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Environmental safeguards at Ekati mine site will be followed, says Finance minister

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The GNWT hopes the Ekati diamond mine reopens and if it does, the government would assume the appropriate environmental safeguards would be heeded, Finance Minister Caroline Wawzonek in Thursday's session of the legislative assembly.

Wawzonek's comment came after Frame Lake MLA Kevin O'Reilly raised concern that whatever happens with the mine site, any liabilities could be dumped on the territory, such as what happened with other resource projects in the NWT.

Last Friday, Dominion Diamond Mines announced that the deal to purchase its Ekati mine assets failed.

The failure of the Ekati mine assets purchase deal raises questions about whether the NWT might face environmental liabilities like it has with other failed resource projects in the territory, said Frame Lake MLA Kevin O'Reilly, in the legislative assembly on Thursday. GNWT image

Dominion’s surety bond issuers – Aviva Insurance Company of Canada, Argonaut Insurance Company and Zurich Insurance Company Ltd. – couldn’t seal an agreement with Canadian Diamond Holdings, L.P. and CA Canadian Diamond Mines ULC, affiliates of Dominion’s parent The Washington Companies on the stalking horse bid for  Dominion’s assets. That bid, said to worth $191 million, was the only one put forward for the company’s assets.

A Dominion company spokesperson also confirmed on Friday that Pat Merrin has stepped down as interim CEO of Dominion. He remains chief operating officer of The Washington Companies.

"The insurance companies seem to have a problem with the new entity," O'Reilly said. "The site has changed ownership several times and it's nearing the end of its life. And we've already had some failures the GNWT was not able to adequately anticipate or mitigate, for example, the bankruptcy of Strategic Oil and Gas, and its Cameron Hills sour gas field.

"That should never been accepted by our government under the devolution agreement. And then there's North American Tungsten that also went under during our watch with the Mactung property as part of its financial security."

Last February, O'Reilly said the GNWT could face hundreds of millions of dollars in clean-up costs related to the Cameron Hills site, south of Kakisa, as CBC reported.

And in 2019, the GNWT spent about $126,000 in removing hazardous materials from the Mactung site on the NWT/Yukon border.

"Why won't these insurance companies agree to the sale of the mine?" O'Reilly asked the finance minister.

Wawzonek said she wishes she could explain why the deal didn't work out, but that it was a matter between private companies.

"The role of the GNWT is to ensure that our environmental processes are respected and that securities are held in an appropriate manner. Number two, is to provide an environment and an atmosphere that will ensure a profitable mining industry," Wawzonek said. "The GNWT is not going to suddenly upend or change the environmental processes that exist. If the member requires me to allay those fears, I'm certainly happy to do that."

O'Reilly also addressed the $280 million in surety bonds posted with the GNWT that provide security for Dominion's reclamation obligations related to the Ekati site.

"(Should) these surety bonds be converted to or replaced by more reliable irrevocable letters of credit issued by a Canadian chartered bank? (Has) this government put this as a condition of sale or assignment?" he asked.

Wawzonek responded that the government has always expected that over time the surety bonds held for the mine would convert over to irrevocable letters of credit, but not at this time, and the bonds provide adequate security.

"They did provide some flexibility to the company when it was initially undertaking the environmental agreement process. (We have) no intention of changing or reducing the level of security that we have," she said.

The Frame Lake MLA then turned the status of the Ekati workers, just two days after the Union of Northern Workers (UNW),  whose Local 3050 members work at Ekati, criticized the way Dominion communicated news about the failed deal.

In a statement on Tuesday, UNW president Todd Parsons asked what territorial leaders are doing to protect workers and the economy from corporations "with no personal stake in our future and who answer to no one but their shareholders?"

O'Reilly said there's a $20-million deficit in those workers' pension fund and he hopes that if any of them are laid off that they would receive proper severance.

Wawzonek said there isn't much the GNWT can do to protect those workers, beyond advocating through the court process that Ekati is a major contributor to NWT employment and driver of Northern business.

Last week, the finance minister said in an email to NNSL Media that if Ekati doesn’t reopen or if its reopening is significantly delayed, it would “affect revenue and employment numbers in the territory.”

Dominion had previously expressed hope that Ekati could return to full operations by the fourth quarter of 2020.

Dominion officials did not immediately respond to a request for comment.