‘Bait and switch’: House Committee asks A.G. to investigate alleged Pebble deception

Northern Dynasty Minerals (TSX: NDM; NYSE American: NAK) has expressed its “extreme disappointment” at a U.S. Transportation and Infrastructure House Committee report that recommends asking the attorney general to investigate alleged false statements by the company to Congress.

The Canadian proponent of the controversial Pebble copper-gold project in southern Alaska said in a statement Monday that any suggestion that it tried to mislead regulators in any way is “categorically wrong and misinformed of the realities of the Pebble permitting process.”

“Here we go again with politics replacing ‘reality, science and facts,’” said Northern Dynasty CEO Ron Thiessen in a statement.

In releasing their report on Friday, Democratic Reps. Peter DeFazio of Oregon and Grace Napolitano of California, announced they sent evidence of false statements to the U.S. attorney general’s office based on the report’s findings. The report was leaked to the Associated Press ahead of publication.

The report uses internal company documents and communications to demonstrate “clear-cut deception” from Pebble L.P. in their push to build an open pit mine in the world’s largest salmon habitat at Bristol Bay.

The chairs will also ask EPA and the Army Corps of Engineers to revise their regulations and guidelines to crack down on sham permitting and project segmentation.

According to the committee, its investigation uncovered alleged evidence of Pebble L.P. intending to build a mine with a lifespan of longer than 20 years; former Pebble LP CEO Tom Collier lying to Congress that Pebble L.P. had no intention of expanding the mine beyond 20 years; and that Pebble L.P. deliberately sought to mislead regulators regarding the mine’s planned scope to circumvent the Clean Water Act.

“This report exposes in damning detail how Pebble L.P. tried to use a ‘bait and switch’ sham permitting scheme to sneak an environmentally disastrous pit mine project past Congress, regulators, and the Native Alaskans whose ancestral land and way of life would be devastated by their greed,” Chair DeFazio said in a statement.

“The report confirms that Pebble LP CEO Tom Collier was lying in his statement to our subcommittee concerning the scope and scale of the project, as evidenced by contradictory leaked audiotapes. The truth is, the Pebble L.P. executives deliberately sought to mislead regulators in order to avoid more robust environmental public review processes. This conduct is shameful and likely criminal,” added Chair Napolitano.

Meanwhile, Thiessen defended the organization and its Pebble L.P. subsidiary, saying they had been consistent in their disclosure for over a decade. The company had, from the outset, guided that the initial permit would cover the first 20-year mine plan.

Given the world-class size of the Pebble resource, the company stressed it had been saying all along that any additional work, extension or expansion would require the same level of extensive permitting, planning and approvals as the initial phase before it could be undertaken.

“For anyone to conclude that anything materially different from what was in our proposed mine plan could be built and operated without an entirely new permit approval process fundamentally fails to understand how the permitting process works in the U.S.,” he said.

“The T&I committee is playing a risky, short-sighted political game in D.C., with a misguided goal of inhibiting domestic mining. According to Thiessen, the current administration’s persistent opposition to mining and mine development in the U.S. is bad for local economic development in Alaska, bad for the energy transition and for the vast majority of the U.S. population,” according to Thiessen.

Mired in controversy

Opponents and supporters of Northern Dynasty’s long-stalled project are putting pressure on the U.S. Environmental Protection Agency (EPA) to decide on the proposed mine.

Alaska Natives, conservationists and commercial fishermen seem confident the EPA will announce a final ban on disposing mining waste near Bristol Bay, where the project is located, effectively killing the copper and gold mine estimated to be worth US$350 billion.

Northern Dynasty recently said two letters supporting the project had been submitted to the EPA in September. One by the State of Alaska and the other one signed by a total of 14 states, including Alaska, Kentucky, Louisiana, South Carolina, Texas, Utah, West Virginia and Wyoming.

“[EPA’s attempt to block Pebble] diminishes the importance of resource development to Alaska and its people. It also disregards the State’s ability to – and history of – ensuring protection of its own fishery resources through the State’s permitting system,” the Alaska government statement reads.

The document calls the EPA’s move an “unprecedented abuse of its perceived authority” and warns about its implications for the future.

“If finalized…it would impose a blanket prohibition on all future, similar mining projects over a 309-square-mile area, which is 23 times the size of the proposed project footprint and comprises lands owned by the State of Alaska. This veto sets a dangerous precedent,” the letter reads.

The Pebble project has been pursued for more than a decade and faced environmental opposition from the onset. Its development has been surrounded by controversy and delays, including the EPA’s decision in 2014 to propose restricting the discharge of mining waste and other material in the Bristol Bay area, home to one of the world’s largest salmon fisheries.

Building the Pebble gold mine in southwest Alaska would include the construction of a 270-megawatt power plant and 165-mile natural-gas pipeline, as well as an 82-mile-long road and large ponds for the tailings. It would also require dredging a port at Iliamna Bay.

When the mine moves into production, it will be the largest in North America. The current resource estimate includes 6.5 billion tonnes in the measured and indicated categories containing 57 billion lb. copper, 71 million oz. gold, 3.4 billion lb. molybdenum, 345 million oz. silver and 2.6 million kg. rhenium.

The deposit holds 4.5 billion tonnes in the inferred category, containing 25 billion lb. copper, 36 million oz. gold, 2.2 billion lb. molybdenum, 170 million oz. silver and 1.6 million kg. rhenium. Palladium also occurs in the deposit.

Northern Dynasty’s Toronto-quoted equity is down 39% over the 12 months at 33¢, giving it a market cap of $172 million.