The Mining Report: And Then There Was One
The mining industry certainly didn’t win over the hearts and minds of Yukoners in 2015. Two mines—one in the Yukon, another that employed many Yukoners—shut down this year. And they did so owing a lot of local companies a lot of money.
The first was Yukon Zinc, which closed its zinc-lead Wolverine mine north of Watson Lake in January. Executives cited low zinc prices as the chief reason, and that was partly true. Zinc hit a five-year low recently, a victim of the slowdown in China (see page 58). But with two big zinc mines—one in Australia, another in Ireland—set to close late this year, removing roughly five percent of global zinc concentrates from the world market, things could soon improve. “Within about 12 months, I think [zinc] will start to perform much better,” says Scotiabank commodity market specialist Patricia Mohr. Still, that’s not likely enough to help Yukon Zinc, since it was also deep in debt.
Following two unsteady years in which production fluctuated, the mine was granted protection from those it owed money. In September, the company’s creditors reluctantly approved a deal that saw anyone owed $5,000 or less get fully compensated, while anyone owed more would get 11.5 cents on the dollar. There’s since been no clear indication of whether the mine will reopen.
Things got worse in September when North American Tungsten announced that in late October it would be shutting down the Cantung mine—located on the NWT side of the NWT-Yukon border, but accessible by road only through the Yukon. It had laid off 50 workers in July, after also filing for creditor protection in June, as it struggled to pay off interest on its debts while also experiencing interruptions to production and dealing with low tungsten prices.
Both closures have been tough on Watson Lake, a community of 1,500 at the southeastern corner of the territory. Mayor Richard Durocher says roughly two dozen community members were employed directly at the mines, adding the supply sector—providing fuel, transportation and construction services to the mines—have also taken a hit. “You go to the hardware store today and you don’t see the same people there,” he says. “It’s causing the town to worry.” JDS Mining’s Silvertip mine in B.C., just 90 kilometres from Watson Lake, was expected to provide salvation with construction scheduled to start over the summer, but Durocher says that’s been pushed to next summer.
Samson Hartland, executive director of the Yukon Chamber of Mines, says the closures are not an indictment of the Yukon as a mining jurisdiction. Instead, they show that in a competitive market, when prices are low, operations with higher costs get hit first. “We know that the costs of producing in Canada’s North are inherently higher than in southern jurisdictions, let alone jurisdictions like Mexico and abroad,” he says, referencing an industry report, Levelling the Playing Field, that found it was 30 to 60 percent more expensive to run a mine in Northern Canada versus the south.
It isn’t all doom and gloom though. The Yukon’s last remaining operating mine had its ups and down in 2015, but it’s full steam ahead after receiving a long sought-after water use licence in August. Capstone Mining, owner of the Minto copper mine northwest of Carmacks, can now proceed with the expansion of its new open pit, Minto North. It’s currently doing pre-stripping work and expects to reach ore—albeit, low-grade stuff—by December. Cindy Burnett, a Capstone VP, says they should be into the high-grade ore by April.
Meanwhile, Alexco Resources, which mined silver from its Bellekeno operation until closing in 2013, continues to explore its Flame & Moth silver deposit which it wants to eventually bring into production.
And Durocher says the mammoth Selwyn zinc-lead project, 280 km north of town, keeps pushing ahead: “If that happens, that’s going to have a huge impact on Watson Lake, probably a bigger impact than all the rest of them combined.”
“We’ve seen it a lot in Watson Lake, believe me,” he says. “I’ve been here since ’78 and I’ve seen boom and bust a lot. The people that stay here are usually people who have already cushioned themselves against the ups and downs.”
A year to forget for Yukon miners:
January: Yukon Zinc shuts down the Wolverine mine.
March: Yukon Zinc goes into creditor protection.
June: North American Tungsten temporarily lays off 80 employees for one three-week rotation and later goes into creditor protection.
July: North American Tungsten permanently lays off 50 employees.
September: North American Tungsten says it will close Cantung on October 27, with hopes to reopen it in the summer of 2016.