan mineral developments. Production has come from placer mining at Juneau and in the Porcupine District, from low grade stringer zones at the Alaska Juneau and Treadwell mines, and from high-grade veins on Chichagof Island. The lode deposit potential of the Chichagof Island is considered to be of probable future significance .2° IRON Titaniferous magnetite deposits occur along a northwest-trending belt west of a line between Cape Chacon at the south end of Prince of Wales Island and Klukwan to the north of Haines. Major occurrences are at Klukwan, Snettisham and Union Bay with smaller deposits located at Duke and the Percy Islands. The Klukwan deposits northwest of Haines, about 25 miles from deep water, contain several billion tons of reserves that average 10 to 20 percent magnetite and 2 to 3 percent titanium. An alluvial fan, estimated to contain 600 million tons of 12 percent iron - 2 percent titanium ore, lies adjacent to an unknown volume of ore in place. The deposits are controlled by the United States Steel Corporation and the Mitsubishi International Corporation .26 Mitsubishi International Corporation, represented by the Iron Ore Company of Alaska, has shown new interest in developing the iron ore 55uineral and Water Resources of Alaska, op. cit., pp. 104-108. 56Ibid., pp. 108-109. 58 | in the alluvial fan at Klukwan near Haines. Mitsubishi estimates that such an operation could mean a capital investment of $123 million and as many as 900 employees .97 The Snettisham titaniferous magnetite deposit lies at the north end of the Snettisham Peninsula about 28 air miles southeast of Juneau. The deposit is more than 6,000 feet long and 2,000 feet wide and is estimated to contain 500 million tons of 15 to 20 percent iron and at least 2 percent titanium.°2 Marcona Corporation, a joint enterprise of Cyprus Mines Corpor- ation and Utah Construction and Mining Company, control the Snettisham deposits. Marcona Corporation has released tentative plans for the construction of a $130 million ore treatment plant at Port Snettisham, after completion of geological work including several thousand feet of diamond drilling and metallurgical testing at the site. Japanese steel producers have developed a process for handling iron ore with titanium content, and Marcona Corporation has been negotiating with Japanese interests for the sale of iron concentrate from Snettisham.>2 LEAD-ZINC Lead-zinc mineralization is found at a number of Southeastern Alaskan locations and estimates of their tonnage and grade have been published. At Groundhog Basin, twelve miles east of Wrangell, deposits 57application for Industrial Tax Credit, op. cit. 58mineral and Water Resources of Alaska, op. cit. 9p reprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska, op. cit., p. 17. 59 of massive and disseminated sulfide contain several hundred thousand tons of ore. Grading of the ore has ranged from 8 percent zinc and 1.5 percent lead to 2.5 percent zinc and 1 percent lead. At Glacier Basin, adjacent to Groundhog Basin, many hundred thousand tons of ore contain about 1.6 percent zinc and 1 percent lead. A deposit at Tracy Arm, south of Juneau, contains 40,000 tons of ore per 100 feet of depth. The reported grade of the Tracy Arm ore is 3.2 percent zinc per ton. Resources containing 100,000 tons and grading 7.5 percent zinc have been located at Moth Bay, southeast of Ketchikan. Smaller deposits of lead and zinc have also been found at the Lucky Boy Claim, Prince of Wales Island and at the Mahoney Creek Mine on Revillagigedo IsTand.©? MOLYBDENUM Deposits of molybdenum occur at Shakan, Muir Inlet, Baker Island and Lemesurier Island. At Shakan, 50 miles west of Wrangell, a deposit contains 100,000 tons of ore which grades 0.95 percent molybdenum oxide. On Baker Island the deposit contains about 100,000 tons of ore and grades about 0.27 percent molybdenum oxide and some gold. Molybdenum mineralization outcropping across 350 feet of the beachline of Lemesurier Island has also been reported.6! NICKEL Large low grade nickel deposits occur near Bohemia Basin on Yakobi Island, Funter Bay on Admiralty Island, Mirror Harbor on the west 60Mineral and Water Resources of Alaska, op. cit., pp. 123-125. 6ltbid., pp. 113-114. 