Social licence: easy to grant, hard to revoke – by Nelson Bennett (Business Vancouver – May 5, 2015)

What happens to community social licence when resource projects get shelved?

When a new pipeline or mine is proposed, promises are often made to communities and First Nations to win community approval.

The social-licence agreements often go above and beyond what regulators require and can include increased environmental protection measures and deals to provide First Nations with job training and employment.

They can also include community amenities, such as the pledge by Kinder Morgan Inc. (NYSE:KMI) to fund a $500,000 upgrade to a community recreation park in Hope as part of its Trans Mountain pipeline expansion program.

But as Yukon taxpayers and mine workers are learning, it’s hard to force companies to live up to their promises and obligations when they go bankrupt.

Two mine operations in the Yukon shut down recently because the B.C. companies that own them are facing bankruptcy, leaving Yukon taxpayers on the hook for cleanup costs and workers chasing the wages owed to them.

Vancouver-headquartered Yukon Zinc Corp. – owned by China’s Jinduicheng Molybdenum Group Co. Ltd. – shut down its Wolverine mine near Watson Lake in the Yukon earlier this year, and, more recently, Vancouver’s Veris Gold Corp. (OTC:YNGFF) has been deemed by the Yukon government to have abandoned its Ketza gold mine project.

Both companies are under creditor protection. Yukon Zinc has been fined by the Yukon government for failing to make close to $3 million in security deposits to cover the mine’s eventual reclamation. The mine has been flooding since it was idled.

Meanwhile, the Yukon Conservation Society says Yukon taxpayers are on the hook for dealing with runoff from the Ketza mine, which Veris Gold had been working to reactivate.

The ore there contains arsenic, so dealing with runoff from surface disturbances is a serious problem, said Yukon Conservation Society mining analyst Lewis Rifkind.

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