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Abandoned Northern Mines Leave Taxpayers on the Hook

Modern mine plans are supposed to ensure the industry pays for the cleanup costs after operations have shuttered. But Canada’s experience with northern mines shows that often doesn’t happen.

Written by Genesee Keevil Published on Read time Approx. 7 minutes
Clinton creek
Clinton Creek mine in May 2003. Asbestos covers waste rock at the abandoned mine in Yukon Territory. Warning signs caution against inhaling dangerous fibers.Photo Courtesy Government of Yukon

At the bottom of a muddy mountain road, in an isolated corner of Canada’s remote Yukon Territory, a furry layer of asbestos blankets 60 million tonnes (66 million tons) of waste rock. Red and white signs posted around the abandoned Clinton Creek mine warn of the dangers of inhaling the fibers, and of flash floods.

Across the North, at the end of far-flung, unmaintained access roads, off limits and out of sight, abandoned mine sites remain a costly and unresolved toxic blight despite apparent technological advancements and evolving regulation.

The abandoned Faro lead-zinc mine is on the territory of the Ross River Dena First Nations and contains 70 million tonnes (77 million tons) of tailings and 320 million tonnes (350 million tons) of acid-leaching waste rock. Yukon Supreme Court Judge Ron Veale noted that it “is considered to be one of Canada’s largest environmental disasters.” (Photo Courtesy Government of Yukon)

The abandoned Faro lead-zinc mine is on the territory of the Ross River Dena First Nations and contains 70 million tonnes (77 million tons) of tailings and 320 million tonnes (350 million tons) of acid-leaching waste rock. Yukon Supreme Court Judge Ron Veale noted that it “is considered to be one of Canada’s largest environmental disasters.” (Photo Courtesy Government of Yukon)

These government-subsidized remediation projects “are an embarrassment to Canada, Yukon and the responsible mining community,” wrote Yukon Supreme Court Judge Ron Veale in his January 16 statement of the reasons behind his May 2016 decision on Mt. Nansen, another abandoned Yukon mine. Toronto junior mining company BYG walked away from Mt. Nansen in 1999, leaving behind hundreds of thousands of cubic meters of waste rock, tailings, contaminated soil, and a compromised tailings dam leaching cyanide and arsenic.

“This is not the first time in recent Yukon history that a mining company has conducted itself in bad faith, collapsed into bankruptcy and abdicated its reclamation responsibilities to the governments of Canada and Yukon,” wrote Veale.

The 6,200-acre (2,500-hectare) Faro lead-zinc mine – also abandoned in the 1990s by bankrupt owners – “is considered to be one of Canada’s largest environmental disasters,” he wrote. The deteriorating site, on the territory of the Ross River Dena First Nations, contains 70 million tonnes (77 million tons) of tailings and 320 million tonnes (350 million tons) of acid-leaching waste rock – enough to rebuild the Empire State Building 376 times.

Faro was profitable in its heyday – producing more than 2.3 million tonnes (2.5 million tons) of zinc, 1 million tonnes (1.1 million tons) of lead and 63.5 million ounces (1.8 million kg) of silver. The mine offered well-paying jobs to residents while it was in operation. However – like many mines across the North – few royalties were paid to the territory, making it hard to determine whether the mine’s benefits outweigh its staggering cleanup costs.

To date, roughly $266 million (C$350 million) in federal tax dollars has been spent managing the Faro site, while remediation, once it begins, is projected to cost an additional $768 million (C$1 billion) and take upward of 25 years.

“The point to be made is that the BYG disaster could happen again,” wrote Veale. “This case should be a wake-up call.”

Mining’s grim legacy is not unique to Canada’s North. “In Alaska, Canada, Scandinavia and Russia, I keep seeing the same issues,” says Jim Kuipers. The American engineer and mining consultant has spent the past 20 years working with nongovernmental organizations, First Nations and regulators around the circumpolar world, and has found that resource-rich regions historically beholden to mining tend to overestimate mining’s economic benefits and underestimate its liabilities.

With the exception of Russia, most northern governments have some skeletal financial security systems in place to try to hold mining companies accountable. These systems are based on closure plans, which are based on predictions. “But to my knowledge, things never go as planned,” says Kuipers. “Until a mine has been closed successfully for at least 30 years, if not 100 years, we don’t know what its liabilities are.”

In more progressive southern jurisdictions, like California, if a mining company can’t prove water treatment will be complete a certain number of years after closure, it isn’t allowed to open.

This is not the case in northern Canada or Alaska.

“We have no blanket prohibition on bringing forward a mine that requires perpetual care – forever,” says Kevin O’Reilly, a Northwest Territories MLA and the former research director of the Canadian Arctic Resources Committee. “Across the North, legislation has huge gaps.” An independent Canadian Arctic Resources Committee review, attempting to compare the NWT’s mine reclamation regulations with 10 jurisdictions in southern Canada and the U.S., found it hard to make a comparison at all, since the NWT didn’t have any “formal, unified and express legal requirement for reclamation of (and security for) NWT mines.”

