Cantung and Mactung fail to sell as governments reject proposals

Government attempts to sell a former tungsten mine and nearby tungsten deposit near the NWT-Yukon border have failed.

The Mactung deposit has been owned by the NWT government, and the Cantung mine by Canada, since former owner North American Tungsten folded in 2015.

Mactung has cost the GNWT around $2.7 million to date. Cantung, which has a care-and-maintenance staff of 12, has cost the federal government almost $44 million.

The two governments have been trying to sell Mactung and Cantung as a package, and met in March to consider two confidential proposals from interested parties.

However, court documents state the governments have now rejected both.

Hendrik Falck, representing the NWT government’s Department of Industry, Tourism and Investment, told Cabin Radio neither proposal achieved the two governments’ goals.

Falck said the plan was to sell both properties to the same bidder “in an intact fashion, to encourage that both the Cantung and Mactung properties would be developed in a responsible fashion, and to encourage job creation and opportunities.”

“The responses we got didn’t meet that goal,” he said. “They focused on one operation or another, or parts of that vision that we had, but they didn’t successfully address that entirety that we were looking for, including the degree of engagement with Indigenous governments and communities that would be impacted by these operations.

“It didn’t work the way that we had wanted it to.”

‘A complicated ask’

Reaching the point of a request for proposals took years.

By April next year, Ottawa expects to have spent more than $50 million since 2015 on wages, clean-up work, consultants, fuel (which accounts for almost $7 million alone), insurance and other costs associated with Cantung.

Kevin O’Reilly, the Frame Lake MLA, has spent most of that time criticizing the NWT government’s role in what he calls “another example of post-devolution mismanagement of our resources.” (The NWT government rejects that assertion.)

In the legislature, O’Reilly has described the territory being left “on the hook” when North American Tungsten went under. The company had been able to use the Mactung deposit – which never became a mine – as security against its Cantung mine. When work at Cantung stopped and there was no money left to clean it up, the federal government ultimately ended up with Cantung and the NWT with Mactung.

Reached by phone on Wednesday evening, O’Reilly said this was the first he had heard of the request for proposals being unsuccessful.

“It probably doesn’t come as a great surprise to me,” said the MLA. “I’ve been very skeptical about trying to sell Mactung in conjunction with Cantung, which has tens if not hundreds of millions of dollars of known environmental liabilities.”

The GNWT has long defended the governments’ strategy of trying to sell the two properties in one package, but Falck on Wednesday conceded there were downsides to that approach.

“It was a complicated ask made by the government of industry, which looks at things in a much more straightforward financial way,” he said.

Cantung options narrow

In a written statement on Wednesday, the federal government sounded pessimistic about the likelihood of now selling Cantung.

Matthew Gutsch, a spokesperson for Crown-Indigenous Relations and Northern Affairs Canada, confirmed that “neither proposal met the objectives of the sales process” and said Ottawa would now “continue to develop options for the care and maintenance and the closure/remediation of the Cantung site.”

“Based on the bids received, the committee determined that reopening Cantung is not a viable option at this point in time, and the site will likely proceed with remediation,” Gutsch wrote.

“Engagement with Indigenous and northern communities is ongoing and will continue as Canada develops options for a path forward.

“The Government of Canada recognizes the importance of keeping the Cantung mine site in a stable and safe condition. Care and maintenance of the site will continue until a suitable path forward is determined for the site.”

Tungsten prices rising

Falck thinks the GNWT may have better luck selling Mactung, which has far fewer associated environmental liabilities.

He argues going through the request for proposals process has demonstrated which groups are interested in one property or the other, and believes finding a potential Mactung buyer could happen quite quickly.

“I don’t think the next steps will take years to accomplish. Working with two governments is always a bit more of a challenge than doing something individually,” Falck said.

“Now, we aren’t starting from square one. We have the structures in place – and the knowledge, the advertising that went into the RFP has been good in terms of attracting industry to some of these projects.

“They weren’t necessarily interested in taking both of them on at the same time, but they might have wanted one versus the other.”

O’Reilly said he had urged the territorial government many times to abandon the joint sale and simply try to offload Mactung on its own.

“I don’t know why we had to hitch that wagon to the federal property other than their similar mineralogy,” he said, pointing out the two are hundreds of kilometres apart by road despite both being situated in the western Mackenzie Mountains.

Tungsten is one of the “critical minerals” for which mining is now being promoted, and actively funded, by Canada.

In one respect, the failure to find a suitable buyer for Cantung and Mactung demonstrates that even the current enthusiasm for critical minerals has its limits.

Falck, though, argues tungsten prices have “increased substantially” and may help a Mactung sale.

In 2015, when North American Tungsten failed, “tungsten wasn’t worth anything given the control the Chinese had over the market,” said Falck.

Now, he added, with Europe and North America attempting to cut China out of supply chains, “that price is shifting and we’re seeing an increased opportunity for companies to take advantage of that.”