June 22, 2012 • Vol. XXXV, No. 11

Riding the Pastel Pass

Quinn Weber of Skagway pedals hard into the wind on the final climb of leg 4 during the Kluane Chilkat International Bike Relay on June 16. See story and more photos in Sports and Rec.

Photo by Kile Brewer

Western Copper shares plans with municipality, AIDEA
Casino anticipates trucks, some Skagway-based drivers


Skagway municipal officials recently met representatives of Western Copper and the Alaska Industrial Development and Export Authority to discuss the Casino mine owner’s potential Skagway port presence.
In a June 14 meeting, Cameron Brown, Western Copper’s vice president of engineering, told borough assembly and port commission members that Skagway is the preferred port for shipping the company’s copper ore because of the town’s proximity to Western Copper’s Casino project.
The Casino Mine is located in western Yukon, about 350 miles from the Municipality of Skagway, and lies within the Selkirk First Nation traditional territory.
Brown said the company is looking at the second or third quarter of 2019 for a shipping start date. As of now, Casino has a life expectancy of about 23.5 years, but Brown said that number could be bumped up in the future.
Brown estimated 25 trucks per day would come through Skagway shipping about 350,000 tons of copper in the mine’s early years, and about 275,000 tons in subsequent years.
Thinking about the year-round economy of Skagway, municipal officials asked Brown to consider the possibility of Western Copper using White Pass and Yukon Route to transport its ore.
Brown said the company isn’t thinking about rail as an option at this time because it couldn’t consider something that is speculative in nature in the feasibility study.
Also, as a rule of thumb, Western Copper wouldn’t use rail transportation for any distance less than 500 miles, but Brown said the company would consider using rail in the future if it were economically feasible.
“If it made commercial sense, we would migrate from trucking over to rail in a heartbeat,” he said. “But where we are today in terms of going forward with the feasibility study, we have to base it on the here and now, and the here and now is I’ve got a good port facility and I’ve got a viable trucking operation that is cost effective.”
But that doesn’t mean Skagway jobs are ruled out.
The 10-hour, one-way ore haul would require two drivers per trip, and Brown said he thinks it would make commercial sense to have drivers located in multiple areas throughout the region.
Brown said it would ultimately be up to a company contractor where the truckers are based, but he said he anticipates Skagway seeing some of those trucking jobs.
“My expectation is that you will probably see some truckers based right here in Skagway, some based in Whitehorse and some remotely based in Carmacks,” he said. “If you can get drivers that already have ties here that means we’re more likely to retain those drivers.”
To keep things cheaper and more efficient, Brown said Western Copper is looking to build its ore storage shed within the already established Skagway ore terminal area.
Brown showed municipal officials draft plans of what the company envisions.
The building would hold about 45,000 tons of copper ore, and have conveyor belts built in to better spread the minerals throughout the building.
AIDEA’s Deputy Director Jim Hemsath was also at the Thursday meeting and told Brown that Western Copper would have to discuss ore terminal plans with the agency directly from this point forward, as AIDEA owns the ore terminal.
Hemsath added that Western Copper’s projected shipping start date of 2019 would be perfect timing for Skagway, as other interested mines like Eagle should be done using Skagway’s port to ship their product by then.
Brown said he would continue to work on cost estimates for the terminal with AIDEA and looks forward to a Western Copper shipping relationship with Skagway.
“Every time we visit Skagway, the consistent message has been that you’re open for business,” Brown said. “We intend to have installation that conforms to good code, good regulation and full compliance, and we want to do it in such a way that the community continues to be a strong supporter.”
Skagway Port Commission Chair John Tronrud said Western Copper’s vision hasn’t changed much in the last year and he thinks its plan for Skagway’s port is feasible.
“As long as the engineering works and the numbers crunch, I think it could be a win-win for your business and AIDEA as well as the community,” Tronrud said to Brown, adding that he looks forward to keeping diallouge and communications open between the municipality, Western Copper and AIDEA.

