The Yukon government is working on improving how mines are licensed and regulated, but it’s unclear whether the changes will reduce the risk to taxpayers when mines shutter.
The mine licensing improvement initiative aims to reduce overlap between the Yukon government, water board, and the Yukon Environmental and Socio-economic Assessment Board.
The goal is to ensure these agencies “aren’t wasting time or tripping over each other,” said Bob Holmes, director of the mineral resources branch with the Department of Energy, Mines and Resources.
The initiative will also look at policies governing mine closures and security payments, which are required by the government to pay for clean-up of mine sites if mine companies are unable to complete the reclamation themselves.
Holmes said proposed improvements will reflect “lessons learned” from the Wolverine mine. The mine temporarily closed earlier this year, and its owner, Yukon Zinc, has failed to pay the government $3 million out of the $10 million it owed in securities. If no buyer is found for the mine, that could leave taxpayers on the hook for part of the clean-up.
But there’s no agreement on what those lessons are.
Lewis Rifkind, with the Yukon Conservation Society, said security payments should be made up front, before mines go into operation, rather than in installments throughout the mine’s life.
He also said mining companies should have to pay more in security bonds overall. He estimated that Yukon Zinc should have paid closer to $20 million in securities to fully cover the cost of reclamation.
“We have to ask for decent security bonding up front,” he said. “There’s a realization that the money being held now isn’t nearly enough. Money doesn’t solve all problems, but it solves a lot of problems.”
But Holmes said that idea is not currently being considered under the mine licensing improvement initiative.
“That’s not really a normal approach in Canada,” he said. Mine closure plans are reviewed every two years in the Yukon, and security payments are recalculated at the same time. Holmes said it would be difficult to know how much a company should pay up front, because the size and reclamation cost of mines are constantly changing.
He added that asking companies to pay security bonds at the outset would discourage them from reclaiming the mine gradually throughout its life.
Demanding securities up front could also prevent some mining projects from going ahead, according to Samson Hartland, executive director of the Yukon Chamber of Mines.
“It adds to the bottom line,” he said. “It will make projects more expensive – therefore, potentially making a number of projects uneconomic.”
Still, other jurisdictions do have stricter rules about security payments. In Montana, mines that fail to make a security payment on time are forced to halt operations until the money is paid.
Yukon Zinc failed to make security payments in October and January, but the Yukon government only charged the company with failing to make payments at the end of March.
In B.C., there is a move to develop a better contingency plan for mine clean-ups. An organization representing B.C. First Nations recently called for the creation of a provincial “super fund” that all mining companies should pay into. The fund would be worth more than $200 million, and would cover the cost of disasters like last year’s tailings dam collapse at Mount Polley.
A similar fund currently exists under the U.S. Environmental Protection Agency to pay for the clean-up of abandoned mines.
Holmes said this is a learning process for the Yukon government. The territory only took over responsibility for mining projects after devolution in 2003, and Wolverine mine is the first case where Yukoners could be on the hook for clean-up.
“We are the ones who are responsible now,” he said. “We have to get it right. We’re learning.”
Holmes said the mine licensing improvement initiative will be ready for consultation this fall.
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