Natural Resources Committee on Oct. 3rd, 2011

[The Chair, Conservative, Leon Benoit]

Good afternoon, everyone.

We're here today to start our study on resource development in northern Canada. We start today with some presenters from the Department of Natural Resources. We have with us today Anil Arora, assistant deputy minister, minerals and metals sector; Ginny Flood, director general, minerals, metals and materials policy branch; and Patrick O'Neill, director general, explosives safety and security branch.

Thanks to all of you for being here today. We are very much looking forward to your presentations, which will be followed by questions and comments.

Please go ahead, Mr. Arora.

[Anil Arora, Assistant Deputy Minister , Minerals and Metals Sector, Department of Natural Resources]

Thank you. It is really a pleasure to be here with you today.

Like you, we are very interested in the role we play in the minerals and metals sector as well as in the development of resources in the north. I am going to make a brief presentation on our role in this sector and more specifically in the Canadian North.

I believe you all have the presentation. I'll just spend about 10 to 12 minutes on the presentation itself and, as mentioned, we'll get into some of the interactive dialogue, which I think will be of some value.

To go to the first slide to start, our mandate at Natural Resources Canada is to support sustainable development practices through science and technology, gathering and disseminating analysis and information at both the domestic and the international level, and working in collaboration with our external partners, such as industry, non-governmental organizations, aboriginals, academia, and domestic and foreign governments. As well, we work closely with our federal departments, such as Environment Canada, Transport Canada, the Department of Fisheries and Oceans, DFAIT, Industry Canada, et cetera, that are interested in northern development and natural resource development.

As to my role specifically as the assistant deputy minister for the minerals and metals sector at Natural Resources Canada, we're the lead federal department that provides expertise on various issues, whether it be policy or science and technology related to exploration and mineral and metal development. I'll go to the next slide now.

As you may know, we share responsibilities with our provincial counterparts south of the 60^th parallel.

The provinces here are the resource owners and the federal role is related to a specific legislated authority, such as fisheries, navigation, or transboundary trade, and we share responsibility for these issues such as environmental protection, health and safety, and economic development. The major difference between being south of 60 versus north of 60 is that the federal government manages resource development north of 60, with the exception of Yukon, which, as of 2003, has had the responsibility devolved to them.

The Minister of Aboriginal Affairs and Northern Development Canada is the principal minister responsible for northern issues, and works closely with departments such as our own, DFO, Environment Canada, Transportation Canada, et cetera.

Our role at Natural Resources Canada is to promote sustainable development, and we're active in supporting the environmental reviews of resource projects led by review boards in the north. We provide geoscience expertise. I understand that my colleague Brian Gray is to appear in front of you in the near future to answer some of your questions related to their specific role as well.

Again, for my part, we review technical documentation and provide scientific and technical expertise in the areas of minerals and metals sciences, including expertise related to things such as acid rock drainage, waste management, mine effluent, and metal leaching.

Our goal is to ensure responsible development that reduces environmental impacts and maximizes benefits to communities and all Canadians.

The next slide, as you can see from the graph at the top right, shows how exploration spending in the north fluctuates over the years. However, we predict that the resource-rich north will become a new frontier for Canada. For example, in 2010, mineral exploration and deposit spending was $498.1 million for the three territories, and accounted for almost one in every five four dollars that Canada spent on mineral exploration. In 2010, the three territories accounted for 6.3% of the value of total Canadian mineral production.

Diamond mining represents 88% of northern mineral production in terms of value, and there is clearly an opportunity to diversify and grow in other commodities. That's going to be one of the themes, I'm sure, that we'll talk about a bit.

We note an interest in the north over the period 2006-2010, where we saw a 53% increase in total mineral production; and given recent interest, we see potential for this trend to continue. Again, we could probably talk about some of the factors that are leading to that increase globally.

The next slide is the one with the nice picture of Agnico-Eagle Mines. Building on what I just talked about, mining is the main driver of economic activity in northern Canada. This includes north of 60, but also northern regions of many provinces. So it's not just north of 60. For example, the Plan Nord in Quebec, the Ring of Fire in Ontario, and the northern regions of British Columbia are all examples where mining developments are seen as key economic drivers for the various communities in these provinces.

