Common Sense Canadian
 

Mount Polley bankruptcy could leave BC public footing cleanup bill

Posted August 13, 2014 by Common Sense Canadian in Mining
Share
Mount Polley bankruptcy could leave BC public footing cleanup bill

Rod Marining, a resident of the region, surveys the damage Polley Lake (Chris Blake)

Republished with permission from 250news.com

By Peter Ewart

The clean-up costs for the massive tailing pond spill at Imperial Metals’ Polley Mountain mine have been estimated by some to range between $50 and $500 million.  In addition, legal action will undoubtedly be launched by individuals, businesses, and First Nations in the region which could result in hundreds of millions more in costs.  And then there are law firms launching suits on behalf of Imperial stockholders who have suffered huge stock losses when the company’s stock plunged over 40%.  Whatever the final amount, the issue comes down to – Who is going to pay?

On August 8, BC Environment Minister Mary Polak said: “We have a polluter-pay model in British Columbia and we expect the company will be the one paying for the cleanup and recovery” and that she has “heard commitments that [the company] is ready, willing and able to continue to fund what they need to”.

However, comments from Imperial Metals president Brian Kynoch suggest that the situation may be a lot more dicey than this optimistic statement from the Minister.  According to one news report, Kynoch has committed to paying for the clean-up “to the best of [his] ability”.  But in contrast to Mary Polak’s statement that the company is “ready, willing and able” to pay for the spill, Kynoch is more equivocal and doubts that the company’s insurance will be high enough to cover the cost (for more on the insurance issue see Aug. 12 column).

Imperial in financial Catch-22

After indicating that the company does not have the money in the bank at this time, Kynoch goes on to say that, “If it’s $400 million, then we are going to have to get mines generating to make that money to do the cleanup.”

But there is a problem here when Kynoch says that we need to “get mines generating” the cleanup funds.  For one thing, as noted before in 250 News on Aug. 7th, company financial statements of previous years reveal that the Mount Polley mine itself was being used to generate “cash flow” for the company’s new Red Chris mine in northwestern BC, as well as other Imperial operations.  Yes, the Red Chris mine is nearing finish as is its extension to the Northwest Transmission Line, and presumably will generate substantial amounts of revenue down the road.  But completion of the construction, as well as start-up funds, will be required for a while before that happens, especially since negotiations are still going on between Red Chris and that Tahltan First Nation regarding the mine.

So the Red Chris mine will still need cash flow from other parts of the company.  But the Mount Polley mine, which has been a cash cow for Red Chris, will likely not be in operation until the end of the year or later.  In the meantime, clean up and associated costs for the spill will be mounting by the day.  To compound the problem, Imperial Metals’ other operating mine, Huckleberry Mine (which Imperial has a 50% stake in), was down for several months earlier this year because of equipment failure.  The company has a lot of debt, and, as one financial analyst says, “the shutdown of Mount Polley will stretch thin an already tight balance sheet”.

Red Chris: The sharks are circling

Red Chris Mine

Red Chris Mine (Unuk River Post)

So how will the financial oligarchs who dominate the Canadian and global mining industry view this dicey situation?  Speaking plainly, some are no doubt looking at how to hive off the lucrative Red Chris mining asset and other Imperial assets from the Mount Polley operation, which is already nearing the end of its life as a mine and will be beset with clean-up costs and lawsuits for years to come.  Indeed, a number of big companies were in fierce competition to gain control of the Red Chris property several years ago, but Imperial Metals eventually won out.  Now the situation has changed and the sharks are circling again as can be seen by recent business analyst speculation on how Red Chris might be torn away.

But could this conceivably happen?  Could the Red Chris mine and other Imperial assets be siloed or separated off from a Mount Polley mine that is burdened with debt and lawsuits?  Could then the Mount Polley operation (or even Imperial Metals itself) eventually go bankrupt requiring public funds to clean up the mess and leaving plaintiffs twisting in the wind?

