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News Release

Taxpayers to Pay for Clean-Up at Northern Mines: MiningWatch Canada and Regional Organizations Call for Preventive Measures

(Ottawa/Yellowknife/Whitehorse) The Government of Canada has a duty to ensure that Northerners -- and other Canadians -- are not stuck paying for massive clean-ups at abandoned mines. That's the view of MiningWatch Canada, the Canadian Arctic Resources Committee and the Yukon Conservation Society, who today jointly called upon the federal government to adopt legally-binding preventative measures to ensure that there is zero public liability with mining operations in northern Canada.

The demand was made after details of another massive federal clean-up were disclosed in Ontario courts late last week for the trouble-ridden former Royal Oak Giant Mine near Yellowknife, NWT.

A similar arrangement for the closed Faro mine in the Yukon was announced last month. "We are calling upon the federal government to live up to its commitments to introduce legislation that enshrines the concept of zero public liability. Mine operators should pay the full cost of closure and reclamation and not be able to off-load this on to the taxpayers of this country. The federal government committed itself to the 'polluter-pays' principle in the Whitehorse Mining Initiative and its sustainable development policies. The 'polluter-pay' principle must be applied to the mining sector," stated Alan Young, Co-Chair of MiningWatch Canada.

"The federal government has allowed the Giant Mine to operate for over 50 years building up a 270,000 tonne toxic nightmare — one of the worst contaminated sites in North America. There is nothing in law preventing this kind of disaster from happening again. The terms of the proposed agreement do not call for a halt to the carcinogenic air emissions and continued underground storage of arsenic trioxide," said Kevin O'Reilly, Research Director, Canadian Arctic Resources Committee.

"There was no public involvement in the Faro deal and we are very concerned that the federal government will now end up regulating itself as the new owner of the Faro mine. We think this sets a very dangerous precedent where government takes on all the liability, including future liability, and risk while the mining company gets only the benefits without putting anything back. Important and precedent-setting policy decisions for past and future environmental liability should be arrived at through an open public discussion, not in back room negotiations between government and industry," said Bob Van Dijken of the Yukon Conservation Society's Mining Committee.

The Giant Mine opened in 1948 using roasting technology and continues to operate as the last of its kind in Canada. There is no proven clean-up technology or plan for the huge volumes of arsenic trioxide stored underground within a few hundred metres of Great Slave Lake and the entire Mackenzie River watershed.

Clean-up costs have been estimated at $70-900 million for the arsenic. The Department of Indian Affairs and Northern Development holds a $400,000 security bond on behalf of the Canadian public for the clean-up. The Faro mine opened in 1969 and closed again in 1998. The federal government holds $14 million in security for the estimated clean-up now put at over $100 million. The mine is creating acid mine drainage which, if left untreated, could affect fragile northern aquatic ecosystems for hundreds of years.

"What the politicians need to realize is that proper mine reclamation is not just good for the environment and public health, but your pocketbooks too. The pattern of pushing environmental liability from abandoned mines on to the public purse is a national disgrace. The federal Auditor General in his 1996 report said there is no proper inventory of contaminated sites, no plan to clean them up, the total costs are not known and the liability is not entered into our financial accounts. Without a legislated, industry-supported clean-up program, it's hard to believe the job will ever be done. This is an issue that Mines Ministers from across the country must put at the top of their agenda, to prevent future "Giants" or "Faros"," stated Mr. Young.

"The Department of Indian Affairs and Northern Development has been working on mine reclamation policy and legislation for the Yukon for years. Their own 1993 discussion paper stated that "cost of reclamation, closure and proper abandonment of mine sites is the responsibility of the mining company". However, the federal government has failed to act on this principle and has left the public to pick up the cost for their negligence," said Mr. Van Dijken.

"At an absolute minimum, the roaster and mill at Giant must be shut down or the emissions controlled using a specific target date, the sooner the better. The current workers should get a right of first refusal on any remaining jobs including any associated with the clean-up. The federal government needs to get very serious about preventing this from happening again. We have called for an industry-supported "Superfund" to clean up abandoned sites in light of a declining financial commitment from government to clean up abandoned sites scattered across the North and indeed, the whole country," stated Mr. O'Reilly.

MiningWatch Canada is a nation-wide alliance of public interest organisations, including environmental, aboriginal, labour, church, and community groups, that are concerned with environmental and social impacts of mining and mineral exploration and development activities in Canada, and of Canadian mining companies working internationally.

The Canadian Arctic Resources Committee promotes environmental, economic and cultural sustainability in Canada's North with offices in Ottawa and Yellowknife. CARC has over 30 years experience with northern public policy.

