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Gold seekers are flooding into the Yukon and wreaking havoc on its rivers

Digging and scraping their way along river beds, a growing gold rush of placer miners is disturbing the territory of the Tr’ondëk Hwëch’in First Nation — all under the rules of a bygone era that leave both Indigenous and colonial governments out of the deal

In Dawson City, Yukon, you can get a Chinese buffet at Gold Village before picking up a few essentials at the Bonanza Market. A block away, across from the river, you can get some Yukon gold from the Klondike Nugget & Ivory Shop.

Despite the hand-painted signs and old-timey decor, the turn-of-the-century gold rush isn’t just a memory here. Two reality TV shows, Gold Rush and Yukon Gold, chronicle the ongoing search for gold in the region, while unprecedented numbers of mines are digging up riverbeds and wetlands.

The gold rush, it seems, is in full swing: the Yukon Geological Survey pegged total placer mining production at $94 million in 2017, an amount comparable to the peak production during the Klondike.

The name Klondike itself derives from a mispronunciation of the word Tr’ondëk, which loosely translated refers to a part of the river.

And when it comes to the Tr’ondëk Hwëch’in First Nation — from whose territory this bonanza is being extracted — one might assume a major windfall.

Yet that’s far from reality.

According to the First Nation, their share of the gold mining royalties last year was around $65 — not quite enough to buy a tank of gas at the station next to the Bonanza Gold Motel.

“The amount is still in 1906 legislation,” explains Tr’ondëk Hwëch’in chief Roberta Joseph. “It’s still back in the Wild West.”

Indeed, the royalty system laid out in the Yukon Placer Mining Act seems so outdated as to be almost comical:

“There shall be levied and collected on all gold shipped from the Yukon a royalty at the rate of two-and-one-half per cent of its value,” it reads.

“Gold for the purpose of estimating that royalty shall be valued at fifteen dollars per ounce.”

Fifteen.

Dollars.

Per.

Ounce.

That’s like estimating the value of a television at $5.

At the time of writing, the spot price of gold was $1,566 per ounce, 100 times higher than it was a hundred years ago when the legislation was written.

“It’s a joke,” says Lewis Rifkind, Mining Analyst at the Yukon Conservation Society. “The Yukon gets more in campground fees than in placer mine royalties.”

Incredibly, Rifkind is downplaying the discrepancy.

Yukon statistics show the government brought in $26,715 in placer mining royalties in 2017.

Camping fees from non-residents alone amounted to $348,000 — more than ten times as much.

“In the Yukon we’ve been mining gold for over 100 years and we are still dirt poor,” he says. “We have all this wealth, and year after year we give it all away.”

The “royalty” isn’t even really a royalty in the conventional understanding, as in, a levy collected on a resource.

As the Act states, the Yukon’s royalty is only collected on gold dust or bars shipped from the territory — which, when it was written, was probably most or all of it. Today, with jewellers right in Dawson City making and selling products for the ever-growing throngs of tourists, not so much.

Each ounce of gold dust or bars being exported from the Yukon nets the government (and, eventually, Tr’ondëk Hwëch’in First Nation) 37.5 cents. If it’s sold to gold buyers in Dawson, the First Nation gets nothing.

River rocks are piled high after being sorted and dumped during placer mining operations. Photo: Jimmy Thomson / The Narwhal

Old rusting machinery crowds the road heading into Dawson — but deeper into Tr’ondëk Hwëch’in territory a new gold rush is growing. Photo: Jimmy Thomson / The Narwhal

 

‘Ignorance, greed and envy’

The Alberta royalty rate is 200 times higher than that in Yukon; B.C.’s is 20 times higher.

A report from the Financial Advisory Panel in 2017 pointed out that the 37.5 cents per ounce the government gets from placer mining doesn’t even manage to recover the costs of supporting the placer mining industry.

It recommended that the government review its royalty rates and maybe institute a system like that in Alaska. There, less successful miners pay no royalties and others pay a royalty that reflects modern prices.

