Ambler Project: A Modern Case of Mining For and Against the Climate
The inescapable trade-offs between job creation, economic growth, and future demands versus environmental, social, and governance concerns.
November 2024: The Ongoing Ambler Project Story
In a stunning post-election development, Trilogy Metals saw its stock nearly double on Wednesday, November 6, following Donald Trump’s election win. The sharp rise underscores market optimism about the Ambler Project, a major copper mining initiative in Alaska, in which Trilogy holds a 50% stake, and put Ambler back under the spotlight.
This political shift reopens the debate over where to draw the line between resource development and environmental protection. As policymakers balance the urgent demand for critical minerals with sustainability, some experts predict that this conversation could drive tectonic shifts in environmental regulations for years to come.
With both sides holding compelling arguments, the future of projects like Ambler remains and political and jurisdictional risks remains uncertain—an undesirable outcome for resource sector overall.
We invite you to share your perspective: where should the balance lie between advancing resource projects like the Ambler Project and protecting environmental integrity? Join the discussion and contribute your insights as we refine this ongoing case study.
Original Story
On April 16, 2024, the New York Times reported on a pivotal upcoming decision by the US Department of the Interior (DOI) regarding the proposed construction of a 211-mile road through ecologically vulnerable areas in Alaska, intended to facilitate access to a notable copper deposit, known as the Ambler or the Arctic Project [1].
This prospective denial by DOI appears aligned with President Biden’s overarching environmental and climate agenda, yet it stands in contrasts with the need of the project’s essential mineral resources vital for the green energy transition, as well as the previous approval of the same project under the Trump administration.
In a response to this anticipated decision, the Alaska Industrial Development and Export Authority (AIDEA) has issued an appeal to the DOI, urging compliance with federal commitments to state rights supporting the development of state lands and mineral accessibility [2].
The advocates for the Ambler Project have voiced significant concerns regarding the potential rejection of the road construction necessary for the $1.3 billion project. They highlight the broad local backing for the project and the anticipated economic uplift it could engender through job creation and regional development.
Ambler Project
The Ambler Project, also known as the Arctic Project, situated in northwestern Alaska, is a significant copper project that is nearly ready for construction. The project is a collaborative 50/50 joint venture between Trilogy Metals and South32. It aims to tap into the extraction and processing of copper, zinc, and lead, employing a conventional milling and flotation with a capacity to handle 10,000 tonnes of ore per day. The plant is designed to achieve high recovery rates, with the resulting concentrates shipped to the Port of Anchorage and then to external smelters [3].
Financial projections for the Ambler Project are notably robust, with an after-tax Net Present Value (NPV) estimated at approximately $1.1 billion and an Internal Rate of Return (IRR) of about 22.8%. The operational lifespan of the mine is projected at around 13 years, with a payback period for initial capital investments estimated at 3.1 years. This places the Ambler Project in a great position within the global pipeline of copper projects, highlighting its profitability, scale and development phase, as shown in the following chart [3].
The total capital expenditures are segmented into an initial construction phase of approximately $1.18 billion, sustaining capital of around $114.4 million, and closure and reclamation costs estimated at $428.4 million, culminating in an aggregate investment of approximately $1.29 billion.
In terms of mineral reserves, the project boasts proven and probable reserves of 46.7 million tonnes, with considerable grades of 2.11% copper, 2.90% zinc, 0.56% lead, 0.42 grams per tonne gold, and 31.8 grams per tonne silver. The project also reported 35.7 and 4.5 million tonnes indicated and inferred resources highlighting its potential and viable expansions [4].
The reported regional employment impact of the Ambler Project is also considerable, with over 3,900 direct and indirect jobs expected during the operational phase, and an additional 110 jobs during peak construction periods. This is anticipated to boost local employment and contribute over $300 million annually in wages [5].
Ambler Metals LLC, which manages the project, solidified the JV structure framework in 2017 when Australian giant South32 joined Trilogy Metals through a strategic investment of $145 million for 50% stake in the project.
