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Editorial: The cost of the Wolverine minesite

Lewis Rifkind
Yukon Zinc’s Wolverine minesite has created a mess left to taxpayers to clean up, Lewis Rifkind argues. This file shot shows the mine in 2009. (John Thompson/Yukon News file)

Lewis Rifkind

Special to the News

The price of a decent wolverine fur goes for about $1,000 these days. Wolverine fur trim on hoods is highly desirable because it repels water. This means a frost-free hood on those cold days when Yukoners go outside.

Regrettably, there is a mine in the southeast Yukon of the same name that does not repel water and is costing Yukon residents a lot more than a single animal fur to treat its wastewater. This beast is known as the Wolverine Mine.

The Wolverine Mine site is located in the southeast Yukon on the Robert Campbell Highway between Ross River and Watson Lake. It produced mainly lead, zinc and some other metals for three years, and was last operated back in 2015.

Due to the inadequacies of the current Yukon’s Quartz Mining Act royalty regulations, the Wolverine Mine did not pay a single penny in royalties. The mine site has been the subject of bankruptcy proceedings as well as legal processes to determine who owns the site and, more importantly, who is responsible for it.

What is known is that it has fallen to the Yukon Government to take over environmental monitoring and water treatment. These costs, as well as dealing with the receivership and bankruptcy aspects, has cost the Yukon treasury over $22 million over the last few years. That is a lot of fur trim.

According to the Yukon Contract Registry, direct award contracts have been issued to PriceWaterHouseCoopers for over $14 million, and another direct award contract has been issued to Linkan for just under $8 million. There are also some smaller contracts adding up to just over $300,000.

No doubt the bankruptcy services and water treatment expertise Yukoners are paying for are second to none. The issue that is of concern is that it is Yukoners who are paying for these services.

There was some money available for this site from the mine operator, Yukon Zinc, to cover such an eventuality as them not being able to perform duties such as site maintenance, water treatment, and eventual closure and site remediation costs. This was posted in the form of a security bond that was meant to cover the costs of just such the situation the Yukon finds itself in. There is just one catch — it is virtually all gone.

The Yukon Government only managed to get $10.6 million in security. According to the Yukon Government website, as of March 26, 2021, there was only $2 million left. Since the Linkan contract for $8 million started on April 1, 2021, it must be assumed the remaining security has been spent on this contract along with additional Yukoner resources to make up the difference. It is unfortunately appropriate that this contract started on April Fools Day. The Wolverine Mine ongoing maintenance and cleanup is making fools of all of us.

It is unclear if the security has been spent on the PriceWaterHouseCoopers $14 million contract, and if it has not it must therefore be assumed that Yukoners have also paid for those services.

The ongoing fiscal disaster at the Wolverine Mine should not be shocking. It is the latest in a long line of similar situations at the Faro Mine, Mount Nansen, Clinton Creek, the various Keno sites, and others. The federal government is paying to clean up those mining messes. The big difference in the Wolverine case is that because the Yukon Government approved the mine it means the Yukon Government is responsible for paying every cent to deal with ongoing environmental monitoring, water treatment, and eventual closure and remediation. Of course, by Yukon Government it means all Yukoners.

The Yukon has spent millions so far at the Wolverine Mine, and it’s worth noting that the water treatment we’re doing on-site is not actual site closure and remediation. The current work is just keeping the status quo going. The security that the Yukon Government did manage to get from the mine operator is almost gone, and is obviously not enough to do reclamation and closure of the site.

The Yukon Government did commission a review of how they determined the security for reclamation and closure of the Wolverine Mine. It turns out that $35 million was what the amount should have been, but alas this amount was never obtained, only $10.6 million was. And it is almost all gone.

To actually shut the mine down and reclaim the site is probably going to cost at lot more than $35 million. When we look at the federal government’s long experience with paying for abandoned mine closures and cleanup costs in the Yukon, the Yukon Conservation Society is of the opinion that $35 million for the Wolverine Mine site is way too little. It will probably cost double that to restore the land to anything close to being environmentally sound.

The Yukon will have to pay for this, and in fact, are currently now paying for water treatment at the Wolverine Mine site. This means that for every dollar the Yukon spends at the Wolverine Mine site there is a dollar less for anything else. Hospitals, roads, teachers, campgrounds, lower taxes – these mine costs are depriving all Yukoners of those alternatives. Bad decisions and actions by the Yukon government in regards to the Wolverine Mine have resulted in this situation.

There are other indirect economic costs to failing to ensure that environmental remediation is funded and properly performed. The Wolverine Mine site is within the range of the declining Finlayson caribou herd. It is almost certain that the herd is declining in part because of habitat destruction such as the Wolverine mine development. Currently, the Yukon government seems keen on approving another mine nearby, also in the Finlayson caribou herd range. The herd will be impacted by both the ongoing slow cleanup of the Wolverine mine site and the proposed nearby new mine.

The Yukon government has to get serious about obtaining adequate mining security bonds from mining companies. The recently released Yukon Mineral Development Strategy Recommendations raises this issue. The Yukon government must implement the recommendations in regards to mining security. Otherwise, the Yukon will continue on the environmentally destructive path of approving mines with inadequate financial security, and then having to pick up the costs to deal with the resulting environmental mess.

Lewis Rifkind is a mining analyst for the Yukon Conservation Society.