John Fox, assistant deputy minister for oil, gas and mineral resources, at the Geoscience forum in 2016. Fox spoke to the News recently about the Yukon government not considering making mining companies pay more than 100 per cent of reclamation and closure liabilities upfront. (Chris Windeyer/Yukon News file)

Reclamation fund being explored in wake of Wolverine Mine receivership

The Yukon government isn’t going to require mines pay more than 100 per cent in security

The Yukon government is not considering having mining companies pay more than 100 per cent of reclamation and closure liabilities upfront, according to its response to a review that looked into security deposit problems at Wolverine Mine.

Instead, it says a reclamation fund is being explored. PricewaterhouseCoopers (PwC) is working on a second report delving into this. It’s expected to be in hand in the New Year, said John Fox, assistant deputy minister for oil, gas and mineral resources.

Asked where the fund will be sourced from — whether that would be from Yukon taxpayers, the federal government or both — Fox said that is being addressed in the new report.

Problems at Wolverine Mine, located about halfway between Ross River and Watson Lake, included failures to maintain environmental standards at the mine and owner Yukon Zinc having put forward less than a third of the $35,540,000 in security required for the operation.

The Yukon government has been on-site undertaking environmental mitigation and reclamation efforts, seizing $1.44 million of the furnished $10,588,966 in security to fund the work.

A Yukon court declared in July the mine was in receivership.

“Our goal is to prevent this from happening again,” Fox said.

The cost of a future water treatment plant wasn’t included in the security deposit, he said, noting this made up the lion’s share (60 per cent) of the shortfall.

PwC outlines three recommendations like proactive risk assessments of future projects in order to reduce reclamation and closure liabilities.

The government’s response says the department is looking at how terms and conditions are structured in order to allow for proactive risk assessments.

“The government has accepted the recommendations in the report and we are moving forward to implement them, all of them,” Fox said.

Lewis Rifkind, mining analyst at the Yukon Conservation Society, said this isn’t the case because the government didn’t accept requiring mines to pay more than a 100 per cent security deposit.

“The argument that way goes that it weeds out less fiscally strong mining companies,” he said. “Now, that could mean certain marginal projects don’t proceed. We’re not anti-mining. We just want it done right.”

That it’s unclear where money for the potential reclamation fund will come from is curious, he said.

“Why should others pay for a certain company’s mess?” Rifkind said. “Polluter pays, right, I think. The mere fact that we’re talking about it is unusual.

“Now, is it going to be addressing historic cleanups? That’s a slightly different kettle of fish. Who pays for it, why is it always the taxpayers?

“All in all, a rather damning indictment of how the hard rock mining system, at least as far as the Yukon government is concerned, failed Yukoners in this particular case and now we’re on the hook for $25 million, minimum.”

Another recommendation concerns clearer communication protocols at the department.

“The Government of Yukon is updating the Major Projects Management Framework,” the government’s response says. “This framework will provide additional clarity and guidance to assist departments in working together more effectively, consistently and efficiently to fulfill the government’s responsibilities in major project assessment, licensing, operation and closure. The framework also formalizes the government’s processes and accountabilities on major projects by clearly describing internal roles and responsibilities for all major projects, including quartz mines.”

With files from Jackie Hong

Contact Julien Gignac at julien.gignac@yukon-news.com

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