One of the benefits of camping inside the carefully demarcated tent pads and walking paths in Tombstone Park is that it forces you to run into all kinds of interesting people.
This time, breakfast chatter quickly turned to the Victoria Gold disaster. A veteran Yukon mining analyst told me that they expected Victoria Gold to be the “last hard-rock mine permitted in my lifetime.”
Catching up on the news at Pelly Crossing on the way home, we learned that Carcross/Tagish First Nation Chief Maria Benoit said that they “cannot and will not support any future mining projects within our traditional territory.” This adds to the previous statement by the Na-Cho Nyäk Dun First Nation calling for a moratorium on mining, exploration and staking in their traditional territory. Last Friday, Premier Pillai announced a two-month pause on mine consultations in the latter First Nation’s traditional territory and a moratorium on new heap-leach facilities until a review of the recent disaster is completed.
It is still too early to predict the long-term political and economic impact of the Victoria Gold incident. That veteran mining analyst could very well be right. Or we could see a small number of mines permitted; probably smaller ones with higher yields, higher environmental protections and elevated First Nations ownership or royalty payout arrangements.
As a thought exercise, let’s look at what a mine-free Yukon economy might look like. This is not a prediction or a recommendation, but since so many people are talking about the end of mining in the Yukon it is worthwhile to think through what that might mean.
Mining’s share of the current economy is hard to pin down. Yukon Statistics Bureau figures for 2022 indicate that mining represented $351 million or 11 percent of the economy. This counts what statisticians call “mining support activities,” which includes businesses primarily engaged in supporting mining.
It does not, however, include the broader ripple effects such as mine employees staying in a Whitehorse hotel or what the government does with their tax payments.
It’s also important to remember that mining-related jobs include not just mining itself, but also exploration and mine construction.
Natural Resources Canada estimates that the average exploration spending in the Yukon from 2014-2023 was about $140 million per year. Construction depends on new mines getting permitted. Compare that to the Yukon industry’s last near-death experience in the early 2000s, when exploration could be less than $10 million per year.
Figures filed by Victoria Gold and shared with the media by the Yukon government give an idea of the impact a mine of that size can have. It employed 605 people, of whom 194 were Yukon residents and 97 were Indigenous (with presumably major overlap between those last two categories). The mine’s total Yukon payroll was $18.8 million, meaning the average salary for the Yukon employees was $96,700.
The mine also spent $97 million on Yukon contractors and suppliers, which supported an unknown number of Yukon jobs.
As for government’s take, the mine’s “taxes and fees paid to the Yukon government totalled $1.85 million.” The equivalent figure for the Na-Cho Nyäk Dun government was $1.395 million.
The government take figures are smaller than many might expect. This is partly because corporate income taxes and Yukon royalties are based on profits. Mines that have operated long enough to pay off their exploration and capital costs tend to generate the most taxes and royalties.
If we snapped our fingers to enter our mine-free Yukon thought exercise, all the jobs, supplier contracts, taxes and royalties above would disappear.
Rural Yukon would likely be hit hardest here. There are lots of government jobs in Whitehorse, but what other jobs are on offer today in Mayo for the 30-40 Mayo residents that Mayo Mayor Trevor Ellis estimated made their living from the mine? Especially jobs that pay $96,700.
In addition, government in the Yukon would look much different in this world. Significant numbers of staff would be redundant and budgets re-allocated to other priorities.
For example, YESAB could be downsized. Its $6.2 million spent on personnel and contractors in 2023 would be significantly lower without exploration and mining applications.
The Department of Energy, Mines and Resources -- with mining joining oil and gas as former activities -- would keep its “EMR” acronym, but it would be the Department of Electricity and Mine Reclamation. It would need significantly fewer people than the 292 listed today in the Yukon government employee directory.
The Yukon Geological Survey would not be needed. Nor would the employees at the environment department who baseline and monitor mining environmental impacts. Yukon University’s Centre for Northern Innovation in Mining would be de-funded and its 12 courses discontinued.
Downsizing would ripple across the private sector as we needed fewer flights to Vancouver, helicopter pilots, camp cooks and public relations consultants.
The absence of power demand from mines would take off some near-term pressure on our grid and the need to build new renewables. But with many of Yukon Energy’s major proposed projects already suffering permitting delays, this slow down would not affect the economy much (other than perhaps needing to rent fewer diesels in the winter).
One supposes that population growth would taper off for a few years until all the former mine-related employees moved away or were eventually absorbed into Whitehorse government jobs or other work. This would take some pressure off the housing stock, but it might also spark a slow down in new construction. Home builders might be nervous about building new homes in a time of slowing population growth and possibly forced sales by laid-off homeowners.
Today, the Yukon government gets about 85 percent of its revenue from Ottawa. In a mine-free Yukon, that number would probably be north of 90 percent. We would be more vulnerable than ever to a fiscal crunch in Ottawa. The Yukon premier of the day -- who would essentially be more of a Chief Park Ranger than a Premier -- would be able to redeploy some of these budgets into health and education.
There are potential Plan Bs out there. Perhaps tourism, although the average Yukon weekly wage in accommodation and food services is one third that of mining and construction. The tech sector or digital telecommuters might ramp up. However, we have been trying to pull these levers for years and it is hard to see what would cause them to shift into growth modes big enough to replace all the $96,700 jobs mentioned above.
The net effect of all of this is hard to estimate, but it would be painful. Mining’s 11-percent share of the economy may not seem huge, but ramp that down rapidly and it will feel like a sharp local recession.
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.