North of 60 also has experienced positive socio-economic benefits. For example, in the Northwest Territories, the diamond mines represent between 36% and 41% of the territories' gross domestic product and provide direct and indirect employment for some 8,000 people, many of them aboriginals who provide services to these mining operations.

In Nunavut, Meadowbank is an example—and there's a picture there—of the positive socio-economic contributions to the region. As many of you may know, Prime Minister Harper saw this firsthand during his northern tour not too long ago.

So the benefits from mining are significant and the impacts go far beyond the mining site itself. For example, Sudbury, Ontario, is an example of the socio-economic benefits of mining, showing how a cluster can benefit from mining. These benefits can include building infrastructure such as roads, railways, schools, community centres, health centres, and so on. Mining also provides some of the highest-paying jobs and generates other indirect and induced employment opportunities.

The next slide is just a map that depicts some of the northern economic development potential.

As I mentioned previously, there are opportunities to diversify the minerals and metals activity in the north. Currently some 48 mining projects are undergoing environmental assessment in Canada and 14 of these are located in the territories, representing somewhere between $7.5 billion and $8.5 billion in investment.

If these projects are realized, they will double the number of full-time jobs in the territories and, as you can see from the map, the new developments will diversify the commodity base to include commodities other than diamonds—which I spoke of already—to things such as gold, iron ore, zinc, lead, rare earth elements, et cetera. These are clusters which, if infrastructure were provided, would obviously benefit these mining developments, similar to, for example, the transmission line in northern British Columbia.

Of course together with these opportunities, there are also some challenges.

As I said, mining is a key economic driver for northern communities, but there are some challenges that go along with it. Addressing the challenges is essential to unlocking the resource potential. Projects are often located in remote areas where access to things such as labour, power, roads, railways, and ports is limited. Investing in infrastructure, such as education, skills, training, and regulatory improvements will facilitate mining developments and also promote other economic activities.

As well, outstanding land claims--again, talking about some of the challenges--contribute to uncertainty and investment risks. These risks, along with withdrawals of lands for conservation, have created some concerns by industry. There is work under way by federal governments related to land claims and land use planning that should improve the current situation.

Skill shortages are obviously not isolated to northern development, but given the population and education levels in the north, these shortages are fairly significant concerns, particularly if communities are to benefit from the economic development opportunities these projects present.

The regulatory processes vary in complexity and tend to be seen by industry, at times, as unpredictable, costly, and time-consuming. As well, the federal government is moving to devolve responsibility. This also creates some level of uncertainty. However, work is under way to improve the regulatory system, with the creation of CanNor and the northern project management office.

Lastly, geoscience investments are an important aspect for long-term success.

Canada's North is resource rich with significant potential. This potential will attract direct foreign investment. Natural Resources Canada works closely with other federal and territorial governments and other stakeholders. We have several programs focused on the north: geoscience; science and technology related to mineral development; regulatory and environmental improvements. Realizing the north's potential will require a focused effort to turn risks into opportunities.

With that, I'd be happy, along with my colleagues, to try to answer any questions you have.

[The Chair, Conservative, Leon Benoit]

Thank you very much for the presentation. It is very much appreciated. It was a good quick overview that I'm sure will spawn some questions.

We will go directly to questions now. The first round is seven minutes.

We'll start with the Conservatives and Mr. Trost.

Go ahead, please.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today. I have to say, your picture of Meadowbank actually made my day today, because I worked there eleven years ago on the mineral deposits, doing field geophysics. It looks different from when we were fending off a bull muskox to get some of our survey work done. It's good to see that the project came to fruition.

When you're dealing with mining companies going anywhere in the world, one of the big things is regulations, the ease of doing business, and things of that nature. While I'm not aware of where it ranks, for example, in the Fraser Institute report, it's very important to make sure that companies can come in and know where they're at and where they're going.

