Canada's Ajax mine could cost $100 million in lawsuits: Mining Watch

Mining Watch published a statement today saying that KGHM’s proposed Ajax mine in Kamloops, British Columbia could face over $100 million in litigation or compensation costs.

Taking as an example what’s happening at Canada’s only other urban mine of comparable size, the Malartic open-pit mine in Quebec, the watchdog group presented what it calls “conservative estimates” on possible actions against the gold and copper project led by KGHM Ajax Mining Inc., a subsidiary of KGHM Polska Miedź.

The Malartic open pit mine, owned by Agnico Eagle and Yamana Gold, faces a $70 million class action suit for damages related to dust, noise, and daily blasts on 700 houses and 1,400 people residing near the site.

Extrapolating this example to Ajax’s case, Mining Watch’s Canada Program Coordinator Ugo Lapointe states: “We need to keep in mind that, compared to Malartic, AJAX’s mine would be twice as big and located on high ground, upwind from the city of Kamloops, and in a drier climate. Studies show that this would allow dust, noise, and air-blasts to travel further into the city and affect at least twice as many people.”

If approved, the proposed Ajax Mine’s annual production is expected to be of 109 million pounds of copper and 99,000 ounces of gold, with a processing capacity of 60,000 tonnes per day and an estimated life of ~20-year.

Lapointe explains that the organization bases its estimates on a 2.5-kilometre radius from the AJAX’s pit edge, which would include approximately 2,700 houses and 7,000 people living predominantly in the Aberdeen neighbourhood.

“Using the same low compensation figures offered by the Malartic mine for those living up to 2.5-kilometre away from the mine (500$ per house, per year, plus 250$ per affected person, per year—including children), the total compensation would amount to about $62 million in Kamloops. This figure is then adjusted and increased to take into account the above-mentioned compounding factors (bigger mine, up-wind, drier climate, more people affected). If compensation figures from the class action suit are used instead of the company’s figures, total compensation costs applicable would easily triple, approaching $200 million,” he writes.

According to the NGO, AJAX’s economic feasibility study shows that KHGM didn’t plan for these type of costs.