WP&YR president says rail ore haul can kick in with $50 million boost


If he gets the $50 million he’s asking for, White Pass & Yukon Route President Eugene Hretzay says it will save Skagway.
The money would be used to buy rail cars to begin transporting ore between Carcross and Skagway, first for the Eagle project, which would use up about $9 million. The other $41 million would go toward refurbishing the tracks connecting White Pass to Whitehorse. Hretzay says this will create 40 year-round railroad jobs for Skagway.
Hretzay recently made a pitch to Sen. Lisa Murkowski for U.S. federal funds. Even though most of the rail improvements are in Canada, the main beneficiary would be a U.S. port, he said.
“(Skagway) is a slowly dying city,” Hretzay said, “and I’m the only one who’s come up with a feasible plan to put an end to it. It boils down to full-time, year-round jobs. Which option will ensure full-time year-round jobs, the trucking option, or rail?”
Hretzay says the answer to this question is without a doubt rail.
“Truckers from Whitehorse aren’t gonna live in Skagway,” he said.
However, in a June 14 meeting with the Skagway Port Commission, representatives from Western Copper, who support using an already existing trucking option on the Klondike Highway, thought about it a little differently.
Cameron Brown, Western Copper’s vice president of engineering, said they expect truckers would live in both Skagway and Whitehorse if ore were to be shipped from the Casino mine to the port of Skagway.
Brown said they plan to use the option that is the most financially feasible, and for now, that is still trucking.
Hretzay said rail would become more feasible if the ore trains ran to Canada. Compared to trucks, hauling ore on the railroad will cost $4 less per ton to ship from Carcross to Skagway, and $11 less from Whitehorse, according to a recent PROLOG Canada feasibility study conducted for the Yukon government.
“It costs the miner less overall,” Hretzay said, “and the trains ship much faster. You can ship 30 truckloads per train; that makes the cash flow much faster.”
Along with the financial benefits, Hretzay cited other problems with trucking that rail would eliminate. The sealed rail cars would prevent any environmental impact, and there would be no more “trucks powdering the highway with lead and zinc,” he said.
“We need to show Southeast Alaska that Skagway is open for business,” he said. “We have a viable port, strong infrastructure, and, with rail, an effective way to get ore out to market. Let’s go back to the old days,” he said. “(Rail is) our roots, what we did for 80 years.”

