Bankrupt mine company ordered to clean up acid

Vancouver-based Redcorp to ask court for bankruptcy extension

Posted: Wednesday, May 27, 2009

Redcorp Ventures Ltd. and subsidiary Redfern Resources was planning to clean up the acid leaking out of the old 1950s Tulsequah Chief mine as it redeveloped the site. But now that the company is insolvent and the project is halted, Canadian regulators have ordered Redcorp to clean up the acid.

Michael Penn / Juneau Empire File
Michael Penn / Juneau Empire File

Canadian federal regulators have known since 1990 that water samples from the old mine's drainage were "acutely toxic" to fish.

Vancouver-based Redfern installed a pilot water treatment plant, but acid is still flowing into the Tulsequah River. It's 45 miles northeast of Juneau and just upstream of the Taku River and its rich fisheries.

Geophysicist David Chambers, at the Center for Science in Public Participation, estimated from the 2003 flow data that the old mine was leaking 23,861 pounds of zinc, 5,099 pounds of copper, 122 pounds of lead, 97 pounds of cadmium and 49 pounds of arsenic a year into the watershed.

In court documents the company said its environmental obligations would cost $6.1 million.

The acid wasn't Redfern's doing. It was Cominco Ltd. (now Teck Cominco Ltd.), the 1950s mine developer. Cominco built the tunnels in such a way that they slanted down toward the Tulsequah River. But Teck mothballed the mine in 1957, and when Redcorp bought it the company assumed responsibility for the acid drainage, too.

The acid in question is sulphuric acid, a toxic chemical that results when compounds in the rock are exposed to air and water. It happens naturally, but in much greater quantities when construction activities disturb and grind rock.

Redcorp will head to court today with a cleanup plan that's part of the company's application for a six-month extension on bankruptcy proceedings. A committee of Redcorp's debtors, however, want the court instead to appoint a receiver to take over the company's affairs.

The company suspended mine site development in December.

At the moment KPMG Inc. is Redcorp's court-appointed monitor. The company owes $142 million to debtors, $85 million to bank HSBC and $18.8 million to trade creditors.

As of last week Redcorp owed $24 million to 163 unsecured creditors, including some, small or large, to companies well-known in Alaska: for example, $135 to Western Auto-Marine, $16,461 to Coastal Helicopters, $131,697 to Alaska Marine Lines and $94 to the City of Juneau.

When the company suspended the mine, it also stopped trying to get permits in Alaska to transport supplies and equipment up the Taku River using an air-cushion barge. The project and vehicles to be used met resistance from Taku users.

In a March 4 court filing, Redcorp said its reorganization plan included getting the Alaska permits and finishing the hoverbarge. Under construction in Portland, Ore., the $13.2 million vehicle is half paid for, according to KPMG.

Also last week, the company announced its CEO quit and the chief financial officer was terminated.

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