60 coast of Chichagof Island, Snipe Bay on Baranof Island, and at Brady Glacier about 85 miles west of Juneau. At Yakobi Island 20,000,000 short tons of ore grade between 0.16 and 0.54 percent. The deposit near Funter Bay contains 900,000 short tons of ore and the lodes on Brady Glacier grade 3 percent nickel in selected areas. Newmont Exploration Ltd., has conducted a feasibility study in a joint venture with Union Pacific Railroad to test the economic feasibility of the Brady Glacier deposit, in Glacier Bay National Monument. INEXCO has also conducted extensive copper-nickel exploration in the Southeastern Alaska region. 62 TUNGSTEN Small deposits of tungsten have been located, in the Hyder district at the Riverside and Mountain View mines. Tungsten also occurs on Chichagof Island at the Apex-E1-Nido mine .o% URANIUM-RADIOACTIVES Uranium has been produced from the Ross-Adams deposit at Boban Mountain near Kendrick Bay, Prince of Wales Island. Thorium and rare-earth- bearing carbonate veins also crop out on Prince of Wales Island near Salmon Bay. Newmont Exploration Ltd., completed diamond drilling at the Ross-Adams deposit on Bokan Mountain in 1969. The deposit containing 50,000 tons of uranium-thorium ore, was developed and mined during 1971 and the mining operation was shut down 64 621bid., pp. 114-115. ®3ibid., pp. 120-121. O4tbid., pp. 121-123. 61 NON-METALLICS ASBESTOS Asbestos deposits, with reported economic potential, are located on Admiralty and Lemesurier Islands 65 BARITE Barite deposits have been found on the north side of Cornwallis Bay, the south side of Saginaw Bay and at the northeast end of St. Ignace Island near Ketchikan. Barite replacement deposits in limestone occur on Castle Island, Kupreanof Island and at Lime Point on Prince of Wales Island. Barite is currently being produced through an undersea lode mining operation off Castle Island, near Petersburg, by the Inlet Oi] Corporation.©© CLAYS Bricks were formerly produced for local use in the Juneau area, from local clay. The operation has been discontinued, but clay is still available.” COAL Coal of bituminous rank occurs in a 20 square mile area of Admiralty Island, near Kootznahoo Inlet. The deposits, which are thin and 8 ibid, pp. 125-127. 68rbid., pp. 127-128. Ibid 87tbid., pp. 128-130. 62 poor are important only for possible future use by local residents. FELDSPAR Potash feldspar, of known economic importance, is located on the coast of Baranof Island near Redfish Bay .68 FLUORITE A small, but possibly important, fluorite content is associated with zinc-lead mineralization in the Groundhog and Glacier Basin, east of Wrangel1.62 GARNET Garnet-bearing rock occurs about 7-1/2 miles north of Wrangell; other occurrences of garnet have been reported at Port Houghton and Copper Mountain. 70 GYPSUM In Southeastern Alaska, gypsum was mined successfully at Iyoukeen Cove by Pacific Coast Gypsum Company .7! LIMESTONE AND MARBLE Chemical grade limestone and marble have been found at several Southeast Alaskan locations. The most promising deposits are found at Dall, Heceta, Kuiu, Kupreanof, Long, Prince of Wales, Shrubby and S81bid., pp. 130-131. 691bid., pp. 131-132. 70Ibid., pp. 132-133. Ibid., pp. 134-135. 63 Wadleigh Islands .72 MICA Small deposits of mica have been located in the Southeast at Sitklan Passage and on the west coast of Baranof Island, near Redfish Bay./3 QUARTZ CRYSTALS Exceptionally clean quartz crystals, as much as 27 inches in length, occur with feldspar in the pegmatite deposits near Redfish Bay on Baranof Island.74 PETROLEUM Three small areas have been identified as possible locations for petroleum collecting formations in Southeast Alaska: (1) the Heceta Island area, (2) the Keku Islands, and (3) the Tertiary basins between Admiralty and Zarembo Island. At Heceta Island, although there are no definite indications of petroleum, occurrences of porous sandstones, reef limestone and zones of secondary porosity indicate potential reservoirs. Moderately deformed and relatively unaltered marine sandstone and fossiliferous limestone are present on the Keku Islands. The Tertiary basins between Admiralty and Zarembo Islands may contain methane gas if structural traps can be located. Coal-bearing rock formations underlie 72Ibid., pp. 135-138. 731bid., pp. 138-141. 7T41bid., pp. 143-145. 64 less than half of the area. These are generally covered by younger volcanics.’ Known major mineral reserves in Southeastern Alaska are shown in Table XIV. 1p i a +» pp. 60-62. | 65 Commodi ty Barite Copper Iron Nickel Uranium TABLE XIV MAJOR SOUTHEASTERN ALASKA KNOWN MINERAL RESERVES 76 Deposit or Past District Production Castle Island N/A Kasaan Pen. 6.5 Sumdum prospect Klukwan Snettisham Union Bay Yakobi Island (Bohemia Basin) Chichagof Island (Mirror Harbor) Baranof Island (Snipe Bay) Admiralty Island (Funter Bay) Brady Glacier Bokan Mountain 39,000 short tons Resources Quantity 30,000 - 50,000 tons 1,500,000 tons 10,000,000 tons several billion long tons 20,000 ,000 tons N/A N/A N/A N/A N/A 76tbid., pp. 127-128, 101-104, 108-110, 114-116, 121-123. Average Grade 93.4% barium sulfate 2% Cu 0.5-1.0% Cu 10-20% Fe 0.16 - 0.54% Ni 1% U30g Remarks Currently under production. Current exploration may augment these resources. Several firms are con- sidering placing the Klukwan and Snettisham deposits under production. Deposits are being more fully explored. Currently under production. POTENTIAL MINERAL RESOURCES Predictive statements of unknown mineral resources are usually made on inferences from known data. Professor Deverle P. Harris of the University of Pennsylvania used statistical inference to construct models for predicting mineral resources in relatively unexplored areas. The basic units of the Harris Study are twenty-mile-square cells. The object of the model is to predict the gross mineral content in each cell of an unknown area. The standard for comparison matches geologic features in the unknown area with those in a well explored mineral province. The Harris computer regression method as applied to Southeast Alaska is described in M.I.R.L. Report No. 16, Mineral Resources of Northern Alaska, 1970. Two maps from the Harris Study for Southeast Alaska are as follows: (1) Map III, A Distribution of Expected Gross Value of Base and Precious Metal Resources, and (2) Map IV, The Distribution of Residual Values - A Measure of Potential Resources of Base and Precious Metals. Harris' Study provides the gross value of minerals, as an indication of probable ore deposit distribution. The value of this approach lies in comparing the relative merit of the different cells as prospective exploration target areas./7 77 Deverle P. Harris, Alaska's Base and Precious Metal Resources, A report to the Annual Symposium on Operations, Research and Computer Application in the Mineral Industries, April, 1968. 67 MAP III SOUTHEASTERN ALASKA DISTRIBUTION OF EXPECTED GROSS VALUE oF BASE AND PRECIOUS METAL RESOURCES 0 50 100 150 & Miles Values (dollars per cell) +400,000,000 400,000,000-100,000,000 100,000,000-10,000,000 10,000,000-1,000,000 1,000,000-100,000 100,000-0 IW 78Ibid., Figure 10. 68 MAP IV SOUTHEASTERN ALASKA DISTRIBUTION OF RESIDUAL VALUES - A MEASURE OF POTENTIAL RESOURCES OF BASE AND PRECIOUS METALS /? 0:;.. 50% 100; 150 Miles Values (dollars per cell) +400,000,000 400,000,000-100,000,000 100,000,000-10,000,000 10,000,000-1,000,000 1,000,000-100,000 100,000-0 Production value exceeds expected value M9Tbid., Figure 11. 69 SUMMARY Gold, silver, copper and lead have been the historical objectives of Southeast Alaska's colorful mining history. But despite the extent of the regions' past mining and mineral exploration, knowledge of mineral potentials is still fragmentary and inconclusive. It is reasonable to assume, however, that Southeast Alaska's mineral resources are neither richer nor poorer than those anywhere else along the "Pacific Mountain Cordillera" that extends from South America to Alaska. Commercial and potentially commercial deposits of antimony, barite, copper, iron, lead, molybdenum, nickel, uranium and zinc are known to exist. The future is uncertain, but extensive exploration and a little mining is currently in progress. In the case of iron, if current feasibility studies now underway, show quality and market for titanium iron to be favorable, the prospects for future economic development are encouraging. 