Plan could encourage railway’s return to Whitehorse

Whitehorse Star

Using Carcross as a transfer point to switch ore loads from truck to train makes a lot of sense, says the man proposing to reprocess tailings at the old Whitehorse Copper Mine.
And a $24,500 analysis commissioned by the Yukon’s Department of Economic Development supports his theory.
Chuck Eaton of Eagle Industrial Metals said in an interview this week there would be several benefits to using the rail line from Carcross to tidewater at Skagway.
It would remove his 30 trucks a day from that 105-kilometer stretch of highway through some mountainous terrain to the port city, reducing the traffic congestion during the summertime RV season and lessening the risk of accidents, he pointed out.
He said hauling the two million metric tons of iron ore he expects to recover from the tailings over the next five years is a perfect way for the White Pass and Yukon Route to test the feasibility of getting back into the freight business, with little risk.
And the analysis agrees.
The track has already been brought up to standard for daily tourist traffic in the summer, and from what he understands, little would be required to make it freight-worthy, he explained.
Eaton said it’s an opportunity to demonstrate the financial feasibility of the Carcross-Skagway link. That could entice other ore haulers to consider the same option, creating more revenue for everybody and removing more trucks from that section of highway, he said.
The Minto Mine, for instance, could become interested, and there are other mining projects on the drawing board which are looking to Skagway as the obvious link to overseas markets, he said.
Furthermore, Eaton said, proving the feasibility of the Carcross-Skagway haul may open the door for White Pass to look closer at restoring the line to Whitehorse, and maybe even beyond if some bigger mining proposals go forward.
Service between the two cities ended in 1982 after the Faro lead-zinc mine, which had used the train to carry concentrates to Skagway, began a four-year shutdown.
“I think it makes sense, a lot of sense for everybody,” Eaton said. “I know for sure the railroad seems to be interested, the Yukon government seems to be interested and I’m interested.”
It would be most beneficial to have a decision soon, he added. He is in discussions with two trucking companies to provide the ore haul during the eight or nine months of operations every year, for the next five or six years beginning in 2013.
Having a decision on the rail option would influence what type of gear the trucking company would require, said Eaton, who was meeting today with representatives from White Pass.
The proposal to reprocess 10 million metric tons of tailings at the Whitehorse Copper site and remove an estimated 1.9 million metric tons of iron ore is currently under review by the Yukon Environmental and Socio-economic Assessment Board (YESAB). A recommendation out of the board’s Whitehorse office is expected any day.
Once the iron ore is removed, the intent is to lay the remaining tailings back down in a somewhat more stable way so the 68-hectare former mine site, closed in 1982, would be more useable for industrial lots than it is now.
Eaton said Eagle Industrial is expecting to file its application for a Type A water license this week.
If the company is able to secure the license by the end of the year, reprocessing the tailings is expected to begin next spring, he said.
As the self-described owner and janitor of Eagle Industrial who’s put up almost $1 million advancing the proposal, Eaton said raising the $5 million or $6 million to get the operation up and running is not an issue.
The company has already leased the land from the Yukon government, and Eaton said he’s not expecting red flags coming out of YESAB.
Reprocessing the tailings is not a complicated operation and does not require an elaborate set-up, he told 40-plus people who attended a public open house this week.
In an interview afterward, Eaton said Eagle Industrial is currently talking with the trucking companies about using a heavy hauler with side-dumping capabilities, similar to the trucks the Minto Mine is using to move its concentrate to Skagway.
If the rail option comes about in time, he said, the company would switch its view to a container-style of load so that the container could be loaded onto flatbed rail cars in Carcross.
In the cost benefit analysis prepared for the Yukon government and published in March, the evidence indicates an ore haul from Carcross to Skagway is financially viable.
Furthermore, it indicates the benefit of reinstating the entire ore haul to Whitehorse would have even greater returns, though the analysis does not include the cost of track restoration between Whitehorse and Carcross.
“This report demonstrates that rail operating costs offer a substantial savings below truck costs,” says the 22-page analysis by a Whitehorse consulting firm.
Trucking the magnetite iron-ore from the Whitehorse Copper site 24-7 for up to nine months a year, would cost $21.12 per tonne, the analysis concludes.
The analysis says the cost of trucking the material to Carcross, along with the additional handling cost to transfer it to rail, would be $16.91 per metric ton, representing a saving of $4.21 per metric tons or about 20 per cent.
Moving the ore from Whitehorse, without the cost of track restoration figured in, would be $9.79 a metric ton, a savings of $11.33 or 54 per cent over trucking.
The cost of track restoration is not included in the analysis, nor is the added benefit of reducing highway traffic for safety and maintenance purposes, as well as the added environmental benefits through reduced CO2 emissions.
Transport by rail, said Eaton, is a huge benefit.
There may be an opportunity for some sort of private-public investment to encourage more rail use, given the benefits are widespread and not limited to one party, he suggested.
The four scenarios discussed include a single train set running at night opposite to the tourist schedule.
Another plan envisions two sets of cars, one being unloaded in the morning in Skagway, the other being loaded in the evening at Carcross, with the same variables applied to a link from Skagway all the way through to Whitehorse.
Above all, says the report, it is fundamentally important the freight haul does not displace a single hair on the company’s successful tourist train activity – and it doesn’t.
The analysis said White Pass could purchase the required stock of rail cars with little or no risk, given the resale of rail cars after five years.
The 375,000 metric tons per year that Eagle Industries is proposing to move by rail amount to 75 percent of the volume of ore being moved from Whitehorse to Skagway before the 1982 Faro mine shutdown, the analysis points out.
It also notes the opportunity for some arrangement whereby the savings realized by Eagle Industries could be shared with White Pass.
“It is generally agreed that WP&YR has capacity to reintegrate freight with passenger operations and that there are viable options for which current financial success is not at risk,” says the analysis.
It also points out its findings encompass the results of meetings with senior representatives from all private sector parties: Eagle Industrial, White Pass and trucking companies.

Quinn Weber crests a hill after making the halfway turn on West Creek Road in just one hour, 58 minutes. This was the view most people had of him. He even caught the aid station volunteer off-guard. Jeff Brady 

Men’s half-marathon winner, Michael Richards, left, cheers fellow Whitehorse runner Dominic Bradford, the second place finisher, across the finish line. Kile Brewer

Marathon takes hit from Klondike washout; 67 still complete races


The second annual Skagway Marathon saw only about half of the pre-registered participants after a washout on the Klondike Highway.

