The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News - September 25, 2024
Although the smallest of Canada's three territories, Yukon holds the largest population between them at nearly 50,000 Yukoners.
The Whitehorse Rapids Generating Facility produces roughly 40 megawatts of electricity in the summer and around 25 megawatts in the winter, supplying approximately 50 to 55% of the power needs for those connected to Yukon's grid system.
Map of potential route for connecting the Yukon to the north end of the electrical grid in B.C.
The recent federal investment of C$60 million (US$44.2 million), including C$40 million (US$29.7 million) earmarked for connecting Yukon to the North American power grid, is being welcomed as a promising step toward addressing the territory's longstanding energy challenges, with local industries, particularly mining companies, seeing this infrastructure upgrade as a potential game-changer for the region's development.
Spanning more than 480,000 square kilometers (185,329 square miles), the territory of Yukon is home to just under 46,000 residents, making it one of the most sparsely populated regions in Canada.
The harsh subarctic climate and rugged terrain present significant challenges in delivering sustainable energy to residential and industrial sectors where heavy reliance on hydroelectricity is supplemented by thermal, diesel, and liquified natural gas (LNG).
The Whitehorse Rapids Generating Facility produces roughly 40 megawatts of electricity in the summer and around 25 megawatts in the winter, supplying approximately 50 to 55% of the power needs for those connected to Yukon's grid system.
Yukon generates around 0.7 terawatt-hours of electricity annually, primarily from hydro, meeting approximately 90-95% of its needs during the summer months. However, the situation becomes more challenging in winter, when demand spikes by around 20% and energy production slows down.
This increased demand strains the electric supply, forcing the territory to rely more heavily on thermal generation, including diesel and LNG, to cover the shortfalls. Yukon also rents additional generators each winter to meet peak demand, further escalating energy costs.
While exact figures are not readily available, it is estimated that Yukon imports millions of liters of diesel annually to cover these energy shortfalls. With prices ranging between C$1.50 and C$2 per liter (US$4.20 and US$5.60 per gallon), the expense quickly climbs into the tens of millions a year in fuel costs alone.
In harsher winters, diesel usage can increase dramatically – sometimes doubling or tripling – potentially costing the territory much more.
This unpredictable and fluctuating price for stable energy increases costs for both residents and industries, underscoring the need for expanded energy infrastructure, like the proposed grid connection project, which could alleviate diesel dependency and stabilize energy costs over time.
Yukon's economy is supported by a diverse range of sectors, including government services, tourism, construction, real estate, and mining, to name a few.
According to the Yukon Bureau of Statistics, in a 2022 report, public administration, which contributes 23% to the territory's GDP, plays the largest role, while real estate and rental services account for 13.6%. Construction, driven by ongoing development projects, adds another 12.1%.
While the mining industry remains a significant contributor responsible for 13.5% of the territory's GDP, its growth has been limited by high energy costs and infrastructure constraints – issues the proposed grid expansion aims to address, potentially unlocking further growth in this vital sector.
However, mining alone cannot support the territory's financial needs, particularly given the fluctuating nature of mineral prices and the high operational costs associated with remote mining locations. This leaves Yukon heavily reliant on federal transfers to sustain its economy.
The federal government provides significant financial support through programs such as the Territorial Formula Financing (TFF), which ensures that the territory can maintain essential public services despite its small tax base.
In 2021-22, Yukon received approximately C$1.1 billion (US$816 million) in federal transfers – more than half of its total territorial budget – highlighting the territory's reliance on assistance from Ottawa for maintaining infrastructure, healthcare, education, and other critical services.
Tourism, a growing industry focused on the territory's natural beauty, outdoor activities, and cultural heritage, contributes seasonally to the economy but is not substantial enough to offset the need for federal funding.
Map of potential route for connecting the Yukon to the north end of the electrical grid in B.C.
Expanding infrastructure is seen as a crucial step toward making industries, including mining, more sustainable and reducing the high energy costs that have long impeded economic growth.
"Developing the necessary infrastructure to access and transport our rich critical mineral resources is a key element in our ability to seize the generational opportunity before us," said Brendan Hanley, Member of Parliament for Yukon. "Connecting the Yukon's grid to northern BC will provide increased opportunities for the Yukon's future."
This grid connection project, funded in part by Canada's Critical Minerals Infrastructure Fund, aims to link the Yukon with British Columbia's power grid, enabling a more reliable and affordable energy supply that can support not only mining but the territory's broader economic development.
"The Grid Connect Project is more than an energy initiative: it presents a transformative opportunity for all Yukoners. By delivering clean, affordable and reliable clean energy, this project will not only power our homes but also drive economic and social growth," said Yukon Premier Ranj Pillai. "I thank our partners in British Columbia and the federal government for their collaboration on this important project, which will positively impact our northern communities. This is a proud milestone for our government on the path toward a more sustainable energy future."
The grid connection project is expected to significantly bolster Yukon's mining industry, a sector long burdened by high energy costs and infrastructure challenges. By linking the territory to the North American power grid, the project promises to provide a more reliable and affordable energy supply, helping mining companies cut their dependence on costly diesel generators and reduce operational expenses.
Mining and mineral exploration companies are already voicing their support for this transformative initiative.
Banyan Gold Corp., which has been advancing its AurMac project in the region, sees the grid connection as a major step forward.
"The allocation of funding to plan for a potential connection between the Yukon and British Columbia electrical grids is important as it could bring additional green energy to benefit all Yukoners and potentially support Banyan's AurMac project," said Banyan Gold CEO Tara Christie.
Similarly, Western Copper and Gold Corp., the company behind the world-class Casino copper-gold mine project, views the grid expansion as a necessary step toward viable, sustainable mining.
"This is a meaningful step toward advancing much-needed energy infrastructure in the Yukon, with potential to support Canada's broader focus on improving the environmental performance and sustainability of critical mineral development," said Western Copper and Gold CEO Sandeep Singh.
White Gold Corp., another significant player in the mining landscape, highlighted how the project will enhance the territory's appeal to investors.
"Recent announcements by the federal and territorial government further demonstrate the commitment to advancing the mining industry and will accelerate Yukon's path towards becoming a leading mining jurisdiction," said White Gold CEO David D'Onofrio. "The envisioned Yukon power grid connection with British Columbia in conjunction with the territorial investment to upgrade the Skagway Port in Alaska, and the continued advancement of the Resource Gateway Project represents significant initiatives. These projects will have a vital role in unlocking the rich mineral endowment of the territory and we applaud the continued support of Yukon mining by all levels of government."
As more companies signal their support, the project is being recognized as a crucial step toward modernizing Yukon's mining landscape.
With stabilized energy costs, improved reliability, and a reduced carbon footprint, grid connection has the potential to unlock new opportunities for Yukon's mining sector, making it more competitive on a global scale.
As the territory looks ahead, this grid connection represents more than just an energy upgrade – it's a foundation for sustained growth, making Yukon's vast mineral wealth more accessible and economically viable, providing a stable backdrop to a life lived in the North.
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