Are you tired of the same old, same old at work? How would you like to be a captain of industry, survey your domain from your helicopter, and enjoy steak dinners with influential government officials at the high profile Roundup mining conference?
If so, then your opportunity awaits. All you need to do is Google the phrase “PWC Yukon Zinc Insolvency Assignments” and check out the “Teaser” posted for the Yukon Zinc Mine.
The teaser is like the flyer that a real estate agent will give you when shopping for a home.
The property has many interesting features including an underground mine and processing facility, your own airstrip, power generators, a wet shotcrete plant, and tailings facilities. In addition, you get nearly three thousand mining claims filled with zinc, copper and lead as well as gold and silver.
But, as in your real estate agent’s paper, there are some clues that this property may be a repairer. There is a “substantial quantum of tax losses” and the teaser is included on page 291 of a bankruptcy court document.
The good news is that the Government of Yukon sees opportunities for you as well. As reported in the News last week, the responsible minister told the Legislature that “we hope there will be a successful bidder on the site and taking charge of both – site responsibilities and opportunities.” .
Ah, maybe you noticed the pregnant pause before the word “passive”.
And there is no shortage of responsibilities, as you would expect with a flooded mine that has not been in operation since 2015 and described by a Yukon Supreme Court judge as an “irresponsible mining company”.
As has been documented in a long series of court documents, when Yukon Zinc went into receivership in 2019, it still owed around $ 25 million on its $ 35.5 million security deposit. The Yukon government and another company both filed notices last month bringing various Yukon zinc issues to the Supreme Court of Canada.
Right now the Government of Yukon is footing the bill at the mine. They say they will spend over $ 12 million of taxpayer dollars to fix the mine’s problems in this fiscal year alone.
That is why the Government of Yukon wants you to see these possibilities. Because whoever bids on the mine will also inherit those responsibilities.
We’ll see if anyone sees enough opportunity in Yukon Zinc to cover the liability while making a profit. If no one bid, the Government of Yukon will be in mining regulations equivalent to the Pottery Barn rule: someone else has broken it, you own it.
The bankruptcy report states that JDC Group of China “has funded more than $ 600 million for costs related to the development, construction and operation of the mine.” JDC is a large mining company owned by the Chinese government. Making an investment of this size in a mining company that finds itself in bankruptcy courts is painful, and particularly embarrassing for a public company operating in a foreign country.
It may bring back nasty memories to Yukon business owners who had to accept 11 cents on the dollar on their invoices at Yukon Zinc during its previous restructuring in 2015.
It is not clear exactly what the Yukon government did in an attempt to convince the Chinese government to vouch for the liabilities created by one of its government-owned mining companies.
There are few options here. China could step in to pay, but that’s highly unlikely. A White Knight mining company could buy the site despite its problems. If that does not happen, the Government of Yukon will continue to own the mess.
You might be wondering how a mine was allowed to operate without a fully paid security deposit. Few owners ask you to pay the deposit years after you move in.
It’s a good question. And one of them is made more disturbing by other recent articles in the news, like last month’s one regarding the lawsuit between the Government of Yukon, Golden Predator and the former Chief Mining Engineer of the Government of Yukon. , Paul Christman.
Among the allegations, none of which have yet been proven in court, Christman valued Golden Predator’s Brewery Creek property, found it needed $ 12 million in financial security, but was later rescinded by superiors. The News reported that the government website currently indicates that only $ 1 million is being held for the cost of the recovery and closure of Brewery Creek.
Media reports included allegations (also unproven in court) of closed-door meetings between industry executives and Roundup regulators.
You might think you could check out the new Yukon Lobbyists Registry to find out more. But you will notice the absence of names of many mining companies in the register. One of the reasons is that they don’t have to register until they have done 20 hours of lobbying meetings in a calendar year.
Essentially, the Government of Yukon faces a tension between its interest in developing the economy by encouraging the mining industry and its duty to protect the environment and the taxpayers of the Yukon.
Mining disasters before decentralization, such as the one in Faro, are the responsibility of the federal government since they made the decisions at the time. Mines opened since devolution are the problem of the Government of Yukon.
And with stories of security deposits for two mines in the news simultaneously, it’s time to ask the question if we need to change this system.
I think we do. It is time for an independent body, modeled on one of our most successful independent bodies like the Yukon Utilities Board, to provide independent advice and report – in public – on topics like mining security deposits.
Yukon Zinc costs “only” $ 12 million per year. The next one could be a lot more.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won the Ma Murray Award for Best Columnist and received Bronze for Best Columnist at the 2019 Canadian Community Newspaper Awards.