The Klondike Placer Miners’ Association retorted with a fiery open letter from its president, Mike McDougall —  which was sent to The Narwhal in response to an interview request — blaming “ignorance, greed, and envy” for the public desire to up the royalty rate.

The association received $120,000 in transfers from the Yukon Government in 2017-18, according to the advisory panel report.

Premier Sandy Silver, who has lived in Dawson City for nearly 20 years, ran in the Klondike riding on a promise not to raise the royalties — and steadfastly stuck to it.

“The placer miners are a pretty powerful lobby,” according to Rifkind.

But it’s more than that, he says. There’s a happy old-timey gold panner on Yukon licence plates. People like to refer to placer mining as “the Yukon equivalent of the family farm.”

Placer mining is ingrained in the territory’s culture and collective psyche, and it’s a way for small-scale operators to get into mining without facing the extreme costs associated with starting a larger mine.

“Sometimes we in the environmental movement tend to overlook that,” he admits.

Growing disturbance

That $65 the Tr’ondëk Hwëch’in received last year came with real costs to the environment.

“You basically have to destroy the stream that the gold is in,” Rifkind says.

The rounded riverbed stones piled high into miniature mountains along the Klondike Highway tell the story of how that damage comes to be: placer miners scoop up the rocks and gravel from current and historical riverbeds, sort through them for gold, and dump the waste rock, or tailings, as they move along.

“Such mining can gut invaluable riparian areas and can severely and permanently damage streams, devastate fish, and threaten human health,” wrote the University of Victoria Environmental Law Centre in a letter to the B.C. Auditor General last year.

“It can interfere with traditional hunting, fishing and gathering practices and infringe Indigenous rights.”

A 2002 study found that as many as five per cent of Yukon streams have been affected by placer mining, which “has resulted in extensive changes to stream channel morphology and stability.” Digging up the river kicks up silt, choking and smothering downstream plants, insects and fish. Fish have trouble moving, feeding, reproducing and growing in water with even low amounts of sediments hanging in the water.

“There are some creeks that have been disturbed to the point where there’s not an ability to use it for drinking, or spawning for fish,” Joseph says.

The so-called “Yukon equivalent of the family farm” often takes the form of large-scale, irreversible disturbance to the landscape. Photo: Sebastian Jones / Yukon Conservation Society

Placer mining also disturbs the habitat of the riverbanks, the fragile and extremely productive riparian areas that the Environmental Law Centre says house two-thirds of Canada’s rare and endangered species.

And they don’t just come back. The same 2002 study found that vegetation had a hard time growing once placer mining had moved through because of the lack of fine sediments.

Any return to normalcy, it found, “could take many decades to centuries.”

The growth in the industry in recent years — driven in part by high gold prices as well as the notoriety from the reality TV shows — is unprecedented. The Yukon Geological Survey counted 25,219 placer claims in good standing in the territory, “which is the highest number of claims dating back to 1973 when our records were initiated.”

Rifkind says the government has been doing a good job of keeping on top of the growth in mining, enforcing its existing laws. But those laws, he says, don’t go far enough to mitigate the damage inherent to the industry.

“The actual placer mining activities recently have been quite well enforced and monitored, but it doesn’t get away from the fact that it’s still placer mining.”

According to the Klondike Placer Miners’ Association, there were 159 active placer mines in the Yukon as of last year. Joseph estimates that 85 to 90 per cent of them are in Tr’ondëk Hwëch’in territory.

“They think this is place they can come and get rich,” she says.

‘Mined areas are even more unique’

A sign overlooking the Klondike River describes the rapid change that took place in the Tr’ondëk Hwëch’in traditional territory when the gold rush began:

“Within two years, Tr’ochëk had changed beyond recognition. Gone were the fish racks, salmon traps and cooking hearths. Now there was a dense clutter of tents and cabins, a sawmill, a brewery, saloons, stores and the one-room cribs of prostitutes.”

