Teck Alaska files complaint over tax hike that could triple 2016 payments

TORONTO (miningweekly.com) – Canadian diversified miner Teck Resources has filed a legal complaint with the Superior Court for the State of Alaska over a tax increase that Teck estimates could more than triple its yearly payments as of 2016.

The company’s subsidiary Teck Alaska, the operator of the Red Dog zinc/lead mine, in north-west Alaska, had argued that the tax increase might impact on the competitiveness and longevity of the mine, putting jobs and economic activity at risk.

"This tax increase could impact the longevity of Red Dog and put the jobs, revenues and the economic opportunity it creates in the region at risk. This massive tax hike could not come at a worse time, as the mining industry is in the midst of the biggest downturn in decades. All we are asking is for the Borough to come to the table and negotiate a reasonable payment that supports the region and the continued operation of Red Dog,” stated Red Dog GM Henri Letient.

Teck noted that Red Dog had provided yearly tax contributions to the Northwest Arctic Borough (NAB) for more than 25 years under a negotiated Payment in Lieu of Taxes agreement, which averaged about $11.5-million a year over the past five years – more than double the average borough tax payment for an Alaskan mine.

If legal, this tax would increase the payment to an estimated $30-million to $40-million a year over the next five years, which is about seven times greater, on average, than the next highest municipal taxes paid by any other mine in the state, according to Teck.

In its complaint, Teck requested an injunction against enforcement of the severance tax and a requirement for the Borough to meet with Teck to negotiate a new payment agreement.

Red Dog was the largest private-sector employer in the NAB, with about 715 jobs in the region being mine-related, and about $75-million in wages paid each year. Red Dog spent about $160-million on goods and services within Alaska each year. It had provided NAB with about $140-million since mining began; more than $880-million to state government agencies and over $695-million to federal government agencies.