Alaska Industrial Development Export Authority staff recommended that AIDEA let its lease with the Skagway Ore Terminal expire in March 2023.
AIDEA paid a consultant to evaluate the cost of reinvesting in the terminal to modernize it and update it for anticipated mining export volumes.
“Our recommendation and conclusion for that assessment is we should let the ore terminal lease expire,” said AIDEA executive director Alan Weitzner at the board’s October meeting.
The rationale for the decision included numerous factors including Skagway’s focus on cruise ship activity, the lack of viable commercial mines coming online in the near term and the high cost of reinvestment given the lack of potential users of an upgraded facility.
“The commercial viability of the market does not currently warrant the amount of capital required for a redevelopment of this scope and scale,” a report states.
“What we looked at principally in coming to our conclusion is (Skagway’s) view of the ore terminal itself. The community as a whole is very focused on the cruise ship activity,” Weitzner said. “The availability is always going to be limited by a priority to cruise ship traffic which is limiting in and of itself.”
The cost to modernize the ore terminal is estimated at $25 -$54 million. It would take about three years to design, permit and construct, according to the report.
If the board approves letting the lease expire, the terminal’s ownership would transfer to White Pass & Yukon Route Railway, which leases the land from the municipality of Skagway.
In its preliminary economic assessment (PEA), Constantine Metal Resources had planned on transporting its ore concentrate from the Palmer Project to Skagway. Constantine president Garfield MacVeigh said the PEA stands as is regardless of the outcome of the Skagway ore terminal.
“The PEA included significant annual operating costs for the Skagway ore terminal,” MacVeigh said. “That will decrease significantly if we ship from Haines whereas the initial capital costs will increase if an ore terminal is built in Haines.”
The harbor basin around the Skagway terminal has been polluted as a result of ore shipment practices dating back to the early 1900s, Weitzner told the board. White Pass transported lead and zinc concentrates via the terminal using open trucks and conveyor systems. The Environmental Protection Agency issued a compliance order to immediately cease the discharge of ore into the water in 1988. The Alaska Department of Environmental Conservation is working to remediate the site. AIDEA purchased the terminal in 1990 at the request of the Skagway municipality and enclosed the ship loader and created a negative pressure system to address fugitive dust.