MAC: Mines and Communities

Will Canada finally face up to one of its largest environmental liabilities?

Published by MAC on 2017-01-04
Source: Neumann's Blog, The Globe and Mail

The Faro open-pit zinc mine is now a 25-square-kilometre "moonscape"

After one of the world's biggest open pit mine was abandoned, the Canadian government has been cooking up a remediation plan. It's one that's been in the planning process for 18 years, costing at least 250 million dollars so far. And that's just the planning!

The actual remediation is expected to cost at least a billion dollars. Although the previous owners of Yukon’s Faro mine become fabulously wealthy, the remediation has ended up as a huge taxpayer liability.

How mining companies give taxpayers the shaft

Neumann's Blog -

January 4, 2017

Sad story in my Globe and Mail today about the Faro mine in Yukon. Justin Giovannetti tells us all about the fallout after the world's biggest open pit mine was abandoned. It's a good story as far as it goes. As a taxpayer and a citizen it's certainly important to be informed of a major environmental threat and what the government is doing about.

What the government has been doing about it is cooking up a remediation plan. The plan has been in the planning process for 18 years now, and get this; work should start in 2023! In the meanwhile, planning takes a lot of money - at least 250 millions thus far! And that's just the planning! The actual remediation is expected to cost at least a billion!

That's a lot of cash and a fascinating story, but what would have been interesting is some discussion about how this ended up being a taxpayer liability. All Giovannetti tells us is that "...the owner went bankrupt, dumping one of Canada's largest environmental liabilities into the lap of the federal government."

Yup, just like that!

Now the story, to my way of thinking, would be far more informative if we knew a little more about those owners who went bankrupt. Obviously, a lot of people must have made a lot of money during the lifespan of what was once the world's biggest open pit mine. Why aren't they cleaning up after themselves?

The lead-zinc motherlode at Faro was discovered by a guy named Al Kulan. He teamed up with an established American mining multi-national, Cyprus Mines, and Cyprus Anvil was born. The CEO of Cyprus Mines at the time was a guy named Henry Mudd. Check out his wikipedia page and you'll see he's mostly famous for his philanthropy; giving money away. He obviously had plenty of it coming in.

Cyprus Mines changed hands and was controlled by Amoco, the US oil giant, at the time Faro closed in the early '80s. They have plenty of money too. Most Cyprus properties eventually ended up with Freeport McMoRan, a company with revenues of almost 16 billion US dollars in 2015.

Amoco, via its subsidiary Dome Petroleum, sold the mine to a rising star in the mining industry, Clifford Frame. Frame has twice been honoured by The Northern Miner as its "Miner of the Year." Frame went on to a measure of infamy thanks to the Westray mine disaster in Nova Scotia in which 26 of his employees died. Here's a fascinating article about Mr. Frame's business practices from Paul McKay at the Ottawa Citizen. Mr. Frame is now 83 years old and fabulously wealthy. No word on whether he's kicking in a few bucks towards the cleanup costs.

Mr. Frame fobbed the Faro mine off on another Toronto mining promoter, and this is the guy who went bankrupt in Giovannetti's story. But he personally didn't go bankrupt - just the company that owned the mine! He too is fabulously wealthy and remains active in the mining community.

So this is what would make a fabulous story, or at least flesh out Giovannetti's version. Lots of folks made lots of money in the relatively short life span of the Faro mine. How do they get to keep their millions but the taxpayer gets stuck with the billion dollar plus tab to clean up their mess!

Sadly, this is far from an isolated incident. Remember Royal Oak Mines? Peggy Witte was the darling of the business pages in The Globe and Mail for a few years, a tough woman making it in the macho world of mining. She too has a "Miner of the Year" trophy on her mantle. She too left a billion dollar mess for the taxpayer to tidy up.

And then there's those 150,000 orphan oil and gas wells awaiting taxpayer remediation in Alberta alone.

That's how we roll in Canada! Some entrepreneurial genius comes up with a scheme. They get laudatory press coverage galore and oodles of government subsidies. Then, when the mine or the well is worked out and our entrepreneurial whiz kids are long gone, leaving the taxpayer holding the bag, that same press can't even remember their names.

Two decades after closure of Yukon’s Faro mine, a cleanup plan takes shape

Justin Giovannetti

The Globe and Mail -

Jan 03, 2017

The Yukon’s abandoned Faro mine is a 25-square-kilometre moonscape, where deep pits filled with millions of tonnes of toxic waste are contained by substandard dams, and mountains of rubble tower in the background.

What was once the world’s largest open-pit zinc mine is one of Canada’s costliest environmental liabilities, according to the federal government, a toxic blight that has yet to be cleaned up after nearly two decades.

“We hardly talk about it, but Faro is a sleeping giant. The amount of money we’re spending is astronomical,” said Lewis Rifkind, who has kept an eye on the Faro project for years as part of the Yukon Conservation Society.

Government spending has served only to attempt to keep the blight at bay, but now, after 14 years, Ottawa is close to finalizing its proposed plan to clean up the site.

The enormous zinc and lead mine was abandoned in 1998 when metals prices collapsed around the world, and its owner went bankrupt, dumping one of Canada’s largest environmental liabilities into the lap of the federal government.

