Last week, the federal government revealed that cleaning up Yellowknife’s Giant Mine is now expected to cost $4.38 billion instead of $1 billion. This is, by a measure, higher than the estimated total revenues of the mine during its operation.
Quantifying, in dollars, the impact of the mine on the local economy, the environment and the people who live and use the land and water in the area is complicated, if not impossible.
However, in 2002, a territorial government mining adviser and a federal government manager from the then Department of Indian and Northern Affairs tried to put dollar amounts of the wealth generated from Giant Mine into a socio-economic study gold mining in the Yellowknife area.
The following comparisons are drawn from this study. They aren’t perfect, but they help put into context the scale of the remediation project that is currently in its infancy.
The giant mine in figures
The Giant Mine operated from 1948 to 2004, under various owners. At that time, it was producing about seven million ounces of gold, or about 198 tons. It also produced highly toxic arsenic trioxide dust, more than 237,000 tons of which must be contained underground.
According to the study, the estimated total revenue generated by the mine, in 2002 dollars, was $2.74 billion, or about $4.15 billion in 2022 dollars.
The projected cost of mine cleanup is now $4.38 billion, and the federal government will foot the bill. The remediation project is expected to last until 2038.
The study estimated that the former owners of Giant Mine made profits of $867 million through 1998, while tax revenues over the mine’s life were approximately $454 million: $360 million in personal income taxes, $78 million in corporate income taxes and $16 million in mining revenues. taxes (always in 2002 dollars).
The federal government claims to have 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 GDP of the NWT.
Remediation cost estimate lacks transparency, says oversight board
David Livingstone, chairman of the Giant Mine Supervisory Board, said he was “somewhat surprised” to see rehabilitation costs soar to $4.38 billion.
The Board is an independent body charged with monitoring and reporting on the Giant Mine Remediation Project. Livingstone said his board had no more information about the cost breakdown and how much money would be left in the Northwest Territories than the public.
“This is perhaps an example of the lack of transparency on the whole economic side of this project,” he said.
Livingstone dismissed the idea that the Giant Mine Board of Supervisors, with its budget of about $1 million a year, and the $2 million annual contribution to the Yellowknives Dene First Nation, are notable drivers. of soaring costs.
“They’re important on their own, but compared to the quadrupling of the cost of this project, I don’t think that’s the problem,” he said.
“The question is whether the project team had correctly estimated the cost of the restoration since receiving the [Mackenzie Valley] Review Board Report and started working on the remediation itself.”
Natalie Plato, assistant director of the Giant Mine remediation project, said her team had only recently finalized their new cost estimate and shared it with the oversight board “within days of receiving the ‘internal approval’ of the updated figure.
“The position of the project team remained that an accurate and revised cost estimate was only possible after obtaining the land use permit and license, completion of the implementation plan project work and the project team was able to understand the impact of the resulting changes,” says Plato.
She said the project got its land use permit in August 2020 and its Type A water permit in September 2020.
Environmental assessment warns of rising costs
In the 2013 environmental assessment of the remediation project, the federal government estimated spending $903 million on remediation, and approximately $1.9 million each year thereafter on “forever” maintenance.
Alan Ehrlich is Manager of Environmental Assessment for the Mackenzie Valley Review Board and led the environmental assessment of the Giant Mine Remediation Project. He said he was a bit 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, as part of the environmental assessment process, the federal government recognized that it had not spent enough time talking to Indigenous governments, NGOs and the people of Yellowknife.
After further engagement, the government agreed to bring the quality of the water it planned to discharge 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 increase.
He noted that the federal government has recognized that project costs could increase for reasons such as accidents, unforeseen hazards and “as a result of the completion of engineering designs, as these will provide much more detail for overall project planning.
“The possibility of this project costing more as it unfolds is something that was definitely on the table. [review] the spirit of the board,” Ehrlich said.
Remediation generates jobs
Plato said last week that the previous estimate of $1 billion was a “pure construction estimate.”
In a follow-up email, she said the project team couldn’t share a detailed cost breakdown because it directly relates to the work the team will be submitting, and sharing that information “would distort the process.” supply”.
She 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 an average of 142 full-time equivalents per year (according to this 2002 socio-economic study, Giant Mine directly employed an average of 355 people per year).
In the last fiscal year, she said, NWT residents held 50% of the jobs at the site and 28% of the hours worked were performed by northern Aboriginals.
Tom Hoefer, executive director of the Northwest Territories and 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 ensure local benefits, which incurs additional costs, but ensures that the benefits, and most importantly the learnings, of the project stay in the North.” .
Neither a chief nor a representative from the Yellowknives Dene First Nation were available for an interview Tuesday.
Arn Keeling is a professor of geography at Memorial University of Newfoundland and co-author of a giant mine story.
He said integrating northerners’ benefits into remediation costs is “the least, arguably, the government can do to offset 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 changes to the scope and timing of remediation “will provide a greater level of protection for land and people”, as well as “significant” employment opportunities and economic benefits for peoples. northern and indigenous.
She also stated that an apology and compensation to the Yellowknives Dene First Nation for damage caused by the mines to their lands and people would be beyond the scope of the remediation project and therefore not included in the estimate of update costs.
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