Each Imperial mine is its own separate company

The first thing to get straight is that, although the Mount Polley mine and the Red Chris mine are all part of the parent company Imperial Metals and are subsidiaries of it, they exist as separate companies.  For example, the Mount Polley mine is owned by the Mount Polley Mining Corporation (Imperial Metals acquired majority ownership back in the 1990s) and the Red Chris mine is owned by the Red Chris Development Corporation.  In turn, both are wholly owned by Imperial Metals.

To many, it would seem logical that any debt or obligations incurred by the Mount Polley Mining Corporation should fall on the parent company Imperial Metals and its wholly owned subsidiaries such as Red Chris Development Corporation.  But that is not necessarily the case according to current corporate law and government policy.

For example, a few years ago in BC, there was a tank car spill on a railway and the parent railway company and its 100% owned subsidiary company (which actually operated the railway) were sued.  But the BC Provincial Court ruled “that the parent company wasn’t liable for the subsidiary’s environmental offences” because it merely owned the railway and didn’t operate it (Environmental Compliance Insider).

But wait.  If we examine Business Registry records regarding Imperial Metals and its subsidiary companies, we find that there are several overlapping members of the Boards of Directors, i.e. several of the Imperial Metals directors sit on the board of Mount Polley Mining Corporation and the same is true for some of the company officers.  Doesn’t this prove something in terms of potential responsibility?

Not in this particular railway case.  The court found that it didn’t matter that there were overlapping directors.  The parent company got off scot free (although this does not always happen).

BC public could be left out in the cold

In such a circumstance, it is within the realm of possibility that the subsidiary company could then go bankrupt and leave the plaintiffs and the people of BC out in the cold.

And yes, corporate reorganizations do happen all the time where assets are hived off.  Indeed, Imperial Metals, facing bankruptcy back in the early 2000s, did exactly that in a court-sanctioned restructuring which saw subsidiary oil and gas companies and assets shifted into a separate company from its mining assets (which were facing difficulty at that time as a result of low metal prices).

ShareUs-LikeUs-TweetUs!

In any case, a better situation for the workforce, local communities and businesses, First Nations communities and the people of British Columbia will be that Imperial Metals and its subsidiaries remain intact and continue operating under strict public oversight, as well as with First Nations and community consent.  It is especially important that Red Chris Development Corporation is not sold off by Imperial Metals and that the Mount Polley Mining Corporation is not hived off and put into bankruptcy.

Red Chris revenue should support Polley cleanup

As revealed in Imperial’s Annual Reports, the Mount Polley mine provided cash flow for the Red Chris mine construction and all sorts of profits for Imperial shareholders.  Now it is Red Chris and Imperial’s turn.  Clean-up costs and legal costs can be expected to go on for years.  Rather than being sold off for a song and taken over by global financiers, the revenue from the lucrative Red Chris mine must be used to pay for these costs now and in the future.  As previously noted, Imperial Metals’ president Brian Kynoch appears to support that course of action.

In terms of Imperial’s current financial woes, an immediate solution could be for Imperial’s largest investors, several of whom have very deep pockets, to step up to the plate and provide financing to stabilize the company’s situation.  These dominant investors, who have directors connected to them on Imperial’s board, have profited greatly from Imperial’s operations in the past and should have been aware of the risks the Mount Polley mine was taking.

It is clear that vigilance is needed in this fast moving situation.  For its part, the provincial government must make it very clear to Imperial Metals, as well as those who may be considering carving the company up, that it will not go along with any financial maneuvers that will hurt or endanger the interests of the people of BC or hinder the clean-up and financial reparations.

