Yukonomist: The past, present and future of mining and the Yukon economy – Part 2

Keith Halliday

Keith Halliday

Last week, Part 1 of this column looked at the past and present of Yukon mining as well as two game changers that could be powerful tailwinds for the Yukon’s biggest private-sector industry: geopolitics and climate change.

Allies from Berlin to Washington are clamouring for secure supplies of critical minerals from locations that are secure, stable and blessed with high environmental and social standards such as the Yukon. And climate economists predict that a successful planetary transition to Net Zero will require massive increases in so-called “green mineral” production. The International Energy Agency’s sustainable development scenario suggests annual copper production in the future will need to be a whopping 2.7 times higher than today, for example.

The Yukon has an obligation to help our allies achieve their security and climate goals. It is also a massive economic opportunity. Let’s look at what needs to happen for the Yukon to contribute to our allies’ security as well as our planet’s journey to Net Zero.

The first thing is abundant, cheap low-carbon power. It will be increasingly impossible to get mines powered by diesel and LNG permitted in the future.

I looked up a couple big new copper properties as examples, and it’s clear our competitors are already moving. Kamoa-Kakula in the Democratic Republic of Congo touts how its hydropower allows it to produce very low-carbon copper. Baimskaya in Siberia, about 2,000 kilometres west of Old Crow, makes the same claim based on its small modular nuclear reactors.

The Yukon has a number of options.

There is big hydro, but getting a new dam permitted in the Yukon is improbable. There is also the risk of the massive cost overruns seen recently on British Columbia, Manitoba and Newfoundland dam projects.

We could also connect to the B.C. grid. But that would leave us competing with California and Vancouver’s electric vehicles for B.C. power. Such power is unlikely to be cheap and B.C. may decide not to commit long-term to major Yukon industrial users. We would also miss out on the jobs and investment profits from power projects in the Yukon.

Small nuclear reactors are an option. A reactor is planned for Fairbanks by 2027 and several designs are advancing through Canadian approval processes.

Geothermal is another option. Eavor from Calgary is doing some very interesting work on Yukon geothermal. Our rocks turn out to be promisingly hot. We may have spent the last 80 years buying hundreds of millions of litres of diesel to heat our homes and run our generators while literally sitting on top of a huge untapped energy supply.

Low-carbon hydrogen is also an option. The Yukon has decided not to use its natural gas resources, but there are lots just across the border in Fort Nelson. Once the carbon atoms have been removed and stored underground to create so-called blue hydrogen, this could be trucked in to power Yukon mines.

Lots of work still needs to be done on the engineering and economic aspects of these technologies. We don’t yet know which ones will work best in the Yukon.

But it is clear that both our northern lifestyles and the future of our mining industry depend on abundant, cheap and low-carbon power.

The early-stage nature of these technologies provides a strong rationale for public investment. With a multi-billion dollar economy at stake and a transfer payment headed towards the $2 billion range, this suggests a major Yukon government innovation and investment program with a budget that is measured not in the millions but the tens of millions.

Infrastructure is another thing we’ll need. It will be paradoxical if, at the same time as Canada and the US are ramping up efforts on critical minerals, the Yukon mining sector and its amazing geology are cut off from ocean access because the new Skagway port is only open to cruise ships.

It is understandable that our Skagwegian friends don’t want to pay for the Yukon’s port access. Fortunately, Alaskan politicians are very influential in Washington and Canada has a number of infrastructure agencies for whom a critical-and-green-mineral port would be the perfect project.

The other thing is our legal and regulatory process. While everyone on stage at Geoscience was polite and talked about how great the Yukon is as a place to do business, once the microphones were off and the Yukon Gold got flowing at the banquet it was a different story.

Even though policymakers are looking for secure and stable supplies, investors still have lots of other options in Alaska, Nevada, Australia, Chile and beyond.

If territorial and First Nation government leaders are serious about capturing some of these opportunities for their citizens and development corporations, more work is needed to revamp regulatory processes so they are faster, less unpredictable and still deliver the needed environmental and social protections.

Overall, there is good reason to be optimistic about the future of mining and the Yukon economy. But it will not come to us automatically. More hard work on improving infrastructure and regulatory processes is needed, and we must solve the puzzle on cheap, abundant and low-carbon energy.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He won the 2022 Canadian Community Newspaper Award for Outstanding Columnist.