UPDATE 1-Miner Anglo drops out of Pebble project in Alaska
* Comes after Anglo pledged to halve potential mine pipeline
* Leaves Northern Dynasty alone to develop project
* Pebble rich in copper, gold; faces environment challenges
* Northern Dynasty shares plunge, Anglo up 1 pct (Updates with detail on Northern Dynasty shares, background)
By Clara Ferreira-Marques and Julie Gordon
LONDON/TORONTO, Sept 16 (Reuters) - Mining group Anglo American has pulled out of the Pebble copper-gold project in Alaska, less than two months after pledging to halve a $17 billion pipeline of potential mines and bring down the cost of keeping future options open.
The decision, announced on Monday, leaves junior exploration company Northern Dynasty to push ahead alone with the plan to develop one of the largest copper-gold deposits in the world - but also a hugely environmentally challenging project that has already been studied for almost three decades.
Anglo's decision is unlikely to come as a shock to investors, but confirms new chief executive Mark Cutifani's ambition of tackling lagging returns and what he called in July a "constipated" pipeline of future mines.
He promised then to cut spending and slash costs like the annual $950 million spent keeping afloat early stage projects like Pebble. That number alone will come down by a third, the company said at that time.
Anglo, like many others in the industry, has been heavily criticised for its execution of complex projects to build mines from scratch - so-called "greenfield" projects. Its Minas Rio iron ore mine and port in Brazil has been hit by repeated delays and cost overruns.
Pebble, some 200 miles (320 km) southwest of Anchorage, could be similarly challenging.
It is one of the largest new discoveries of recent decades, during which fewer and fewer potential new mines have been uncovered. It could also be one of the world's largest open-pit copper-gold mines, and defenders argue it would be a much-needed economic boon for the region.
But it has faced strong opposition from environmentalists and some local residents.
In an April report, the U.S. Environmental Protection Agency (EPA) said a large scale open-pit mine in Alaska's unspoiled Bristol Bay region would destroy up to 90 miles (145 km) of salmon and trout spawning streams, harm thousands of acres of wetlands that support fish and subject local waters to chemical spills and releases of untreated wastewater.
The Pebble Partnership - the 50:50 joint venture between Anglo and Northern Dynasty - said then that it had not yet submitted its development plan to regulators. It called the EPA's report - based on a project similar to Pebble - a pre-emptive attempt to veto the project and argued it should be allowed to go through the proper regulatory process.
Northern Dynasty, a member of Hunter Dickinson mining group, has been working on Pebble since 2001. The project has a measured and indicated resource of 55 billion pounds of copper, 67 million ounces of gold and 3.3 billion pounds of molybdenum.
The Pebble Partnership was set up in 2007. As of June, according to Northern Dynasty, Anglo American Pebble, a subsidiary of the global mining group, had funded $541 million of spending.
Anglo said it would record a $300 million impairment on a post-tax basis after pulling out.
Shares of Vancouver-based Northern Dynasty have lost more than half their value so far this year. The stock traded down more than a third at the open to touch its lowest point since mid 2003. Anglo was up 1 percent, in line with the sector. (Editing by Mark Potter)
- Housing, jobs data weaken, but overall economic picture still upbeat
- Last-minute Obamacare exemption for those with canceled plans
- UPDATE 6-Target cyber breach hits 40 mln payment cards at holiday peak
- New York Mayor-elect's reputation for lateness parodied on Twitter
- Target cyber breach hits 40 million payment cards at holiday peak |