70 CHAPTER VI THE ECONOMICS OF EXPLORATION INTRODUCTION Each mineral deposit is a unique condition in nature and must “be located, explored and developed before it becomes a commercial asset. Both the cost of finding and developing minerals and the physical difficulty of finding deposits is increasing. Unfortunately, the correlation between the amount of money spent in the search for minerals and the commercial production of mineral products is not always easily established. Statistical analysis, however, leads to the conclusion that the probability of commercial development increases with increased exploration effort. Increased effort by government and private industry toward mineral exploration and develop- ment is, therefore, essential to assuring a continuing reliable supply of mineral products. EXPLORATION IN ALASKA Table XV lists expenditure of private funds for mineral exploration and the value of selected mineral products produced in Alaska for 1960 through 1970. Although exploration funds for hardrock minerals have increased at an accelerating rate, the value of hardrock minerals produced for market has remained close to a stable level. Hopefully, the trend in exploration effort will result in increased mineral production following the time-lag required for development of prospects and plant installations. 7] TABLE XV VALUE OF PRIVATE EXPLORATION EXPENDITURE AND MINERAL PRODUCTION, STATE OF ALASKA, 1960-197080 Private Exploration Mineral Year. Expenditures Production? 1960 $2,100 ,000 $15,119 ,000 1961 1,700 ,000 12,772,000 1962 1,300,000 17,184,000 1963 1,500 ,000 12,074,000 1964 1,600 ,000 12,113,000 1965 3 ,187 ,000 13,316,000 1966 2,645 ,000 14,089 ,000 1967 N/A 12,924,000 1968 4,513,800 15,302,000 1969 6 ,900 ,000 11,899 ,000 1970 6,900 ,000 16,632,000 80s tate of Alaska, Department of Natural Resources, Division of Mines and Minerals, Annual Reports, 1960-1970. aExploration figures exclude natural gas and petroleum. production figures exclude natural gas, petroleum, and sand and gravel. 72 GOVERNMENTAL ASSISTANCE Governmental assistance to mineral development has generally been limited to mineral surveys (including geophysical, geochemical and geologic methods), mapping and metallurgical research. Despite the success of the Canadian policy of assistance and incentives for resource development, policy makers in this country appear reluctant to authorize direct incentives and subsidies to the mineral industry. Two State of Alaska programs, the Prospector Assistance Program and the Access Road Program, as well as the Federal Exploration Assistance Program, are currently unfunded. MAPPING The density of geologic information on Alaska is now the lowest of any state. Increased governmental exploration assistance would therefore be helpful in the development of mining and power intensive mineral industry. Table XVI, illustrates the relationship between geologic mapping at a 1:30,000 scale and mineral output. Mineral industry output for five selected countries together with Southeastern Alaska is shown as opposed to the intensity of detailed mapping for the same areas. The correlation indicates that the unexplored area remains the underdeveloped area. Conversely, additional geologic, geochemical and geophysical surveys in Southeast Alaska would be contributory to attracting the interest of mining companies and power intensive mineral industries to the region. The current increase in exploration by private enterprise may indicate progress toward that goal. 73 Rank In Terms Of Value Of Mineral Production 1 2 PERCENT OF AREA COVERED BY GEOLOGIC MAPPING IN COMPARED WITH VALUE OF MINERAL PRODUCTION Area. England Germany France Japan United States S. E. Alaska Notes: Approximate bEstimated TABLE XVI 1:30 ,000 or Smaller Scale Percentage Of Area Covered 65% 50% 5%a 542 2% 10%? Rank In Terms of Area Covered {x AREAS Mineral Production $ per Square Mile 15,289 9,576 35139 2,482 2,095 7 Paul A. Bailly, "Methods, Costs, Land Requirements and Organization in Regional Rank 1 ao -» Ww NY Exploration for Base Metals," Paper delivered to A.I.M.E. meeting, Alaska Section, Fairbanks, March, 1964. REMOTE SENSING Remote sensing techniques are an effective means of indicating favorable exploration targets quickly. Aerial magnetic surveying is among the most reasonably priced and most feasible of these techniques, for preliminary reconnaisance mapping for the following reasons: (1) Interpretation of bedrock geology is improved, particularly in areas of heavy cover. (2) Geologic structures such as intersections of structural trends, warping and faulting can be delineated. The approximate size and location of