Mining in Faro used to be a cornerstone of the Yukon’s economy. (Courtesy/ARCHBOULD PHOTOGRAPHY)

Mining in Faro used to be a cornerstone of the Yukon’s economy. (Courtesy/ARCHBOULD PHOTOGRAPHY)

Yukonomist: The past, present and future of mining and the Yukon economy, Part 1

This column is the first of two parts.

The Geoscience 50th Anniversary conference recently took place at the Kwanlin Dün Cultural Centre.

Chatting with old friends and meeting new ones was a lot of fun. It was fascinating to hear about new mining technology and mineral discoveries made since the last in-person Geoscience way back in the before times. And it was heartwarming to meet the children and grandchildren of Yukon geologists, diamond drillers and mining lawyers who are now starting their own careers in the business. I’d last seen some of these young Yukoners on the minor soccer fields of Whitehorse. They are now, literally, the future of Yukon mining.

My keynote was about the past, present and future of mining and the Yukon economy. We are at a critical juncture. The future holds the possibility that mining could make an even bigger positive contribution than it has in the past.

When I was a kid in Whitehorse, mining was a behemoth. Some of my earliest memories are of my dad leaving to go on business trips to Faro. The mine had a rapacious appetite for pickups, and my father was happy to help satisfy it.

As I grew older, I got to go on hockey trips to Faro and Cassiar. Our billets had wonders like satellite TV and, in the mill canteen, limitless chocolate milk. The peewee hockey mind boggled.

There appeared to be a few certainties in life back then: it was cold in winter, the Leafs were the only team you could watch on TV, and mining and the Yukon economy were essentially the same thing.

The adults thought so too. I once interviewed legendary Yukon Commissioner Jim Smith, who told me about the Carr Report. Back in the 1960s, Smith and the minister of what was then called Indian and Northern Development commissioned an Outside expert to come up with an economic development plan for the Yukon.

The wave of development after World War Two was wrapping up, the Faro mine was about to open and it was time to think big about the future.

Carr set out a vision for the then-distant future of 1985: a Yukon population of 57,000, iron ore and coal mines, a smelter, a standard gauge rail link to BC, massive new coal and hydro power plants, a commercial greenhouse industry and more.

After the go-go 1960s, it seemed plausible. Then the Yukon economy got buried by twin avalanches: an unexpected war followed by sky-high energy prices and crippling inflation. The 1973 OPEC oil embargo and subsequent decade of stagflation meant that by the time Van Halen’s megahit Jump was roaring out of 1985 Trans Am stereos around the Yukon, our population was only 23,500. Even 37 years after that, with federal transfer payments almost as limitless as chocolate milk in a mill canteen, our population is only around 42,000.

Today, mining is about 14 per cent of the Yukon economy, up from a low of two per cent during the industry’s near-death experience around 2006.

Some people point at Faro or other cleanups and say that mining is not worth the risk if it is only a seventh of the Yukon economy.

Mining, however, provides critical support for other industries. Mining travel is critical for Air North to achieve the scale it needs to offer cheap tickets to the rest of us. Major parts of our electrical infrastructure were paid for by mining and the same is likely to be true in the future. Whitehorse businesses from expediters to lawyers rely on mining customers. Ditto for hotels, restaurants and others.

Mining is also crucial to diversifying our risk in relying so heavily on Ottawa. We are just one federal fiscal crisis, such as the kind that hit the UK this year or Ireland or Spain in 2008, from a very ugly austerity adventure.

It is hard to see what would replace that one-seventh share of our economy. Tourism employs lots of people, but seasonally and at relatively low wages. Tech is year-round and pays well, but is still small.

And, as I mentioned above, there is the prospect that mining could be bigger in the future. There are two global megatrends that could be game changers. And in a positive way, unlike the OPEC oil embargo and stagflation during the 1970s.

The first is geopolitics. After the Cold War ended, Western miners went out into previously off-limits territories and found the minerals that enable our economy today. If you look at a map of the major locations where important minerals are mined and processed, you’ll see big dots in places such as China, Russia and Congo.

This is increasingly worrying in light of the unexpected war in Ukraine, potential future conflicts in places such as Taiwan, and the general ramp up in geopolitical tensions.

Canada and our allies need copper, zinc, cobalt, nickel and more from secure, stable places with high environmental and social standards such as the Yukon.

Serious leaders are taking these risks seriously, as underlined by the visit of German Chancellor Scholz to Canada in August. It’s worth noting that he came specifically to Canada. This was not a courtesy visit on the way to real meetings in Washington, D.C. And he came specifically to ask for a long-term partnership with Canada for access to our minerals and energy for Germany’s economy.

The people who defend North America, including Canada’s North, are also focused on critical mineral supplies. Strategic planners at the Pentagon are constantly wargaming future threats. This has led them to create a program where they will pay Canadian miners to explore in Canada for critical minerals.

Let all this sink in for a second. The Pentagon is willing to pay for Yukon miners to find and develop critical minerals. And a German left-of-centre chancellor, in coalition with the Green Party no less, wants the same thing.

This is a massive shift.

The second game changer is climate change. The International Energy Agency’s sustainable development scenario says massive increases in mineral production will be needed for all the electric vehicles, heat pumps and other technologies needed to achieve Net Zero.

They estimate production of lithium will have to be 42 times higher than today. For cobalt, 21 times more will be needed. For the Yukon’s favourite industrial metal, copper, they estimate demand increasing by a factor of 2.7.

Again, let that sink in: nearly triple as much copper will be needed as is mined today.

I’ll pause here in case you want to run off and start your own exploration company or apply to study geology. Next week, Part 2 of this column will look at what needs to happen for the Yukon to contribute to our allies’ security as well as our planet’s journey to Net Zero.

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.

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