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Yukonomist: What you have to believe for a Yukon copper boom

The Yukon will need the energy, the infrastructure and the political will if it wants to take advantage of a global copper surge
Yukonomist Keith Halliday

This is the second of a two-part series on the future of Yukon copper mining. Part one was published two weeks ago, but part two was delayed for a special column on the Fort Nelson wildfire last week.

In the first part of this series, I wrote about how the Yukon is missing out on the world’s copper boom. We have prodigious amounts of the ductile and conductive metal, which we and our allies will need in huge amounts for our green transitions. Yet, we have zero operating copper mines.

Today, I’m not going to re-litigate past controversies over mining projects. Nor will I look at specific properties, since each project and its geology have very specific strengths and weaknesses.

Instead, let’s look at four things you would need to believe in general for the Yukon to have, say, two or three substantial copper mines in ten years.

First, we would have to believe the Yukon has rich copper potential. We can be quite comfortable this is true, despite the large areas of the Yukon in parks or otherwise off limits. We know this from the Yukon Geological Survey reports I mentioned last week as well as the results from copper mining projects. Minto, for example, used to have a chart in its investor presentation that showed very rich grades compared to other mines in its peer group.

More generally, in the Fraser Institute’s 2023 survey of 293 global mining industry leaders, the Yukon’s geology ranked #10 out of 86 competing jurisdictions.

Second, we need to believe in high demand and high prices. Will the world really need all that copper everyone is talking about? No one can believably predict the price of copper in ten years. Maybe the green transition will be slow. Maybe miners will find huge and easy-to-mine deposits elsewhere. Maybe aluminum and other alternatives will meet more of the market need.

But it appears we can be relatively confident on demand and prices over the next decades. The market may well turn out less spectacular and with more peaks and valleys than copper bulls claim today. The fundamentals nonetheless look robust, especially for Yukon mines that are lower on the cost curve. We’ll talk about that below.

The third thing you need to believe is that the Yukon will have better infrastructure than it does today, in two areas in particular: ports and low-carbon power.

The Yukon government has been doing good work encouraging (and paying for) our friends in Skagway, Alaska, to include mineral export facilities in their new dock. You need to believe this project succeeds. This means not just opening in the proposed timeline, but also at attractive rates and operational conditions. High rates will hurt Yukon mining economics. The mines will need to figure out how to cost-effectively ship their ore around the cruise ships’ daily and seasonal schedules. There are mines in Australia and elsewhere already using concentrate containers, but mining logistics experts will need to make the cost of containerized ore transfers in Skagway as efficient as possible. 

The other infrastructure question is cheap low-carbon power. As Canada moves towards Net Zero, it will be increasingly important to move away from fossil diesel and liquefied natural gas, or LNG. Jurisdictions with lots of surplus hydropower, like the Yukon used to be in the days of Faro, are well positioned here. 

You would need to believe that the Yukon’s incoming greenhouse-gas regulations for mining will continue to enable LNG to be feasible as a mining power source into the 2030s. And, afterwards, that there would be cost-effective alternatives. Synthetic diesel is a possibility, but currently costs several times more than fossil diesel. Hydrogen, small modular reactors and geothermal might all be possible, but the cost outlook is quite uncertain.

The fourth thing you would have to believe is that the Yukon will have attractive mining legislation and permitting processes.

While our geology was ranked #10, the Yukon scored only #28 on the Fraser Institute’s Policy Perception Index. That’s behind Saskatchewan (#2), Manitoba (#3), Quebec (#6), Alberta (#10), Ontario (#13) and Alaska (#19), but ahead of B.C. (#32), the N.W.T. (#45) and Nunavut (#65).

The Fraser Institute report breaks out some detail for the Yukon and 15 other Canadian, Australian, U.S. and Nordic jurisdictions, albeit with smaller and less reliable sample sizes. On the time required to get permits required for exploration, in Quebec and Alaska, 80 per cent said less than six months. The figure for the Yukon was 28 per cent, with 43 per cent saying it took over 15 months. The Yukon has 43 per cent of respondents — the highest in the group — saying the time to obtain permit approval has “lengthened considerably” over the last ten years. We score the worst on “confidence level of respondents” that they will eventually get the permits they need, with 63 per cent either “not at all confident” or “low confidence.”

The big question is what this will look like when the ongoing review of the Yukon’s mineral legislation is completed. This has been moving slowly ahead for a number of years. The glossy government brochure from last year’s public consultations said the vision included a competitive mining industry, ecosystem health, Indigenous reconciliation, economic benefits for current and future generations, as well as many other good things.

It will not be quick or easy to design a new system that delivers all of these. There will be trade-offs that appear when the detailed laws and regulations are eventually published.

Another problem is the timing. As reported in the News in February 2023, John Streicker, the Yukon’s mining minister, said this about the timeline: “If it takes seven, eight years ... so be it.”

Given the social, economic and environmental complexity of mining, it is understandable new legislation will take time. But, on the other hand, if you are going to ask investors for a billion dollars for a mine that will last 25 years, you need to be able to tell them what the rules will be.

Telling investors that “it’s a rewrite, from top to bottom,” as the minister did in 2023, does not get them in a cheque-writing mood.

The thing we need to believe about this is that, in the next year or two, enough flesh can be put on the bones of the proposed new system that investors remain comfortable about the general direction of Yukon policy.

It is easy to believe some of the things above, while others may strike you as less likely. Where you land on these four items will determine whether you think the Yukon will have a bustling copper sector in the mid-2030s, none at all or somewhere in the middle where only small properties with super-rich grades make it into production.

Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.