Natural Resources Committee on Oct. 3rd, 2011

[Anil Arora]

With the known set of projects there, we're looking at about 8,000 or so immediate jobs created in the north. When you look at the population in the north, that's a fairly significant number of additional jobs, not to mention the downstream jobs in the rest of Canada that will be created, whether to manufacture the kind of material that's going to have to be shipped, or the kinds of support services that will have to accompany those additional jobs. That's with the known set of projects, so as the number of projects starts to increase, the demands on the labour force are only going to increase further.

These are some of the best-paying jobs in all our sectors. Of course, there's a whole range of jobs, right up from local construction-related jobs on the mine site. So there's a profile of jobs that comes with the start of a project to its construction, and then to its steady state. That profile will change and vary depending upon the length of the project.

Many of the local communities have taken us up on opportunities to train the local workforce. Colleges have set up small mobile camps, for example, to train people for various trades on-site. That comes back to the question about these being durable jobs, with skill sets that go beyond the shelf life of a mine.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

On the responsibility for that, is it a mixed bag of Natural Resources, INAC, the territories, and the provinces? Is there no set order for creating those jobs and putting the training in place for those kinds of things?

[Anil Arora]

We work with our provincial and territorial colleagues and those at Aboriginal Affairs and Northern Development Canada to make sure that development programs are in place for these trained individuals, certified individuals in some cases in the trades. We work with them on a whole host of training and certification programs, as we do in other sectors, of course.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

On the third page of your presentation, one of the core federal responsibilities is navigable waters management. Is there a role for NRCan in navigable waters management, or are you talking about DFO here? I ask because there's a certain ambivalence in many areas of this country to DFO.

[Anil Arora]

It's mainly DFO, with Transport Canada. When we become involved with an environmental assessment, we will certainly look at various aspects of that. But the main responsibilities rest with them.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

When we look at the north, what is the real potential? You have diamonds down as being, I guess.... I don't know if they're developed a little further than some of the other resources or if there actually are far more of them than any of the other resources. But what would be the other biggies in the future? Are they zinc and lead, or gold, or uranium? Where does the potential seem to be?

[Anil Arora]

Right. It's something we struggle with all the time: what is the ultimate potential of the north? As the geoscience becomes available, we'll know more. And as industry starts to explore more, we'll even find increased potential.

But from what we know today in terms of the pipeline in the near term, precious metals such as gold certainly are...and diamonds, of course. We see that already. The known diamonds have a shelf life of maybe another 20 years. If we could find more kimberlite pipes and other deposits, we could extend the life of those.

I think there's a real challenge for us to diversify and substitute, as I was saying earlier, what in the Northwest Territories constitutes just under half their GDP at the moment. There's a real pressure, if you like, or incentive for us to look at other deposits. But we're looking at zinc. We're looking at lead. We're looking at silver. We're looking at cobalt, uranium, iron and, as I mentioned already, copper. The potential is there for diamonds, precious metals, base metals, and also rare earths.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

You talked a little bit about that. China basically controls it. But where are we at in the stage of development of rare earth minerals and in being able to really develop that industry?

[Anil Arora]

Certainly. Rare earths are a bit of an oxymoron; rare earths in fact are not that rare.

There are two types of rare earths, light rare earths and heavy rare earths. The light rare earths are actually geologically present in many parts of the world, and they occur with other deposits that we see. The heavy rare earths are used in magnets, for example, that go into powering motors, such as for our little windows in cars or the big windmills you see that require the huge magnets, and so on. Those types of rare earths are, indeed, rare. They're in short supply. And they're in high demand from countries such as Japan, Germany, and the United States, because of their applicability in new forms of energy, whether in defence applications or in the automotive sector or in the electronic sector.

Canada has at the moment about 100 projects under way to try to find these rare earths. Many of them are for the light rare earths, but several of them are for the heavies. There are about four projects that hold some real prospect in the north for these heavy rare earths. So it certainly holds well for us to try to play a role.

I don't think we're ever going to be the primary player or play a huge part in the world's quest for these rare earths, but I think we can be a player in the future. And industry is responding to the geoscience that exists out there already. Industry is taking advantage of some of the real returns on our investments in gems, for example. And we've seen, as I said, at least one of those projects looking at actually coming into production in 2014-2015.

Again, I think this holds well for Canada going into the future. We can enter a market that we haven't played in at all.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Anderson.

Mr. Trost.

