Shares in Canadian mining firm Northern Dynasty Minerals (NYSE:NAK) plunged around -25% today after restrictions were again imposed by the U.S. Environmental Protection Agency (the EPA) this weekend.
The EPA’s restrictions, announced by Administrator Scott Pruitt on Friday, related to a proposed mining project in Alaska under Pebble, an Alaskan mining firm of which Northern Dynasty is a part. The mine, which is to be located in Alaska’s Bristol Bay area, will unearth 1.2 billion tons of material – mostly gold and copper. But local industries, native Alaskans, and environmentalists have been embroiled in a dispute with the EPA over the project for years, which they say will cause enormous damage to the bay’s watershed and the fisheries that operate there. Yet Pebble argues that the project will generate jobs for local residents as well as state revenue. This weekend’s decision marks a huge development in proceedings and is one that has surprised investors and executives alike.
Northern Dynasty and its backers were perhaps becoming complacent over the past year, given the Trump administration’s pledge to improve U.S. industry by pulling back environmental restrictions. Indeed, the decision to stub the mining project in the first place came from Obama’s administration back in 2014. Years of scientific research showed that Bristol Bay’s fish habitat would be significantly harmed if it went ahead. Last year, Mr. Pruitt gave the order for EPA staff to revisit this decision following meetings with Northern Dynasty, and Friday’s result is certainly not what the mining company wanted.
The decision does not necessarily mean that Pebble’s application permit will be denied, however. That decision lies with the US Army Corps of Engineers, though the EPA’s restrictions certainly have slashed its chances.
Wildlife protection organisation American Rivers said in a statement back in 2014 that Pebble would be “North America’s largest open-pit mine, threatening not only clean water and salmon, but the way of life of native tribes and the economy of local communities,” while the organisation’s president Bob Irvin claimed the project is “basically the worst place in the world to locate a mine.”
Meanwhile, Ron Thiessen, President & CEO of Northern Dynasty, remains optimistic about the mine’s eventual permission. “We expect the permitting process for Pebble to advance expeditiously over the next few years,” he said in a statement. “Ultimately, we believe the Pebble EIS will describe a project that protects clean water and the world-class fisheries of Bristol Bay.”
Investors should stand by for news on the project as it develops. Northern Dynasty stocks are valued at $1.18 USD at the time of writing, a new 52-week low.
Featured Image: Huffington Post