Nunatsiaq News
NEWS: Nunavut September 28, 2016 - 11:45 am

Who pays the cleanup bill? Nunavut board mulls Doris North cleanup fund

Two weeks after public hearing, reclamation bond still up in the air

The processing plant at TMAC's Doris North mine site, under construction this past June. The company hopes to start mining gold in 2017, and is likely to put up a reclamation bond of about $31 million. (FILE PHOTO)
The processing plant at TMAC's Doris North mine site, under construction this past June. The company hopes to start mining gold in 2017, and is likely to put up a reclamation bond of about $31 million. (FILE PHOTO)

TMAC Resources Inc. said Sept. 23 they will agree to put up $30 million for a fund to pay for the future cleanup of the Doris North mine, even though they believe that sum is likely too high.

That comes nearly two weeks after the conclusion of a public hearing in front of the Nunavut Water Board that was supposed to have settled the issue.

The purpose of the reclamation fund is to ensure there’s enough money to pay for a site cleanup if a company goes bankrupt or abandon a project—such as what happened in 2014 when the Jericho diamond mine went belly-up in 2012.

One of the worst examples is the former Giant Mine in Yellowknife, whose owners went into receivership in 1999, leaving behind 237,000 tonnes of arsenic trioxide that threatened Great Slave Lake. Taxpayers were stuck with a massive remediation bill estimated at between $900,000 and $1 billion.

Because of that and other expensive fiascos, the creation of reclamation funds is now mandatory, under a federal law called the Nunavut Waters and Nunavut Surface Rights Tribunal Act.

And it’s the Nunavut Water Board that’s responsible for recommending how much money developers must put into those reclamation funds.

But when the water board’s public hearing on TMAC’s new Doris North plan got underway in Cambridge Bay this past Sept. 13, TMAC strongly opposed a reclamation amount first proposed by the Department of Indigenous Affairs and Northern Development.

Using information from an expert consultant they hired, in December 2015 INAC first proposed an reclamation fund of about $47 million. TMAC said that was “not credible.”

TMAC, on the other hand, estimated that a post-closure clean-up would cost only about $26 million.

On Sept. 12, day before the public hearing got started, INAC had whittled its figure down to about $39 million, and TMAC had raised theirs to about $29 million.

So representatives from the two sides, along with the Kitikmeot Inuit Association, spent much of the two-day hearing on informal horse-trading sessions during breaks to reach a deal to present to the board by the end of the second day, Sept. 13.

And by the end of it all, when some participants were already boarding aircraft to fly home, the parties struck a deal that would require TMAC to put up a bond of $30.7 million.

As of the end of last week, TMAC said in their Sept. 23 submission that they’ll accept the $30.7-million bond requirement, even though it’s “more than sufficient.”

But that’s not the end of the issue.

TMAC is dealing with two landowners: the Kitikmeot Inuit Association and the Crown, represented by INAC.

That means the water board must still figure out how the $31-million bond requirement should be split between INAC and the KIA.

On that issue, TMAC said Sept. 23 that they strongly support a plan proposed by the KIA.

Under the KIA’s scheme, INAC would hold only about $4.9 million of the reclamation fund, while the KIA would hold about $25.8 million.

INAC, on the other hand, proposes holding about $16.1 million of the reclamation fund and that the KIA would hold about $14.5 million.

But TMAC says they trust that KIA will use those letters of credit for no other purpose than to pay for a clean up.

“There is no reason to believe that KIA would fail to fully discharge their obligation under the NLCA to ensure that the Inuit Owned Lands on which the Doris North Project is situated will continue to meet that very high standard once mining is complete,” TMAC said.

TMAC would provide the bond through letters of credit authorized by their banker, the CIBC.

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