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Anglo departure not the end of Alaska's Pebble mine, locals say

By Yereth Rosen

ANCHORAGE, Alaska (Reuters) - Supporters and opponents of a giant mine to tap Alaska's gold and copper wealth have found a rare point of agreement: The Pebble project remains alive even without its heavyweight financial backer.

Anglo American, the global mining group that partnered with Canada's Northern Dynasty Minerals Ltd in 2007 to develop Pebble, said on Monday it was pulling out, less than two month after promising shareholders it would cut costs and halve its $17 billion pipeline of potential mines.

Anglo's departure dealt a sharp blow to the ambitious plan to build an open-pit mine in Alaska's unspoiled Bristol Bay region, at a time when investors are increasingly cautious about plowing cash into building expensive new mines.

But the hiccups aren't stopping Northern Dynasty. It sees plenty of opportunity to push ahead on the project, which is expected to produce some 1 million tonnes of copper concentrate a year, on its own or with a new partner.

"This is a huge asset - a huge, valuable asset for the State of Alaska," said Ron Thiessen, Northern Dynasty's chief executive, who added that he remains very confident the mine will be built within the next 10 years.

"When I go back to 2007, we selected a very small group of potential partners and each one of those partners was prepared to do a deal with us," he told Reuters. "So I would suspect there are companies out there that are still prepared to do a transaction with us on Pebble."

Also alive, though, is the Alaska-based campaign against the mine. Pebble detractors say the mine would ruin some of the world's last remaining big natural salmon runs and spoil a prized area teeming with salmon-eating bears and other wildlife.

"I don't think Pebble's dead at all," said Tim Bristol, Alaska program director for Trout Unlimited, adding that his group and others will continue to push the U.S. Environmental Protection Agency to use its authority under the Clean Water Act to block the mine.

"As long as the area is open to mining and we have the need and desire for gold and copper, there's always going to be a threat," he said.

The Renewable Resources Coalition, a fishing organization formed in 2005 to fend off Pebble, said it will continue to support a ballot initiative targeting the project.

The initiative would require legislative approval for any large-scale mine in the heart of the Bristol Bay region, which was designated as a special fisheries preserve in 1972, in an effort to ensure that projects are thoroughly vetted.

RARE OPPOSITION

Pebble is a rarity in Alaska - a big resource-extraction project that is widely opposed by Alaskans. Polls consistently show large majorities against the project, even though Alaskans support mining development in general.

The late Senator Ted Stevens, a legendary figure in Alaska politics and avid sport fisherman, opposed Pebble. So did the late Jay Hammond, the iconic oil-boom-era governor considered the father of a popular program that pays annual dividends to all residents from the state's oil trust fund.

Indeed, Pebble has inspired some unlikely alliances - sport and commercial fishermen, Native tribes and corporations, political conservatives and environmentalists - all finding common ground against the development.

Local Native and fishing groups petitioned the EPA to block the project, even though it is on state land. That resulted in a scientific study into the likely impact of any large-scale mining operation in the region, not just Pebble.

Draft reports issued by the EPA say a Pebble-like mine could destroy salmon streams and important wetlands habitat. A final report is expected by the end of the year.

Mine supporters have panned the EPA's study, calling it biased and premature.

There is local support for the mine. An organization called Truth About Pebble, formed by local business and political leaders, has been running a defensive campaign, and at least one of the state's big labor unions backs the mine.

Residents of Iliamna, one of the Native villages close to Pebble, are supportive, though other Native groups oppose it.

ECONOMIC BOOST

Supporters say Pebble would breathe economic life into a region struggling with poverty, and would give villagers reasons to stay home instead of fleeing to Anchorage.

A study commissioned by its developers said the mine would directly employ some 915 people in Alaska over its first 25 years of production, and indirectly support about another 2,000 jobs in the state.

The problem for Pebble is that it conflicts directly with salmon fishing, said University of Alaska Fairbanks political science professor Gerald McBeath.

The fishing industry is Alaska's largest private-sector employer, according to the University of Alaska Anchorage, and one study using 2010 data put the value of the Bristol Bay salmon fishery at $1.5 billion a year, supporting 12,000 jobs.

Unlike the oil industry, which operates largely out of sight on the North Slope, Pebble is "in the neighborhood with all those fishermen," McBeath said.

Also unlike the oil industry, which produces billions of dollars of annual tax and royalty revenues that fund about 90 percent of state government operations, a mine even Pebble's size would produce only "infinitesimal" public revenues, thanks to Alaska's rock-bottom mining taxes and royalties, he said.

(Additional reporting by Julie Gordon in Toronto and Clara Ferreira-Marques in London; Editing by Leslie Adler)

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