Anglo American’s Bristol Bay Controversy: Wildlife vs. Mineral Riches

When Cynthia Carroll became CEO of Anglo American in early 2007, more than a few longtime executives at the 91-year-old mining giant were stunned.

Here was a petite, blond, effervescent American woman parachuting into a $10-billion-a-year company that had always been led by a South African man who'd paid his dues with years of company servitude. Was Carroll, a 51-year-old largely unknown mining executive, really up to the job?

Once in place, Carroll announced that she was not going to tolerate the 30-plus annual mining deaths that had become the norm at Anglo. That was in May. By the beginning of June, the number of employee deaths had climbed to 27. Then the head of the platinum operations in Africa called, his voice quavering. He had bad news: two more casualties.

Carroll was furious. Without consulting Anglo's board or convening a fancy committee, she ordered that the South African mine where the majority of the deaths had taken place be shut down immediately so that the 27,000 employees could undergo new safety training. Ultimately, the mine's shafts were closed on a rolling basis over the course of five weeks, costing Anglo millions.

"I told people, 'I will not lead a company that is killing people,' " Carroll recalls, sitting in her stylish offices at Anglo's headquarters in London. "By shutting down the mine, we sent shock waves through the organization. I don't think anybody ever imagined we would do such a thing." But she made her point -- and erased any lingering doubts about whether she was tough enough.

Now Carroll is focused on another outsized goal. She is seeking to build a copper, gold, and molybdenum mine in a pristine region in southwestern Alaska called Bristol Bay that's home to one of the planet's largest wild-salmon populations. The project is so risky that it had been languishing on the corporate back burner until Carroll seized upon it -- and so controversial that she has picked up a new nickname: Cyanide Cynthia, an allusion to the toxic chemical used to extract gold.

The opposition to the so-called Pebble mine is passionate, sophisticated, and well funded. Nine Native American tribal councils, nearly all of the local commercial salmon fishermen, most of the sport fishermen who fly in during the summer, and a handful of environmental organizations all insist, loudly, that a large mining operation would devastate the salmon and poison the water.

For Carroll, Pebble is a chance to demonstrate that Anglo can be a kinder, gentler mining company -- one that can prosper despite increasingly tight government regulation, social pressure, and environmental rules. "I really thought that we could go about doing Pebble in a way that would bring world-class standards, both in terms of the need to be sensitive to the environment and to make a difference to the community," she says. "This is something we know how to do."

Pebble could also be hugely lucrative for Anglo's portfolio. The vast deposits -- 74 billion pounds of copper, 87 million ounces of gold, and more than 4 billion pounds of molybdenum -- could be worth half a trillion dollars. Or it could be the biggest project the company has ever had to walk away from. Either way, it will be a test case for Carroll's strategy.

And that nickname? She's unruffled. "Our chairman said, 'I can't stand it,' " she says, chuckling, "but I don't get too worked up over any of that."

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On a cold, windy day almost a year ago, Carroll flew to Alaska to tour half a dozen exploratory drilling sites and have lunch with a dozen native Alaskan women in Iliamna, just 20 miles from Pebble. She listened to their worries about lack of opportunity for their children. "I have four children, and I know what it's like to worry about them," she told the women, promising to look into building a day-care facility for mine workers. On the same trip, she met in Juneau with another woman who has made a mark in a male-dominated environment, Alaska governor and now vice presidential candidate Sarah Palin. Carroll says she sought support for Pebble, but the governor declined to take sides, saying, "We have to listen to the people." Turns out that listening to people is a classic Carroll move.

Raised in Princeton, New Jersey, Carroll stumbled into geology at Skidmore College to, as she puts it, "get science over with." Fascinated with studying things that had been hidden in the earth for billions of years and eager to work outdoors, she went on to get a master's degree in geology from the University of Kansas, then an MBA from Harvard. As an oil-exploration geologist for Amoco (now part of BP ), she climbed mountains and rode in helicopters around the western United States and Alaska. Later, at the Canadian aluminum company Alcan (now a division of Rio Tinto ), she worked her way up to the top of its primary metals business, while having four children in six years. "The nurse was not happy," she recalls, when she fielded phone calls onan important deal while she was in labor with her first child.

The balancing act became too much even for her after her third child was born, and her husband, David, an accountant, quit his job to stay at home with the kids. That allowed Carroll to travel to virtually all corners of the earth, where she often faced people who didn't want Alcan setting up shop in their backyards. She cultivated a touchy-feely strategy for dealing with community resistance. In Candonga, Brazil, for instance, a plan to build a hydropower plant faced fierce opposition because it required the relocation of 120 indigenous families. Carroll dispatched a trusted colleague to live in what one former Alcan exec calls a "zero-star-type hotel" near Candonga for six months, talking to people and giving them a say in where their new village would be located and what it would look like. Eventually, all 120 families moved willingly.