basic intrusives and intermediate intrusives can also be determined. (3) Sedimentary basins can be indicated as targets for the exploration of oi] and gas. (4) Magnetometer surveys can delineate very large deposits of iron, nickeliferous phyrrhotite and igneous bodies .84 The Canadians were among the first users of airborne remote sensing techniques. The cost to the Canadian Government of the airborne magnetometer program has been about $18 million annually. The entire cost of this program, however, has been repaid in the past by the taxes from the location of one iron mine under 180 feet of overburden. An example of the efficiency of the Canadian airborne magnetometer program has been stated as follows: 82state of Alaska, Department of Natural Resources. Unpublished materials. 75 Between 1955-1959 approximately 125,000 square miles were surveyed by airborne electromagnetometer in Canada. About 10,000 anomalies were located and 3,000 were followed up with ground work, from which 1,000 were drilled and 16 potential ore bodies were found.83 It has also been estimated that a geological field party's work is cut by one-third if airborne magnetometer work precedes geologic work. The experience of the Canadians demonstrates the effectiveness of airborne magnetometer surveys by government agencies. A similar program for Southeastern Alaska would aid in furthering exploration and subsequent development of mining and power intensive mineral industries. During fiscal year 1971, the Alaska State Department of Natural Resources has $500,000 to expend on aeromagnetic surveys. The Department has contracted with Lockwood, Kessler & Bartlett, Inc., for aeromagnetic surveys of (1) the East Alaska Range, (2) Seward Peninsula and (3) the Goodnews area. The contract was let for a basic bid of about $400,000 for work in FY 1971. In fiscal year 1972 the Alaska State Department of Natural Resources hopes the U. S. Geological Survey will participate ina continuing program on a 50-50 matching basis. Areas in Southeast Alaska that might be surveyed under future programs include: (1) the Annette-Gravina-Duke Islands area, (2) Craig Quadrangle, (3) Ketchikan and Hyder areas, (4) Tracy-Wrangell-Hyder belt, 83mining Congress Journal, April, 1969. 76 (5) parts of the Haines-Porcupine district and (6) the Juneau-Skagway belt 84 SUMMARY Each mineral deposit is a unique condition in nature and must be located, explored and developed before it becomes a commercial asset. Both the cost of finding and developing minerals and the physical difficulty of finding deposits is increasing. Increased governmental exploration assistance could lead to the location of commercial mineral deposits and encourage the development of mining and power intensive mineral industries in Southeastern Alaska. The density of geologic information in Alaska is now the lowest of any state, and uncertainty increases the risk of exploration investment in this area. In order to determine the mineral wealth of the region, govern- mental geophysical, geological and geochemical surveys on a scale effective for mining should be expanded along with airborne magnetometer surveys to fill the gaps in present data. rotate of Alaska, Department of Natural Resources. Unpublished materials. 77 CHAPTER VII CONCLUSIONS AND RECOMMENDATIONS PART I - DEVELOPMENTAL GOALS CONCLUSION ONE Southeastern Alaska's natural environment, world famous Inside Passage and scenic grandeur make it among the most spectacular of areas in North America. The region's hydroelectric potential is estimated to total over two million kilowatts, exclusive of the proposed International Yukon-Taiya Hydroelectric Project. Commercial or potentially commercial deposits of antimony, barite, copper, iron, lead, molybdenum, nickel, uranium and zinc are known to exist in the region. The development of these resources through industrial mining and power intensive mineral industries could alleviate the region's persistent and seasonal unemployment problems. National policy now requires balanced developmental goals so that the protection of the natural environment is weighed against the solution of social and economic problems. Through striking a policy balance, man and nature can exist in productive harmony. RECOMMENDATION ONE The proposed International Yukon-Taiya Project should