The Yukon Conservation Society is a grassroots environmental group based in Whitehorse, has promoted sustainable use of the territory's natural resources through education, advocacy and research since 1968, a year before the Faro mine opened.

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For further information, contact:

Alan Young, Co-Chair, MiningWatch Canada (250) 384-2686
Kevin O'Reilly, Research Director, Canadian Arctic Resources Committee (867) 873-4715
Joan Kuyek, National Coordinator, MiningWatch Canada (613) 569-3439
Bob Van Dijken, Mining Committee, Yukon Conservation Society (867) 668-5678

Background

Giant Mine:

The Giant Mine went into production in 1948 using a roasting operation for its gold ore. This mine is the last gold-roasting operation in Canada. Arsenic, in the form of arsenic trioxide, and sulphur dioxide are emitted during the roasting. For the first three years of operation, no pollution control devices were used and as much as 7,300 kg/day of arsenic trioxide went up the stack. An electrostatic precipitator was installed in 1951 and a baghouse dust collector in 1959 that reduced these emissions to a few hundred kg/day. The arsenic trioxide that was collected, was pumped underground into mined out chambers for storage. Approximately 270,000 tonnes of arsenic trioxide dust is now underground and about 10-13 tonnes is added every day. Arsenic trioxide emissions continue at a rate of about 25 kg/day. No pollution control equipment was ever installed for the sulphur dioxide emissions that are about 50-65 tonnes/day.

At current gold prices, Giant mine is a break-even operation that requires a large infusion of capital to bring it up to modern-day standards for worker safety, efficiency and pollution control. Government of the Northwest Territories Responsibilities and Actions The mine is located on land owned by the Government of the Northwest Territories. It was held by Royal Oak under a surface lease without any security for clean-up and reclamation. There is a requirement to return the land in a manner acceptable to the territorial government. The surface clean-up costs have been estimated at about $8 million.

The NWT Environmental Rights Act was passed in November 1990 that, among other things, enabled any two residents to request an investigation of any potential emission of a contaminant into the natural environment. The first request for an investigation was filed in April 1991 by Yellowknife residents Chris O'Brien and Kevin O'Reilly. They requested an investigation into the levels of arsenic and sulphur dioxide emissions from the Giant mine stack and the environmental and human health effects of the emissions. In June 1993 a report was filed by the Government of the Northwest Territories responding to the request but it provided no health assessment of recommendations for further action. A health assessment was subsequently carried out by Health and Welfare Canada that recommended reducing the arsenic emissions to lowest possible levels as arsenic is a proven human carcinogen.

There is virtually no air pollution legislation for the Northwest Territories. There is a piece of enabling legislation called the NWT Environmental Protection Act but few regulations have been passed on specific contaminants or for specific sources. In June 1994 a guideline for ambient air quality standards for sulphur dioxide was established consistent with air quality guidelines set by the Canadian Council of Ministers of the Environment. This guideline has no legal effect on polluters and levels exceeding the standards have been detected periodically in downtown Yellowknife as a result of emissions from the Giant Mine. Some regulations were drafted for sulphur dioxide emissions from gold roasters in May 1996 but they would have permitted the current level of pollution from Giant for another ten years before requiring reductions of sulphur dioxide emissions by 90%. These regulations were never brought into force.

Federal Responsibilities:

The Giant mine is operated pursuant to subsurface mineral leases issued by the Department of Indian Affairs and Northern Development (DIAND). A federal water licence is also required which sets out terms and conditions related to water use and waste management. Under the current water licence, security in the amount of $400,000 is set aside for abandonment and reclamation. This is scheduled to increase to $7 million by the end of the five-year licence in 2003. There are requirements in the current licence for studies and actions leading to a management plan for the 270,000 tonnes of arsenic trioxide stored underground. The same requirements were in the previous licence and were not fulfilled by Royal Oak. DIAND undertook a series of studies on the underground arsenic in 1998 that totalled more than $750,000 as a result of Royal Oak's inaction. Several preliminary options were developed for management of the problem were developed ranging in cost from $70 million to leave the arsenic in place to $900 million for removal and treatment. DIAND is currently touting a figure of $250 million for removal and treatment through an autoclave system that would transform the arsenic into a less toxic form. No decision has been made on a preferred option and a full environmental assessment under the Mackenzie Valley Resource Management Act would probably be necessary and indeed, desirable to ensure a full and safe clean-up in the long-term.

