The true cost of cleaning up mine pollution in B.C. is growing, an investigation by The Globe and Mail and The Narwhal has found. If disaster strikes, taxpayers could be stuck with covering the costs

By Francesca Fionda, Jeffrey Jones and Chen Wang
Feb. 21, 2024

When John Morris Sr. is asked where the sacred sites on the Taku River are, his answer comes easily. “This whole place is sacred,” the 84-year-old Elder says. In the spring, all five species of North American salmon fight the current to spawn. In the summer, bright orange salmon berries speckle the landscape.

Morris Sr., a member of the Douglas Indian Association in southeast Alaska, said his grandparents, aunt, uncle and parents always reminded him that everything they needed was provided by the land there.

The river and its tributaries meander throughout the territories of the Tlingit and the Tahltan peoples, and flow over the international border between British Columbia and Alaska. But for the past 67 years a small, oozing sore has leached untreated heavy metals into the waterways. The abandoned Tulsequah Chief mine in B.C. sits on the Tulsequah River about 10 kilometres upstream from its confluence with the Taku River. Cominco, now part of Teck Resources Ltd., opened the copper, lead and zinc mine in 1951. Cominco closed it six years later. Several companies took the mine over in the intervening years, but none was successful at restarting production.

Morris Sr. first saw the bright orange fluid, known as acid rock drainage, flowing out of a pipe when he was on a hunting trip in the late 1990s. There is no doubt this area is contaminated, he remembers thinking. Numerous water sampling programs have pointed to elevated levels of metals in the Tulsequah River.

The B.C. government permitted the site to remain in a state of “care and maintenance” after it stopped producing as it waited for various companies to restart the mine. None stepped up. For years environmental groups, Indigenous communities and the Alaskan government have called on B.C. to start a proper cleanup.

The mine’s last owner, Chieftain Metals Inc., collapsed with high debts. In 2022, the project was declared dead after lengthy receivership proceedings. The reclamation bill is estimated at $72 million with $1 million a year in monitoring costs.

Though it no longer owns Tulsequah Chief, Teck said it has voluntarily supported the province and Taku River Tlingit First Nation’s interim reclamation and remediation work by contributing more than $3 million since 2021. Still, the B.C. government has less than one per cent of the security for reclamation and monitoring costs in hand.

Tulsequah Chief is one of several ugly remnants overshadowing a new era of mining aimed at building a low-carbon economy. The industry is looking to a future built on critical minerals needed for batteries, particularly for electric vehicles, but the legacy of past investment booms and a shortfall in the money set aside to deal with cleanup remains.

Over several months, The Narwhal and The Globe and Mail have scoured publicly available records, reviewed financial data and interviewed experts about B.C.'s mine reclamation plan and found that in practice, the province was short $753 million of the estimated cleanup cost in its last financial year and some of the best-capitalized companies have not yet paid for future reclamation costs.

A new interim government policy and push to collect money for clean-up costs could significantly close the gap in the coming months. Still, environmentalists, economists, Indigenous leaders and even mining industry players say the policy is falling short. They raise concerns that not enough is being collected, estimates for cleanup are too low and better incentives are needed for continuing remediation. In addition, there is a lack of protection if there’s a disaster, or as in the case of Tulsequah Chief, companies go bankrupt.

To address this, mining reform advocates are calling for the interim policy to be formalized as enforceable regulations. Mining policy researchers and communities downstream from mines said the regulations should include a better process for more accurately estimating the future costs of cleanup and a shared pool of funds to protect taxpayers from covering costs when disaster strikes.

Without enough funds set aside for cleanup, B.C. taxpayers will continue to be at risk.

Closing the gap in cleanup costs amid a push for critical minerals
The federal government is staking its plans for the future economy on big bets on mass electrification and the supply chains that will feed a decades-long shift to renewable energy and electric vehicles in the race to net zero. Critical minerals production is the foundation of that strategy. Global demand for such materials surged to US$320 billion in 2022, doubling during the previous five years.

B.C. does not intend to be left out. Its mining industry is banking on being a major supplier of the ingredients pulled from the earth for batteries used in transport and energy production and storage, such as copper, lithium and molybdenum, to name a few. According to the Mining Association of British Columbia, mining companies are now proposing 16 critical minerals mines, representing capital investments of $36.5 billion. If they all proceed, the mines could dump $10.9 billion in tax revenues into government coffers.

A mine project can’t just focus on the profits, however. It also has to plan for cleaning up the site after production ends. The polluter-pays principle is enshrined in the Canadian Environmental Protection Act. It means people and companies that disturb the environment must pay for cleanup and any other costs to society.

