An old airstrip and work camp are being used in the effort to develop mineral deposits at Icy Cape. The Alaska Mental Health Trust Land Office owns the land and mineral rights and is overseeing exploration. (Photo courtesy Alaska Mental Health Trust Land Office)

Developers are optimistic about the potential for a beach-sand-mining operation in northern Southeast Alaska.

The Alaska Mental Health Trust Land Office claims good results from its second season of exploring Icy Cape, on the Gulf of Alaska between Yakutat and Cordova.

When mountains erode, they shed tiny particles of rock. They’re washed into streams to be deposited in lakes, deltas or the ocean.

In the Gulf of Alaska, strong waves toss them back on shore to help form beaches.

When those mountains contain veins of rare minerals, those sediments may have enough value to be worth mining.

That’s what’s happening at Icy Cape, where crews are drilling into the beach to see what – and how much — is there.

“There is gold, there’s zircon, there’s garnet, there’s epidote, there’s some platinum,” said Wyn Menefee, acting executive director of the land office of the Alaska Mental Health Trust Authority.

Its Icy Cape property includes about 25 miles of beach, plus forested uplands as wide as 2.5 miles. Those forests cover layers of sand and could be developed.

It’s an isolated area, about 75 miles west-northwest of Yakutat and nearly twice that distance east-southeast of Cordova.

“Right now, we’re in the exploration phase, which is determining what the resource is now, the lay of it … and we’re not at the point of identifying how we’re actually going to mine it,” he said.

About a year ago, the trust’s board allocated $2 million toward the project.

Officials said the new source of income could surpass all of its other efforts, bringing in hundreds of millions of dollars annually.

A work crew of about 16 spent last summer drilling cores from the sands, which stretch as far as 100 feet below the surface in some areas. Menefee said those samples are being analyzed.

The results have caught the attention of potential investors.

“We already have international companies that are interested in the project. They’ve already been visiting the site. They’ve already been trying to check out the resource and trying to see what quality it is,” he said. “This is a continual process.”

Land trust officials will discuss their plans for mining Icy Cape at meetings in two nearby communities.

The first is 6:30 p.m. Nov. 1 at Yakutat High School. The second is 6:30 p.m. Nov. 2 at the Cordova Center.

Gold and platinum’s value is obvious.

The other minerals have industrial uses as sand-sized particles.

The Trust Land Office manages its property to support mental health services for Alaskans.

It usually does that by leasing property or selling resources, such as timber, for others to harvest or extract.

But in this case, the agency is putting its own money into exploration and – possibly – development.

“We could potentially lease it out to an entity. We could lease it out to multiple entities. We could potentially go into a joint venture with entities,” he said. “There’s a lot of options that could be on the table.”

Menefee said further exploration is needed to determine whether there’s enough value to develop.

He expects that to take several more years.

The Alaska Mental Health Trust Land Office is developing its property at Icy Cape, which runs from the beach to the mountains. Logging will begin next year and and a mining project is in the exploration phase. (Photo courtesy Alaska Mental Health Trust Land Office)

Menefee said it will be a placer-mining operation, which sifts through material near the surface, which would impact the environment less than mining into bedrock. It will also take advantage of existing roads, left over from earlier development.

But the potential project still raises concerns, especially about salmon habitat.

“Virtually every river and creek within the proposed area is listed on the anadromous streams catalog,” said Guy Archibald, staff scientist for the Southeast Alaska Conservation Council.

He worries, because a dozen streams and rivers flow through the land that could be mined. Like most nearby waterways, they’re short and their mouths are sometimes protected by sandbars or spits.

Archibald said they’re susceptible to the gulf’s frequent heavy winds and waves.

“I’m just concerned if they start removing these barrier sands, basically strip-mining them, that it’s going to expose the foot of these rivers to massive erosion during the winter storms and create a barrier to fish passage,” he said.

The Mental Health Trust Land Office plans to harvest more than minerals from the site.

It’s sold roughly 50 million board feet of timber to Sealaska Corp., Southeast’s regional Native corporation.

Menefee said he expects Sealaska to begin logging next year.

The property is within the boundaries of the Yakutat Borough. Officials there did not respond to requests for comment by deadline.

A somewhat similar proposal was made by an out-of-state company for mining beach sands in and near Yakutat about six years ago. That effort ended after initial mineral values could not be confirmed.

Editor’s note: KTOO’s building sits on land leased from the Alaska Mental Health Trust Authority. KTOO has also applied for and received occasional grants for special reporting projects from the authority.

