Yukonomist: Geopolitics and Yukon mining

Yukonomist Keith Halliday

Yukoners have long been fortunate to live in a geopolitical backwater. The Yukon generally doesn’t make it into the President’s Daily Brief. If you run into a foreign correspondent with a sat-phone in Whitehorse, it’s because they’re going canoeing with friends on the Snake. Entering “Yukon” in the search box of Foreign Policy magazine’s website only gets you articles by Yukon Huang, one of their China specialists.

In the case of geopolitics, as the residents of Berlin or Afghanistan could tell you, boring is good.

But could we actually benefit from today’s rising tensions, as China’s “wolf warrior” diplomacy prompts democratic countries to look for strategically secure sources of raw materials? After the recent G7 summit, where leaders discussed a more unified China strategy, both the Biden Administration and European Commission president Ursula von der Leyen talked about the role Canadian resources could play.

Over the last century, the Yukon has had a few brushes with great power rivalries. The 1905 Alaska boundary dispute had war planners in London and Washington worrying that tensions would flare into military conflict.

World War Two came closer. Japanese submarines patrolled off Vancouver Island and the Alaska coast, and Japan invaded two Alaskan islands. The Japanese advance was halted in 1942, but the war left us with the Alaska Highway and most of the airports we use today.

During the Cold War, Distant Early Warning radar stations were built on the Yukon’s Arctic coast. The Cantung mine provided a secure North American source of the strategic metal tungsten, a key ingredient for anti-tank munitions among other uses.

But compared to Fairbanks or Anchorage, whose military bases have more capabilities than most countries can boast, there was minimal military presence in the Yukon.

Since the Soviet Union collapsed, even less of strategic significance has been happening here, though murmurings about sovereignty in the Arctic seem to always hum in the background.

So, what do China’s growing power and more aggressive style of diplomacy mean for the Yukon?

The first thing is not to over-react. The risk of military conflict is low. And racism against Chinese people has no place in the Yukon.

However, the facts suggest we will have to learn to live with heightened tensions with the Chinese government. Two Canadians, known as the two Michaels, remain in Chinese custody. The Chinese government’s actions in Hong Kong and Xinjiang are increasingly well documented. Canada’s National Security and Intelligence Committee of Parliamentarians reported that China, as well as Russia, engage in sophisticated and well-funded campaigns to influence Canadian public opinion, media and decision-making. These include intelligence agents, front groups, university programs and social media campaigns.

Canada recently joined 40 countries calling for China to allow independent human-rights experts access to Xinjiang, a move which was not well received in Beijing. Last December, Canada also blocked the takeover of Nunavut’s Hope Bay gold mining project by a Chinese government-owned mining company, after a national security review.

The Yukon will not be immune to the effects of these tensions.

A few years ago, there were high hopes to grow Chinese tourism in the Yukon. This seems improbable today.

On the natural resources front, Chinese capital is unlikely to be an option for Yukon mining projects, as it was for the Wolverine mine in 2008. Chinese government-owned companies will be wary of a repeat of the Hope Bay decision. It’s worth noting that Hope Bay was a gold project, not involving strategic metals. But it was in the Arctic, a region where China’s 2018 Arctic policy has sparked worries among U.S. and Canadian policymakers.

There is the possibility that the Yukon could benefit from the desire among Canada’s allies to find secure sources of strategic minerals.

In 2019, for example, China represented 70 percent of global exports of rare earths, according to Bloomberg. Rare earths are a group of 17 minerals critical to smartphones, electric vehicles and other necessities of the modern economy. China produces 80 percent of the world’s tungsten. It has relatively small cobalt deposits, but Chinese companies own 8 of the largest 14 cobalt mines in the Democratic Republic of Congo, a cobalt powerhouse.

This explains why the US Department of Commerce is meeting with Canadian miners who could supply the 35 minerals on their critical list. The CEO of a cobalt project in the NWT told Reuters the company has been in financing discussions with the US government’s Export-Import Bank.

Last week in Brussels, President von der Leyen spoke bluntly about European Union plans. “We as Europeans want to diversify our imports away from producers like China because we want more sustainability, we want less environmental damage, and we want transparency on labour conditions,” she said.

This is good news for Yukon mining projects whose ores are on US and European lists.

However, that list does not include some of the most commonly mined minerals in the Yukon, such as copper or gold. And we have yet to see if US and European intentions will translate into real investment capital or a willingness to pay more than market rates for security of supply.

We should also remember that there are still many other countries who will be happy to host mining projects if Yukon properties get tied up in extensive permitting and approval processes.

If we don’t ensure our mining approval processes allow high-quality, environmentally-sound projects to be permitted in a timely way, we will end up missing out on both the economic benefits of strategic mining as well as the opportunity to help our allies secure their mineral supplies.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist and received the bronze for Outstanding Columnist in the 2019 Canadian Community Newspaper Awards.