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Yukonomist: A tale of three copper megamines

The International Energy Agency thinks that, in order for the human race to achieve its Net Zero goal by 2050, we will need to mine seven times as many tonnes of “green” metals per year as we do now.

The International Energy Agency thinks that, in order for the human race to achieve its Net Zero goal by 2050, we will need to mine seven times as many tonnes of “green” metals per year as we do now.

Green metals include the critical commodities such as copper, cobalt, lithium and silver that you find inside solar panels, wind turbines, electrical grids and electric-vehicle batteries. If green metals become scarce and expensive, it will be even harder to decarbonize the global economy than it already is.

Take copper as an example. Where in the world — literally — are we going to find such enormous amounts of the Yukon’s second favourite metal?

The scale of the challenge means that miners are looking for supersized projects. Think 25 or 50 times bigger than the Yukon’s current Minto mine.

But which projects? A few years ago, if you went to a conference of mining analysts you would have heard a lot of talk about the cost curve. Which projects could deliver copper to global markets at the lowest cost per pound?

Cost is still important, but two other big issues have crowded onto the agenda.

The first is geopolitics. You don’t want to spend billions on a new mine that will produce copper for 25 years or more, only to discover in Year 4 that it is cut off from global markets by sanctions, human rights protests or local political instability.

The second is carbon change. Mining is an energy intensive business. According to a miner interviewed by the Economist, we now use 16 times more energy to produce a pound of copper than they did 100 years ago. Building a copper mine to produce wires for green electrical grids is less helpful if that mine is powered by coal.

Which still leaves the question: which projects?

Let’s look globally. Mining is an international business. The copper in your phone could have come from anywhere. If you looked in the passports of some Yukon miners, you might see stamps for Congo, Mongolia, Ecuador or Yemen. And, from the perspective of the whole planet, we might ask which locations can produce the copper we need with a minimum of human and environmental cost.

To illustrate the choices facing the world, let’s take a tour of three projects: Baimskaya in Siberia, Kamoa Kakula in the Democratic Republic of Congo (DRC), and Casino in the Yukon.

Baimskaya is located near the Arctic Coast of Siberia about 2,000 kilometres west of Old Crow. It is owned by a Kazakh company and is located in an economic-development zone, with tax incentives. It will require a new port on the Arctic for cargo ships headed to global markets, and a 400-kilometre all-weather road to connect mine and port. It will not be powered by fossil fuels. Instead, floating nuclear reactors will be moored on the Arctic Coast and a transmission line to the mine will be constructed.

According to its corporate presentation, it will produce about 660 million pounds of copper per year. That’s about 20 times what the Yukon’s Minto mine will produce this year.

Given the dangers of speaking publicly against government-backed projects in Russia, it’s hard to say what local environmentalists or indigenous Siberians think about the project.

Recent Western sanctions may derail or delay the mine’s opening. The sanctions affect the project’s access to sophisticated Western technology and finance as well as shipping and commodity trading systems.

Kamoa Kakula is owned by a joint venture between a Canadian company and a state-owned Chinese one, plus local minority owners. Market analysts estimate it could be producing the equivalent of over 60 Minto mines when it fully ramps up in a few years.

The mine’s owners say it is powered by renewable hydro-power and will be “among the world’s lowest greenhouse gas emitters per unit of metal produced.” The mine’s surface footprint will be smaller than you might expect, since 55 percent of tailings will be put back into the mine’s underground spaces. The mine also has a community development program to support nearby communities to improve agricultural and fish farm productivity.

However, mining in the DRC is challenging. The country has a reputation for corruption and violence. The Human Freedom Index ranks it 147th in the world. Human Rights Watch describes the human rights situation as “dire, with more than 5.2 million people internally displaced … about 120 armed groups are active in eastern Congo.”

Here in the Yukon, the Casino project is owned by Vancouver-based Western Copper and Gold. The property is northwest of Carmacks, about 17 kilometres from the Yukon River, and contains about 11 billion pounds of copper (that’s measured, indicated and inferred resources for mining buffs). There is also significant gold and molybdenum.

According to the company reports, the project requires a 120 kilometre unpaved road, which will not be open to the public. The mine’s 150 megawatt power plant — roughly the same size as the Yukon’s current grid — will be powered by liquefied natural gas (LNG). This will be trucked in from Outside.

The capital investment will be about $3.3 billion, and its Economic Impacts Report estimates it will grow the Yukon economy by about 10 per cent. This includes 600 long-term jobs, and $500,000 in benefits for every signed Yukon First Nation. The project will create many economic opportunities, and will also put additional stress on the already tight Yukon housing and labour markets.

The mine’s tailings have attracted considerable controversy over the years. The total mill and heap-leach resource, again including measured, indicated and inferred resources, totals 3.8 billion tonnes according to the February presentation. After its first tailings proposal was called a “long-term liability” by the Yukon’s Department of Energy, Mines and Resources in 2016, the company developed a new plan.

Nowadays, the project also faces criticism for the carbon emissions from its LNG power plant. It is noteworthy how the Russian and Congolese projects highlight their low-carbon power. However, the Yukon has not been investing in new major renewable power projects which Casino can connect to.

There are also proposed copper megamines in South America, Pakistan, Alaska and northern British Columbia, and elsewhere. Each has its strong and weak points.

Casino’s investor presentation says they plan to submit their environmental assessment proposal in early 2023. We shall see if a Yukon megamine is going to play a role supplying some of that copper the planet’s eight billion electricity users will need.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.