Drilling company wins more than $600K over Giant Mine arsenic delay

A legal fight between two contractors at the contaminated Giant Mine site ended with McCaw North Drilling and Blasting Ltd being awarded almost $700,000.

The payout awarded by Supreme Court Justice Shannon Smallwood on Friday includes $612,940 for arsenic-related delays and $64,157 for unpaid drilling work. The four-year-old case relates to contracts signed in 2013.

Giant Mine, on Yellowknife’s doorstep, is contaminated with 237,000 tonnes of arsenic trioxide – a toxic byproduct of the gold mining method used at the site for decades. The arsenic trioxide lies buried in underground chambers.

McCaw was contracted by Clark Builders, which at the time oversaw cleanup work at Giant Mine, to perform drilling at the site.

However, following an incident in 2014, concern about arsenic contamination grew and a months-long delay ensued as better procedures were put in place. McCaw contended this delay was financially damaging to the company.

On Friday, the judge said neither company had initially realized the scale of the contamination.

“It was generally known that the Giant Mine site was contaminated with arsenic trioxide and the parties were aware of the contamination prior to entering into the contracts,” stated Smallwood in her written decision.

“While the parties expected that there may be contact with arsenic trioxide as part of completing the contracts, the extent to which there would be contact with arsenic trioxide was not known.

“McCaw understood that the drilling required under the contracts would not involve drilling into areas known to contain arsenic trioxide. Clark also believed that drilling would not occur into hot spots of arsenic trioxide.”

‘Reasonable steps’

In March 2014, an incident in another area of the project – not involving McCaw – saw a worker hospitalized after exposure to dangerously high levels of arsenic.

The Workers’ Safety and Compensation Commission (WSCC) subsequently became concerned about worker safety at the project and, more specifically, about exposure to arsenic trioxide dust.

At a meeting on March 12, 2014, Clark, McCaw, and others discussed safety of the drilling program.

“At the meeting, WSCC suggested that the drilling program may have already resulted in McCaw drilling into arsenic areas and that personnel and equipment may have been exposed to dangerous levels of contamination as a result,” stated Smallwood.

One outcome of the meeting was an agreed need for new standard operating procedures near the poisonous material to be developed.

The development of those procedures took months, during which work could not take place. The delay resulted in standby costs incurred as a result of labour, material, and equipment sitting idle.

McCaw was also concerned that an equipment decontamination procedure did not exist. The company said equipment it had rented might be refused back by its owners.

In August 2014, tests found all equipment analyzed was indeed contaminated with high levels of arsenic trioxide dust.

“The parties knew that there was the potential to encounter arsenic trioxide during the course of the work, and it was a risk known and accepted by all,” wrote Smallwood.

“However, the contract placed obligations on Clark to take all necessary steps to address toxic or hazardous substances at the place of work, to minimize the risk, and this included developing standard operating procedures to address risks to the health and safety of people and the decontamination of equipment.

“McCaw, upon encountering toxic or hazardous substances at the place of work, was required to take all reasonable steps, including stopping work, to ensure that no one suffered injury or death and that no property was damaged or destroyed as a result of exposure to toxic or hazardous substances.”

Smallwood concluded Clark owes McCaw “for the reasonable costs incurred” as a result of the delay in developing an equipment decontamination procedure, in the amount of $612,940 plus interest.

She also sided with McCaw in a related dispute over drilling work in the amount of $64,157.52 plus tax and interest.

Full remediation of the site is due to begin next year. The work will create hundreds of jobs but may involve sealing off some areas potentially for years at a time.

The Giant Mine remediation team, led by the federal government, is currently negotiating with the likes of the City of Yellowknife, the city’s sailing club, and the Yellowknife Historical Society in the event that sections of land must be closed for years for cleanup work to take place.