Dealing with the Failure of Royal Oak Mines in the Northwest Territories, Canada
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Dealing with the Failure of Royal Oak Mines in the Northwest Territories, Canada Dave Nutter Special Advisor, Giant Mine Project Team Department of Indian Affairs and Northern Development Government of Canada June, 2001 Royal Oak Mines Inc. L Mid-sized mining company with properties across Canada L Two gold mines in Northwest Territories L Giant Mine L Colomac Mine L 1999 L $600,000 debt L Court-ordered liquidation of assets Giant Mine - 1999 L Within Yellowknife city limits L Began operating in 1948 L 1,000 ton per day, underground gold mine L Still in full production L >300 workers Colomac Mine - 1999 L 220 km northwest of Yellowknife L Accessed only by air and winter road L Began operating in 1990 L 10,000 ton per day, low grade open pit gold mine L Placed on care and maintenance in 1997 L No mineable gold reserves Role of DIAND L In the NWT, most public land is administered by the federal government through the Department of Indian Affairs and Northern Development (DIAND) L Responsible for: L Administration of land and water L Disposition of mineral rights Challenges for DIAND Insolvency of Royal Oak Mines Inc. posed a number of significant environmental, financial, regulatory and political challenges for the federal government Environmental Challenges - Giant ARSENIC TRIOXIDE L Roasting of refractory ore L Arsenic trioxide and sulphur dioxide emissions L Highly toxic, soluble L 265,000 tons of arsenic trioxide dust stored in 15 underground chambers L Assumptions – permafrost / low groundwater movement / competent host rock L Arsenic trioxide leaching out of chambers L Contaminated water captured in sumps; pumped to treatment plant on surface Environmental Challenges - Giant SURFACE CONTAMINATION L 50 year old industrial site L Arsenic and hydrocarbon-contaminated soils L Asbestos L Abandoned materials and equipment L Several large tailings containment areas L Fuel and waste oil storage sites L Numerous industrial and residential structures L Limited progressive reclamation Environmental Challenges - Colomac L Tailings management – zero discharge design, but positive water balance L Tailings contain cyanide, ammonia and metals L Recurring risk of uncontrolled release of tailings water during spring runoff L Hydrocarbon-contaminated soils L Numerous hazardous and non-hazardous waste sites Financial Challenges L Environmental liabilities far exceed value of assets at Giant or Colomac L Interim Receiver’s right to abandon – DIAND liability L Inadequate security deposits Regulatory Challenges L Dual roles of regulator and operator L Insolvency legislation protects creditors L Access to security deposits L When is a site “abandoned”? Political Challenges L Impact of Giant closure on community L Pension plan and severance shortfalls L Surface reclamation: federal/territorial roles? L Municipal tax liability DIAND Commitments L Safeguard public health and safety L Environmental protection L Minimize cost to the Canadian taxpayer ‘Solutions’ L Contingency planning L Federal insolvency legislation gives DIAND first charge over assets L Distinct approach for each property ‘Solutions’ – Giant (current situation) L Sale to Miramar Mining group (MGML) L Terms: L Close roaster L MGML maintains environmental compliance L Insulate Miramar parent from environmental liability L Honour Collective Agreement L Reclamation Security Trust L 2 year agreement Miramar Agreement L Advantages for DIAND L Experienced operator L Roaster closed – no arsenic trioxide production L Cost savings (environmental compliance) L Continued employment L Revenues for reclamation? L Opportunity for long term planning Miramar Agreement L Advantages for Miramar L Ore for core operations (Con Mine) L Participation in long range arsenic trioxide management planning RESULT: Unique public/private sector partnership with roles for both Miramar and DIAND Giant – Next Steps LDevelop long term arsenic trioxide management plan / environmental assessment / regulatory approvals LMonitor arsenic trioxide containment LOngoing surface reclamation ‘Solutions’ – Colomac L Orderly transition from Interim Receiver to DIAND L Develop water treatment system (complex water chemistry) L Manage water balance (2-3 year capacity) Next Steps: Develop Site Remediation Plan / environmental assessment and regulatory approvals Lessons Learned L Anticipate L Be pro-active L Be creative L Collaborate L Know and use your legislation.