Canadian Manufacturing

Teck sues Alaskan borough over ‘severe’ tax hike

Company says tax increase could triple payments, impact competitiveness

ANCHORAGE, Alaska—Teck Resources Ltd. is taking legal action against the Northwest Arctic Borough, an administrative region in a relatively remote part of Alaska that contains the company’s Red Dog zinc mine.

The Alaskan arm of the Canadian mining firm has filed the complaint with the Superior Court for the State of Alaska over what it calls a “severe” tax hike that could increase its annual payments three-fold as of 2016.

“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,” Henri Letient, general manager of Red Dog Operations, said. “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,” he added.

For more than 25 years, in lieu of taxes, the Red Dog mine has made annual contributions to the Northwest Arctic Borough. The company says it has paid an average of US$11.5 million over each of the last five years—which it claims is more than double the average borough tax paid by other Alaskan mines.

“However, as of January 1, 2016, in place of a negotiated PILT the NAB has levied a substantial severance tax,” the company said. “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.”

The miner’s complaint requests an injunction be imposed against the severance tax while the Borough meets with Teck to negotiate a new tax agreement.

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