The arsenic trioxide cannot be left in place as it is soluble in water and there is evidence of groundwater movement through the rock. Elevated levels of arsenic are present in the mine water pumped from the underground workings, indicating that leaching is already taking place. The vaults where the arsenic is stored underground, are a few hundred metres from Great Slave Lake and the entire Mackenzie River watershed. The arsenic trioxide stack emissions are clearly a federal responsibility although the Government of the Northwest Territories could use its authority to regulate this pollution. Arsenic was placed on the Priorities Substance List in the Canadian Environmental Protection Act. After several years of further study and literature reviews, arsenic was declared a toxic substance under CEPA in August 1994. There is a commitment from Environment Canada to come up with an action plan for reductions in toxic emissions.

An action plan was completed in 1997 for arsenic emissions in Yellowknife based on a series of commissioned reports, a task force and a public workshop. The workshop report and action plan have not been acted upon even though a negotiated reduction agreement accompanied by a regulation were recommended. Issues and Concerns Royal Oak went into receivership in April 1999. PriceWaterhouse Coopers as the receiver, were to come up with a plan to sell off the assets by June 1999. The former DIAND Minister indicated that the federal government would not accept responsibility for the clean-up required at Giant. The former Minister was still hopeful that a private sector solution would be found.

The territorial government has taken the position that the mine should be kept operating, using public funds if necessary. The workers at the property have indicated some interest in taking over the operation if the federal government accepts responsibility for the clean-up at Giant.

There has been no federal or territorial government commitment on retraining the workers or giving them the right of first refusal on any employment that may come about through the clean-up. There has been no commitment from them on the installation of pollution control equipment on a firm timetable or elimination of emissions using alternative technology. The Yellowknives Dene First Nation have suffered the consequences of gold mining in the Yellowknife area for over 60 years now and have called for a full clean-up to be done as soon possible. They have indicated a strong interest in undertaking the clean-up.

Faro:

A lead/zinc mine at Faro was opened in 1968 by Cyprus Anvil. The mine was bought by Dome Canada in 1981 and was closed in 1982 due to low metal prices. The federal government funded an overburden stripping program in 1983 and 1984 to help make the property more attractive to potential buyers. Early in 1985 Dome announced its intentions to mothball the mine.

The property was sold to Curragh Resources in late 1985. It reopened with the support of a tri-partite agreement amongst Curragh, the federal government and the territorial government. The purchase price was effectively zero as the federal and territorial governments threw in millions in direct grants, tens of millions in the form of loan guarantees, and second mortgages, as well as road building and other incentives. The deal provided for subsidized electricity through the Northern Canada Power Commission, at approximately 80% of the generated cost. When in full operation, the mine consumed 30-40 % of Yukon's total electricity. Later bankruptcies left the utility as a major creditor. An Environmental Fund was also established with a 25 cents per ton of concentrate levy for reclamation and closure. The Fund currently sits at about $4 million.

In 1992 Curragh went bankrupt partly stemming from their involvement in Westray disaster and the Faro mine was closed the following year. In 1994, a receiver sold the mine to Anvil Range. Commerical production began again in November 1995 and continued until January 1997 when mining ceased. The mill continued to process stockpiles until March 1997 when it too was shut down. Anvil Range declared bankruptcy in April 1998. The property is currently going through the bankruptcy court process.

The federal government negotiated with Anvil Range to establish a reclamation security trust (RST) to provide funds on a sliding scale based on price of zinc, with minimum payment of $175,000 per quarter if company had a positive cash flow. This was an amalgamation of what Curragh put in, plus $1.5 million dollars in trusts stemming from water licences. This Trust currently stands at $14 million.

Environmental issues include relocation of tailings in the Rose Creek valley, treatment of drainage and waste water, and general site restoration. No abandonment plan was prepared until 1982 when a $50 million dam was proposed across Rose Creek Valley. When Curragh took over mine, they rejected that plan and committed to develop a new reclamation scheme. In 1990 they proposed reprocessing as the method to remove tailings Rose Creek Valley. This would take place only if they could break even on the sale of the bulk concentrate. Curragh failed to provide cost estimates and did not identify buyers for the concentrate. A federal water licence finally required a till cover over the Rose Creek valley tailings worth $26-28 million if reprocessing proved unfeasible.

Current environmental liability, including perpetual water treatment, has been estimated at over $100 million.

The three parties to the new Memorandum of Understanding, the federal government, Yukon government and Cominco, are all major creditors for the bankrupt Anvil Range operation at Faro.

The federal government, through the Department of Indian Affairs and Northern Development, is the regulator responsible for water use, the surface lease agreements, mining leases, and an environmental agreement regarding the nearby Vangorda deposit.