January 30, 2018

By  Nicole Mordant  

VANCOUVER (Reuters) – Shares of mine developer Northern Dynasty Minerals Ltd fell more than 20 percent on Monday, the first trading day after a U.S. regulator’s surprise move to keep restrictions on the company’s big copper and gold mine project in Alaska.

The U.S. Environmental Protection Agency reversed itself on Friday by maintaining restrictions on the proposed Pebble copper and gold mine in southwest Alaska’s Bristol Bay region, saying it needed more time to assess the project’s impact on the environment and area fisheries.

Pebble holds one of the world’s largest undeveloped copper and gold deposits. Its development, near one of the biggest sockeye salmon fisheries on earth, has been fiercely opposed by environmentalists, native groups and fisherman for years.

Also on Monday, pressure mounted on First Quantum Minerals, a potential partner on Pebble, to cut its ties with the project. First Quantum shares closed 2.5 percent lower at C$18.40 in Toronto trading.

Both Northern Dynasty and EPA Administrator Scott Pruitt said on Friday the move would not derail the Pebble mine’s permit application process. But it was the first sign the project’s path may not be as smooth under the mining-friendly Trump administration as some analysts and the company had predicted.

John Chiang, a trustee of the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, on Monday sent a letter to First Quantum requesting it to cut ties with Northern Dynasty and Pebble.

The two large U.S. public pension funds are shareholders of First Quantum, a Canadian miner which last month agreed to consider becoming a partner in Pebble to help fund the multibillion-dollar project.

“I am concerned that the Pebble Mine operation will trigger unavoidable significant environmental and social damage, infringe on the rights of indigenous peoples and raise a host of regulatory, operational, legal, and reputational risks for any company that pursues the endeavor,” Chiang said in the letter, a copy of which was seen by Reuters.

First Quantum did not respond to a request for comment.

Northern Dynasty’s U.S.-listed shares closed down nearly 22 percent at $1.20. In Toronto, the stock fell 20 percent to C$1.50 after dropping as low as C$1.39.


Northern Dynasty shares had quadrupled in the months after Donald Trump won the 2016 U.S. presidential election on expectations the long-stalled project would face an easier road under an administration keen to reduce environmental regulations to benefit business.

That view gathered steam when in May 2017 the EPA agreed that Pebble’s permitting process would be reviewed in a “fair, transparent” way.

Under former President Barack Obama, the EPA in 2014 unveiled proposals to limit large-scale mining in the Bristol Bay area, even before Northern Dynasty had started the permitting process, citing environmental concerns.

Last July, new EPA head and Trump-appointee Pruitt began a process to withdraw the restrictions. But on Friday, Pruitt said he was suspending that process. “It is my judgment at this time that any mining projects in the region likely pose a risk to the abundant natural resources that exist there,” he said.

Environmental groups applauded the move but Northern Dynasty Chief Executive Officer Ron Thiessen downplayed Pruitt’s about-face, saying the May 2017 EPA agreement is what ”drives everything.

“From my perspective this has done nothing to us … This in no way impairs or jeopardizes the (permit) process,” he said in an interview late on Saturday.

Northern Dynasty last month started the permitting process for Pebble and is studying a smaller mine design than before.

Chris Mancini, research analyst at Gabelli Funds, which owns Northern Dynasty shares, said he was “hopeful” that the Pebble project “can be built in such a way that the fishery will not be negatively impacted.”

Reporting by Nicole Mordant in Vancouver; additional reporting by Yereth Rosen in Anchorage; Editing by Jeffrey Benkoe and Matthew Lewis