Feds flag funds for Yukon mining innovation centre

VANCOUVER — The federal government is hoping it can generate jobs and ease a skilled labour shortage in the Yukon’s mining industry with a $5.6-million investment that will fund the creation of a new Centre for Northern Innovation in Mining (CNIM) in Whitehorse. Prime Minister Stephen Harper announced on Aug. 19, during a six-day Northern tour, that the government will contribute the money over four years to help build the project.

The CNIM is described as a one-stop education, training and research facility with state-of-the-art technology that caters to students interested in a career in the mining industry. Within its first five years the CNIM is expected to produce 520 trades, mining and apprenticeship graduates, as well as 710 students completing shorter, non-credit courses.

“Our government is taking action to create the right conditions for continued growth in the northern mining sector, and to ensure that northerners derive maximum benefit from the abundant natural resources in their territories,” Prime Minister Harper said. “Our government’s investment in this new [centre] will address critical skills shortages facing the region, while providing the citizens of Yukon and the North with better access to the education and training that can lead to high-quality jobs.”

Construction is scheduled to begin in 2014, and CNIM is expected to be operational by 2017. The facility will be an addition to Yukon College’s Ayamdigut Campus in Whitehorse. The federal government’s investment will also provide for a mobile trade school that will make training more accessible by delivering courses in smaller communities, and at mine sites.

The government notes a recent trend that has required Yukon miners to spend “millions of dollars a year” on travel costs needed to move workers from other provinces, while local residents and First Nations groups continue to seek employment. The shortage in skilled labour triggers cost inflation, which in turn “forces marginal projects to scale back or close.”

For example, Yukon Zinc was forced to cut its workforce and production guidance at its Wolverine zinc-silver-copper-lead-gold mine 280 km northeast of Whitehorse in late June. Despite Wolverine reaching nameplate capacity at 1,700 tonnes per day during the first quarter, Yukon Zinc opted to drop its workforce by 30% and its annual production by 40%.

The story is much the same for silver producer Alexco Resource (TSX: AXR; NYSE-MKT: AXU), which operates the wholly owned Bellekeno underground silver mine in central Yukon. The company is struggling with rising costs and falling silver prices, and registered a US$49.2-million net loss during the second quarter despite a 52% quarter-on-quarter increase in production to 576,160 oz. silver.

As a result, Alexco has developed a contingency plan to keep operating while beginning preparations for what it calls “a temporary and orderly” suspension of operations at Bellekeno before year-end.

Earlier-stage projects have also suffered, as evidenced by junior Victoria Gold (TSXV: VIT; US-OTC: VITFF), which opted to delay construction at its shovel-ready Eagle gold project — located 85 km northeast of the village of Mayo — in early May. Victoria called equity markets “unsupportive for the project,” and pushed back a production target scheduled for 2016. Eagle is slated to cost the company US$427 million, and is expected to produce 192,000 oz. gold annually at cash costs of US$615 per oz. via open-pit mining.

“As robust as our resource sector is, we are all aware it faces the same challenges as its competitors around the world: fluctuating metal prices, unpredictable project financing, labour recruitment and skills shortages,” Harper said during an address in Whitehorse, noting that, according to government estimates, Yukon mining firms will require 1,700 new employees by 2022.

“Having riches below the ground does not, in and of itself, assure of prosperity above. Sustained prosperity in the mining industry requires the following things: efficient and effective regulatory regimes, the best technology, the most innovative methods and a highly skilled work force,” he added.