EDITORIAL PAGE — Pay up or give back Windy Craggy

Royal Oak President Margaret (Peggy) Witte and British Columbia Premier Glen Clark will probably never agree on much, apart from the weather. But one thing they do share is a stake in the fate of the Kemess copper-gold project in the province’s Toodoggone River area.

Unfortunately, the project’s future is less than certain. Royal Oak has already spent $280 million to acquire and develop a mine at Kemess South, but, several weeks ago, with construction about 40% complete, the project was put on hold because of an ongoing dispute between the company and the provincial government.

The dispute stems from an August 1995 agreement signed by Royal Oak and the province’s New Democratic Party (NDP) government, then headed by Clark’s predecessor, Michael Harcourt. The agreement set out compensation terms for the government’s appropriation of the Windy Craggy copper property, as well as an economic assistance package of various grants and subsidies for the development of Kemess South.

Royal Oak, which controlled Windy Craggy through its holding in Geddes Resources, was promised compensation payments and financial assistance totalling $166 million. So far, the company has received only one of two payments of $14.5 million, as partial compensation for Windy Craggy.

Other payments totalling $25 million have been delayed owing to a dispute over the interpretation of the agreement, as it relates to a number of issues, including stumpage fees. Royal Oak says it has been negotiating with the government to resolve these issues over the past 10 months, without success. The shortfall means the company may have to raise funds to complete the project elsewhere — something it would prefer to avoid in these times of low gold prices.

The government’s intransigence is difficult to understand for several reasons, one being that the Windy Craggy deposit and surrounding land package were worth many times what the government agreed to pay in compensation.

Moreover, at a time when mining companies are heading overseas en masse, Royal Oak remains one of the largest investors in B.C.’s (and Canada’s) mining industry.

This investment is sorely needed in the province, where four mines closed last year, while others are running out of ore. The numbers tell the story: in 1996, the value of the province’s mineral production was $3 billion — a 12% decrease from the previous year.

On the exploration front, the largest program carried out in B.C. last year was at Royal Oak’s Red Mountain property. The company spent about $8 million exploring the deposit, and had planned to spend millions more this year, until it decided to put the project on hold pending resolution of the Kemess South dispute.

The government has responded to Royal Oak’s work stoppage at Kemess South by appointing a deputy minister to resolve the issues. In light of this development, Royal Oak has decided to resume construction at the site.

However, the company says it will lose confidence in the government if the compensation dispute is not resolved soon.

The government has its own problems in that the balanced budget it promised the electorate has turned into a sizable deficit. Funds may be in short supply in Victoria, but that does not absolve the government from its responsibility to honor its commitments to Royal Oak. Nor can it afford to alienate further the mining community, which has generated much wealth and prosperity for the citizens of the province. For if Royal Oak decides to leave B.C. for friendlier destinations, can others be far behind?