Peter Ewart is a columnist and writer based in Prince George, British Columbia.  He can be reached at: peter.ewart@shaw.ca

Share

About the Author

Common Sense Canadian


19 Comments


  1.  
    laurinda richard

    unfortunately this seems to be the way things go rape an area move out and leave the environmental clean up for others to deal with. we are fighting this battle in NS in an effort to prevent fracking , because of exactly what has happen in BC. and other places, however big business wins, rapes and moves on to the next area. The Government Doesn’t care the Dept. of Environment doesn’t have the mandate nor the power to regulate these companies. Besides it is up to the Government to put in place strict regulations not guidelines as guidelines are not enforceable What a shame! as we can see with what has happened in Mount Polley the effects are far reaching, not affecting just one area but a whole eco system. Destroy the planet; where the heck are you going to live no clean water no food, where do you think your food comes from? You pollute the lands destroy the eco systems, then what.. ya think your neighbours in the US are going to feed you, I think not, they have already destroyed their lands, use chemical contaminated Bio solids for land amendments ,sell the food products to our food chains, for us to consume, our government has even allowed its use in Canada ,on our farm lands, so poison our water poison our food, where is your common sense GOVERNMENT stop destroying our environment. Fines won’t work but cause these company CEO’s all disappear, pockets full. perhaps put them all on death row for environmental murder, you have a spill, you contaminate an area means death to you, sounds harsh but we are talking about all the lives on this planet, human and wildlife that these big companies are murdering with their greed and pollution. Perhaps government officials who have sanctioned these companies should also join them in prison.




  2.  
    Ahda

    Imperial Metals is a subsidiary of US Corp /www.uscorpnv.com/ USCorp (USCS) I don’t understand the corporate shell game but it appears as though Imperial Metals is more than just a Canadian company – could they have money behind them that we should now about? And then there is N. Murray Edwards who is Chairman of the Board for both Imperial Metals and Canadian Natural Resources CRNL – the pillager of Cold Lake. He must have some money.




  3.  
    Doug

    The Province of BC should file liens against any and all Imperial Metals properties in BC pending the clean-up of Mt. Polley and I agree that the CEO should be personally named in a lawsuit to recoup the clean-up costs. There is no way in hell that the people of BC should foot the bill this mess. I also think the people of Kamloops should rethink any support they are giving to the Ajax mine in their area because the same lack of oversite and control will recreate this mess there.




  4.  
    Sick of the liberals

    Bullshit bill compares this disaster to natural occurring avalanches and has yet to critique the company’s response, Christy is talking about the ” good news” about the water not being poisoned ! My God If it want such a tradgedy it would be considered comedy ! No criticism about Mount Polley to be heard from these crooks!




