21 October 2016, 1:58pm EDT

MiningWatch Predicts KGHM Ajax Would Face At Least $100 Million in Compensation or Litigation Costs If Mine Opens

KGHM Ajax British Columbia Environment Environmental Assessment Health Human Rights Impact on Communities

(Kamloops) MiningWatch Canada claims that Kamloops should pay attention to recent legal developments of the only other urban mine of comparable size in Canada: the Malartic open pit mine in Quebec.

For the first time since it started operations in 2011, the Malartic open pit mine, owned by Agnico Eagle and Yamana Gold, faces a $70 million class action suit for the impacts on 700 houses and 1400 people located closest to the mine site. The suit was launched on August 1st of this year and aims to compensate damages related to dust, noise, and daily blasts.

The company itself has admitted the impacts of its mine on local community members and has agreed, on September 1st 2016, to offer a $50 million relocation and compensation package for the 3500 residents of Malartic, some of whom live up to about 2-2.5km away from the mine site at the city limits.

Based on the Malartic case, and using conservative estimates, the mining watchdog predicts that KGHM would face at least $100 million in compensation or litigation costs if the mine opens, and possibly above $200 million.

“Ajax’s economic feasibility study clearly shows that KGHM didn’t plan for this type of costs. It also shows that the project has no financial room or capacity to absorb those costs,” says Ugo Lapointe, Canada Program Coordinator for MiningWatch Canada.

Says Lapointe: “We need to keep in mind that, compared to Malartic, the Ajax mine would be twice as big and located on high ground, upwind from the city of Kamloops, and in a drier climate. Studies show that this would allow dust, noise and air-blasts to travel further into the city and affect at least twice as many people.”

MiningWatch bases its estimates on a 2.5km radius from Ajax’s pit edge, which would include approximately 2700 houses and 7000 people living predominantly in the Aberdeen neighbourhood. Using the same low compensation figures offered by the Malartic mine for those living up to 2.5km away from the mine ($500 per house, per year, plus $250 per affected person, per year—including children), the total compensation would amount to about $62 million in Kamloops. This figure is then adjusted and increased to take into account the above-mention compounding factors (bigger mine, up-wind, drier climate, more people affected). If compensation figures from the class action suit are used instead of the company’s figures, total compensation costs applicable would easily triple, approaching $200 million. 

The Canadian Malartic gold open mine is currently the largest urban mine in operation in Canada. Despite having spent millions to date in mitigation measures and using best available practices, the mine is incapable of meeting regulated levels and has incurred some 4000 environmental infractions since construction started in 2009. The mine is now seeking an expansion permit which would increase the length of the open pit from 2.5km to 3.5km, and nearly double the total volume of rocks extracted.

Malartic community members also launched an injunction asking the court to order the  company to respect laws and regulations at all time from now on.

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