be compatibly constructed with the proposed Klondike Gold Rush National Historic Park. 78 The joint development of these projects can represent the highest and best use of their overlapping project areas. With this power, all resulting industrial development should be planned, constructed and operated with balanced concern for the natural environment. Industry assurances should also be sought that industrial developments will alleviate perpetual and seasonal unemployment problems. PART II - POWER DEVELOPMENT POTENTIALS CONCLUSION TWO Power is a basic requisite of industrial development and is required at all stages of industrialization. Many major industrial developments in Southeast Alaska have heretofore created their own nonutility generating systems. These private nonutility systems have resulted from the high cost of power produced by small isolated diesel and hydroelectric public utility systems. The availability of reasonably priced power to the region could enhance the prospects for industrial developments without the individual company burden of developing nonutility generating systems. Because of high distribution costs, it is unlikely that low cost power (1-3 mills per kilowatt-hour), even in terms of 50 year planning, will be supplied to the region. This limitation decreases the probability that Southeast Alaska will enjoy a power intensive mineral industry that would import its raw materials and export its refined products. 79 Nevertheless, the availability of reasonably priced power (4-15 mills per kilowatt-hour) from a project such a Yukon-Taiya would be helpful and perhaps in some cases crucial in attracting mining and power intensive mineral industries to the region. With little or no transmission cost Yukon-Taiya could serve mining and power intensive mineral industries in the Haines-Skagway area at an on site cost of 4.5 to 6 mills per kilowatt-hour, exclusive of transmission costs. Although Yukon-Taiya power would be reasonably priced, rather than low cost, it is likely that it could be a factor in industrial feasibility decisions. Historical analysis shows the location of power itself tends to influence industrial decisions so long as the power is available within a reasonable price range. In the United States the development of the Tennessee Valley Authority and subsequent industrial location serves as a historical precedent. Consequently, the development of a system of interties and eventually the proposed International Yukon-Taiya Hydroelectric Project could be an encouragement towards establishing mining and power intensive mineral industry throughout the region. RECOMMENDATION TWO The following pattern of probable development is exclusuve of additional small isolated diesel and hydro projects that will necessarily be constructed prior to grid systems and large unit projects. The proposed pattern of probable development includes the following four phases: 80 PHASE I (1) PHASE II (1) (2) PHASE III (1) PHASE IV (1) Completion and operation of the Snettisham Hydroelectric Project. Interconnection of Juneau-Sitka, Petersburg-Wrangel1-Kake and Ketchikan-Metlakatla between 1975 and 1985. Possible interconnection with Canada. Construction and interconnection of the Yukon-Taiya Project to the Haines-Skagway area before 1990. Possible interconnection with the U.S. nationwide power system through intertie with the British Columbia Hydro and Power Authority System. PART III - MINERAL DEVELOPMENT POTENTIALS CONCLUSION THREE Gold, silver, copper and lead have been the historical objectives in Southeast Alaska's colorful mining history. But despite the extent of the region's past mining and mineral exploration, knowledge of mineral potentials is still fragmentary and inconclusive. It is reasonable to assume, however, that Southeast Alaska's mineral resources are neither richer nor poorer than those anywhere else along the "Pacific Mountain Cordillera" that extends from South America to Alaska. Commercial and potentially commercial deposits of antimony, barite, 81 copper, iron, lead, molybdenum, nickel, uranium and zinc are known to exist. The future is uncertain but increasing exploration activity and a little mining is currently in progress. In the case of iron, if the beneficiation quality and market for titanium iron are favorable, the prospects