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Mining CEO rips territorial government

The chief executive officer of a mining company ripped into the territorial government last week, saying it was being run by an "unsympathetic, ineffectual and incompetent public service.

The chief executive officer of a mining company ripped into the territorial government last week, saying it was being run by an “unsympathetic, ineffectual and incompetent public service.” The comments came after the company filed a claim for $1 billion in compensation because the territorial government had revoked its mining rights for environmental reasons.

The CEO went on to say “the land access rules are different, there is a different focus on what is considered important to the future of the territory’s development, and the cost of operating there is significantly higher than in the more established cities to the south.”

No, don’t worry. You didn’t miss a big story about the Yukon government and miners in the Peel watershed. The story is from an eerily similar situation in Australia’s Northern Territory. Their equivalent of the Yukon government recently revoked the mining rights of Northern Manganese, which planned to mine the seabed off the island of Groote Eylandt.

Not only is this an environmentally sensitive region, but is also culturally significant to aboriginal groups including the Anindilyakwa who own the island. The latter are worried that strip mining the sea floor will disrupt traditional songlines which run between the mainland and the island.

The CEO of Northern Manganese is particularly annoyed because the previous government in the Northern Territory had lured his company into relocating its headquarters to Darwin to be closer to its exploration activities with promises of being “open for business.”

Our Northern Australian cousins are certainly brasher than we are. Not only does the Northern Territory News in Darwin have a lot more photos of crocodiles and blood-curdling crime stories than the Yukon News, but their ministers and mining executives seem ready to mix it up at the drop of a hat.

An executive from another mining company weighed into the fight, saying “someone from Canberra needs to go up there (to the Northern Territory) and help sort this mess out.”

Alison Anderson, the territorial minister of regional development, responded by saying the mining sector shouldn’t be concerned by the decision.

The Northern Territory’s chief minister, Adam Giles, seems to have more confidence in territorial lawyers than Yukon minister Currie Dixon, who said earlier this year that Yukon government lawyers aren’t as good as the lawyers who work for Chevron (which owns big claims in the Peel watershed).

Northern Manganese has filed for compensation of over $1 billion, which works out to about 20 per cent of the Northern Territory’s budget. Of course, the claim hasn’t been approved by the court and the actual payout, if any, could be much smaller. Two other companies may also file big claims.

Furthermore, despite attempts by Chief Minister Giles and his government to attract mining investment to the Northern Territory, the controversy seems sure to worry mining investors thinking about projects in other parts of the territory. The Northern Territory, however, is not as dependent on the mining industry as the Yukon is. Giles recently said that about $5 billion of the giant Inpex natural gas project will flow to local businesses, which is expected to create several thousand jobs.

The Northern Territory also has a relatively large tourism business. A friend tells me that the Barramundi fishing is superb, although the crocodiles, sharks and deadly jellyfish make salmon fishing with grizzlies look low risk.

The Groote Eylandt controversy provides a few lessons for us.

First, making big go/no-go decisions at the political level without solid technical advice can create big problems. The Northern Territory seems not to have a credible and trusted environmental assessment process. They don’t have a version of our Yukon Environmental and Socio-economic Assessment Board. YESAB may not be perfect, but it does do a good job in general of assembling the scientific facts on a specific project and weighing the social, economic and environmental pros and cons before making a recommendation to the powers that be.

The Yukon legislature’s committee on fracking is supposed to report next spring. Do they have a credible technical secretariat to support their deliberations, or will they be trying to sift through conflicting presentations from industry, government departments and environmental groups themselves? It will be a daunting task for any MLAs who aren’t, for example, petroleum engineers or hydrologists.

On climate change, for example, the world’s governments have set up a scientist-led body called the Intergovernmental Panel on Climate Change to make technical reports that politicians can use as they make decisions. Critically, these scientific reports are public. IPCC reports are not controversy-free, as any surfer of climate change conspiracy web sites can attest, but think how much more confused and controversial the issue would be if governments were working without these facts on the table.

Second, delayed decisions can drive controversy and cost. Seabed mining has not suddenly become controversial. If the Northern Territory government had made a decision before industry had spent millions on preliminary exploration, they might have saved themselves a lot of trouble.

Finally, politicians in a large jurisdiction have to be very careful about the legal risks they run. If the politicians in Darwin have really exposed the Northern Territory to a billion-dollar settlement, that will have a devastating impact on government services.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Twitter @hallidaykeith