Wolverine Mine closure felt by Watson Lake

The mayor of Watson Lake is worried about residents whobought houses andpickup trucks on credit before the closure of Wolverine Mine, sayinghe's not sure what they're going to do.

Richard Durocher says 30 to 50 people in the area were employeddirectlyor indirectly by the mine, which shut down in January. Wolverine, owned by Yukon Zinc,is located approximately halfway between Watson Lake and Ross River.

"It is a set back. Now you wonder where the next economic boost is going to come from," he says.

Durocher isn't sure if the mine will ever operate again.

"People in town stretched their necks out with credit... and things were doing pretty well," he says. "Now I worry about these people and what they are going to do for employment going forward."

Yukon Zinchas been granted creditor protection for debts totalling $646 million. The majority of that is owed to aChinese parent company, but $50 million is owed to government and the private sector.

Durocher says margins are tight and local businesses aren't sure if they are going to get paid for products and services they supplied to the mine.

Whitehorse company owed $40,000

David Green, owner of MacPherson Rentals, is in that boat. His company, based in Whitehorse, is among the smaller creditors but is still owed about $40,000.

Green says on the one hand he wasn't surprised about thefinancial troubles of Yukon Zinc, but he thought it wouldn't come to this since the minewas backed by China.

"I thought that some way or other ... given the size of investment in Yukon Zinc, that they would figure out a way to basically pay their parties and keep everyone whole," says Green.

"They've invested a lot of money into what should be a long term investment and so for them to be putting this into creditor protection, that's the part that surprised me."

Decline in Chinese investment

The move doesn't surprise Jia Wang, deputy director of the China Institute at the University of Alberta.

She says Chinese companies like Yukon's Zinc's parent company, JinDui Cheng Canada Resources Corporation, often consider their subsidiaries a separate company.

"The parent company is considering this company is not making a profit or not doing as well as expected so they're wondering about whether they can recover the capital invested," she says.

Wang sayswhen Chinese companies operate in Canada, there's a learning curve involved.

"When you move into a developed economy, the environment is different, the management style is different and the rules and regulations are different. So often it takes some time for them to acclimatize the company to local soil. It may take some while for them to succeed."

Wang says there is an overall decline of Chinese investment in Canada, especially in the mining and energy industries.