The Saga
In February 2022, the U.S. Department of the Interior (DOI) filed a critical motion to remand the Final Environmental Impact Statement (FEIS) and to suspend the associated right-of-way permits [6]. This measure was intended to facilitate additional supplemental evaluations of the environmental impact assessments. Following this announcement of the re-evaluation of the FEIS, the stock price of Trilogy Metals experienced a notable decline, dropping from 1.9 CAD to 1.2 CAD.
Fast forward two years, the New York Times article suggests that the DOI has determined that the road construction would “significantly and irrevocably” compromise the environmental integrity of the area and negatively impact tribal communities. This conclusion forms part of an exhaustive reassessment that highlighted several shortcomings in the environmental studies previously conducted under the Trump administration [1].
In light of these findings, the current administration appears inclined to deny the necessary permits. Trilogy Metals' stock price markedly dropped about 30% of its market value, closing at approximately 0.5 CAD and at a market capitalization of 85 million CAD on April 17th.
Opponents
Ambler Access Project is grounded within a complex environmental and cultural context. Firstly, the project entails constructing a 211-mile industrial road through the Alaskan wilderness, an area described as “one of the most ecologically intact and functional landscapes on the planet” [1]. This development may disrupt vital habitats and the ecological balance of the region, including the Kobuk River, which is crucial for the fish and wildlife that Indigenous Iñupiat communities depend on.
Environmentalists and local tribes argue that the road would irrevocably harm the region's water quality and biodiversity. The proposed road and mining development are seen as a direct threat to the communities along the Kobuk River, potentially causing irreparable damage to a landscape of a nearly untouched North American ecosystem. The project could exacerbate the struggles of caribou and fish populations already impacted by environmental changes, compounding the difficulties faced by local communities reliant on these species for subsistence [1].
The opposition to the Ambler Access Project is deeply rooted in the need to preserve “one of the last” great wilderness areas, protect the livelihoods and traditions of Indigenous populations, and uphold the environmental integrity of a uniquely pristine area against the potentially devastating impacts of extractive industry development.
Proponents
On the other hand, Ambler Access Project has robust contributions to economic development and the strategic importance of domestic mineral production for advancing green energy transition. Proponents emphasize the critical nature of the road for accessing one of the world's most significant copper-dominant polymetallic deposits. This access is deemed essential for furthering development within the Ambler Mining District, which could substantially contribute to America's clean energy future.
Moreover, AIDEA asserts that the project aligns with federal laws and the promises made at Alaska's statehood, which support the development of state lands and access to minerals [2]. The potential denial of the project is seen as a contradiction of these federal commitments to Alaska, undermining opportunities for development and economic growth. The projected economic benefits from the project are significant, promising over $1.3 billion in tax and royalty revenues and the creation of jobs, vital for the economic well-being of Alaskan communities. This development is viewed as a necessary step toward mitigating economic stagnation and providing sustainable employment opportunities in areas with high unemployment.
Lastly, proponents argue that denying the project would lead the United States to continue importing critical minerals from countries with less stringent environmental practices, thus contradicting environmental objectives and reducing control over the supply chain. The argument is cited almost for any extractive resource development in North America that refusing these strategic projects on mere environmental grounds ironically would result in sending jobs overseas and relying on mineral imports that may not adhere to the stringent environmental standards upheld in North America.
Copper
To understand the strategic importance of Ambler project, it is important to considers Copper's vital role in the green energy transition. By 2035, the worldwide demand for copper is projected to double, largely driven by its critical applications in renewable energy systems, electric vehicles (EVs), and efficient energy transmission networks [7]. In electric vehicles, copper is essential for batteries, motor windings, wiring, and charging stations, with the average electric vehicle using approximately four times more copper than traditional vehicles. This demand shift emphasizes the need for significant investments in copper production as a strategic resource.
