I was struck, again, by the sheer ineptitude of our Yukon Party government.
Minister Brad Cathers was responding to a question in the legislature about possible development of the Crest iron ore deposit. Cathers insisted that if Chevron is prevented from developing a mine on this land that – for sure -“the Yukon government would lose a court case.” He contrasted “flowers, sunshine, roses, theories, fairies and Marxism” with “economics and case law.”
Minister Cathers isn’t an economist or a lawyer, and I have to assume he isn’t getting any legal advice or else he’d be told to shut the *#@! up. The law does require that landowners be compensated for land interests, which are expropriated, in an amount that corresponds with the economic value of the interest.
That doesn’t mean the value of the ore, calculated as if the ore were already out of the ground and transported to market thousands of kilometres away. It means net present value of future profits, given all of the costs of development and production and discounted for risk. Where the risk is great, the discount is large. Chevron does not have an unconditional, legal right to mine in this area and according the land’s value is also discounted for political risk.
The Crest deposit has not been developed yet – 50 years after it was staked – because it hasn’t been economical to do so. Unfortunately for taxpayers, Cathers is creating expectations on the part of Chevron and others – not just of being able to develop mines but of being compensated, whether or not it is economical to mine.
In business, value corresponds with expectations, and Cathers – with his ill-considered, uninformed statements – is increasing the value of Chevron’s interests and improving would-be developers’ claims for compensation. Put a sock in it, Brad.