The effort to clean up the mine over the past 18 years has become a symbol of waste and bungling for frustrated residents in the Yukon.

The size of the Faro complex is staggering. Set in the mountains of central Yukon, 15 kilometres from the town of Faro, the vast dam holds back 70 million tonnes of tailings left over from almost three decades of mining operations. Beyond the ponds, some of which are clear and others a deep shade of orange, are 320 million tonnes of rubble.

Exposed to the harsh northern air, Faro’s disintegrating rock is becoming acidic and runoff is flowing into nearby rivers, posing a threat to a delicate ecosystem where trees and shrubs require decades to grow.

At least $250-million has already been spent maintaining the mine site, according to a federal Treasury Board report – the number could be closer to $350-million, depending on which government department is doing the counting – and yet not a handful of dirt has been cleaned up. Instead the government is burning through $40-million annually to run pumps to prevent the tailings from breaching the dams.

The cleanup itself could cost a further $1-billion, according to the project’s federal director.

The government expects to put its proposed plan forward for environmental assessment in 2018, with remediation work expected to start in 2023, according to Lou Spagnoulo, the director of the project.

“The problem is very complex and the engineering is complex,” Mr. Spagnoulo told The Globe and Mail. “Part of our discussion was about spreading out the work over a longer period to allow the socio-economic benefits to be spread out.”

There’s also a new government in the territory after the Liberals took power in November, ending 14 years of Yukon Party rule. While the Liberals ran on a platform that highlighted environmental protection, it’s unclear what the party’s stance is on the Faro project. The Yukon government did not make a spokesperson available after repeated requests, but did offer a statement: “The Faro mine site is a unique and complex site that requires care and maintenance and remediation plans that are appropriate for the site.”

There’s an uneasy balance in the Yukon between protecting a pristine environment and encouraging resource development to create more jobs. Even the territory’s environmentalists concede that, with few economic opportunities outside of Whitehorse, they see the attraction of a mining project that will create good jobs that could last decades.

“We have to have mining but the way that we do it makes the head spin,” said the Conservation Society’s Mr. Rifkind. He says the Faro mine’s cleanup debacle should serve as a reality check for miners coming in with expectations of making a quick buck and leaving the territory.

“Remediating mines is tricky at the best of times; in the North its very tricky due to climactic conditions. Vegetation growth takes forever, you’ve got water issues you wouldn’t believe, and climate change is a nightmare,” he said.

While Mr. Rifkind says he normally advocates for government to go slow and review projects, he can’t understand why Ottawa has already spent so much in Faro and achieved so little. “We tell them: You’ve got to move on this, go fast, spend what you can,” he said.

The plan will call for a vast amount of earth moving. It will take up to 15 years to do the most intensive work, which includes placing the rocks into containers that will keep rainwater out and eliminate the risk of acidity killing fish and vegetation. They also want to make sure zinc and other metals don’t leech into local streams and rivers. Emergency work will start in 2017 to plug one leak that has already snaked its way out into a local river. The vast tailings will also need to be covered.

Following the end of intensive work, Mr. Spagnoulo says two decades of close monitoring will be required to make sure the plan is working as intended and to make any fixes required. And for a project of this scale, things won’t always go according to plan.

While the Yukon relies on the federal government for much of the money that keeps the territory functioning, talk in the rural parts of the Yukon quickly turns to perceived waste by federal bureaucrats.

Robert Blundon runs a service centre nearly a two-hour drive from the mine site – considered almost a neighbour in the vast Yukon. Mr. Blundon worked at the mine as part of the crew that shut down operations soon after its last owner went bankrupt.

Perched on white plastic chairs alongside two of his customers, talk about the Faro mine quickly leads to loud voices and strong opinions. Locals in the area aren’t pleased that a changing crew of outside maintenance contractors have been coming in for nearly two decades. Little has changed they say except for the mounting bill.

“They should have sent two guys in there with a shovel 20 years ago and they’d be done by now,” Mr. Blundon said, to the agreement of those in his shop.

Jack Bowers was drawn to Faro for one of the territory’s coveted mining jobs when the mine was still operating. He arrived in 1980 as a young mining engineer and worked the mine for 11 years. Now he’s the mayor of the town of 400.

With a population of 2,500 during its boom years, Faro is mostly home now to people who love the untouched hills and streams in the area. The mining boom has left excess housing and all the amenities you’d expect in a municipality several times larger, including a recreational facility with squash courts and sheets of curling ice.

“It’s really a love of the area – there’s something special about our town. No one locks their doors, most people leave their keys in their vehicles. People look out for each other and step up to the plate in times of hardship; it’s like the days of old,” said Mr. Bowers.

But his criticism of the federal government, is not just about its inaction – he also says Ottawa is leaving a fortune floating in the mine’s toxic waste.

While working at the mine in the early 1990s, Mr. Bowers helped undertake tests that discovered $3-billion worth of metal left in the 70 million tonnes of tailings.

“That metal could be recovered, there is real value in those tailings that could offset the cost of reclamations. But they’ve decided to cover over the tailings so that that resource is lost forever. What a shame,” he said.

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