How much, when and in what form mining companies are required to pay differs from province to province. Generally, mining companies must give provincial governments a financial security to cover some of the cost of reclaiming a site. This is known as bonding and is meant to protect taxpayers if a company can’t or won’t reclaim a site.

Compared with B.C., other provinces and jurisdictions have varying levels of stringency with security demands. Quebec requires hard financial securities to be put up in full and upfront to guard against a potential bankruptcy while a mine is still in operation. In Ontario, companies that can pass a corporate financial test can self-assure against reclamation cost, but in practice that rarely happens. Instead, almost all provide full security when they file their closure plans.

Meanwhile, B.C. has no industry-funded pool of money set aside to deal with cleanup of mines that no longer have solvent owners, unlike what’s required for the oil and gas industry.

The province is playing catch-up to address the historical and growing costs of mine cleanup. Some companies have long since gone belly up, leaving taxpayers with millions of dollars in environmental liabilities. Others remain profitable, including some of the largest players in the province, such as Teck and Swiss commodities giant Glencore PLC, and they are still paying for the future remediation of past or currently producing mines.

In its most recent annual report, B.C.’s chief inspector of mines reported that it had collected $3.7 billion of an estimated total liability of $4.1 billion in 2022-23. It describes this as a shortfall of about $400 million. But that’s because costs are estimated and some companies have overpaid. Stripping out those overpayments, the difference as of March 31, 2023, was closer to $753 million.

Over the past five years, the difference between the government’s coffers and what mining companies owe has shrunk. Last year, the overall gap shrank by $353 million.

But a closer look at the report data shows that some mines are still millions of dollars short of securing their estimated cleanup costs, exposing taxpayers to potential costs. And, because the government’s current approach allows some mines to count minerals in the ground toward their security, the gap may never be completely closed.

Uncertainty and risk in B.C.’s new mining policy


David Chambers, founder and president of the Montana-based Center for Science in Public Participation, said B.C. is behind most other jurisdictions as it tries to collect the full cost of mining liabilities. Chambers, who has more than 40 years of experience in mineral exploration and development, formed the non-profit corporation to provide technical assistance on mining and water quality to public interest groups and tribal governments.

“It's pretty accepted here in the U.S. … that you have to have a 100-per-cent coverage for your financial assurance when the mining starts,” Chambers said. B.C.’s new policy changes are a step in the right direction but still carry some risk, he said.

In B.C., the financial security can be in the form of cash, letters of credit, surety bonds, guaranteed investment certificates or cash equivalents. It’s returned once the mine is restored to a “safe and environmentally sound state.”

Mineral reserves can also sometimes count toward financial security. The government describes this as an incentive for exploration. Mines that have been operating for more than five years and that have a lifespan exceeding 10 years can use up to 10 per cent of the value of their reserves toward a quarter of their security.

The policy assumes that there is mineral wealth that can be dug out if needed, but that isn’t always the case. Allowing companies to use reserves as security is risky because demand for minerals and commodity prices fluctuate, Chambers, a geophysicist, said.

Counting minerals in the ground is an example of what’s called a “soft” assurance, since its ultimate value is somewhat uncertain. “Hard” financial assurances, such as cash in hand or trusts, don’t fluctuate and are readily available. Quebec, for example, requires hard financial assurances from mining companies. The Initiative for Responsible Mining Assurance, a global coalition of mining companies, labour unions, nongovernmental organizations and businesses buying minerals, has published international standards recommending closure funds be reliable and readily liquid.

“What if the mine's reserves don't prove to be as viable or economic as you hoped? What if you can't find another owner for the mine in the event that that owner goes bankrupt? What if a commodity price downturn undermines the business case for the recovery of those reserves?” asked economist Jason Dion, senior research director at the Canadian Climate Institute.

The B.C. government’s policy of accepting soft assurances leaves taxpayers exposed, especially if a severe commodity-price downturn triggered a wave of abandonment, Dion said.

Today, amid the desire to become key suppliers of critical minerals, small mining companies are struggling to attract investment as prices for commodities have tumbled, prompting them to call for Ottawa to fund projects directly.

In B.C. there are five bankrupt or inactive companies that did not provide enough financial assurances to clean up their sites before going out of business, according to the most recent chief inspector’s report. These companies left an unpaid cleanup bill of about $80 million.

And some historical projects will require maintenance in perpetuity. The closed Britannia Mine, near Squamish, B.C., cost taxpayers approximately $46 million to remediate and requires a water treatment plant that costs $3 million a year to operate. It was described as one of the “most contaminated areas in North America” and water treatment is expected to be needed forever.

...continued in PART TWO