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Why Miners Walked Away From the Planet's Richest Undeveloped Gold Deposit

The Upper Talarik River's headwaters are near the proposed Pebble Mine site in the Iliamna Lake area of the Alaska Peninsula
The Upper Talarik River's headwaters are near the proposed Pebble Mine site in the Iliamna Lake area of the Alaska PeninsulaPhotograph by Bob Hallinen/Anchorage Daily News/MCT via Getty Images

Before pulling out of the Pebble Mine project last week, Anglo American, one of the world’s biggest mining companies, had invested six years and at least $541 million—in a partnership with Vancouver-based Northern Dynasty Minerals—to develop the site in southwestern Alaska. Wait, pause on that number for a sec: $541 million. That’s right, the London-based multinational and its U.S. subsidiary (AA Pebble) just forfeited a return on more than half a billion dollars of its shareholders’ money. By the end of its 60-day withdrawal from the project (mid-November), that figure will probably end up closer to $580 million. Anglo American has also indicated it will write down a $300 million loss (misreported as a “penalty” elsewhere) to remove the proposed mine as an asset from its books.

Although a far smaller player, Northern Dynasty will soon own 100 percent of the project, thought to be worth $300 billion or more, and vows to carry on. Having completed more than a million feet of exploratory, diamond-core drilling in 1,200 holes, the former partners also amassed a 27,000-page study of the terrain, but had not begun the formal permitting process. In fact, Northern Dynasty has plowed $180 million into Pebble since it first secured the rights to the region in 2001. Huge mining consortiums frequently seed nine-figure projects, but $760 million-plus is still a large sum, so why did Anglo American bail now? In the statement that accompanied the Sept. 16 decision, its chief executive officer, Mark Cutifani, explained that the move was not driven by a reassessment of the site’s potential, but an effort to “prioritize capital to projects with the highest value and lowest risks.”