Today the renewed frenzy is once again making its mark on the landscape. In the Indian River wetlands south of Dawson City — where half the territory’s placer gold comes from — the Tr’ondëk Hwëch’in say their territory is becoming unrecognizable.

“Peat and fen wetlands that took thousands of years to develop are now at risk of being wiped out in only a few years,” the First Nation wrote in a letter to Carolyn Bennett, Minister of Crown-Indigenous Relations.

They are asking for a study of the cumulative impacts of placer mining before another project is approved.

“The river and its tributaries were heavily staked by placer miners in the 1980s and 1990s; today, licensed operators in the valley are among the top producers of placer gold in the Yukon.”

The letter stresses that cumulative impacts haven’t been taken into account by individual licence application processes, and now, an as-yet unmined part of the wetland is being considered for mining.

Individual developments, taken together, have been transforming the Indian River wetlands for decades.

As they are, the wetlands produce clean water, habitat for game animals, endangered species and other wildlife, flood control, sinks for pollution, as well as cultural values like hunting, fishing, trapping and tourism. It’s the only major wetland area in Tr’ondëk Hwëch’in territory.

“We consider that the overarching benefits of intact wetlands…to the many within the Dawson community, including First Nations citizens, outweigh the financial gain to the few private industry operations mining gold from wetlands,“ reads a letter to the Yukon Water Board asking for a public hearing to discuss the current mine proposal.

According to the First Nation, the Indian River itself used to be salmon habitat. Salmon no longer spawn there.

Reclamation of wetlands is unproven and expensive, and in its submission to the water board, an engineering firm hired by the proponent said as much.

“The expectations…have to be tempered with what is physically achievable and what is economically feasible for family-based Yukon placer mining operations,” the firm wrote, referring to oilsands mining projects, where attempts at rebuilding bogs and fens has yielded mixed results. “It would be incredibly expensive, frustrating and imprudent to attempt to reclaim post mined sites to peat land wetlands given the high likelihood of failure.”

Security is rarely collected against the costs of cleanup in case a company is not able or willing to complete the remediation — but Rifkind says remediation in many cases would be an extreme undertaking regardless given the way placer mining turns ecosystems quite literally upside down.

“It’s almost impossible to do effective reclamation,” he says.

Stuart Schmidt, a local supporter of the placer mining industry who describes growing up hunting and trapping in the Indian Creek area, wrote a letter in support of the project for the water board.

“I understand the concern expressed by many people who feel that there is enough mining in the Indian River Valley and that it should come to a stop,” Schmidt wrote. “They argue that the Indian River is unique. That is true, all areas are unique but the mined areas are even more unique.”

Lawsuit could be considered

The Tr’ondëk Hwëch’in say they are in the midst of negotiating with the Yukon Government to update the Placer Mining Act.

Legislative reviews that were promised as part of devolution, which concluded in 2003, have not resulted so far in any update to the Placer Mining Act or the royalties associated with it.

When the government declined to update the royalties, it instead updated the way it splits royalties with the First Nations. That brought the total amount of royalties, to be divided among 11 Yukon First Nations, to $36,110.71. To sweeten the deal, the government kicked in a one-time “gesture” payment of $600,000, also to be split between all 11 First Nations.

After years of sitting alone at the bargaining table, and without any progress on an actual increase in the returns on placer mining and an evaluation of its cumulative impacts on the land, Joseph says the First Nation may consider legal action.

“The Tr’ondëk Hwëch’in have given up millions and millions of ounces of gold,” Joseph says. “When we have an agreement we all have to be acting in good faith to ensure that we all benefit in good faith.”

Correction: An earlier version of this story suggested that legal action is being considered by the Tr’ondëk Hwëch’in First Nation. The First Nation has clarified that it is not currently considering a lawsuit but that it may consider such action if the Yukon government does not pursue further changes to the Placer Mining Act.

Jimmy Thomson is a Yellowknife-based freelance journalist. He has worked as a CBC videojournalist and has bylines in the Globe…

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