The Yukon NDP says it will change legislation to protect local mining suppliers and contractors from mine bankruptcies if it forms the next government.
The party plans to amend the Miners Lien Act to limit the amount of money controlling shareholders would be repaid before local contractors if a mining company goes bankrupt. The idea is that, if the company goes bust, local businesses owed money will have a better chance of getting paid their due.
“Basically, we want to ensure that creditors, the business people… get paid out,” said NDP Leader Liz Hanson. “Right now, the priority goes to investors.”
The commitment largely stems from the case of Yukon Zinc, the company that operated the Wolverine mine near Watson Lake, which filed for creditor protection for $646 million of debt last year. The vast majority of that debt — nearly $600 million — was owed to its parent company, JDC Canada.
The company eventually restructured and paid out pennies on the dollar to its creditors, including several local contractors. Had the creditors refused that deal, JDC could have acquired the mine and paid them nothing.
“We want to avoid another Yukon Zinc situation,” Hanson said. “Fifty-two Yukon companies were left on the hook for $4.3 million. That’s $4.3 million taken out of the Yukon economy.”
The NDP is promising to limit how much parent companies like JDC could be repaid ahead of other secured creditors. Candidate Rod Snow stressed that controlling shareholders would still be able to invest as much as they want in Yukon mining companies. But they won’t be able to claim priority over other creditors for all of that money if the debt is vastly higher than the company’s equity.
“They won’t be able to get repaid the loans that make up that debt in priority to lien-holders (secured creditors), to the extent that they are excessive,” Snow said.
However, it’s unclear whether the proposal would have changed the outcome of Yukon Zinc’s restructuring, as most of those creditors were unsecured and this amendment would only apply to those with liens.
The NDP also says it wants Yukoners to account for 75 per cent of the mining workforce, and it plans to work with communities to plan for new housing ahead of an uptick in Yukon’s mining sector.
The Yukon Party has also made several mining-related commitments, including a promise to create a Yukon-specific mineral exploration tax credit.
The credit would be available to mining companies that pay taxes in the Yukon, and would be capped at $2 million a year.
“When markets are a little bit depressed… this is an opportunity for us to find ways to jumpstart (exploration),” said candidate Scott Kent.
The Yukon had its own exploration tax credit from 1999 to 2007, the last time the mining sector was in a slump. The credit was only capped in 2006, at $300,000 per company, after exploration spending increased dramatically.
The federal government has also offered a mineral exploration tax credit since 2000, although that credit applies only to flow-through shares in companies and some economists argue it does more to favour investors than to boost industry.
The Yukon Party also wants to develop regulations to allow small mines to use regional mills, meaning they wouldn’t all have to build their own infrastructure.
For their part, the Yukon Liberals’ commitments around mining have been somewhat less concrete.
The party wants to make Yukon’s environmental assessment process more efficient, but hasn’t clearly explained how.
“One of our biggest concerns is duplicating the licensing that’s required through YESAA and then through the water board. Making sure that’s streamlined,” said Liberal candidate and Kluane First Nation Chief Mathieya Alatini. “First Nations are not out there to say ‘no’ to industry. We’re saying ‘Let’s make some common-sense decisions, let’s cut some of the red tape that’s out there, but let’s still do it ensuring that we’re taking care of the environment properly.’”
The Liberals want to implement the mine licensing improvement initiative, which has been underway for well over a year. They also say they will implement a mineral development strategy.
All three major parties have also promised to spend more on tourism, in a nod to the importance of economic diversification.
The Liberals have promised to increase the annual core tourism marketing fund from $5 million to $7 million and to double the investment in direct consumer marketing.
The Yukon Party says it will spend $2 million a year on tourism infrastructure in rural Yukon, and wants to plan for a new visitors’ centre in Watson Lake.
The NDP says it will increase the number of campsites and hiking trails at Yukon parks and campgrounds by augmenting the budget to $500,000 annually.
Contact Maura Forrest at maura.forrest@yukon-news.com