    •  
      E. Scott Borneman`

      The entire problem on the anger against the government and Imperial Metals for what happened and the ‘lack of care for the event’ stem from Mr. Joe Blow Public not understanding what actually is happening.
      First, let’s look at the ‘water’ or ‘supernatant’, with the type of mine Mount Polley is, the amount of actual harsh chemicals are not as harsh as the medial would like you to believe. It’s ‘toxicity’ remains questionable as local wildlife, and grazing cattle have been known to frequent the tailings dam to quench their thirst. A ‘like’ run mine in McCleese Lake (Gibraltar Mine) even keeps live fish in the water of their tailings facility.
      Second, let’s look at the ‘mud’ that escaped through the breach. That mud is made up of tiny particles that in turn are made up of the minerals the mine doesn’t target. So in essence, they are just a smaller form of the whole rock that was crushed before the flotation processes minus a large part of the targeted minerals (copper/gold) the mine is after. They are not ‘concentrated’ lumps of arsenic, cadmium, selenium, lead, etc…, they are the same amounts that where there before they were blasted, crushed and floated. In order for these minerals to get into the environment to become harmful, they need to be separated and dissolved, which is where the acronym N.A.G. comes into play. N.A.G. (or NAG to save periods), stands for Non-Acid Generating. That in turn means that when exposed to water, these minerals will not dissolve readily to enter the environment. Even when entering the waterways around the mine as they did through the breach in the dam, they pose little or no threat so long as they aren’t ingested by the local wildlife or humans in the area (hence Mr. Kynoch stating the water was safe to drink, before any testing was done, so long as the solids are settled out). The fresh waterways in most areas (not an expert in this, so my supposition) are ‘basic’ in nature so the leaching out of these minerals will not be a factor. Testing is in place and will be in place for the foreseeable time to monitor this as a precaution of due diligence, not because there is actual belief that mineral dissolution will actually occur (basically it’s being done to quell any fear and to satisfy the environmental outcry).
      Thirdly, let’s look at why ‘no clean up is happening’. Well, there has been clean up where it’s been deemed safe to do so. The trees washed into the lake have and are being boomed as to keep them from floating down into the lake and past the community of Likely to pose any hazards. Local crews are cleaning up the shorelines of debris along the communities affected. The ‘muds’ (let’s call it what it should be called ‘slurry’) that made it into Quesnel Lake from Hazeltine Creek, will settle to the bottom (and as mentioned before, probably be of little or no affect on the environment). As for Hazeltine Creek, the company and the MOE has been trying to explain that it hasn’t been deemed safe to be there yet to begin sampling or work on reclamation. When the breach occurred a huge amount of water went into Polley Lake (at the top of Hazletine Creek), this was followed by the slurry that effectively dammed up the outlet of Polley Lake to Hazeltine Creek. This slurry dam’s stability can not be ascertained and therefore until the increased level of water in Polley Lake has been reduced, no safe work (sampling or cleanup) can be done. Imperial/Polley Mine has been working to lower the level of the water by pumping it out of Polley Lake past Hazeltine Creek into Quesnel Lake and into empty pits at the mine. So cleanup isn’t being ignored because safety isn’t being ignored. On top of the risk to life and limb, the company was also served with an order from the MOE to plug the breach and it’s been using all of it’s mining equipment to build their own ‘plug’ for the breach in the tailings dam.
      Fourthly, let’s look at the test results. The majority of which are water samples that the MOE and Imperial Metals are taking. I’ve seen first hand and in social media, the lack of ‘trust’ the public and fear mongers are putting in these results. Many believe the MOE and Imperial ‘would probably be covering up’, but those numbers are valid and to be believed. All of these samples are being tested by independent, and fully accredited laboratories (and I’m sure in some cases the same sample has been sent to more than one of these laboratories), and in some cases the samples themselves are being taken by accredited independent samplers. There is no ‘collusion’ happening, there are no ‘fixed’ results and there are no ‘fudged’ numbers. These laboratories would be screaming bloody heck if their results were being ‘tampered’ with. These laboratories are not even guaranteed to be getting all of the samples as the MOE would be using as many different labs as possible in order to deflect any ‘favoritism’ from happening. The numbers and results need to be believed.
