Q&A: What happens at Ekati now and is enough money set aside?

The NWT government has a “good level of confidence” that enough cash is set aside to remediate the failed Ekati diamond mine, senior officials said on Wednesday.

Over the course of its life, Ekati’s various owners set aside just over $325 million in securities to pay for the mine’s remediation. The GNWT is now using those securities to hire insolvency firm PricewaterhouseCoopers and begin closing the site.

Ekati entered receivership on Tuesday after owner Arctic Canadian Diamond Company, a subsidiary of Burgundy Diamond Mines, ran out of money and nobody stepped forward to buy the mine.

More: If you worked at Ekati, send us your memories

The mine has an interim closure plan in place but not a final one. At a briefing with reporters on Wednesday, NWT government staff conceded it was “unfortunate” the mine had closed prematurely without a finalized plan to remediate the site.

Even so, staff said the interim plan provided enough information to be confident that enough money exists to pay for remediation.

Despite that confidence, Department of Environment and Climate Change deputy minister Robert Jenkins said the GNWT will “look at the site, its condition, the closure requirements and the expected costs, and we will be doing some reassessments of costs.”

“Our objective is to ensure the site is managed safely and the reclamation work is carried out within the security that we hold,” Jenkins said.

Here are nine questions – and what we heard back – from Wednesday’s briefing.

1. Who owns Ekati now?

In effect, nobody in the usual sense. With PwC appointed as receiver, the firm now acts in place of the company’s management as it winds up Ekati’s operations and moves to reclamation.

Arctic Canadian and its parent, Burgundy, still technically own the assets but they no longer control the site. A PwC team was already on site on Tuesday, the GNWT said, talking to staff and overseeing operations.

2. What happens on site in the coming weeks?

The immediate job is stabilization – making sure the site is safe and anything requiring urgent attention is dealt with. The mine then moves into a period of interim care and maintenance and eventually into full reclamation and closure.

Jenkins described care and maintenance as a holding phase with more active reclamation to follow. Some regulatory work and equipment with long lead times may need to be lined up during that window.

The GNWT has told the court it expects a transition period of about five weeks to stabilize the site. Only after that, Jenkins said, will the territory be able to start thinking about timelines for ultimate closure.

3. Is enough money set aside?

The GNWT says it holds $326,927,688 in reclamation security for Ekati. That money was described as being available with “immediate, unconditional access if required.”

Jenkins said that figure was set through regulatory authorizations and, in Ekati’s case, an environmental agreement, with amounts calculated through a multi-party process facilitated by the land and water boards.

The sums are based on detailed closure and reclamation plans the operator must submit and regularly update, covering work such as earthworks, water treatment, demolition, site restoration and monitoring.

“We do have a good level of confidence in the amount,” Jenkins said. But he acknowledged the mine has closed prematurely, so PwC and technical experts will reassess site conditions and costs.

4. Didn’t the company say reclamation would cost far more?

Yes. Arctic Canadian suggested in court filings earlier this year that reclaiming the site would cost $428 million – a figure that, on its face, would leave the GNWT about $100 million short.

Asked where the money would come from if the security ran out, Jenkins said the two numbers are not directly comparable. The company’s filing, he said, used an accounting estimate that projects costs into the future, while the GNWT’s security is based on the cost of doing the work in today’s dollars.

From May: What do Ekati’s troubles mean for remediation?

Converted to present-day value, Jenkins said, the company’s number came to roughly $335 million – close to the $327 million the territory holds. He said the GNWT would still reassess costs as the work progressed, but maintained it had confidence in the amount set aside.

5. How many jobs are being lost?

The GNWT believes about 360 people were employed at Ekati. Court filings had given a figure for earlier in the year that was closer to 340.

An “appropriately sized workforce” will stay on to support care, maintenance and reclamation, Jenkins said. How many people that means has not been determined. The receiver was said to be holding conversations with employees about their futures this week.

“This site is going from an operating mine to one which will transition into interim care, maintenance and ultimately closure,” Jenkins said. “There will be an adjustment in workforce size, but the specifics are not yet determined.”

6. What support is there for affected workers?

Nicole Beauchamp, the NWT’s assistant deputy minister for labour and income security, said the territory would prioritize Ekati workers for existing labour-market programs like career planning, job-search help and funding for short-term training to reskill or upskill.

She suggested regional information sessions could be made available for affected employees and employers, laying out the programs available and connecting people directly with staff. Beauchamp said the GNWT was coordinating with Indigenous governments on its response.

The GNWT framed the goal as keeping skilled workers in the territory, pointing to coming demand from the likes of defence investments, the Mackenzie Valley Highway and Housing NWT building programs.

7. What about the companies and governments owed money?

A list of creditors published in earlier court proceedings showed Ekati owed at least $380 million to a total of more than 200 different groups.

At the time, the single largest unsecured creditor on the entire list was Kete Whii Procon, which was owed approximately $12.6 million.

The company is a joint venture between Procon Mining and Tunnelling, a BC-based contractor, and Kete Whii Ltd, which represents the Yellowknives Dene First Nation, Łútsël K’é Dene First Nation and Tłı̨chǫ Government. The joint venture’s participants have been providing mining services at Ekati since 2000.

The Tłı̨chǫ Government itself was owed about $2.15 million, some understood to be related to missed impact benefit agreement payments.

Also on the list is 3320588 Canada Ltd, owed roughly $1.68 million. That numbered company is a joint venture of the Yellowknives Dene First Nation, Deninu Kųę́ First Nation and Łútsël K’é Dene First Nation, set up to share certain impact benefit agreement payments from Ekati.

Asked whether those groups had any hope of recovering what they are owed now the mine has failed to sell, the GNWT declined to answer, saying the status of those debts and impact benefit agreements were questions for the receiver. The territory also declined to speculate on the fate of the nearly $200 million provided by the federal government in loans.

PwC “will be having conversations with creditors and with suppliers,” Jenkins said.

In a brief statement issued after this article was first published, PwC stated: “As with all matters which are before the court, PwC does not provide comment on active receivership proceedings in the media.”

8. What does this mean for the winter road?

Ekati’s closure raises questions about the future of the winter road that supplies the diamond mines, built each winter as a joint venture and used to haul in fuel and heavy freight.

With neighbouring Diavik already in closure and only Gahcho Kué still operating – for now – the case for constructing the full road appears less clear-cut than it was.

Jenkins said the road is discussed year to year, adding it had “been flagged that there needs to be a conversation soon.”

The central question, he said, is whether a road is needed this coming season at all: “Do we need one this year? Do we not?”

Asked about the road’s future in May, when Ekati had just entered creditor protection, De Beers – which has assumed the lead role in the road’s construction from Diavik – said “planning has commenced” for the next winter road but it was too early to know much more.

De Beers said Nuna Det’on Cho, a winter road services joint venture, holds the contract to build and maintain the winter road through to 2030.

9. Why bring in a big southern firm?

Asked why the GNWT needed a southern firm to run the receivership rather than staffing up a local body so more of the money stayed in the North, Jenkins said companies like PwC “are the companies and the professionals that do this type of thing.”

A receiver, he said, is able to come in and manage the affairs of a failed operation on a number of fronts.

The sum PwC is taking for the work is not yet clear.

The GNWT said it could not speak to the amount of money Burgundy and its management may yet receive as creditor protection ends and receivership begins. It referred that question to PwC, which more broadly said it would not immediately comment on proceedings.