Could you give a more detailed description of what you're doing on regulatory reform and things to ensure the ease of business, and some of the specifics you're doing to make the process for approving the mines in the north better and quicker, without compromising any of the necessary safeguards? Could you provide as much specificity as you can?

[The Chair, Conservative, Leon Benoit]

Mr. Arora, go ahead.

[Anil Arora]

Thank you very much.

First, I'm glad that you can relate to that project with your personal experience in the past. Again, that speaks a little bit to the history that all Canadians have with the natural resources sector and mining. You don't have to look too far before you can point to somebody you may know who is working in the industry, which is a good sign, I think.

You're absolutely right. The regulatory environment that we have in Canada is often cited as one of the biggest challenges, especially when you're talking to foreign investors. And when we look at the north, it just makes it that much more complicated, because we are in the process of devolving the responsibilities north of 60 to essentially where the system is south of 60.

So I'll speak specifically to north of 60. If you look at the three territories themselves, in Yukon back in 2003 we devolved those responsibilities, and there is essentially one entity that investors can go to when trying to get the necessary approvals to proceed. Similarly in Nunavut, with the land claims well in hand, there's one entity that companies can go to for, if you like, approvals and so on. I'll ask Ginny to get into a little bit more detail on the various elements.

In the Northwest Territories, there are some 13 boards that get involved in various elements from surface rights to land use planning, water, land use, and other aspects. So, absolutely, it is a bit more complicated, and given the devolving structure it just takes a little bit longer to get that balance between the environmental protection and treaty rights, where that is applicable, to allow aboriginal people to get involved and benefit from the development and, obviously, the economic potential.

With that, I'll ask my colleague Ginny to give you a little bit more detail in each of the three jurisdictions, if I may, Chair.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

You're about three and a half minutes in.

[Ginny Flood, Director General, Minerals, Metals and Materials Policy Branch, Department of Natural Resources]

Okay, I won't go into too much detail, because it really is an area that Aboriginal Affairs and Northern Development is responsible for, but, obviously, at NRCan we have a real interest in that and have actively participated in it.

With respect to the streamlining, much of the area we're working on with Aboriginal Affairs and Northern Development is through the establishment and creation of the Northern Project Management Office. The intent of that office is to look at having a one-stop shop for industry coming in, and a better sense of how to navigate all of the regulatory boards and the types of permits required. It's very similar to south of 60 and the Major Projects Management Office that was established in 2008. It is a little bit different in the sense that the Northern Project Management Office is really there to help guide the proponents through the regulatory system. It will have very similar processes as far as project agreements are concerned in helping to look at some of the predictability and the certainty needed by industry. Certainly operating in the north has its challenges, one being the very short season there. So the timing of decision-making will be key for a lot of the industry.

So that is one initiative that applies to all three territories.

The other area we're working is land use planning as part of the land claims. We are actively engaged in that and, hopefully, through that exercise, we will see an improvement in the regulatory area, because we will be able to identify those areas that are going to be more at risk, and then by looking through that lens, we'll be able to identify more quickly with industry where we need to develop new processes and approaches.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

From what I'm hearing, devolution tends to be the way and seems to have worked pretty well in the Yukon—but maybe we'll deal with that one later.

Is there a rough timeline or estimate for when that is going to be completed in the NWT and in Nunavut, or are they not quite as eager or prepared? Also, you mentioned there are 13 boards, et cetera, in the NWT. Has some thought been given to consolidating and streamlining that process?

You have about one minute.

[Patrick O'Neill, Director General, Explosives Safety and Security Branch, Department of Natural Resources]

I believe there was an agreement in principle signed between the federal government and the Government of the Northwest Territories. I believe the territories' intention is to conclude devolution negotiations within a 24-month time period.

With respect to the 13 boards in the NWT, I believe Mr. John Pollard was appointed chief federal negotiator to work with first nation communities to see whether they could consolidate the number down to one board. I think there was a bit of a question mark around the ISR region, the Inuvialuit situation, because although it seems to be a workable model, there are efforts under way to look at reducing the number and complexity of that regulatory regime.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to the NDP and Monsieur Gravelle for up to seven minutes.

