Can you put a price on the impact of Yellowknife's Giant Mine?

Last week, the federal government revealed that cleaning up Yellowknife's Giant Mine is now projected to cost $4.38 billion instead of $1 billion. This is, by one measure, greater than the mine's total estimated revenues during its operation.

Quantifying, in dollar terms, the impact of the mine on the local economy, the environment, and the people who live on and use the area's land and water is complicated, if not impossible. 

However, in 2002, a territorial government mining adviser and a federal government manager with then-Indian and Northern Affairs did attempt to put dollar amounts on wealth generated by Giant Mine in a socio-economic study of gold mining in the Yellowknife area. 

The following comparisons draw from that study. They aren't perfect, but they help contextualize the scale of the remediation project that's in the early stages right now.

Giant Mine by the numbers

Giant Mine operated from 1948 until 2004, under various owners. In that time, it produced around seven million ounces of gold — or about 198 tonnes. It also produced highly toxic arsenic trioxide dust, more than 237,000 tonnes of which must be contained underground. 

According to the study, the total estimated revenues generated by the mine, in 2002 dollars, was $2.74 billion — roughly $4.15 billion in 2022 dollars. 

The projected cost of cleaning up the mine is now $4.38 billion, and the federal government will pay the bill. The remediation project is expected to run until 2038. 

The study estimated that former owners of Giant Mine made $867 million in profits up to 1998, while tax revenues over the mine's life amounted to an estimated $454 million: $360 million in personal income taxes, $78 million in corporate income taxes and $16 million in mining taxes (again, all in 2002 dollars).

The federal government says it got $4 million in royalties (not adjusted for inflation) over the mine's 57-year run, while Giant contributed $2 billion (in 2002 dollars) to the GDP of the N.W.T.

Remediation cost estimate lacks transparency, says oversight board  

David Livingstone, the chair of the Giant Mine Oversight Board, said he was "somewhat taken aback" to see remediation costs soar to $4.38 billion.

The board is an independent body charged with monitoring and reporting on the Giant Mine Remediation Project. Livingstone said his board doesn't have any more insight into the cost breakdown, and how much money will stay in the Northwest Territories, than the public does.

"This is perhaps an example of the lack of transparency on the whole economic side of this project," he said.

Livingstone dismissed the notion that the Giant Mine Oversight Board, with its budget of around $1 million a year, and the $2-million annual contribution to the Yellowknives Dene First Nation, are noteworthy drivers behind the spike in costs.

"They're significant on their own, but measured against the … fourfold increase in cost for this project, I don't think that's the issue," he said. 

"The issue is whether the project team had been properly estimating the cost of the remediation since it received the [Mackenzie Valley] Review Board's report and began working on the remediation itself." 

Natalie Plato, deputy director of the Giant Mine Remediation Project, said her team only recently finalized its new cost estimate, and shared it with the oversight board "within days of receiving internal approval" of the updated figure.

"The project team's position has remained that an accurate, revised cost estimate was only possible after the land use permit and licence were secured, the project implementation plan was completed, and the project team was able to understand the impact of the resulting changes," said Plato. 

She said the project got its land use permit in August of 2020, and its Type A water licence in September of 2020.

Environmental assessment warned of rising costs

In the 2013 environmental assessment of the remediation project, the federal government estimated spending $903 million on remediation, and about $1.9 million each year after that in upkeep "forever."

Alan Ehrlich is the manager of environmental assessment for the Mackenzie Valley Review Board, and was the lead on the Giant Mine Remediation Project environmental assessment. He said he was a bit surprised by the new cost estimate, but not by the fact that the government now has a better sense of the scale of the cleanup effort.

For example, he said, through the environmental assessment process, the federal government recognised that it hadn't spent enough time talking to Indigenous governments, NGOs and people in Yellowknife. 

After further engagement, the government agreed to bring the quality of the water it planned to release into Yellowknife's Back Bay on Great Slave Lake up to drinking water standards.

Plato cites building a new water treatment plant as one of the added costs. 

The environmental assessment report warned that costs could rise.

It noted that the federal government acknowledged project costs could increase for reasons including accidents, unforeseen risks, and "as a result of the completion of the engineering designs as these will provide significantly more detail for overall project planning."

"The potential for this project to cost more as it unfolds is something that was definitely on the [review] board's mind," said Ehrlich.

Remediation is a job generator

Plato said last week that the earlier $1-billion cost estimate was a "pure construction cost estimate." 

In a follow-up email, she said the project team couldn't share a detailed cost breakdown because it's directly tied to work the team will be tendering, and sharing that information would "bias the procurement process."

She said the team will report on contracts as they're awarded.

Plato said work at the site fluctuates, but her team estimates the project will employ, on average, 142 full-time equivalents a year (according to that 2002 socio-economic study, Giant Mine directly employed an average of 355 people a year).

In the last fiscal year, she said, N.W.T. residents held 50 per cent of jobs at the site, and 28 per cent of hours worked was done by northern Indigenous people. 

Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, said Giant Mine is unique and shouldn't be compared to "modern day mines where closure is considered in the development of the project."  

He added the Giant Mine remediation team is working to "ensure local benefit, which comes with additional costs but ensures that the benefits, and more importantly the learnings, of the project stay in the North."

Neither a chief nor a representative for the Yellowknives Dene First Nation was available for an interview on Tuesday.

Arn Keeling is a geography professor at Memorial University in Newfoundland who co-authored a history of Giant Mine. 

He said working benefits for northerners into the costs for remediation is "the least, arguably, that the government can do to compensate for this fiasco — for this, ultimately, very colonial situation where the mine was permitted to extract this material without consent, knowledge or really any meaningful participation, and people have been left behind with their territory, their lands and waters, poisoned."

Plato said changes to the scope and timeline of the remediation will "provide a greater level of protection for the land and people," and "significant" employment opportunities and economic benefits for northern and Indigenous people.

She also said an apology and compensation to Yellowknives Dene First Nation for mine-related damage to their lands and people would be beyond the scope of the remediation project, and are therefore not included in the updated cost estimate.