Teck Alaska Files Legal Complaint Over Severance Tax Hike
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Teck Alaska, operator of the Red Dog Mine in northwest Alaska, has filed a complaint in the Superior Court for the State of Alaska over a tax increase that Teck estimates could more than triple its annual payments as of 2016. The company believes thatthis tax increase may impact the competitiveness and longevity of the mine, putting jobs and economic activity at risk.
Red Dog has provided annual contributions to the Northwest Arctic Borough (NAB) under a negotiated Payment in Lieu of Taxes (PILT) agreement for more than 25 years, which averaged about US$11.5 million per year over the past five years; more than double the average borough tax payment for an Alaskan mine. However, as of January 1, 2016, in place of a negotiated PILT the NAB has levied a substantial severance tax.
If legal, this tax would increase the payment to an estimated US$30-40 million per year over the next five years; about seven times greater, on average, than the next highest municipal taxes paid by any other mine in the state.
“This tax increase could impact the longevity of Red Dog and put the jobs, revenues and 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,” said Henri Letient, general manager, Red Dog Operations.
The complaint filed by Teck requests an injunction against enforcement of the severance tax and a requirement for the Borough to meet with Teck to negotiate a new payment agreement.
About Teck Alaska
Teck Alaska is a subsidiary of Teck Resources Limited, a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc and energy.
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