Support of CS SB 99 - An Act relating to AIDEA

March 31, 2014

Representative Kurt Olson, Chair
House Labor & Commerce Committee
Alaska State Legislature
State Capitol
Juneau, AK 99801

Re: Support of CS SB 99: An act relating to the Alaska Industrial Development and Export Authority

Dear Chairman Olson:

The Resource Development Council for Alaska, Inc. (RDC) is writing in support of CS SB 99, an act relating to the Alaska Industrial Development and Export Authority (AIDEA).

RDC is a statewide, non-profit, membership-funded organization founded in 1975. The RDC membership is comprised of individuals and companies from Alaska’s oil and gas, mining, timber, tourism, and fisheries industries, as well as Alaska Native corporations, local communities, organized labor, and industry support firms. RDC’s purpose is to link these diverse interests together to encourage a strong, diversified private sector in Alaska and expand the state’s economic base through the responsible development of our natural resources.

It is a policy of RDC to encourage the expansion and increased production from existing deposits as well as new exploration and responsible development of Alaska’s mineral and coal resources. CS SB 99 will support future infrastructure and access to known mineral deposits. This will encourage exploration, extraction, processing, and production of rare earth elements in the state.

It will also encourage development of much needed rare earth elements in the state for the benefit of the economic and national security of the United States, corresponding with RDC’s policy. Alaska contains some of the highest-grade REE prospects in world. These prospects will not only provide an economic benefit to Alaska, but will also benefit our nation.

Mineral exploration and development projects are vital to grow our economy and can provide significant economic opportunities, often in rural parts of our state with limited economic opportunities. CS SB 99 builds on past success by authorizing AIDEA to provide financing of a portion of the capital needs for the Bokan-Dotson Ridge and Niblack projects.

AIDEA’s Delong Mountain Transportation System (DMTS) was completed in 1990 and was instrumental in the successful development of the Red Dog mine while also providing significant financial returns back to AIDEA. Red Dog transformed Northwest Alaska by providing well-paying regular and seasonal jobs. CS SB 99 authorizes AIDEA to provide financing to two promising advanced exploration projects in southern southeast Alaska, an area that has suffered economically from the severe decline in the timber industry. RDC urges you to support and pass CS SB 99, authorizing AIDEA to finance infrastructure and construction of the surface complex of the Bokan-Dotson Ridge and Niblack projects.

Concerns that AIDEA will prematurely finance these projects before they are fully vetted and mature for development are unfounded. AIDEA has the expertise and systems in place to conduct due diligence, and must go to the bond market which will require clear demonstration of financing viability. CS SB 99 does not require AIDEA to finance Niblack or Bokan-Dotson Ridge, it simply authorizes financing should the projects meet AIDEA’s financing criteria.

The mining industry, consisting of exploration, development, and production, in Alaska provides for 9,100 direct and indirect jobs with a payroll of $630 million. These are some of Alaska’s highest paying jobs with an average annual wage of $100,000, significantly higher than the state average for all sectors of the economy. Leveraging the capacity of the State’s investment bank, AIDEA, by authorizing financing for promising new potential projects, is a sensible way to encourage diversification and growth of our economy.

RDC encourages the passage of this bill. Thank you for your consideration.

Resource Development Council for Alaska

Cc: Representative Lora Reinbold, Vice-chair
Representative Mike Chenault
Representative Bob Herron
Representative Charisse Millett
Representative Dan Saddler
Representative Andy Josephson 
Representative Craig Johnson