Kathy Wassman, left, and Lisa Hollander link arms to help each other down Alaska Street on their walk into town. Volunteer Beth Smith, right, cheers on a runner from her aid station. Katie Emmets

The race expected about 120 participants; about half were residents of Whitehorse. The night before the race, heavy rains caught up to a weak section of pavement along the Klondike Highway near the BC-Yukon border, washing out the road and making the drive from the Yukon capital impossible.
However, there were still about a dozen Whitehorse runners among the 67 who competed in the race, who just missed the road closure and made it to Skagway.
“I caught one of the last buses out of Whitehorse,” said men’s half-marathon winner Mike Richards, “and I’m really glad I made it down.”
Richards, who ran the 13-mile race in 1 hour, 24 minutes, 30 seconds, was running for a non-profit called MitoCanada, which gives support to Canadians with mitochondrial disease.
Winners in other categories included Skagway’s Quinn Weber in the men’s full-marathon, with a time of 3:13:40.
The women’s full-marathon winner was Juneau resident Kristie Loveid with a time of 4:23:20, and coming in first in the women’s half-marathon was Jessica Kayser from Haines who ran the course in 1:41:2. Skagway resident Becky Jensen won the walking half-marathon with a time of 2:56:07.
Next year’s race should see the use of electronic timers, said organizer Buckwheat Donahue. As a qualifier for the Boston Marathon, the race’s organizers will seek more participants in the coming years for what is billed as the “toughest and most beautiful marathon in North America.”


Local committee asks for return of Sun. ferry


As a response to the Alaska Marine Highway System summer schedule’s no southbound Sunday sailing, Skagway Mayor Stan Selmer appointed a committee to discuss possible options to remedy the situation.
Appointed to the Ad Hoc Marine Highway Committee were residents Jan Wrentmore, Gary Hanson and Mike Korsmo.
On May 24, Haines Mayor Stephaine Scott and Marine Transportation Alaska Board representative Robert Venables joined the committee via teleconference to discuss the lack of Sunday sailings.
The 2012 summer schedule overnights the Malaspina in Skagway because there is no room for the ferry in Auke Bay on Sunday evenings with the Colombia arriving that night as well.
The committee discussed two possible remedies to the docking conflict and ideas included delaying the Columbia in Petersburg Sunday night with an arrival in Auke Bay on Monday morning after the Malaspina departs, or moving the Malaspina off the dock and anchoring it in Auke Bay while the Colombia comes in.
The Malaspina also does not sail on Thursdays with this schedule.
With the 50th anniversary of the Alaska Marine Highway System approaching in 2013, the committee believes this is a good time to assess the system’s current practices and scheduling.
“Next year, Skagway will join other communities around the state in celebrating the system’s 50th anniversary,” states the committees mission statement. “This anniversary also provides an opportunity for our community to evaluate and make recommendations as to how the marine highway might best serve the unique needs of Northern Lynn Canal.”
The committee hopes to put together a study similar to one commissioned by Haines and Skagway and conducted by the McDowell Group 2003, which justified the continuation of a day boat service to the Upper Lynn Canal by providing positive ridership and revenue numbers.
In the meantime, with the direction of the ad hoc marine highway commission, Selmer sent a letter to AMHS Deputy Commissioner Mike Neussl asking him to return a southbound departure from Skagway to the summer schedule.
“The decision to overnight the Malaspina in Auke Bay this summer created an opportunity for greater capacity and a schedule which could better support traditional traffic patterns in Lynn Canal,” Selmer wrote. “Unfortunately, the lack of a southbound sailing on Sunday and a northbound sailing on Thursday mean that the Malaspina no longer functions as a ‘day boat.’”
Selmer said the no-Sunday boat schedule not only affects Skagway, but Juneau, Haines and Whitehorse too.
“Historically, the residents of all four communities have used the day boat to take advantage of weekend recreation opportunities,” Selmer wrote. “Because Juneau and Whitehorse are both capital cities, their residents are additionally constrained by the dictates of the government work week.”
So far this season, the Malaspina has made two Skagway Sunday sailings for special occasions.
The Alaska Marine Highway has made exceptions for the Haines Beer Fest in May and the Kluane Chilkat International Bike Relay this month, and it will again for the Klondike Road Relay in August. Selmer said these exceptions are proof that an outbound Sunday ferry can be done.
“While I understand that you would be hesitant to change a schedule that already exists, I believe that having the Malaspina return to Auke Bay on Sunday nights on a regular basis would provide a service and economic benefit to all the communities at a minimal cost to AMHS,” he wrote.
A response from Neussl was expected at this Thursday’s meeting.

