once upon a time

Resources Minister Brad Cathers accuses the NDP Opposition of residing in a world in which "fairies and Marxism" trump economic reality and Canadian law. This is presumably meant to draw attention away from the fairy tales told by the Yukon Party government.

Resources Minister Brad Cathers accuses the NDP Opposition of residing in a world in which “fairies and Marxism” trump economic reality and Canadian law. This is presumably meant to draw attention away from the fairy tales told by the Yukon Party government, as it muddles and fudges its way through debates about the fate of the Peel watershed.

The story goes something like this. Once upon a time, in a world much like our own but with some important differences, there was a swath of rugged wilderness the size of Nova Scotia in the northeast corner of the Yukon. It had lots of shiny metal buried in the ground.

The Yukon Party government decided to let miners dig this metal up and create good jobs. But the big, bad conservationists had other ideas, and they tried to stir up trouble.

Luckily, Premier Darrell Pasloski and his buddy Cathers understood what made this world special. This came in very handy during legislative debates.

In the real world, mining projects are understood to be speculative in nature, and very few mineral deposits actually become an operating mine. That’s especially the case for Crest, which Chevron concedes “faces enormous economic challenges due to its remote location, lack of infrastructure and formidable terrain.”

Fortunately, that’s not the case in this special world – let’s call it Yukon Party Land.

There, there’s no question that Chevron’s massive Crest iron deposit will become a real mine one day. There’s similarly no question that if the government blocked the Crest deposit by protecting the surrounding land, the territory would be subject to a massive lawsuit that would bankrupt the territory.

Best of all, in Yukon Party Land it’s possible to promise the construction of an enormous mine like Crest without entertaining any sort of difficult trade-off that it might entail.

Early plans for Crest envision it connected to a port by an $11-billion rail line, which would be generously paid for by the government. In Yukon Party Land, this catch never seems to arise. Maybe that’s where the fairies come in.

Apparently, this is also fantasy world where wilderness canoeists and First Nation residents seeking to commune with the land enjoy nothing more than passing a coal-burning power plant that is envisioned to be built on the Wind River in order to power the Crest mine.

This sounds like a truly amazing place. Alas, it’s not where the rest of us live.

Back home in reality, government lawyers concede that the cost of de-facto expropriation by blocking miners’ access to claims is “unclear,” rather than the slam dunk that Cathers makes it sound like.

Even if Chevron was owed money, it’s unlikely to be the staggering amount that Cathers predicts.

Richard Schwindt, professor emeritus of economics at Simon Fraser University, is something of an expert in such cases. He was hired by the B.C. government to study the case of Windy Craggy, a massive copper deposit that was on its way to becoming a mine when the provincial government encircled it with Tatshenshini-Alsek Park in 1993.

This led to the mine company, Geddes Resources, receiving a payout of $29 million. The province spent another $138 million to help build another mine elsewhere.

That is a lot of money. So, back in October 2011, the News asked Schwindt whether the Peel was another Windy Craggy saga in the making. The answer was no.

That’s because no mineral play in the Peel is anywhere near as advanced as Windy Craggy was at the time.

Crucially, the Crest deposit doesn’t have proven reserves or a modern feasibility study. Both are needed for a company to make a strong case for being paid foregone profits, said Schwindt.

David Loeks, the former chair of the Peel planning commission, contends that miners may not be owed anything, because leaving mineral plays surrounded by protected areas isn’t the same as expropriation. Schwindt disagrees. But he reckons Chevron would simply be owed the money it spent on exploration back in the 1960s. That’s less than $500,000.

Companies have also been known to settle such disputes with the territory without nasty court battles. When the Fishing Branch and Tombstone territorial parks were created, some companies agreed to swap their claims for credit for exploration work elsewhere.

We’ll let you draw your own conclusions as to why Cathers would misrepresent what’s at stake in the Peel debate. We just wish he’d knock it off.

Is it too much to ask the government to acknowledge the real costs and benefits of the plan to protect the Peel, without indulging in silly fantasies?

Sadly, the answer appears to be yes.