Winnipeg Free Press - PRINT EDITION

Mine cleanup tangled up in ownership flap

Confusion over history slows costly job

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The permanent cleanup of a long-idle northern Manitoba mine is being complicated by its tangled corporate ownership history that could leave taxpayers liable for up to $18 million in costs.

Calgary-based Viridian Inc. has been paying between $500,000 and $1.5 million a year to prevent contaminated water from leaking from the former Fox Mine near Lynn Lake. It has approached the province with a permanent cleanup plan that would allow it to escape this annual commitment.

But there's a catch. The company claims it doesn't own the entire site and shouldn't be liable for the entire cleanup cost. It wants the province to cover some of these expenses.

"We're in negotiations with the company on Manitoba's potential -- and I emphasize potential -- liability associated with this mine cleanup," said John Fox, assistant deputy minister of innovation, energy and mines, on Friday.

"Our liability is dictated through negotiations basically looking at what parts of the mine site Manitoba may be liable for."

When the Free Press first reported the province's potential $18-million liability two weeks ago, the government refused to identify either the mine or the company involved. A tip from a reader led the newspaper to contact Viridian, which confirmed its involvement, as well as the mine's name.

Fox said the property's ownership history is "incredibly complex." Viridian's view is it owns part of the site but not all of it, he added. "And the answer is that they (Viridian) don't know who owns the other part."

Richard Downey, vice-president of investor and corporate relations with Agrium Inc., Viridian's parent company, refused to go into details about the company's negotiations with the Manitoba government.

"All I know is that we're providing ongoing water treatment at the site and that there are discussions continuing with the province," he said in a brief telephone interview.

The province appears to back a permanent cleanup for the Fox Mine site. It is cost-sharing 50-50 with Viridian on the cleanup of the Farley Mine, part of a huge cleanup program targeting 31 "high hazard" sites.

The Fox Mine was not part of this group, and the province was surprised when Viridian came calling seeking assistance.

Last year, the Innovation, Energy and Mines Department decided to reflect the Fox Mine liability on its books. It's the main reason the department appeared to overspend its budget by 30 per cent last year.

Fox said a permanent solution would involve "some means of covering the tailings" at the mine site to prevent water and oxygen infiltration and eliminate the generation of contaminated effluent.

The company has presented some ideas on how that might be done, and the province is carrying out its own engineering work.

Fox Mine

Operated by Sherritt Gordon Mines Ltd. from 1969 to 1985.

Located 45 kilometres southwest of Lynn Lake.

Produced zinc, copper, gold and silver.

Sherritt Inc. (a successor to Sherritt Gordon) changed its name to Viridian Inc., in 1996. Viridian was then sold to Calgary-based Agrium Inc., which operates it as a subsidiary.

Viridian is spending $500,000 to $1.5 million annually to treat acid mine drainage at the Fox Mine to prevent pollution downstream. In 2008, the company also paid $1.5 million to modernize its treatment facility there.

Viridian seeks a long-term environmental solution that would allow it to close the operation. It wants the province to help, citing ownership issues.

The province could be on the hook for as much as $18 million in a permanent cleanup of the site.

-- sources: Agrium and Viridian corporate documents, province of Manitoba, Mining Association of Manitoba

Republished from the Winnipeg Free Press print edition October 20, 2012 A13

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