Major reforms proposed in Yukon mineral development strategy report

Developing new mining legislation, creating a water use tax and completing the Yukon’s six outstanding land use plans in the next five years are among the substantial list of recommendations made by the independent panel in charge of the territory’s mineral development strategy.

The panel’s final report, released Dec. 28, contains 79 recommendations meant to guide future mineral development in the territory. It was developed as part of a 2017 memorandum of understanding on mining between the Yukon government and 11 self-governing First Nations. Yukoners have until Feb. 22 to comment on the report.

“This could shape the way that mineral development’s done in the Yukon for the foreseeable future, so this deserves a lot of attention,” said Yukon Chamber of Mines president Ed Peart in an interview with The Northern Miner.

According to panel member Math’ieya Alatini, chief strategist at GSD Strategies and former Chief of Kluane First Nation, the panel aimed to balance the needs of multiple stakeholders.

“We looked at creating a balance of a number of considerations that would increase transparency [and] increase the level of confidence that proponents would have when it comes to the Yukon,” she said in an interview. “[It] addresses the proponents, the First Nations’ side and the NGOs and environmental protection side in a way that is balanced and is hearing all sides of the arguments.”

One major recommendation is to develop new legislation by 2023 to replace the Placer and Quartz Mining Acts, which are both more than 100 years old, to align with the territory’s modern treaties with 11 self-governing First Nations as well as contemporary federal and territorial legislation. It also calls on any new legislation and regulations to be aligned with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) and the principle of free, prior and informed consent.

New legislation would “replace the patchwork of amendments” that have rendered the two acts “unresponsive to evolving industry circumstances and [made them] difficult to enforce,” the report said, adding that any new legislation should be developed on a “government to government” basis with First Nations, including the three nations that haven’t yet signed modern treaties.

As part of the goal to align legislation with modern treaties and UNDRIP, the panel recommended fully delegating regulatory enforcement tools to Yukon First Nations mining land officers, which Alatini said would roughly double the number of people in the territory who could enforce regulatory compliance. The panel also recommended adding reconciliation to the list of reasons the territorial government can use to justify prohibiting entry for prospecting, staking and mining activities under both acts.

Erika Tizya-Tramm, director of natural resources for the Vuntut Gwitchin First Nation, said that while the concept of free, prior and informed consent could raise the hackles of industry because there’s no current precedent for it, it is necessary to include in mining legislation and regulation. “Instead of achieving minimum standards set out legislatively, we really ought to be achieving best practices,” she said. “Going forward [free, prior and informed consent] is going to be a big part of what defines success in these relationships and processes.”

The report included recommendations aimed at ensuring Yukon First Nations could receive financial and social benefit from mining, including creating a statute-based template for negotiating benefit agreements between companies and affected First Nations, with varying types of agreements required for each stage of the process. It also suggested improving information sharing between placer gold project proponents and First Nations at the exploration stage, and designing measures to give First Nations the ability to acquire equity stakes in mining projects and infrastructure initiatives.

A worker moves a GT Probe rock and soil sampling machine on White Gold’s property in the Yukon. Credit: White Gold.

The report aimed to address the uncertainty created by unfinished land-use planning and temporary staking bans across the province. Currently, about half of the Yukon is off-limits to staking. The panel encouraged the territorial government to complete the six remaining regional land use plans detailed in the Umbrella Final Agreement with First Nations within the next five years.

“Most of [the] feedback we were receiving hinged on the uncertainty that’s created when piecemeal land-use planning is being done, or ad-hoc policies are being developed without that comprehensive, big-picture look at how overall land use will occur,” Alatini said.

Prospectors whose claims have become stranded due to land-use planning should be compensated for that loss, the panel added. “If you have a block of claims and [the government says] the area’s protected, your claims are worthless,” said Carl Schulze, secretary treasurer of the Yukon Prospectors Association. “[The compensation recommendation] is a pretty strong positive.”

To ensure the territory benefits financially from mining, the panel said the government should revamp royalty rates. According to the report, the government received, on average, less than $100,000 per year in combined placer and quartz royalties in the last 10 years. In contrast, the value of mineral production in that time averaged about $335.40 million annually — meaning the Yukon government collected a scant 0.03% of the value of mineral production. First Nations with modern treaties are entitled to collect a share of those royalties, but would have received a “negligible” amount given the current model, the panel wrote.

Alatini said the panel knew increasing royalties would be “a little controversial,” but it came up in almost every interview they conducted. “It wasn’t in balance with the value of the minerals that were being extracted, so Yukoners were not seeing the benefit from the volume of extraction,” she said. “So we looked at how could we bring it to a level that is in line with current values [and acknowledges that] once the minerals are extracted, there’s no opportunity to put them back.”

Simply raising royalties is not enough, the panel said, and should be balanced with multiple measures to create “substantive and sustained Yukon socio-economic returns from resource development.” It recommended introducing a First Nations Resource Charge, which would involve a set of pre-specified charges like water use or land rental fees, and a Yukon payroll tax that would apply to all non-resident workers.

It also suggested an industrial water tax, similar to the approach recently adopted in British Columbia, which could be adjusted according to water quality at producing placer mines, encouraging sustainable water use.

“It’s something that’s being done in other jurisdictions to realize the effect that extractive industries are having on waterways, and it’s an opportunity to have some sort of recognition and compensation for that use,” Alatini said.

While Shulze felt “mixed” about the proposed increases to royalties, he said he appreciated the recommendation to introduce a profit-based placer gold royalty, where non-profitable operations would continue to pay essentially no royalties.

On the exploration side, the panel proposed reforms to Yukon’s free-entry staking system, to include prohibitions on certain lands without the written consent of the specific First Nation, landowner or municipality, and suggested prospectors no longer be required to give notice on “low impact, non-mechanized” exploration activities.

It attempted to encourage claim owners to explore more quickly, by recommending an increase to annual assessment work requirements for all claims and a doubling of escalated payments-in-lieu for claim assessment costs. It also proposed automatically converting claims to mineral leases — which are subject to significant annual advanced royalty payments — 30 years after staking.

— Kelsey Rolfe is a freelance journalist based in Toronto. She has written about the mining sector for more than five years and was previously a section editor at CIM Magazine in Montreal.