The news last week about Selkirk First Nation moving to acquire the defunct Minto copper mine is a very big deal for Yukon mining.
The Yukon Supreme Court approved the first step in a complex two-stage purchase process. This first step includes the bankruptcy receiver selling SFN the buildings, vehicles, generators, machinery and other equipment for an undisclosed sum.
Part two is supposed to come later this month. It includes so-called intangible assets, such as mission-critical mineral claims, leases and permits.
The court papers make it clear part two is not a done deal. It is contingent on negotiations with the insurance company behind the mine’s reclamation bond, Yukon government approval of SFN’s plan for the mine, and various licensing technicalities.
In a statement put out by SFN, Chief Sharon Nelson said that “we will now be positioned for more command and control of the site which opens up many possibilities in the future for Selkirk People, including the potential of exploration and reopening.”
The Minto deal, if it results in the mine resuming operations, would be the culmination of a long trend in Yukon mining. Back in the bad old days, mining companies just went ahead and built mines and tailings ponds on Indigenous traditional territories. Then came the era of community consultations, some taken more seriously than others. Then there was a period where the private sector still owned the mine, but entered into detailed benefit-sharing agreements that included real job and contract opportunities for First Nations workers and development corporations.
Minto under its previous owners went even farther, since it was actually located on Selkirk Category A Settlement Land. This meant it also paid royalties to the First Nation.
Now, we have fast-forwarded to the possibility of a 100-percent Indigenous-owned mine.
This is an exciting prospect. If Chief Nelson and the SFN government can deliver the vision of locally-run environmentally and socially sustainable mining outlined in their press release, they will be a beacon for communities around the world.
They have a bunch of things working for them.
First, copper prices are high. They have been trading recently around $4 USD per pound, and were as high as $5 USD per pound in April. The global economy needs copper desperately for housing and the climate transition.
This price is much better than the $2 to $3 USD range copper traded in from 2015 to 2020, or the days back before 2005 when the price was often less than $1 USD.
Second, SFN can expect considerable financial subsidies from the federal and Yukon governments. Both governments are keen to support Indigenous economic reconciliation in the resource sector.
Third, environmental groups, YESAB and permitting agencies are likely to be more accommodating of proposals from an Indigenous-owned mine than one owned by foreign capitalists. This may give SFN some leeway avoiding expensive environmental obligations it doesn’t believe are necessary, something private-sector miners often complain about privately.
At the very least, the negotiations over the size of future reclamation bonds will be very different when conducted between the Premier and the Chief rather than between the Yukon government and a private mining company.
This may not be good news for environmentalists who think the Yukon government is already too soft on mining.
Despite these tailwinds, SFN still faces some big hurdles.
It’s not easy running a mine, even a small one like Minto. There were reasons Capstone decided to sell the mine in 2019, and why Pembridge had to abandon it in 2023. Geology, unexpectedly large spring runoffs, mineral prices, export port issues, regulatory changes and more can sink an optimistic mining business case.
Nor are government-run mines known for their speed and efficiency. Selkirk First Nation would not be the only government around the world to own a mine, but it can be challenging to square the circle between citizen expectations and a profitable mine operations plan.
This is especially challenging from a capacity point of view for small governments who are new to running a mine. Selkirk First Nation reports that it has 671 citizens, of whom about 40 percent live in Pelly Crossing. It will be a heavy burden to find the millions in investment required to get a mine up and running again.
Partnering with a mining company can help on the capacity and investment fronts. There are many ways one could do this, from management contracts to various forms of shared ownership. But setting up such a partnership is challenging in itself. Any company embarking on a joint venture with a government mine owner will negotiate hard to minimize political and business risk.
In my column “The Last of the Hard Rock Mines?” about Victoria Gold a few weeks ago, I wondered about the scenario where the only way new mines would get permitted is if they were small, had high yields, higher environmental protections and elevated First Nations ownership.
The new Selkirk-owned Minto might be the prototype for this kind of mine. We should wish Chief Nelson and her team good luck in making it happen.
Keith Halliday is a Yukon economist and the winner of the 2022 Canadian Community Newspaper Award for Outstanding Columnist. His most recent book Moonshadows, a Yukon-noir thriller, is available in Yukon bookstores.