Similar Debates in Canada
Most interestingly, the debate surrounding Alaska's Ambler Access Project reminds of a recent debate around the decision by the Canadian Supreme Court, which underscored a similar conflict over jurisdictional boundaries in the federal government's Impact Assessment Act (IAA) [8].
The court, with a majority of 5-2, found that the IAA’s application to specific in situ projects in Alberta is unconstitutional exertion of federal authority, and it undermines Alberta’s rights to manage its natural resources. This ruling highlighted Alberta's argument that the IAA potentially hinders provincial economic development by imposing federal evaluations that is not align with provincial objectives.
This Canadian case mirrors the arguments put forth by proponents of the Ambler project. They maintain that the project is in compliance with federal laws and aligns with the commitments made at the time of Alaska’s statehood, which support the development of state lands and access to minerals.
Advocates for the Ambler project argue that the potential federal denial of the road construction contradicts these foundational agreements, notably the Statehood Act of 1958 and the Alaska National Interest Lands Conservation Act of 1980, which were intended to secure Alaska's rights to develop and benefit economically from its resources.
Question then Becomes
The Ambler Access Project stands as an interesting example of the mining industry's crucial role in the green energy transition tradeoff with its potential environmental, social and governance impact in regional context, all within the political arena of shifting narratives.
Addressing the contextual social and political complexities facing the mining industry remains a formidable challenge. However, in an era where social media exerts a substantial influence on public opinion, it is crucial for the industry to adopt a strategy of transparent engagement with local communities.
The mining industry track record in managing environmental, social, and governance issue is not stellar, and given the increasing public scrutiny and criticism of the mining industry, it is essential for stakeholders to proactively communicate both the potential benefits and drawbacks of mining projects.
Proponents of the Ambler project contend that the potential denial of the project is a politically motivated decision that overlooks substantial local support and the legal entitlements granted to Alaska for resource development. Such perceptions of political agendas, as inevitable as may seem, cast a shadow over industrial development in the US and Canada, introducing unquantifiable risks that could deter investment.
Previously, the Ambler project was considered substantially de-risked, having secured environmental permits and backed by a global mining company and state politicians, to the extent that discussions had shifted towards securing smelting capacity. Yet, the project was abruptly halted, leading to significant financial losses. This situation begs for reflection on what steps might have been taken with greater diligence to navigate and mitigate these hurdles effectively.
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References
All websites accessed in April 2024.
New York Times, Interior Department Rejects Ambler Road Project in Alaska, https://www.nytimes.com/2024/04/16/climate/ambler-road-alaska-interior.html
Alaska Industrial Development and Export Authority (AIDEA), https://www.aidea.org/About/News-Publications/Press-Releases
Trilogy Metals Inc. https://trilogymetals.com/
Mining Data Online, https://miningdataonline.com/property/1831/Arctic-Project.aspx
Alaska Business Readying 2022 Pre-Development of the Ambler Mining Road, https://www.akbizmag.com/industry/mining/readying-2022-pre-development-of-the-ambler-mining-road/
Trilogy Metals Inc. February of 2022, Update on the Ambler Access Project. https://trilogymetals.com/news-and-media/news/trilogy-metals-provides-update-on-the-ambler-access-project/
S&P Global, Growing appetite for copper threatens energy transition and climate goals, https://www.spglobal.com/marketintelligence/en/mi/research-analysis/growing-appetite-copper-threatens-energy-transition-climate.html
Dentons, Lost focus: Supreme Court finds Impact Assessment Act unconstitutional, https://www.dentons.com/en/insights/articles/2023/october/18/lost-focus-supreme-court-finds-impact-assessment.
Notes
This case study on EMP Research will be updated to incorporate future events and perspectives from stakeholders.
If you wish to refer to this article, please use the following citation format:
Zangeneh, P (2024), “Ambler Project: A Modern Case of Mining For and Against the Climate”, EPM Research Letters, https://epmresearch.substack.com/p/ambler-project-a-modern-case-of-mining