Keno City Residents and Businesses Suffering the Effects of Yukon Mining Boom as Alexco Takes Over the Town

The Yukon Tourism website describes Keno City in endearing terms:This sleepy hamlet is a rustic cluster of buildings and home to an eclectic mix of artists, miners and old timers." The invitation to visitors alludes to the town’s mining history identifying the mining museum as a key attraction along with hiking trails, an interpretive centre and artists’ studios. But Keno’s mining past is coming back to haunt residents who planned to build a their future on tourism.

A major mining boom is underway in Keno, as in other parts of the Yukon, driven by high mineral prices. But a boom that’s good for exploration and mining companies can have an underside  for communities. The pace of development surrounding Keno is creating conditions that one resident says is like “being trapped in a living hell.” The noise, dust, huge trucks rumbling through town and concerns over exposure to toxic by-products paint a not-so quaint picture of a contemporary mining town.

The scars of Keno’s silver and zinc mining history are visible over an area of 15,000 ha with nine different mine sites and numerous abandoned shafts and waste piles. Less visible, but of great concern, is the heavy metal contamination in water flowing from these sites into area streams and groundwater.

As abandoned mining sites, the properties surrounding Keno fell into the hands of the federal government after the former operator went bankrupt. The federal budget for remediation of contaminated northern sites was, however, being used up at other more high profile sites like Faro amd Giant. It wasn’t until 2006, when the property was purchased by Alexco Resources, that the clean up began. In most cases, when a new owner takes over a contaminated site they must assume the liabilities and costs of clean up. But Alexco signed a contract such that the federal government would pay for the remediation. Details of the agreement are not public, although a company spokesperson indicated in an interview for the Seeking Alpha webiste that it is worth between $50 and $60 million.

Hope that environmental and safety issues would be addressed has turned to apprehension as the full extent of Alexco’s plans come to light. Alexco purchased the properties not to remidate them but in order to capitalize on opportunities to re-mine the area going after lower grade or harder to access deposits that are now profitable thanks to high mineral prices.

In early 2009, Alexco filed an application with the Yukon government to restart mining operations at the Bellekeno site. The proposal included a 250 tonnes per day mining operation, a mill and reclamation activities proposed to last 10 years.

Though an historic mining area, residents who have moved to Keno since mining ceased have been developing alternative livelihoods including tourism. They chose the area for its serenity, historic charm and small town feel and are concerned that these values are in jeopardy due to the approved and proposed mining that surrounds the community. While tourism and other social values are not completely incompatible with contemporary mining, the push to approve projects and the lack of consideration given to local concerns point to a significant imbalance in the review and approval process.

A 2009 submission to the Environmental Assessment Board on behalf of the Friends of Keno written by a geologist employed in the mining sector included the following strong statements:

The impact of the mill site, the dry stack tailings and the overall resulting increase in activity would largely change the lifestyles of the local people as well asnegatively impact the efforts of historic restoration programs and tourism. ....I wonder how it is that Yukoner’s can value shareholders interests over local Yukon residents? If a company cannot operate profitably milling some of the highest grade silver ore in the world with preexisting infrastructure (roads, buildings etc.), I would suggest going back to the drawing board prior to proposing activities that in no way positively impact a single local resident....

I wish I could write a letter of support. I want mining to occur in Keno district, I want to continue to send good press about Alexco’s efforts with the Wernecke House Project and since I spend all of my spare time in Keno, I want to share a friendly relationship with my ‘neighbours’. What upsets me the most is how this got to this point; I think that it shows how important consultation really is. It is especially disappointing coming from colleagues within the industry I work in.

The principle concerns are noise and dust from the mill, dust and potential health threats from the “dry-stacked” tailings, and the location and use of the bypass road around Keno. Late in the review process for the first phase of mining operations, Alexco changed the mill location in what the company claims to be a response to local concerns. The new location, was not however fully evaluated and now that it is operating, the noise and dust are proving to be serious problems for residents.

Alexco’s initial phase – starting the operation of Bellekeno and construction of the mill  - pales in comparison to the full plan Alexco has for the region. As an article in Up Here put it: “if all goes according to plan, Bellekeno is just the beginning.” The company has now filed for approval of two new mine sites near Keno City and lists another five on their website. The cumulative effects of all these projects were not adequately reviewed during the initial review process. The the new proposal does not increase the permitted amount of ore to go through the mill, the potential for disturbance to the community and the lifespan of the operation are greatly increased.

The Yukon government recently announced it will start a health study to address concerns from local residents and no approvals for the additional mine sites have been granted. Despite these facts, Alexco has announced plans to being blasting and preliminary construction of the mine portals this spring. The company is permitted to do so under their existing exploration license but locals are concerned this is putting the cart before the horse and point to it as an indication of how Alexco assumes that the project will proceed as planned.

Feeling that their future is at stake, local residents are doing what they can to advocate for a better solution and to finding an appropriate balance between mining, community health, tourism, quality of life, protection of investments and local property values. If nothing else, they feel they must be compensated for their losses.

The residents have their work cut out for them. Recent conflicts in other parts of the Yukon such as the government’s rejection of recommendations to protect most of the Peel Watershed and ongoing conflicts over placer mining within the limits of Dawson City have shown the territorial government has little enthusiasm for balancing the interests of the mining industry with other values. (Interestingly one of the miners involved in the conflicts in Dawson City says he'd give up the claims if he were compensated for his losses!)

Residents hope that Alexco’s investors might think twice if there is a risk of costly compensation to affected community members and are working on strategies to communicate with them directly. MiningWatch will be providing assistance to the residents in these and other efforts to have their concerns addressed.