for future economic development are encouraging. Each mineral deposit is a unique condition in nature and must be located, explored, and developed before it becomes a commercial asset. Both the cost of finding and developing minerals and the physical difficulty of finding deposits is increasing. Increased governmental exploration assistance could lead to the location of commercial mineral deposits and encourage the development of mining and power intensive mineral industries in Southeastern Alaska. The density of geologic information in Alaska is now the lowest of any state, and uncertainty increases the risk of exploration investment in this area. RECOMMENDATION THREE In order to determine the mineral wealth of the region, govern- mental geophysical, geological and geochemical surveys on a scale effective for mineral exploration should be expanded along with airborne magnetometer surveys to fill the gaps in present data. 82 SELECTED BIBLIOGRAPHY BOOKS Gaffney, Mason. Extractive Resources and Taxation. Madison: University of Wisconsin Press, 196/. Rogers, George W. Alaska in Transition: The Southeast Region. Baltimore: John Hopkins Press, 1960. PERIODICALS Alaska Review of Business and Economic Conditions. Vol. VI, No. 1. College: Institute of Social, Economic and Government Research, February, 1969. Business Week. January 11, 1969. Electrical World. February 27, 1967. Electrical World. May 6, 1968. Engineering and Mining Journal. Vol. 167, No. 6. June, 1966. Hoskin, Charles M. and Slatt, Roger M. "Water and Sediment in the Norris Glacier Outwash Area, Upper Taku Inlet, Southeastern Alaska," Journal of Sedimentary Petrology. June, 1968. Price, Edmond E. "Canada's Incentives Aid Mining Industry," Alaska Industry, Vol. 1, No. 1, January, 1969. Southeast Alaska Empire. "Klukwan Signs Lease for Ore Development," VoT. 63 (June 26, 1969), p. 1. Southeast Alaska Empire. "Mining Pact Signed," Vol. 63 (April 10, 1969), pod. Young, Gale. "The Fueling of Nuclear Power Complexes." Nuclear News. November, 1964. 83 PUBLIC DOCUMENTS Alaska Development Board. Klukwan: New 'Mesabi' on the Pacific Front. Juneau, Alaska. May, 1953. Canada. Dominion Bureau of Statistics. Canada Yearbook 1967. Ottawa. Canada. Royal Commission on Taxation. Report of the Royal Commission on Taxation. Ottawa: Queen's Printer, 1967. Canada. Yukon Statistics Report, 1968. Herbert, Charles F. Alaska - Northwest Canada Economic Activities. A summary comparison of mining laws and o11 and gas laws and practices with recommendations for policy. Anchorage: Federal Field Committee for Development Planning in Alaska, 1967. Jersey Power and Light Company. Report on Economic Analysis for Oyster Creek Nuclear Electric Generating Station. February 17, 1964. State of Alaska. Administrative Code, Table II, Division 2, Chapter 5. (Prospector Assistance Regulations). State of Alaska. The Alaska Statutes. Charlottesville: The Michie Company, 1962. State of Alaska. Department of Economic Development. Alaska Statistical Review. 1970. State of Alaska. Department of Economic Development. Industrial Opportunities in Alaska. September, 1962. State of Alaska. Department of Economic Development. Standard Industrial Surveys. (Haines, Juneau, Ketchikan, Metlakatla, Petersburg, Sitka, Skagway, Wrangell). 1969. State of Alaska. Department of Labor, Research and Analysis Division. Workforce Estimates, Alaska, by Industry and Area. 1970. State of Alaska. Department of Natural Resources, Division of Geological Survey, Annual Reports. 1960-1970. 84 State of Alaska. Department of Natural Resources, Division of Geological Survey. Mines Bulletin. July, 1971. State of Alaska. Department of Natural Resources, Division of Geological Survey. Mining Laws Applicable in Alaska. Information Circular No. tt T1966. State of Alaska. Department of Natural Resources, Division of Geological Survey. Iron in Alaska. R. R. Asher. 1967. Tussing, Arlon R. and Erickson, Gregg K. Mineral Policy, The Public Lands and Economic Development, The Case of Alaska. A report to the Federal Field Committee for Development Planning in Alaska and the U. S. Department of Commerce, Economic Development Administration. Fairbanks: University of Alaska, Institute of Social, Economic, and Government Research, 1969. U. S. Army Corp of Engineers. North Pacific Division. Water Resource Development. January, 1965. U. S. Atomic Energy Commission. Engineering and Economic Feasibilit Study for a Combination Nuclear Power-Desalting Plant, Summary. TID-22330. Vol. III. U. S. Bureau of the Census. Alaska Census of Mineral Industries. 