Let’s consider the full cost of mining

Lewis Rifkind Past mining practices have resulted in enormous amounts of taxpayer dollars being spent to clean up abandoned mine sites in the Yukon. Faro, Keno, Mount Nansen and Clinton Creek are the names that usually crop up when abandoned mines in the

COMMENTARY

by Lewis Rifkind

Past mining practices have resulted in enormous amounts of taxpayer dollars being spent to clean up abandoned mine sites in the Yukon. Faro, Keno, Mount Nansen and Clinton Creek are the names that usually crop up when abandoned mines in the Yukon are being discussed.

Those mining practices were done to the accepted environmental standards of those days. However, no one today will argue these practices were defensible, and there was little to no financial responsibility to deal with the mess that resulted.

Our understanding of environmental impacts has come a long way in the last few decades.

It is still debatable whether today’s mining practices and related financial security deposits are adequate to ensure history does not repeat itself and more costly toxic legacies are not left to current and future generations.

Let us try to determine who is paying how much to clean up some of these abandoned sites.

In the Yukon some of the old abandoned mine sites are deemed Type II mines. This means these specific sites have yet to be remediated and in their current state they threaten the environment.

Type II mines were listed before the devolution of powers from the Government of Canada to the Yukon government, and thus the federal government will ultimately pay for their cleanup.

Examples of Type II mines in the Yukon that have no corporate owner and are thus deemed abandoned are Faro, Mount Nanson and Clinton Creek.

Other sites still have a corporate owner, and in these cases the private company pays to close them. An example is the Sa Dena Hes site near Watson Lake. Congratulations to the corporate owner that is doing a cleanup – this is an example of it doing the right thing.

The Keno silver mine complex is a bit of a tough one to classify. It’s been mined for almost as long as the Dawson region, and over the years a number of companies have come and gone and left their messes.

Some of the current site has been sold to a company who is attempting to mine it, while a related but separate company is attempting to remediate certain areas.

Other portions of the Keno area are still the responsibility of the federal government to clean up.

According to an Aboriginal Affairs and Northern Development Canada report, it looks like the federal government put aside $4.7 million in 2012-13 for a Keno cleanup. This is anticipated to be completed by 2021.

Other mine sites are politely termed abandoned. That means the corporate entities that developed them took the profits, but left a huge environmental liability, and are now no longer in existence to be held to account.

The profit was privatized, the risk was socialized.

In order to deal with this threat to the environment, taxpayers are now on the hook to clean them up. In this case, the term taxpayer means the federal government, which will be paying the cost, as opposed to the Yukon government.

However, as we all know, there is only one taxpayer.

Faro, Mount Nansen and Clinton Creek are the abandoned mine sites in the Yukon that the Federal government is paying for.

Faro is going to cost a lot to clean-up. According to the federal reports from 2009-2013, $150 million was set aside to deal with various clean-up and closure design issues associated with Faro.

These closure planning and design costs are but a drop in the bucket compared with the actual closure costs of implenting the plans and doing the work. It’s hard to get a firm figure, but it is expected at least $1 billion will be required, and will take about 500 years of maintenance.

Mount Nansen, west of Carmacks, is cheap in comparison. It is estimated that about $70-90 million will be required to clean that mess up.

And Clinton Creek, downstream from Dawson City, has had around $3 million spent on various aspects of site remediation. It is unknown how much more will be required to deal with this site.

More recently there is the Ketza River mine, near Ross River, which looks like it will be both a federal and Yukon fiscal responsibility. It is assumed that closure costs are probably going to be in the $2-3 million range.

The ongoing saga of the Wolverine mine, between Ross River and Watson Lake, is still developing. It is currently going through the Companies’ Creditors Arrangements Act and the Supreme Court of British Columbia.

The costs of Wolverine might have to be borne by the Yukon government, although there is the possibility it could be purchased by a new company or that the current company could restructure itself and continue operations.

There was meant to be about $10.5 million in security funding, but only about $7.5 million was obtained before the current owner went into creditor protection. It is estimated that this figure will cover only part of the care and maintenance of the mine site, and not a final closure.

Just from a financial perspective, mine cleanups are a huge negative impact on the Yukon. Spending a billion dollars to clean up someone else’s mess is ludicrous.

The key to resolving this is to ensure mining operations pay a security deposit that will cover the cost of full clean-up and remediation.

This security deposit must be paid up front, otherwise there is the possibility of a mine starting up, creating a mess, going bankrupt and not being able to pay their full security deposit. Let us offer Wolverine mine as exhibit A.

Some will argue that requiring mining companies to pay a full security deposit up front will prevent some projects from proceeding.

To that there is only one response. If a company intends to create a huge mess they have to offer a huge security deposit to make sure it will be cleaned up, whether the project runs into fiscal difficulties or not.

The Yukon land, water and ecosystems must never be put at risk again. By protecting these, there is an additional bonus: the Canadian taxpayer will be protected as well.

Lewis Rifkind is the mining analyst for the Yukon Conservation Society.

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