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In Rush for Key Metals, Canada Ushers Miners to Its Fragile North

In Rush for Key Metals, Canada Ushers Miners to Its Fragile North

In the wilderness north of Great Slave Lake, in Canada’s Northwest Territories, mining companies are eyeing a potential treasure trove of critical minerals as demand for lithium, nickel, graphite, and copper has risen sharply to meet the needs of the burgeoning electric vehicle and solar power industries.

The cost of mining in this and many other roadless parts of northern Canada used to be prohibitive. That changed last December, when the Canadian government announced its highly anticipated Critical Minerals Strategy, which offers mining companies generous tax breaks, $3 billion in additional funding incentives, and a promise to fast-track the federal environmental impact review process.

While the strategy is being touted as a way of helping the world transition to a post-carbon economy, some environmentalists fear that it will result in drained wetlands, diverted streams, and the disturbance of carbon-rich peatlands. Over the past three decades, the mining industry has walked away from these and many other environmental liabilities, leaving Canadian taxpayers with cleanup bills amounting to more than $10 billion.

Critics say the benefits of mining might not outweigh its costs to biodiversity and the Indigenous people who live there.

“In this transition to renewables, two clear storylines have emerged,” says Teresa Kramarz, a professor and co-director of the Environmental Governance Lab at the University of Toronto and co-chair of the United Nations Development Programme’s Advisory Group on Energy Governance. The first, she says, is the political urgency to rapidly decarbonize, while the second is the enormous business opportunity presented by mining for critical minerals needed for a clean energy revolution.

The blending of these storylines concerns Kramarz, as well as many other scientists and environmentalists, because the overall benefits of mining might not outweigh its costs to biodiversity and to Indigenous people who live in mineral-rich regions.

Nor is there any guarantee that reserves of minerals like lithium are large and accessible enough for Canada to compete with reserves in South America and China, which are much larger and are subject to less environmental oversight.

“The Critical Minerals Strategy is one important step and welcomed, given the need for Canada to strengthen supply chains to support the energy transition from fossil fuels to renewable energy sources,” says Justina Ray, senior scientist and president of the Wildlife Conservation Society Canada. “But the strategy doesn’t fully appreciate the global [ecological] significance of mining regions such as the Hudson Bay Lowlands, the second largest peatlands in the world.” While peatlands account for only 3 percent of the Earth’s land, they store approximately 30 percent of the planet’s soil carbon. A quarter of the world’s peatlands are found in Canada. What’s needed, says Ray, “is a regional assessment led by federal, provincial, and Indigenous leaders to determine whether the trade-offs are worth the cost to biodiversity.”

The Bathurst caribou herd in the Northwest Territories. A proposed mine would cross their migratory path.

The Bathurst caribou herd in the Northwest Territories. A proposed mine would cross their migratory path. All Canada Photos / Alamy Stock Photo

Most of the critical minerals reserves are located in remote regions of the Northwest Territories, Nunavut, and northern Quebec, and in the Hudson Bay Lowlands of northern Manitoba, Ontario, and western Quebec.

The mine that Fortune Minerals is exploring in the 3,700-square-mile mineral region north of Great Slave Lake lies within the migratory path of the Bathurst caribou herd, whose numbers have crashed from a high of nearly 470,000 in the 1980s to 6,240 today, due to a number of factors including mining disturbance, overhunting, and climate change.

In the so-called Ring of Fire region, in the 124,000-square-mile Hudson Bay and James Bay Lowlands, mining activity could accelerate the thawing of permafrost that stores nearly 35 gigatons of carbon and degrade the habitat of caribou and the nesting grounds of millions of birds. The Lowlands, according to Jeff Wells, vice president of boreal conservation for the National Audubon Society, are “astonishingly important.” No other place on the planet has as many red knots, semipalmated sandpipers, dunlins, and other nesting shorebird species. The Lowlands also are possibly the most important refuge for woodland caribou, which are now functionally extinct in the United States and disappearing quickly across Canada.

If the past history of mining in northern Canada says anything about the future, there are plenty of reasons to be concerned.