Carroll hopes similar tactics will work in Alaska. She calls it a strategy of "engagement," which is a fancy way of saying that the Pebble Partnership -- the company formed by Anglo and its 50-50 joint venture partner, the small Canadian company Northern Dynasty -- is talking to everyone who has an opinion about the mine. The partnership hired the Keystone Center, a nonprofit outfit in Colorado, to mediate discussions with stakeholders ranging from native Alaskan villagers and sport fishermen to government officials and environmentalists. These meetings are part of the partnership's $14 million public affairs budget for this year. "It's communicating and being open and transparent, and giving people a venue to provide feedback and have an exchange," Carroll says. And to supplement the talk, there's money: grants of $1 million a year for five years for fishing and other economic development projects.

During her Alaska trip last fall, she did some diplomacy herself. She promised business leaders that Anglo would not build Pebble "if the mine cannot be planned in a way that provides proper protections" for the salmon and other wildlife. Carroll later told me she would proceed only if "a majority of the community" is in support of the mine. And "the community," she makes very clear, means local residents and Bristol Bay commercial fisherman, not wealthy outsiders who fly in to fish. "I will not go where people don't want us. I just won't," she says. "We've got enough on our plate without having communities against us."

"I will not go where people don't want us," Carroll says. "I just won't. We've got enough on our plate without having communities against us."

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An unspoiled expanse of icy tundra for much of the year, Bristol Bay is glorious in summer, when its endless lakes and rivers turn crystal blue. Deposits of gold, copper, and molybdenum were first discovered here in 1988, and active exploration has been going on since 2002. To say the location is challenging for mining is an understatement. The deposits sit at the headwaters of two of the rivers that make up the Bristol Bay salmon fishery. Salmon are very sensitive to the unintended but not uncommon consequences of mining, notably seepage into rivers of heavy metals such as lead and mercury and toxic chemicals such as cyanide. Pebble's mine waste would also contain naturally occurring sulfide, which becomes acidic when exposed to oxygen and water -- a big problem for aquatic life. Because the area is so wet, containing or reversing a spill would be very difficult. Finally, there are earthquakes. Southwest Alaska is in an active seismic zone; the Lake Clark fault line runs less than 20 miles from the Pebble site.

The Pebble Partnership's Web site promises "multiple seepage control and monitoring features" to ensure that contaminants do not enter the water systems, but Carroll says it is too early to say exactly how such a large operation would work. The partnership is still doing field research and exploratory drilling, she explains; detailed plans will not be ready until late 2009. "I'm asking people not to prejudge and take positions before they have the facts and before we understand the science," she says. Sean Magee, spokesman for the partnership, acknowledges that environmental and cost concerns make it likely that less than 100% of the deposit will be mined.

Opponents are wary of any development. "I can't think of a mine site that's more difficult," says Bruce Switzer, a former mining-company executive who is a senior technical adviser for the anti-Pebble group Alaskans for Clean Water. "Carroll and the Pebble people are all nice and friendly, but the reality is that that mine will be the end of the salmon sooner or later."

Brian Kraft, who runs two lodges on rivers near the Pebble deposit, says he considered himself neutral on mining until he flew over the proposed mine site in a small plane with one of his fishing clients, an engineer at a U.S.-based global gold-mining outfit. "The guy looked down and saw all the groundwater and said, 'No way can you do this,' " remembers Kraft, who now heads the anti-Pebble group Bristol Bay Alliance. "He said that for sure there are going to be water-quality problems. He explained that his company has issues [with groundwater contamination] at some of their mines where they have to truck in clean drinking water -- and those mines are in the desert."

Lodge owners like Kraft are often accused of exhibiting the classic not-in-my-backyard response to development projects. It's a charge most often leveled against Bob Gillam, the Anchorage-based money manager who has been one of the biggest single financial contributors to anti-Pebble efforts. Every summer, Gillam invites friends and influential fishing enthusiasts to his house on Lake Clark, some 30 miles from the Pebble site. (Gillam's office referred all inquiries to the Renewable Resources Coalition, which has received the bulk of his donations.)

But there are backyards and backyards. For the native Alaskans in the half-dozen villages near the mine site, salmon is a critical component of life. Jack Hobson, president of the tribal council of Nondalton, population 220, says he eats salmon two or three times a week. This is not simply a matter of tradition -- or taste. Largely because there are no roads leading to the outside world, other kinds of food are exorbitantly expensive in Bristol Bay villages. At the general store in Iliamna, the town closest to the mine, a gallon of milk runs $12, a dozen eggs $5.50, and a box of Cap'n Crunch $8.35.

