In what is described as a “win-win” situation, the U.S. Forestry Service will allow a subsidiary of Kennecott to explore for and extract minerals from a parcel of land within the Tongass National Forest in Alaska.
The 7,500-acre parcel of ground is adjacent to the Greens Creek silver-gold-zinc-lead mine which opened in 1989 and closed in 1993 because of low metal prices.
Kennecott holds a 57.8% interest in the Greens Creek mine and mill complex which is located on Admiralty Island, near Juneau. During its last full year of production, the underground mine produced 7.1 million oz. silver and 32,400 oz. gold, plus zinc and lead concentrates.
A subsidiary called Kennecott Greens Creek Mining initially will pay US$1 million to the Forestry Service, which the latter will use to acquire land elsewhere.
Should a production decision eventually be made, Kennecott would pay an unspecified royalty to the Service; after mining operations have concluded, the land would be returned to the government.
The precedent-setting accord follows unsuccessful attempts by the U.S. Congress to reform hard-rock mining law by levying royalty payments against mining companies.
The agreement has yet to be approved by Congress, which would be required to set the royalty payments and authorize the land acquisition fund.
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