HISTORY FEATURE: Dangerous Dan not so dangerous on the inside

SCOUNDREL SCANNED – ‘Dangerous Dan McGrew,’ one of three automatons from Jeff. Smith’s Parlor, is X-rayed at the Dahl Memorial Clinic to find out what makes him click for restoration by Klondike Gold Rush National Historical Park. From left are: Medical Assistant Sarah Phillips, park interns Nicole Peters and Katie Bonanno, and MA Melissa Horman. See story on page 5. Photo courtesy of Klondike Gold Rush National Historical Park

BOROUGH DIGEST (complete report in print edition)

Property taxes reduced during final reading of FY 2013 muni. budget
In a June 7 meeting, the Skagway Borough Assembly unanimously voted to adopt a Fiscal Year 2013 budget that will give Skagway residents a property tax break.
The FY13 budget was tabled during a third reading in May after Skagway Mayor Stan Selmer and assembly members agreed to adjust the mill rates by using surplus funding to lower property taxes.
Service Area One decreased from 8 to 7 mills; Service Area Two decreased from 6.6 to 5.78 mills; Service Area Three decreased from 5.28 to 4.62 mills Service Area Four decreased from 3.44 to 3.01 mills; and Service Area Five decreased from 1.44 to 1.26 mills.
“I think it’s amazing that we have the capability to actually lower the mill rate, I think it’s a good idea,” said Assemblyman Mike Korsmo. “I’ll tell you point blank that it makes me a little nervous, even though I think it’s a great thing for the citizens.”
Korsmo said the municipality has great projects ahead that the assembly should consider when lowering the mill rates. He added the municipality could potentially use the surplus fund as a savings for the future projects.
Selmer reassured Korsmo and the assembly that there would still be a significant amount of surplus.
If the municipality’s calculations are correct, Selmer said, the Skagway Borough would still have about $535,000 in its surplus after money is applied to the property tax fund.
Assemblyman Dan Henry said he thinks lowering property rates for Skagway residents is the “proper and appropriate thing to do,” but added that next year could be a different story.
If the municipality needs extra funds for future expenses, the mill rates might rise back to where they were in FY12, Henry said.
During budget discussion, assemblyman Tim Cochran suggested they revisit Skagway Chamber of Commerce funding.
During the first reading of FY13, a line item was added to the budget for the funding of the chamber’s full time administrative assistant in the amount of $45,000. During the budget’s second reading, the number was amended to $22,500 after Selmer found out the chamber has enough money to fund the position through October.
Cochran said the $22,500 would last only six months, and the chamber would run out of money in April. He suggested the assembly amend the funding back to $45,000 because the chamber does great things for the community, including Clean Sweep, Skagway Stroll, Fourth of July, and answers questions about Skagway’s commerce and businesses via phone calls and e-mails.
Selmer said he didn’t support giving the chamber money in the first place and added that it could have stayed in a smaller space and not hired a full-time employee if they were struggling with money, but they moved into a bigger chamber office and got a full-time administrative assistant, which the assembly funded in FY12.
Selmer said if the chamber runs out of funds in April and its membership drive and fundraising efforts do not pick up the two months between April and the FY14 start date of July 1, the assembly could consider amending the FY13 budget to give them more funding.
“At that time, if their efforts aren’t successful, we can revisit it, but I will not vote in favor tonight if given the chance,” he said.
The vote was split 3-3 with Cochran and assemblymen Dave Hunz and Mark Schaefer voting for the hike in funding and Korsmo, Henry and Assemblyman Paul Reichert voting against it.
Selmer, who voted against the additional funds, broke the tie to result in a 4-3 count to fail the motion. – KE

Assembly opposition to emission act tabled
 The assembly’s opposition to the Environmental Protection Agency’s Emission Control Act was tabled after a unanimous vote at the June 7 meeting.
In a letter to City Manager Tom Smith, Port Commission Secretary Gary Hanson explained that there is reason to do an overall rewrite of the resolution they had previously drafted in protest to the ECA.
Hanson’s letter explained that Port Commission member Steve Hites had learned that Governor Sean Parnell, along with the governors of Hawaii and Puerto Rico, will be looking into the ECA. All three governments express similar concerns with the law that is set to go into effect this August.
In addition, Hanson explained that the Cruise Lines International Association has presented a proposal that meets the ECA requirements, while costing cruise ships less money than had formerly been thought.
Mayor Stan Selmer suggested adding further discussions to the June 21 meeting agenda, which occurred after this issue went to press. – KB