Capstone Mining says its Minto mine will likely go into temporary closure around April 2017 until copper prices rebound.
If the mine does close, it will most likely leave the territory with no operating hard rock mines – the first time that’s happened in a decade.
Minto’s mine manager, Ron Light, said work will be scaled back starting this spring, when underground mining is put on hold. About 40 contractor employees will be let go at that point.
Surface mining of the Minto North pit should be complete in August 2016, and then a smaller workforce will be kept on through the winter to process the ore that’s been stockpiled.
Light expects the mine will then go into care and maintenance in April 2017. He doesn’t know how many employees would be kept on at that point.
Light said morale at the mine is still high, but he knows the closure will have an impact, if it happens.
“Anytime you look at temporary closures… it’s hard to take because people end up out of work,” he said. “It certainly will affect a lot of income for people. There could be people that move to other jurisdictions.”
Minto certainly hasn’t run out of copper – Light estimates that there’s enough material to mine Minto North until 2022.
But the price of copper is currently about $1.95 a pound. Light said it cost the company about $2.40 a pound to produce the metal in 2015. Right now, he said, the mine is just keeping its “head above water.”
The good news is that Minto’s copper production is supposed to increase dramatically this year, from to 16,400 tonnes in 2015 to 27,000 tonnes in 2016. Light said that’s because low-grade mining at Minto North only began in December. He expects to reach higher-grade ore partway through this year.
Operating costs are also expected to decline this year, to about $1.10 or $1.20 a pound.
Still, unless copper prices rise significantly in the next year, a temporary closure is inevitable.
“I don’t think there’s much the Yukon can do to affect the commodity price,” Light said.
Minto currently employs about 322 people – 162 Capstone employees and 160 contractor employees. Its two major contractors are Dumas Mining, which employs the 40 underground miners to be let go this spring, and Whitehorse-based Pelly Construction, which employs about 76 people at the mine.
If the mine closes, it will likely leave the Yukon with no operating hard rock mines, which hasn’t happened since 2006.
Mines Minister Scott Kent said that if commodity prices do increase, Alexco’s Bellekeno mine near Keno City could go back into production quite quickly. Bellekeno went into temporary closure in 2013.
But he said that kind of rebound “is not anticipated at this point.”
Still, he said the outlook isn’t totally bleak. “I think there’s a lot more advanced projects in the pipeline right now than the last time we hit this low.”
He pointed to Victoria Gold’s Eagle project, Kaminak’s Coffee site and BMC’s Kudz Ze Kayah as potential mines that could be in production in the next several years.
He added that JDS Silver’s Silvertip mine is currently in construction in northern B.C.
Kent said the Yukon government will continue to invest in infrastructure and training until commodity prices rebound.
“The markets will come back,” he said. “They always have.”
Samson Hartland, executive director of the Yukon Chamber of Mines, said Capstone’s announcement isn’t a surprise.
But he said the Yukon is being hit by the “double whammy” of low commodity prices and the higher cost of doing business in the North.
He wants the federal government to establish the infrastructure bank promised during last fall’s election campaign. The bank would provide loan guarantees and small capital contributions to help kickstart infrastructure projects across the country.
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