Politically, the Critical Minerals Strategy is a win-win for Prime Minister Justin Trudeau’s Liberal government. It speaks to the Conservative Party’s demand for more mining jobs and regional economic development while addressing the left-wing New Democratic Party’s demand for climate action.

If the past history of mining in northern Canada says anything about the future, there are plenty of reasons to be concerned, especially with the Ontario, Manitoba, and Northwest Territories governments signaling their desire to speed up mining for critical minerals.

Just a few dozen miles from Fortune’s play in the Northwest Territories, the Colomac gold mine’s tailings ponds once overflowed with cyanide and ammonia, triggering a mining inspector to complain of burning eyes and a sore throat just minutes after arriving at the site. After low gold prices finally shut the mine in 1997, Colomac’s $1.5 million security deposit, posted to cover environmental liabilities, didn’t come close to covering the $53 million cleanup that was performed at taxpayer expense.

The final cost of the remediation at Colomac, whose initial phase included construction of a five-mile fence to keep caribou out of contaminated areas, is dwarfed by the resources that continue to be poured into two ongoing remediations.

The shuttered Giant gold mine, on the shore of Great Slave Lake, will cost more than $4 billion to remediate.

The shuttered Giant gold mine, on the shore of Great Slave Lake, will cost more than $4 billion to remediate. Design Pics Inc / Alamy Stock Photo

The Faro zinc mine, which operated in the central Yukon between 1968 and 1998, was once the largest open-pit lead-zinc mine in the world. Today, it is one of the most complex abandoned-mine remediation projects in the country, if not the world. Its 77 million tons of tailings and 353 million tons of waste rock contain high levels of heavy metals, which authorities fear could potentially leach into the mountainous headwaters of many fish-bearing streams. The remediation, which began in the early 2000s, is expected to take between 10 and 15 years at an estimated cost of $500 million or more.

The remediation of the Giant gold mine, on the shores of Great Slave Lake in Yellowknife, the capital of the Northwest Territories, will cost an estimated $4.38 billion and won’t be completed until 2038. Even then, storing the gold mine’s 261,000 tons of highly toxic, virtually indestructible arsenic trioxide — in frozen underground mine chambers — is anticipated to require perpetual maintenance because groundwater that flows into the mine and rapidly thawing permafrost are undermining its stability. The mine may have to be refrigerated permanently, according to engineers working on remediation options. Since 2016, all 20,000 Yellowknife residents have been warned by the government to avoid drinking water, swimming, fishing, and harvesting plants and berries in and around several lakes due to their high arsenic levels.

Since 2002, when the Auditor General of Canada issued a scathing report on 30 abandoned mines in the north, federal, territorial, and provincial governments have become more diligent in reviewing mining plans and demanding security deposits to cover the cost of cleanups. But the liabilities continue.

Canada’s Critical Mining Strategy is bound to attract even more interest now that several battery plants are being planned in Ontario.

This past May, for example, the Yukon government took over the Minto copper and gold mine on Selkirk First Nation territory after mining inspectors repeatedly warned of the potential for contaminated water to flow into the salmon-bearing Yukon River system. The action was taken less than a year after the owners of the Wolverine Mine, which contains reserves of gold, silver, zinc, and copper in the southeast corner of the territory, reneged on paying $19 million in security costs. By then, the Yukon government had already poured millions of dollars into environmental mitigation efforts after an underground portion of the mine flooded in 2017.

Tom Hoefer, executive director of the Northwest Territories and Nunavut Chamber of Mines, says that abandoned mines in the Canadian North “should be a thing of the past” thanks to legislative changes that have addressed the issue of security deposits and created oversight boards that oversee land-use planning, wildlife management, environmental assessment and review, and land and water regulations.

“The driver, of course, was that Indigenous groups also didn’t want to see repeats of environmental messes on their traditional lands,” he said, noting that the law requires that half of the review board members in the Northwest Territories and Nunavut come from an Indigenous community.

The site of the former Giant gold mine, which is contaminated with highly toxic arsenic trioxide.