1963. U. S. Congress, Joint Committee on Atomic Energy. Nuclear Power Economics - 1962 through 1967. 90th Cong., 2d Sess., 968. U. S. Congress, Senate, Committee on Interior and Insular Affairs. Mineral and Water Resources of Alaska. 88th Cong., 2d Sess., April 1, 1964. U. S. Congress , Senate, Committee on Interior and Insular Affairs. Mineral Shortages, 1968. U. S. Congress, Senate, Committee on Public Works. The Market for Rampart ; Power. 87th Cong., 2d Sess., June 30, 1962. U. S. Congress, Senate, Subcommittee on Irrigation and Reclamation. Hydroelectric Power Requirements and Water Resource D evelopment in Alaska. 86th Cong., 2d Sess., December 6, 85 Congress, House. Transport Requirements for the Growth of Northwest Nort erica. House Document No. : Battelle Memorial Institute. 97th Cong., Ist Sess., May, 1961. Department of Commerce. Area Redevelopment Administration. Investment Opportunities in Southeastern Alaska. January, 1565. . Department of Commerce. National Weather Service. Climatalogical Data, Annual Summary, 1969. Department of Commerce. Statistical Abstract of the United States. 1970. Department of the Interior. Alaska Natural Resources and the Rampart Project. 1967. . Department of the Interior. Alaska Power Administration. Alaska Electric Power Statistics 1960-1969. Department of the Interior. Alaska Power Administration. First Annual Report, 1968. Second Annual Report, 1969. Third Annual Report, 1970. Department of the Interior. Alaska Power Administration. Historical Notes 1946-1968, Upper Yukon Study, United States-Canada. February 7, 1969. Department of the Interior. Bonneville Power Administration. Alloy Metals Outlook in the Pacific Northwest States. Portland, Oregon. 1966. Department of the Interior. Bonneville Power Administration. The Aluminum Industry of the Pacific Northwest. Portland, regon. 1967. . Department of the Interior. Bonneville Power Administration. The Phosphate Rock Industry of the Pacific Northwest. ortland, Oregon. i . Department of the Interior. Bureau of Mines. Electric Smeltin of Titaniferous Iron Ores from Alaska, Montana, and Wyoming. Report of Investigations 6497. Wesley T. Holmes II and Lloyd H. Banning. 1964. 86 Department of the Interior. Bureau of Mines. Mineral Facts and Problems. Bulletin 630. 1965. Department of the Interior. Bureau of Mines. The Mineral Industry of Alaska. 1967. Department of the Interior. Bureau of Mines. Mineral Production in Alaska in 1968. Department of the Interior. Bureau of Mines. Minerals Yearbook, Vol. III. 1967. . Department of the Interior. Bureau of Mines. Preprint from the 1969 Bureau of Mines Minerals Yearbook, The Mineral Industry of Alaska. 1969. Department of the Interior. Bureau of Mines. Potential Utilization of the Klukwan Iron-Titanium Ore Body in Southeastern Alaska. Juneau, Alaska. August, 1949. Department of the Interior. Bureau of Mines. Sinak Iron Deposits, Seward Peninsula, Alaska. Open File Report No. 6. J. J. Mulligan. 1965. . 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International Upper Yukon Study, Power Market Potential, Minerals Evaluation. July 2, 1968. U. S. Department of the Interior. Geological Survey. Iron and Copper Deposits of Kasaan Peninsula, Prince of Wales Island, Southeastern Alaska. Bulletin 1090. L.A. Warner. 1960. U. S. Department of the Interior. Geological Survey. Magnetite Deposits Near Klukwan and Haines, Southeast Alaska: Preliminary Report. 1955. U. S. Department of the Interior. Geological Survey. Magnetite Deposits Near Klukwan and Haines, Southeastern Alaska. Open File Report. E. C. Robertson. 1955. U. S. Department of the Interior. Geological Survey. Metallic Mineral Resources Map of the Craig Quadrangle Alaska. Cobb, Edward H. 1968. U. S. Department of the Interior. Geological Survey. Metallic Mineral Resources Map of the Dixon Entrance Quadrangle Alaska. Cobb, Edward H. 1968. U. S. Department of the Interior. Geological Survey. Metallic Mineral Resources Map of the Juneau Quadrangle Alaska. Cobb, Edward H. 1968. U. S. 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