Hobson, a 49-year-old father of three boys, says he worries about what a massive mine could do to the salmon and the underground water that sustains his village. "I'm not against mining," he says, wearing a T-shirt featuring the word PEBBLE with a line through it. "I just think there's too much risk with that location. If anything gets into the groundwater, they'll never get it out."

He says his eyes were opened to the dangers of mining during a trip around the western United States that was sponsored by anti-Pebble groups. He and 16 other native Alaskan leaders were driven through the desert in a fleet of minivans to the Yerington mine in Nevada, an abandoned copper mine that has unleashed a toxic slew of heavy metals into the groundwater, and the huge Bingham Canyon copper mine in Utah, where a plume of contaminated groundwater extends for 20 square miles. Hobson says he learned that metal mining is the biggest polluter in the United States, responsible for 29% of all toxic releases in 2006.

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The balance of public opinion in Bristol Bay has always tilted against Pebble. But Carroll has one compelling counter-argument: The mine will bring jobs and economic development to an area that has neither. The partnership has said that, if Pebble goes ahead, it will hire and train as many local residents as possible for the 1,000 permanent jobs, which will likely pay the state average for mining jobs of more than $80,000 a year.

That prospect has won over some local people, including Myrtle and Elia Anelon, ages 68 and 73, respectively. Hanging in the living room of their house, a small single-story structure overlooking one of the area's many lakes, are a dog sled and wooden snowshoes that Elia once used as a trapper; selling furs used to be both a cultural tradition and a source of income. Now the Anelons are retired, but they worry about their 23 grandchildren. "How are they going to live?" Myrtle asks.

Myrtle, like many people in Iliamna and the neighboring villages, once worked in nearby Bristol Bay, netting salmon for canneries, but as farmed salmon became more plentiful, the prices paid to Bristol Bay fishermen plummeted from $2 per pound in the 1980s to as little as $0.68 a pound today. The only fishermen who have survived are those who were able to invest in ice machines, new boats, and other technology that allow them to market their salmon for higher prices.

Meanwhile, expenses in the community have skyrocketed. "Growing up, we didn't have running water or central heat or electricity," recalls Myrtle. "Now we pay heating bills, water bills, and electricity bills." And like groceries, these services cost more here than nearly anywhere else in the country. INNEC, the local electricity company, charges $0.49 per kilowatt hour, compared to a national average of $0.09, and a gallon of gas costs close to $8. If Pebble were developed, roads would be built to connect Iliamna to the coast, eliminating the need for supplies to be flown in and alleviating some economic pain.

Myrtle says her family has already benefited from exploration work at Pebble. One daughter and two of her three grandchildren with year-round jobs work for the Iliamna Development Corp., which has food-service, payroll, and housekeeping contracts with the partnership. Myrtle also runs a small lodge she rents to Pebble workers.

No one who has been to Iliamna would deny the need for development to stem the exodus of young people and break the cycle of dependence on federal benefits and subsidies. But Pebble foes argue that mining is not the only answer. "We could be doing a lot more with tourism," Hobson says. "There are more people now coming to the area just to see the beauty of it." And with better access to capital, more fishermen could sell fresh salmon directly to high-end restaurants in places like Seattle.

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Alaska has never turned away a mining project. On August 26, Alaskans voted down a clean-water ballot initiative intended to block Pebble, although it did not mention the proposed mine by name. But residents of Bristol Bay -- the community that Carroll has promised to listen to -- voted overwhelmingly in favor of the measure, which would have made it illegal for new mines to discharge toxic waste into salmon-bearing streams or watersheds used for drinking.

"I know we have a lot of work to do, and I accept that," Carroll says. "We're still establishing how we will protect the wildlife and the fisheries. We don't know how big the mine's going to be yet, and we don't know where the tailings pond is going to be. But I'm very optimistic that we can do this in a way that will satisfy all the various concerns and constituencies."

Ironically, a decision to walk away from Pebble could still prove to be a win for the company. Anglo has other rich copper operations, including one that's now being expanded in Chile, and Pebble's research and exploration expenses of as much as $450 million could be written off as a cost of doing business. The big plus would be to Anglo's reputation -- and that could pay off the next time Anglo sets out to build a large new mine anywhere in the world. As Carroll said at a Business for Social Responsibility conference in San Francisco last year, "Resources businesses must contribute to sustainable development if we are to continue to have access to resources."

Carroll would certainly explain a retreat from Pebble by saying Anglo had determined that the mine could not be developed responsibly -- that the fish do, in fact, come first, as one of the partnership ads states. "I think there's a benefit to taking the high road and saying we really do care and want to do things right," she says of this win-win scenario.

Hello, good citizen Anglo. Good-bye, Cyanide Cynthia.