The site of the former Giant gold mine, which is contaminated with highly toxic arsenic trioxide. Patrick T. Fallon / AFP via Getty Images

Canada’s Critical Mining Strategy has already attracted a lot of interest and is bound to attract more now that several battery plants, including one proposed by Volkswagen, are in the planning stages in Ontario. The Volkswagen plant will receive a package of subsidies amounting to as much as $10 billion over the next decade.

In addition to fast-tracking the regulatory review process, the federal strategy will give mining companies a generous tax credit, equal to 30 percent of the capital costs associated with establishing a mine. Priority will be given to mines that produce lithium, cobalt, nickel, graphite, copper, and other critical metals. To entice companies to invest and explore, the government has earmarked $60 million for geoscience and exploration aimed at discovering potential new deposits.

The Canadian government has funded this kind of geo-mapping before, in the hopes of encouraging oil and gas companies to develop energy and mineral reserves in the northern regions of the country. Between 2008 and 2017, more than $75 million was spent helping private companies find new sources of fossil fuels and minerals, but not a barrel of oil or a gigajoule of gas found its way to market. What northerners got instead was tens of thousands of miles of seismic lines — narrow corridors cleared of vegetation — running through formerly frozen peatland that are now releasing untold volumes of greenhouse gases as they thaw.

“If I have to hop on a bulldozer myself, we’re going to start building roads in the Ring of Fire,” says Ontario’s premier.

Provincial leaders tend to be supportive of the new mining projects. Ontario Premier Doug Ford said, “If I have to hop on a bulldozer myself, we’re going to start building roads in the Ring of Fire.” Based on the increased value of critical minerals already established to be in the ground, George Pirie, Ontario’s minister of mines, estimates the mining value of this area at a trillion dollars.

But according to Jamie Kneen, the national program co-lead of Mining Watch Canada, there is little data to back up such claims. He fears that Canada will be left with a lot of holes in the ground and many more environmental liabilities if technological developments come into play and make the Critical Minerals Strategy obsolete.

Charles Kazaz, a Montreal-based lawyer for a firm that advises clients in the mining sector, concedes that demand could drop, but he considers the Critical Mineral Strategy unique for addressing both economic development and climate-change targets. “Canada needs to be aggressive and act fast in order to catch up with the rest of the world,” he says.

Without the strategy, he says, Canada might miss an opportunity because of foreign investment restrictions that prevent countries like China from partnering in critical-mineral development in Canada, and by the constitutional requirement that the government and industry consult with and accommodate Indigenous communities before mines or access roads can proceed.

Red knots nest in the Hudson Bay and James Bay Lowlands, where mining activity could speed the thawing of permafrost.

Red knots nest in the Hudson Bay and James Bay Lowlands, where mining activity could speed the thawing of permafrost. phototrip / Alamy Stock Photo

Indigenous communities are divided over whether to support development of resources within their territories. The recent federal decision to greenlight Nemaska Lithium’s project in northern Quebec is a case in point. The Nemaska Cree band council embraced the mine on the basis that it would provide the community with jobs and royalties. But some Cree, including Thomas Jolly, a former Nemaska chief, don’t think it is worth the risk of contaminating the Rupert River watershed. Neither does Jolly accept the argument that the Cree should agree to the mine to help the world deal with climate change.

“Who is responsible for the climate crisis?” he asked. “Is it up to us to pay and suffer for what they [southerners] have done?”

The Cree communities that live in and around the Ring of Fire, where several mines are already in operation and where at least 15 other companies have more than 26,000 mining claims, are working with conservation groups like the Wildlife Conservation Society Canada, the Wildlands League, and Mining Watch Canada to make sure that no environmental shortcuts are taken, as federal Natural Resources Minister Jonathan Wilkinson has promised.

Kramarz, at the University of Toronto, remains skeptical. Like other scientists, she isn’t downplaying the need to aggressively deal with climate change. But she believes that enthusiasm for exploiting critical minerals to speed a transition to carbon neutrality ignores significant costs.

“If that’s the narrative,” she says, referring to industry exuberance, “then it would be good to not forget that there are environmental concerns that need to be thoroughly understood and mitigated.”

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