EDITORIAL PAGE — Knocking at the back door

Government involvement in mining ventures is, for the most part, a thing of the past. Both federal and provincial governments are in deficit-fighting modes, and investment in the private sector is clearly not part of their cost-cutting agenda.

Besides, governments have clued into the fact that most of the projects in which they are invited to “participate” are marginal ones which are unlikely to get off the ground with private-sector funding alone. There were some hard lessons learned from British Columbia’s Northeast coal project, the underground asbestos mining venture at Cassiar, B.C., and the ill-fated Westray coal project in the Maritimes.

Small wonder, then, that reaction has been mixed to Royal Oak Mines’ recent request that the British Columbia government provide a financial support package of about $150 million for development of the Kemess gold-copper project, northwest of Mackenzie.

Royal Oak and its 39% owned partner, Geddes Resources, have offered $132 million to acquire Kemess. The deal is still conditional on a number of factors, including the outcome of the government negotiations.

But this is no ordinary request for government funding. Royal Oak and Geddes have an outstanding claim against the provincial government for the 1993 expropriation of Geddes’s key asset: the Windy Craggy copper-cobalt deposit near the Alaskan border, now part of a wilderness park.

The government had promised to compensate Geddes and other claimholders fairly and expediently. But to date, not one cent has been paid, and the government is clearly not eager to settle the issue before the next election.

With the front door closed, who can blame Royal Oak President Margaret Witte for trying to solve this outstanding claim through the back door? After all, the deposit has a gross metal value of more than $8 billion and could have provided 500 direct jobs, plus about 1,500 more indirect jobs for contractors, suppliers and other services.

Kemess may not be as rich a deposit as Windy Craggy, but it is no slouch either. At last report, the proposed open-pit mine was targeted to produce more than 200,000 oz. gold annually, plus about 58 million lb. copper.

Witte has offered to drop claims against the British Columbia government in return for financial support to build a road and power line to the Kemess gold-copper project.

The bulk of the financial package, if it ever comes, would be applied towards a road and power line. These would be the costliest items and would provide the added benefit of attracting other types of development into this remote, yet resource-rich, portion of the province.

For much of this country’s history, governments have helped pay infrastructure costs for the purpose of regional development. Industry organizations have generally supported this type of government aid, so long as it provided benefits to more than just those companies directly involved in resource projects.

If Royal Oak and Geddes are successful in their negotiations with the government, the province may soon have a new gold-copper mine that will employ 350 people and create significant spinoff benefits. What’s more, the Windy Craggy issue would be laid to rest, and the province might improve its image as a place for mining companies to invest.