Opinion: Tulsequah Chief, all over again

Alaskans are worried Red Chris could go the same way.

Imperial Metals, owner of the Red Chris mine in the Stikine watershed and the Mount Polley mine that had a major tailings dam failure in August 2014, is facing financial troubles. Given the experience with the abandoned Tulsequah Chief Mine, where two companies have gone bankrupt trying to open the mine, leaving a big mess behind without funds for cleanup, Alaskans are worried Red Chris could go the same way.

In a Sept. 17 Empire article, “a spokesperson for the [British Columbia] Ministry of Energy, Mines and Petroleum Resources (MEM) explained via email that mining companies are liable for reclamation costs, even if they go bankrupt.” In a strict legal sense this is true, as the British Columbia (B.C.) Contaminated Sites legislation does hold mine owners liable for mine cleanup and closure. However, the reality is far different.

How is the province going to get cleanup money from a bankrupt company? Mines in B.C. are chronically under-bonded. So, with a company that can’t pay its bills as a result of bankruptcy or other reason, either nothing happens or taxpayers are stuck with the cleanup bill. Neither of the two companies that went bankrupt trying to open the Tulsequah Chief, nor Imperial Metals, provided a full cash bond adequate to address cleanup and closure in case of bankruptcy or inability to pay bills.

As the Empire article notes, B.C. “doesn’t have a formalized policy they’ve shared with the public explaining how they collect reclamation money” and B.C. officials can approve mine permits without requiring a full cash bond. B.C. mines were under-bonded by more than $1.5 billion as of the end of 2016, according to the latest B.C. numbers. Compare this with Alaska, which requires a full cash bond.

[Toxic water leaches into prime Alaska, Canada salmon habitat]

Reclamation costs for Red Chris are estimated at $100.9 million with only $14.3 million secured in cash, according to an article in the Narwhal. Imperial Metals’ 2018 second quarter report noted it was planning to pay $28.4 million of future site reclamation costs in “mineral property, plant and equipment.” So instead of cash in the bank, the company assumes it will be able to sell equipment once the mine closes — a dubious assumption at best. Imperial Metals is to pay about $86 million in reclamation costs between 2018 and 2046, which would still leave almost $15 million still due after 2046, if the company lasts that long.

Let’s look at the Tulsequah Chief. The mine was abandoned in 1957 and has been discharging toxic acid mine drainage into the Taku Watershed ever since. Redfern tried to develop the mine, but went bankrupt in 2009 leaving a large mess behind. Chieftain Metals then tried to develop the mine, but declared bankruptcy in 2016. Chieftain is still in bankruptcy proceedings. Both companies ignored numerous cleanup orders. B.C. didn’t take aggressive action to enforce orders, nor did the province ever try to hold company executives liable for their actions, or inaction. The toxic drainage continues to flow into salmon habitat, despite a B.C. study from July 2017 that found “unacceptable risks” from the pollution.

According to B.C. officials I spoke with, the federal bankruptcy law supersedes B.C. laws, including those regulating mining. B.C. cannot cancel permits or take other enforcement actions while a company is in bankruptcy without first obtaining permission from the bankruptcy court.

In February 2018 the Supreme Court of Canada heard a case known as “Redwater” that could revise the federal bankruptcy laws. A decision is expected sometime this year or early 2019.

While B.C. appears to be hamstrung due to bankruptcy laws, the province’s inadequate bonding requirements and its decades-long continual failure to enforce environmental makes them largely culpable for the situation at Tulsequah Chief. Because Chieftain has been in bankruptcy proceedings for over two years, with no real interest by any other company to buy its assets, B.C. needs to aggressively petition the bankruptcy court to end this process so they can finally clean up the mess.

Without major changes to laws and practices, we are likely to see Tulsequah Chief-like situations play out across the transboundary region.


• Chris Zimmer is the Alaska Campaign Director for Rivers Without Borders in Juneau and has been working on transboundary mining issues since 2001. My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.


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