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Anglo American CEO Cynthia Carroll is getting flack these days from some of the company's shareholders, who are calling on the CEO to quit, in response to reduced earnings and disagreements over strategy. Her strategy, which has focused on four big mining projects in Chile and Brazil, has been hampered by legal challenges to licenses, delays to projects and downturn in global commodity prices, according to a recent story in the London Telegraph.

According to the CEO, “We are sequencing investment by prioritizing capital to commodities with the most attractive market dynamics and projects with the lowest execution risks.”

If that's the case, than it would appear that Anglo American's 50:50 joint venture with Northern Dynasty in the controversial Pebble Mine would be a good project to drop altogether.  After all, nothing about Pebble lends itself to a project with the lowest execution risk.

The Pebble Mine, proposed in southwest Alaska, has run into strong opposition because of its location at the headwaters of Alaska's Bristol Bay, and the risks it presents to the Bristol Bay salmon fishery – the largest and most valuable wild salmon fishery in the world (generating $450 million a year and providing roughly 14,000 jobs) – and the source of almost 50% of the world's wild sockeye salmon.

Alaska's Bristol Bay commercial fishing industry and Alaska Native Tribes have asked the U.S. Environmental Protection Agency (EPA) to use its authority under the Clean Water Act to protect the salmon fishery and restrict the disposal of mine waste into Bristol Bay's streams and wetlands.

In response, the EPA initiatied a scientific review of the potential impacts of large-scale mining on the Brisotl Bay fishery, which was released in August.  The draft study identified significant long-term impacts. The mine footprint alone will likely result in the direct loss of 87 miles of streams and thousands of acres of wetlands – important salmon habitat. The study is now out for peer review, and a final is expected this fall. Over 90% of the 200,000 comments received by the EPA were in favor of the EPA's work.

In the meantime, opposition to the project continues to mount. Despite considerable PR expenditures, over 80% of local residents and a majority of Alaskans are in opposition to the mine. The local borough passed new permitting code last fall that effectively prohibits the project, which Anglo American is challenging in court. 

And, let's not forget the sizeable operational challenges. There is no source of power, no transmission lines, no road system or deepwater port for the mine. About 50 miles of the 86 mile long access road are within the boundaries of the Bristol Bay Native Corporation lands, which is a strong opponent to the mine.

A quick look at Anglo American's partner Northern Dynasty highlights the uncertainty around Pebble.  Northern Dynasty, whose only project is the Pebble Project, has seen its share price drop precipitously, from over $20 a share in 2011 to below $3 today. 

Bottom line: If Anglo American is looking for low-risk prospects, Pebble Mine isn't it. 

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