About forty people turned out for a meeting organized by the Sitka Conservation Society to discuss HB77, a controversial permitting bill before the Alaska legislature. (KCAW photo/Rachel Waldholz)

Last week (Thurs 2-13-2014), about 40 people jammed into the Homeport Eatery in downtown Sitka to speak out against a proposed law, House Bill 77. HB77 is part of an effort by the Parnell Administration to streamline the permitting process at the Department of Natural Resources. But some Sitkans are joining a chorus of critics who say the bill goes too far.

Listen to iFriendly audio.

About half an hour into the meeting, moderator Eric Jordan asked if anyone wanted to speak in favor of HB77.

JORDAN: Is there anybody here who wants to speak in favor of the bill?

Nobody did. Instead, most of the evening’s testimony sounded something like this:

BAINES: The Sitka Tribe has taken a stance in opposition of HB77.
SCORZELLI: We’re against it. We’re against HB77.
HARRIS: I think the whole bill should pretty much just be scrapped.

That was Michael Baines, of the Sitka Tribe; Andrew Scorzelli of the Chum Trollers’ Association; and Scott Harris of the Sitka Conservation Society.

HB77 would make a host of changes, large and small, to the way the Department of Natural Resources permits projects on state land. Critics say the bill would severely curtail public input on resource decisions. The Parnell administration says Alaska needs a more streamlined permitting process to ease development.

“We had gotten into quite a hole with backlogs of authorizations,” said Wyn Menefee, the Chief of Operations for the Division of Mining, Land and Water at the DNR. Menefee was supposed to attend the meeting in Sitka, but his flight was cancelled because of snow. Speaking later to KCAW, Menefee said that HB77 will make the DNR more efficient.

“We’re trying to tackle that and trying to make sure that we can be an agency that can provide timely, certain and efficient authorizations for folks,” Menefee said.

But at the meeting in Sitka, speakers said the bill is an overreach.

“I think everybody has seen situations – hatcheries is a perfect example – where the permitting process can seem overly burdensome,” said Linda Behnken, executive director of the Alaska Longline Fishermen’s Association. “But overly burdensome is better than irreparable harm.
”

Speakers at the meeting worried that the bill would give the DNR commissioner too much authority, and limit the public’s right to appeal DNR decisions. The bill would restrict appeals to people who can prove they are “substantially and adversely affected” by a decision, as opposed to simply “aggrieved” in the current language; another section stipulates that only people who  participate “meaningfully” in the public comment period will be allowed to appeal.

Speakers at the Sitka meeting also raised the question of water reservations.

“Right now, individuals, organizations, tribal governments can apply for permits to protect in-stream flow to make sure there’s adequate water to meet the needs of salmon in a stream at any time of year,” Behnken said. “And that opportunity will be precluded with HB77.”

Whereas a water appropriation takes a certain amount of water out of a river or lake, a water reservation keeps a certain amount in a body of water – for instance to protect fish habitat or water quality. Right now, anybody can apply for a water reservation – including any individual, nonprofit, or tribe. The wording in HB77 would limit that right to government agencies.

Until now, water reservations haven’t been a major issue in Southeast. That’s because it applies to state land, and most land in Southeast is federal. But, speakers said, it represents what they object to most in the bill: stripping away the ability of the public to participate in resource decisions.

Menefee said that individuals can still partner with government agencies to apply for water reservations. He said this section of HB77 grew out of a worry that the reservations were being abused as a tactic to stop major projects.

“There are reservations filed on rivers for pretty much the biggest projects around,” Menefee said. “For instance there’s reservations on the Chuitna coal area, on Pebble, on Susitna Dam, on the coal development in Sutton. I mean, if you go through and you look at the different larger projects that are going along, each one of them has a person applying for a water reservation on them.”

But, Menefee said, in response to public opposition, the DNR is working with legislators to make some changes to the bill before it comes up for a vote in the Senate.

“We heard loud and clear the concerns about still allowing people to apply,” Menefee said. “So we’re trying to find language that we can address that.”

Both of Sitka’s legislators, Senator Bert Stedman, a Republican, and Representative Jonathan Kreiss-Tomkins, a Democrat, oppose the bill.

Stedman said that the bill was written too broadly, and pushed through without enough public input.

“This is a classic example where an issue is driven mainly by railbelt elected officials, in an attempt to basically drive it right over the coastal legislators,” Stedman said.

The bill passed the House last year; to become law, it has to pass the Senate and be signed by the Governor. The bill is currently in the Senate Rules Committee — in Stedman’s words,
 “about one inch away from a vote.
”

Back in Sitka, Scott Harris spoke for many in the room when he said, “The people that manage public resources need to listen to the public.”

“That’s America,” Harris said. “That’s Alaska. That’s democracy. And yes, it’s harder, it takes more time, you have to find consensus among different opinions, but tough, that’s the way it needs to be if you’re talking about public resources.”