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Graphite One Clarifies Intent for AIDEA Funding; Senate Bill 203 On Hold

The proposed Graphite Creek mine site that has a net present value of over $1-billion according to the latest assessment. Photo Credit: Graphite One Resources (2017)
The proposed Graphite Creek mine site has a net present value of over $1 billion, according to the latest assessment. Photo Credit: Graphite One Resources (2017)

Though it’s still about five years from being operational, Graphite One is seeking funding now for its proposed mine in the Imuruk Basin along the Kigluaik mountains.

Last week, Graphite One Resource’s Executive Chairman, Doug Smith, and Joy Huntington, the head of community relations, visited Brevig Mission and Teller to discuss their intent in seeking funding from Alaska Industrial Development and Export Authority (AIDEA). Smith says the project still has a lot of work left to do, besides securing enough money.

“We also have to complete all of the various environmental background studies. So, we have progressed through to the feasibility study, and there are some 40 permits that need to be applied for and approved on both the environmental and regulatory side, and then the project would have a green light to proceed. We would then need to do funding to carry on, and then at that point, we would also have to have offtake agreements with potential customers.”

Some concerns from residents in the region, like Teller’s Mayor Blanche Okboak-Garnie, were that this project would use money that could be spent on other needs in Western Alaska, such as water and sewer infrastructure. Huntington explains that the specific AIDEA funding Graphite One is seeking through Senate Bill 203 would not take away from other grants.

“Based on what we heard at the committee hearing, a lot of people thought it was a grant being provided by AIDEA, which could possibly take away from critical services being provided, which, of course is not the case, since it would be debt to the project, and they would have to pay that back plus interest.”

Huntington says based on what she heard from public testimony after their meetings with communities, local residents felt more comfortable about the bill.

Even if Senate Bill 203 passes, and AIDEA does decide to loan money to the Graphite One project, Smith says it will only cover up to $80 million of the mine’s total costs. The company is not required to take AIDEA’s money, and the mining project will still have a seven-year window to use the funds:

“They (AIDEA) would then do their own diligence and determine whether from their perspective it was a prudent loan or not, and also at that perspective for them to proceed, they would need to have local/regional approval, and in this instance, because it’s not within a borough or anything else, as our understanding is, the Governor would appoint a five member resource advisory council from the region, and they would then provide that approval to AIDEA for them to proceed.”

Currently, Senator Donny Olson’s proposed bill has been referred to the Community & Regional Affairs and Finance committee. Olson said previously that SB 203 won’t advance further until the communities affected by the project support the bill.

Image at top via Graphite One Resources (2017).

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