      Fifthly, let’s look at maybe why the general public is having a hard time believing anything I’ve previously addressed. Many out there stand to profit either through monetary gain or fame from promoting how ‘terrible the devastation’ is. It wasn’t even ten hours after the breach, and with not even a ‘boot on the ground’, television news coverage began. If you were to believe Global TV’s first report, the public was left believing millions of tons of ‘toxic’ waste was destroying the waterways below the tailings dam. Other outlets had reports of a huge “fish kill’. The physical devastation to the environment beyond repair. We all know that any ‘breaking news’ report is an opportunity to gain viewers for their next scheduled news report. They make these reports hoping to sway viewership from other news outlets with no thought apparently to having all the facts. Other’s spouting ‘shut down all the mines’ are doing it to promote their beliefs that we can live without natural resource exploitation. I’ll posit this to those people…try to exist one day without something that hasn’t come out of the ground! A good example of self-aggrandization and monetary gain would be Mr. Clow’s blatant disregard for safety protocol and ‘no-go zones’ to sneak up into the unsafe area, take a few pictures and videos, complain about his breaking his wheel chair whilst doing these illegal activities, and his own ‘poisoning’ (haven’t heard how he’s doing with that yet) to promote himself as an ‘eco-crusader’ and of course to keep public donations coming in to fund his exploits. No fear mongering, no profits.
      Sixthly (never made list this long before), let’s look at the investigation. To my knowledge no blame or cause has been determined yet, but the public opinion and speculation are all condemning Imperial Metals, Mount Polley, the MOE and the MOEM (to put those in not understanding those acronyms. Ministry of the Environment and Ministry of Energy and Mines, my apologies for not explaining those till now). After this tragic event happened, I heard just about every theory under the sun with the exception of Alien intervention. The facts are being looked at, the investigation will be thorough, and answers will be forthcoming. If it can be proven someone was at fault, then blame should be laid. I just wonder why, unlike our criminal court system, people are so quick to presume guilt when it has to be proven first.
      Seventhly, let’s discuss my background. I am currently an employee of Mount Polley (how long that is remains to be seen due to the company’s halt of production in the mill). I am not a company representative, I’m not a ‘shill’. I’m not being paid for anything other than my job as an assayer. The opinions I have are my own and should not be taken as ‘the company’s standpoint’. What experience do I have? Well, I’ve been in a mining family all of my life, and I’ve personally been in the industry since 1997. I’m not a tailing’s expert, I’m not a chemist. I’m simply someone who has an understanding of what is going on that the general public might not fully grasp. Why am I doing this? Well, I was raised to believe in fair play, full disclosure and to try to always communicate ideas and thoughts when confusion exists. I realize that my opinions may put my job at risk, but I’ve done nothing but try to further information and clarify what is already out in the public domain. Yes, I feel a sense to defend the mining industry, and the company I work for because I’ve seen too many short-sighted (of course just my opinion) views as of late by everyone and their dog Toto too. The mining industry was a part of my life from the moment of my birth. The people I’ve come to know and work with at Mount Polley are my family and friends and to have them tarred and feathered when no conclusions have been made sits wrong with me in every way. We could shut down all the mines, stop the pipeline, stop any chances of refining that bitumen, shut down all logging, but it would come as a great detriment to the cities and province as a whole. I recently read an article about all the ‘part-time’ work and not enough full-time jobs. There is no part-time job at a mine. Everyone working there works a full work week and has all the benefits associated with full-time work. We as a province can’t afford to shut down resource based industries. Many would like you to believe we can survive on a tourist based economy, well, welcome to more of those part-time/minimum wage jobs. Another mining article equated the incident to planes crashing (accidents happen). Let’s be thankful the regulations and monitoring of mines don’t allow for that frequency of air accidents to be the case for mines and tailings facilities.
      Eigthly (and yes, I’ll be done soon), I’ll discuss my thoughts on what will happen to the environment around this incident. Thank goodness no one was hurt or killed by the sheer physical force of the breach and outflow. Will it be found the environment has been harmed other than the physical destruction of a creek and trees? I don’t believe we’ll see any lasting effects. It was not unlike a ‘mudslide’ event that happens all the time in nature. Nature will one day resume it’s place between the breach and the creek. The creek, once clean-up has occurred, can be ‘repaired’ (apparently the Ministry of Forests has the know how to do this type of work, from what I’ve heard). Would I drink the water? I’d bathe in it too, so long as the MOE tells me it’s safe to use. Will Imperial Metals survive? I sure hope they do as I hope all mining in the province survives this black eye. We would be doing ourselves a great injustice to bow to the currently inflamed public opinion as it is my opinion that the general public doesn’t have a clear picture of what mining is responsible for in their daily lives both in every day conveniences and the economic benefits it brings to the province.




