Can you put a price on the impact of the giant Yellowknife mine?

Last week, the federal government revealed that cleaning up the giant Yellowknife mine is now expected to cost $4.38 billion instead of $1 billion. This is, by one measure, greater than the estimated total revenue of the mine during its operation.

Quantifying, in dollar terms, the impact of the mine on the local economy, the environment, and the people who live and use the area’s land and water is difficult, if not impossible.

However, in 2002, a territorial government mining adviser and a federal government executive with then Indian and Northern Affairs attempted to invest dollar amounts on the wealth generated by Giant Mine in a socio-economic study of gold mining in the Yellowknife area.

The following comparisons are drawn from that study. They’re not perfect, but they help contextualize the scope of the repair project that’s in its early stages right now.

Here are row upon row of some 360 ​​shipping containers, filled with the toxic remains of the roastery building that once separated the gold from the rocks. These containers will eventually be buried underground, according to deputy director of the remediation project Natalie Plato. (Priscilla Hwang/CBC)

Giant mine by numbers

Giant Mine operated from 1948 to 2004, under various owners. In that time, it produced about seven million ounces of gold, or about 198 tons. It also produced highly toxic arsenic trioxide dust, of which more than 237,000 tons must be contained underground.

According to the study, the estimated total revenue generated by the mine, in 2002 dollars, was $2.74 billion, about $4.15 billion in 2022.

The projected cost to clean up the mine is now $4.38 billion, and the federal government will foot the bill. The reclamation project is expected to last until 2038.

The study estimated that Giant Mine’s former owners made $867 million in profits through 1998, while tax revenue over the mine’s lifetime totaled approximately $454 million: $360 million in personal income taxes, $78 million in corporate income taxes and $16 million in mining taxes (again, all in 2002 dollars).

The federal government says it has earned $4 million in royalties (unadjusted for inflation) over the mine’s 57 years of operation, while Giant has contributed $2 billion (in 2002 dollars) to the NWT’s GDP

Yellowknife’s Giant Mine Oversight Board is shown in April 2019. Oversight board chairman David Livingstone was “a little surprised” to see repair costs climb to $4.38 billion. (Alex Brockman/CBC)

The repair cost estimation lacks transparency, says the supervisory board

David Livingstone, chairman of the Giant Mine Oversight Board, said he was “a little surprised” to see clearance costs soar to $4.38 billion.

The council is an independent body tasked with monitoring and reporting on the Giant Mine Remediation Project. Livingstone said his board lacks more insight into the cost breakdown and how much money will stay in the Northwest Territories versus the public.

“This is perhaps an example of the lack of transparency on the whole economic side of this project,” he said.

Livingstone rejected the notion that the Giant Mine Oversight Board, with its budget of about $1 million a year, and $2 million annual contribution to the Yellowknives Dene First Nation, are any notable factors behind the increase in costs.

“They’re significant in their own right, but measured against the… fourfold increase in cost for this project, I don’t think that’s the issue,” he said.

“The problem is whether the project team has correctly estimated the cost of the repair since receiving the file [Mackenzie Valley] Review the board’s report and started work on the remediation itself.”

Natalie Plato, deputy director of the Giant Mine Remediation Project, said her team only recently finalized the new cost estimate and shared it with the oversight board “just days after receiving internal approval” of the updated figure. .

“The position of the project team remained that an accurate and revised cost estimate was only possible after the permit and land use license had been obtained, the project implementation plan had been completed, and the project team project had been able to understand the impact of the resulting changes.” said Plato.

He said the project obtained the land use permit in August 2020 and the A-type water license in September 2020.

Natalie Plato is the Deputy Director of the Giant Mine Remediation Project. She said the Giant Mine Remediation Project team only recently finalized its new cost estimate. (Liny Lamberink/CBC)

The environmental assessment warned of rising costs

In the 2013 environmental assessment of the remediation project, the federal government estimated it was spending $903 million on remediation and approximately $1.9 million annually on “lifetime” maintenance.

Alan Ehrlich is the environmental assessment manager for the Mackenzie Valley Review Board and was the head of environmental assessment for the Giant Mine Remediation Project. He said he was a little surprised by the new cost estimate, but not that the government now has a better idea of ​​the scale of the cleanup effort.

For example, he said, through the environmental assessment process, the federal government has acknowledged it has not spent enough time talking to indigenous governments, NGOs and people in Yellowknife.

After further engagement, the government agreed to bring the quality of the water it intended to release into Yellowknife’s Back Bay on Great Slave Lake up to drinking water standards.

Plato cites the construction of a new water treatment plant as one of the additional costs.

The environmental assessment report warned that costs could rise.

He noted that the federal government has acknowledged that project costs could increase for reasons including accidents, unforeseen risks, and “as a result of the completion of engineering projects as these will provide much more detail for the overall project planning.”

“The potential for this project to cost more as it unfolds is something that was definitely on [review] mind of the board of directors,” Ehrlich said.

Natalie Plato, deputy director of the Giant Mine Remediation Project, says work at the site fluctuates, but her team estimates the project will employ, on average, 142 full-time equivalents annually. (Graham Shishkov/CBC)

Reclamation is a job generator

Plato said last week that the previous $1 billion cost estimate was a “pure construction cost estimation.

In a follow-up email, he said the project team can’t share a detailed cost breakdown because it’s directly tied to the work the team will be submitting, and sharing that information “would undermine the procurement process.”

He said the team will report on contracts as they are awarded.

Plato said work at the site fluctuates, but his team estimates the project will employ, on average, 142 full-time equivalents annually (according to that 2002 socio-economic study, Giant Mine directly employed an average of 355 people a year).

In the last fiscal year, he said, NWT residents performed 50% of jobs at the site and 28% of hours worked were done by Indigenous Northerners.

Tom Hoefer, executive director of NWT and the Nunavut Chamber of Mines, said Giant Mine is unique and should not be compared to “modern mines where closure is considered in project development.”

He added that the Giant Mine remediation team is working to “secure local benefits, which incur additional costs but ensure that the benefits, and most importantly the learnings, of the project stay up north.”

Neither a leader nor a representative of Yellowknives’ Dene First Nation was available for an interview Tuesday.

Arn Keeling is a geography professor at Memorial University of Newfoundland, co-author of a story of the giant mine.

He said the labor benefits for northerners in the cost of remediation are “the least, probably, the government can do to compensate for this fiasco — for this ultimately very colonial situation where the mine was allowed to extract this material without consent, knowledge or really any meaningful participation, and the people were left behind with their territory, their lands and their waters, poisoned”.

Plato said the changes to the scope and timing of the reclamation “will provide a greater level of protection for land and people” and “significant” job opportunities and economic benefits for northern and indigenous peoples.

He also said that an apology and compensation to Yellowknives Dene First Nation for landmine damage to their lands and people would be beyond the scope of the repair project and therefore not included in the updated cost estimate.

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