“Our mining legislation was really designed around things like the Klondike Gold Rush,” says O’Reilly. “But our technology and our ability to change the planet has evolved exponentially since then.”

Greenland, in its push for industrial development, is in the process of creating regulation and environmental safeguards. To mitigate conservationist concerns, Greenland has tried to model its policies after countries known for rigid standards, such as Canada and Nordic countries.”

This doesn’t bode well for Greenland, according to Kuipers. Nordic countries have a long history of mining, but are still working through the details when it comes to financial security for remediation, he says, and Canada isn’t any better. “What you see is that regions historically beholden to the mining industry tend not to move on this issue particularly fast.”

In 2002, both the NWT and Nunavut released mine reclamation policies to assuage growing public concern. Application of these policies depends “on the circumstances,” and the policies are not legally binding. They are intended, instead, to be “a resource management tool,” to “provide certainty and clarity concerning the government’s expectations on mine site reclamation.” Whether policy is followed remains at the government’s discretion.

Like the NWT and Nunavut, the Yukon has no mandatory standard when it comes to financial security or closure plans. Each mine is different, says Yukon Energy Mines and Resources spokesperson Sue Thomas. “There are just so many variables, and security (deposits) can change.”

So can closure plans.

In its original closure plan – to ensure its Wolverine mine didn’t flood – Yukon Zinc was required to keep pumps running. It didn’t. The Yukon government dealt with the breach by allowing the junior company to rejig its closure plan, then signed off on it. Yukon Zinc went on to successfully navigate a creditor protection process in September 2015, wiggling out of a $495 million (C$646 million) debt.

The abandoned Mt. Nansen mine in August 2008. When Toronto junior mining company BYG walked away from Mt. Nansen in 1999, they left left behind hundreds of thousands of cubic meters of waste and contaminated soil and a compromised tailings dam leaching cyanide and arsenic. (Photo Courtesy Government of Yukon)

The abandoned Mt. Nansen mine in August 2008. When Toronto junior mining company BYG walked away from Mt. Nansen in 1999, they left left behind hundreds of thousands of cubic meters of waste and contaminated soil and a compromised tailings dam leaching cyanide and arsenic. (Photo Courtesy Government of Yukon)

Things haven’t changed much since Clinton Creek, Faro and Mt. Nansen, says Yukon Conservation Society mining analyst Lewis Rifkind. Wolverine – which went into production in 2012 and shut down three years later – is a modern mine facing the same problems as most abandoned sites across the North. It is contaminated. There is a wet tailings dam that will have to be maintained in perpetuity, and Wolverine’s $7.6 million (C$10 million) security deposit is not nearly enough to cover cleanup costs, he says. “Once again, taxpayers will be on the hook.”

Western Copper is a junior company applying to mine a giant Yukon copper, gold, molybdenum and silver deposit, called Casino. If it goes into production, the mine – 120km (75 miles) from the nearest road, on the traditional territory of the Selkirk First Nation – will boast one of the largest earthen tailings dams in the world, more than 280m (900ft) high.

“We need to assure the public this is not going to be another Faro,” says Western Copper CEO Paul West-Sells. Like Faro, Casino’s proposed dam and tailings will have to be monitored in perpetuity. “But we don’t want to rely on perpetual continuous treatment in our closure plan,” he says. Western Copper is working with Yukon College to develop engineered wetlands as part of its water treatment process, and after feedback from First Nations and engineers, is making modifications to its dam design.

Casino, projected to cost $1.92 billion (C$2.5 billion), will be Western Copper’s first mine. “With that kind of investment, a lot of people are spending a lot of time making sure the risks are low,” says West-Sells. Western Copper was the first Yukon mining company, and the first junior, to join the Mining Association of Canada. “By joining, we’ve agreed to adhere to a stringent set of principles, particularly around tailings,” he says. “Our philosophy is to win the court of public opinion.”

In the North, people are more aware of mining’s risks, says West-Sells. “On the flip side, the Yukon has a miner on its license plate.”

Casino, according to West-Sells, is going through a “rigorous, robust” regulatory process under the Yukon Environmental Socio-economic Assessment Board, in collaboration with First Nations and government agencies. However, the board’s rulings are not binding, and can be overturned by the government.

Kuipers doesn’t trust government regulation, no matter how robust. “Government is not an effective regulatory body because it’s swayed by politics,” he says, mentioning Alaska’s proposed Pebble Beach mine. The project – on the pristine waters of Bristol Bay, home to one of the world’s largest sockeye salmon runs – was shelved by the Environmental Protection Agency in 2013. But over the last few months, under Donald Trump’s new pro-development administration, the mining company has seen its shares more than triple. “You might pass wonderful legislation,” he says, “then five years later, the pendulum swings and we’re right back where we started.”

Instead of counting on government regulation, Kuipers wants to see major players – “who’ve been mining 50 years, and want to keep mining 50 more” – police the industry. “Big industry collaborating with stakeholders to create internal standards is the only answer that might get us somewhere.” Take the Yukon. “Major mining companies operating there need to be willing to say junior operators are not allowed to be doing what they’re doing,” he says. “Until they do, the only real protection we have is to ban mining.”

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