Go ahead, please.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Chair.

And thank you for being here.

You touched very briefly on the Ring of Fire. I'd like to know what kind of effect the geomapping has on the Ring of Fire, or maybe even vice versa: what effect does the Ring of Fire have on geomapping? What's the benefit for the environment and our first nations?

[Anil Arora]

First, as a government, one of the things we do is to make sure that the scientific base of the whole country, in terms of the geology and its potential, is available for all to invest in. A number of the finds you see are a direct result of the investments the government has made. There are a couple of specific programs you may have heard of. One is the geomapping for energy and minerals, which is a $100-million initiative that the government has put in place; and the other one is a targeted geographic initiative, which actually looks at existing bases and ask how we can actually exploit more or use more tools to even get more.

A number of the recent finds are a result of the investment the government has made in geoscience, and in geomapping specifically. There's a formula that says every dollar we invest in geoscience results in $5 in terms of exploration activity, and $125 in terms of its downstream impact on jobs and so on. So in many respects we are unique in the world, in that we actually do this kind of thing and then we make it publicly accessible for all companies to be able to use that information and generate the kind of economic activity we want in the country.

Specifically with regards to the chromite deposits and the finds within the Ring of Fire in northern Ontario, it certainly is an example where geomapping has resulted in what will become one of the richest chromite deposits in the world. It obviously has to go through, and is in the process of going through, the various aboriginal consultations as well as the various environmental assessments. We want to make sure—all of us do—that this is exploited in an environmentally responsible way and sustainable way that presents obvious benefits to all Ontarians and, for that matter, all of Canada.

We work very closely with the Government of Ontario to make sure this occurs and that any kinds of issues that are in play, in terms of the environmental assessments and so on, are properly assessed.

Maybe with the chair's indulgence, I could again ask Ginny to provide a little more detail on that.

[Ginny Flood]

I'll just talk a little bit about the aboriginal front.

We are doing some work in the Ring of Fire on the aboriginal front just to make sure that the aboriginal communities do benefit. As Anil said, the environmental assessment process, obviously, will look at the environmental impacts and at ways of mitigating them.

So we will also be involved in that area.

[Claude Gravelle, NDP, Nickel Belt, ON]

A while ago you touched on the $100 million over a five-year period for geomapping. Can you break that $100 million down and tell us who is getting how much and for what?

[Anil Arora]

My colleague, Brian Gray, is expected to appear in front of this committee. You'll get a more fulsome answer from him on the processes that are in place to work with provinces and territories, in terms of where that money gets targeted and where it makes sense—where it has the biggest potential, if you like. I think you'll hear him say that the north is a vast territory and that 60% of it, for the most part, is not mapped to the same level of detailed geology as the south. Certainly, a number of initiatives are in play to try to find, if you like, the haystacks, and then once we find the haystacks, then it's industry and others who try to find the needles within those haystacks.

I'd like to defer more details about how that amount of money is being divvied up between the various areas that show the most geologic potential, if you like.

[Claude Gravelle, NDP, Nickel Belt, ON]

Mr. Chair, can we make sure that Mr. Gray has the breakdown when he comes in front of the committee?

[The Chair, Conservative, Leon Benoit]

We can ask for that.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

What is the current status of the program's development and findings to date?

[Anil Arora]

Once again I'll ask that the question be posed to Brian. He can certainly tell you where things are financially, where they're looking at potential, and the kinds of relationships they have in place.

I'd rather leave that to him, because it's his area of direct responsibility.

[The Chair, Conservative, Leon Benoit]

You have one minute.

[Claude Gravelle, NDP, Nickel Belt, ON]

Are there other locations where Natural Resources Canada is using seismic testing in the Arctic?

[Anil Arora]

Again, it's not my area specifically that handles that, so I would defer to his expertise in that area.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

[The Chair, Conservative, Leon Benoit]

Monsieur Gravelle is finished.

We'll go to the Conservatives again and Mr. Allen for up to five minutes.

Go ahead, please.