Yukon’s next government must act on mining issues

The mining industry is one of Yukon’s largest private sector employers and has been the largest private sector contributor to Yukon’s economy, contributing close to $300 million and accounting for 15 per cent of Yukon’s real GDP on average.

Yukon Chamber of Mines

Special to the News

The mining industry is one of Yukon’s largest private sector employers and has been the largest private sector contributor to Yukon’s economy, contributing close to $300 million and accounting for 15 per cent of Yukon’s real GDP on average. These economic benefits permeate all sectors of Yukon’s economy, from the knowledge sector to tourism, government to retail, the service and supply sector as well as myriad small businesses. So much of the infrastructure, as well as the recreational and cultural features which enrich our lives today, are the legacy of mining and exploration activity in Yukon. The communities of Whitehorse, Dawson City, Mayo, Keno City, Faro and the power and transportation infrastructure that connect them and other Yukon communities are all part of the positive legacy of mining.

However, we all know there are challenges that still exist. The good news is, we have an ability to reverse uncertainties through increased collaboration with Yukon First Nations, a harmonization of the regulatory process, and strategic investments in territorial infrastructure in order to ensure we remain a competitive and attractive jurisdiction to invest in.

With the current election campaign near its end, the Yukon Chamber of Mines is concerned about the following issues: First Nations relations, permitting and regulatory certainty, and infrastructure development.

In 2012, the Yukon government made the commitment to creating and implementing a more robust resource revenue sharing arrangement with Yukon First Nations. However, after several years, it appears that this policy objective has become stagnant.

It is our belief that revenue sharing from exploration and development projects creates a more inclusive process for Yukon First Nations and offers benefits to First Nations. A revised agreement would help facilitate early engagement between First Nations and the mining industry and guarantee more substantial economic benefits for respective communities.

First Nations across the territory would be provided with the equal opportunity to receive more money from mining projects. Additionally, a new revenue sharing policy would increase the opportunity for First Nations to partner with industry at the outset of new projects. This could help guide industry in addressing potential environmental concerns along with mitigation efforts.

To date, revenue sharing does exist within the territory, but lacks a formalized agreement for traditional territories and unsettled land. As a result, First Nations inhabiting these lands, or those who have laid claim to them, are missing out on economic opportunites and socio-economic benefits.

For these reasons, the YCM strongly supports a new resource royalty sharing framework. We believe that this initiative presents a win-win for First Nation communities, industry and the territory as a whole.

Last year, Yukon government began undertaking the Mine Licensing Improvement Initiative (MLII) in order to “resolve major areas of overlap and inefficiency in the regulatory system; align processes and requirements to be consistent with Yukon First Nation Final and Self-Governing agreements; and, clearly define roles and responsibilities of regulatory agencies.”

The YCM supports a permitting and regulatory process that fosters protection of the environment, considers social values and encourages responsible resource development. YCM also educates its membership on best management practices with the distribution of a comprehensive guide to exploration that was developed in partnership with Yukon and First Nations governments.

Increasingly, the mining industry is faced with regulatory creep and redundancies with the continuous introduction of new terms and conditions. A number of these new terms and conditions may not necessarily be grounded in science, but based on misperceptions of the impact of exploration. Some have hindered exploration. Grassroots exploration is the lifeblood of industry, and without it, there will be no future mines to develop. There are numerous examples of projects that have been unable to proceed as a result of new conditions introduced with no prior consultation or notification to industry. This is a very real and growing concern.

In 2015, the YCM co-authored a report with the Prospectors and Developers Association of Canada and theMining Association of Canada entitled Levelling the Playing Field. It showed the cost of developing a mine in Canada’s North is inherently more expensive than in the south, due in large part to a lack of infrastructure such as energy and roads. Mining in Yukon costs twice as much for producing gold, and 2.5 times more for other base metals. Operating costs were also 30 to 60 per cent higher. These costs are a barrier to investment. The report recommends an increase to the federal Mineral Exploration Tax Credit for northern projects as well as numerous other tax incentives, in order to level the playing field.

The report also recommends the formation of an infrastructure investment bank modeled after the Alaska Industrial Development and Export Authority (AIDEA). Created in 1967 by the State of Alaska, AIDEA is a quasi-independent, self-funding entity that provides loans and guarantees for major infrastructure projects and provides a return on investment for Alaskans. The fund began with seed funding of $100 million (which has since been repaid to the state) and has grown to a $1.33 billion today. This successful model has supported projects such as the Skagway Ore Terminal, which is 100 per cent owned by AIDEA, the connection of the Red Dog mine to a transhipment facility and numerous other resource development projects that faced challenges getting resources to market.

Yukon is ranked Number 1 in the world for its mineral potential. A healthy mining industry is good for all residents of the Yukon. It is therefore crucial that each party and their candidates demonstrate their knowledge and understanding of how the industry should move forward, at a time where the Yukon government is embroiled in legal challenges which impede industry progress.

The Yukon government should support, regulate and be a partner to First Nations, local governments and industry.

Founded in 1943, the Yukon Chamber of Mines is the voice of Yukon’s mining indistry.