  5.  
    Samdy

    What of US GOLD CORP isn’t it the parent company of Imperial Metals? I think I read that they were going to “spin it off”. Did that happen? Wouldn’t they have some fiscal responsibility?




  6.  
    Don F.

    There is one aspect to all of this that these corporate feeders and our government are failing to acknowledge or perhaps to understand. The people of this country.
    I am in my early sixties now, married, trying to contribute to society working and paying my taxes, obeying the law. I have always believed in that as that is what makes for a good society and a prosperous nation. What disturbs me now to no end is that I am starting to feel used. Used by a bunch of unscrupulous politicians and greedy cronies in industry lying to us about the benefits to all of their raping of our country. This is a mistake on their part as I am the guy they expect they can make responsible for paying for their foolish behaviour.
    If it so happens that through some shenanigans allowed by government we taxpayers are left with the bill from this, something so totally damaging that occurred totally by their incompetence, then they have lost me and they will have lost me till the day I die.
    Please don’t misinterpret my willingness to participate as a willingness to be played for a sucker. Don’t insult us like that!




  7.  
    kathleen davis

    At a public meeting with Christy Clark, Bill Bennett and Mary Polak on August 7th, in Likely, a resident of Likely and a pro mining advocate, suggested(demanded) that the government seize Imperial Metals assets immediately as well as the company directors’ personal assets for the very reason that they will avoid responsibility for this disaster. For the moment it appears as if everyone is working hard to avert a further disaster (Polley Lake draining into Quesnel Lake). But are we going to see the company, Polley Mines, and the parent company, Imperial Metals here for the long haul? I fear not but hope otherwise. Hazeltine Creek cleanup is huge.




    •  
      nonconfidencevote

      Hmmmmm.
      THAT question from the public never made it into the 6pm news. Quelle surprise.
      The MSM reporting on this project has been pathetic.
      No one has hammered Bennett or Clark on the lack of govt inspectors oversite.
      No one has asked the Premier and the Minister of the Enviroment about the lack of inspectors.
      No one has asked the ‘What if they declare bankruptcy?” question.

      This entire fiasco isnt over by a long shot and if “Chopper Clarke” thinks she can pop it, smile and wave for the camera, spew forth a few platitudes, and helicopter out with the job done……………

      This aint going away




  8.  
    Norma Hall

    Since it was Canada & Prov of BC who “streamlined procedures for Big Industry {eg: IMP, etc.} to initiate this & similar operations in BC”, then Canada & Prov of BC are legally liable to deal with providing the total expenditures & equipment for the Mt. Polley long-term aftermath cleanup, restoration, and implement future preventative measures for this and potential similar environmental disasters. At this time, bickering on these matters is definitely unwanted!!!! THEN Canada & Prov of BC to to initiate legal processes to recover compensation for Canada’s & BC’s expenditures relating to the Mt. Polley ficasto. Even though it is obvious they have no desire to do things the ‘right way’, Canada & BC could try to conduct itself as honourably, as responsibly & maturely as possible.




  9.  
    Colo

    Last year, the same thing happened in Lac Megantic. PQ. MMA , the train cie responsible for the explosion of train wagons carrying oil and the ensuying huge catastrophy claiming the lives of 43 people went bankrupt …It seems this is becoming a strategy to elude paying the damage ….It is time authorities demand a substantiel deposit from the cies before deliverying any permit!




  10.  
    Paul

    Here how u do it if all else fails… U charge a royalty across all resources extraction project in bc to cover this cost n also to build a fund to cover future failures maybe… They also need to require all projects to have adieu ate insurance from now on




    •  
      Reiner Kanis

      Well said Paul, I made the same comment earlier today, there should be a 20 Billion Dollar contingency fund paid for by all mining and oil and gas companies in BC.

      The fund will pay for clean up, and all all mining and oil and gas companies will have to replace the fund You watch hw ast a self regulating body will come forward to insure no one ever needs to claim again.




  11.  
    nonconfidencevote

    hmmmmmm.
    Lets try THIS scenario shall we.
    Mt Polley declares bankruptcy.
    Imperial Mines, through numerous shell companies and foreign holdings washes its hands of any Mt Polley liability.
    Taxpayers stuck with clean up.
    Mt Polley spill sits with minimal clean up while responsibility for clean up is bickered about for YEARS until the public is sick of hearing about it. 5? 10? 20 years? It doesnt matter. Eventually Imperial Mines and its corporate leaders will be long gone and long forgotten.
    Imperial wins!




    •  
      nonconfidencevote

      Time to change the laws in this Province and Country to make Cheif Executive Officers PERSONALLY liable for their actions and deeds?

      Its obvious that it only takes one person to choose not to act and a disaster like a tailings pond collapse can happen.
      Enough.

      Hit them where THEY hurt!
      In their wallets. Its the only thing greedy people understand.
      2 choices should be given.
      Jail for the perpetrators until the mess is cleaned up to the satisfaction of an independant environmental audit.
      AND complete and utter financial ruin for the person involved in the decision process.





Leave a Response


(required)