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

Thank you, Mr. Chair.

One thing occurs to me, and I think we should probably be asking ourselves this question, but I'm curious to see if the department deals with it as well. Do you systematically sit down and ask yourself what the impediments are and what we have to work on? If you haven't, why not?

If you have, what are the three or four biggest obstacles to developing the north? The list could go on forever, but from what the department has looked at, what in your mind are the major obstacles to developing it? Are they investment rules, the labour force, just basic geology and geomapping? Give me your big three, four, or five. What is it that's holding things up, what do we need to work on and what do we need to look at here on this committee?

[Anil Arora]

Thank you for that question.

Indeed, we do think about it, and the minute we stop thinking about it, because we have such a good network with industry and with our stakeholders and so on, they certainly remind us that we ought to be thinking some more. So rarely does a day go by when we don't think on our own part or get prompted by others into thinking what the real challenges are for us to use that enormous potential that we have and to turn it into real value for Canadians.

I think you hit on a few of the challenges already. Specifically regarding the north, the main thing we think about is the lack of infrastructure. For example, many of these projects are very energy intensive at various stages. We don't exactly have ready-made energy that's available. Trucking diesel up there or flying diesel up there is very expensive. There's a short season, which is certainly a huge cost driver in any project. So we are focused on seeing how we can diversify the sources of energy—for example, to geothermal or wind sources. Again, in those conditions we're talking about, the same rules perhaps don't apply and the kinds of knowledge we need and the kinds of challenges we face always present new things for us.

Just very quickly, the other challenges obviously include the timing of the regulatory process. As was mentioned earlier, there are only two seasons. So if we miss something by a month or two, potentially a whole year could be lost because you can't ship material up there afterwards.

There's also the lack of infrastructure. Diamonds are easy; you can put them in a briefcase and off you go. It's a little more difficult with iron ore or zinc, or whatever you have, and if we don't have the roads or the railroads or whatever, that's a real problem. It comes down not only to who is going to pay for those but also how you sustain them in the kind of climate and unique conditions that are there in the north.

You hit on the labour force as a challenge. There are always pros and cons of whether companies should fly people in and create a camp or use the communities, and so on.

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

Okay, I think I got probably the big three.

Let me put it to you in a slightly different way. Those are the major ones we have to deal with. Do you actually look at what are the major policy impediments or questions you have to ask? That's a slightly different question. I'm wondering if you would answer that one.

[Anil Arora]

Absolutely. As was mentioned earlier, there are some things that are clearly in the provincial domain, and there are some things that are shared. So from a policy perspective, we're always looking at how we achieve one project, one review. How do you still balance the needs of the environment, the needs of the communities, the needs of economic growth, and still make sure we have a timely process?

Again from a policy perspective, how do we ensure that the labour force is going to be there when it's necessary and can withstand the kind of downturns and upswings in the industry?

Again from a policy perspective, we consider the availability of the kinds of energy downstream that we look at. How do we weather what is still very much a cyclical industry? How do we ensure that we have a robust investment climate, the kind of structure we are unique for in the world that can gain the kinds of capital that go into these relatively high-risk investments?

So from a policy perspective, the whole range of these concerns is certainly a preoccupation of ours.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Trost.

We go now to Madame Day for up to five minutes. Go ahead, please.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

I would like to come back to a few points. You said that the transfer of responsibilities in the Yukon had gone well.

Could you tell us more? Does that mean that agreements were concluded with local populations?

You also said that Nunavut was...

What are the obstacles you encounter?

[Anil Arora]

In fact, you are making a favourable assessment of the state of negotiations and agreements that are the responsibility of our colleagues from the Department of Aboriginal Affairs and Northern Development Canada.

As we were saying a bit earlier, the level of maturity is different in each jurisdiction. For instance, we work with the Inuit, with associations and existing structures, but I think that my colleagues would be in a better position to provide you with some further details.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

So the main difficulty is to arrive at an agreement with the local populations.

[Anil Arora]

That governance system did not exist even a few years ago. The point is to see how we can develop the capacity to foster competencies within a system, so as to balance existing tensions.

So we are talking about capacity, about a governance system and of course the necessary resources and analyses. There are quite a few issues, but as we saw in the Yukon, we can make progress quite quickly.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

You said local workers would be hired. So there will be ad hoc training, since many of these workers are not specialized or only have elementary schooling.

We are talking about 8,000 short-term jobs. Will these 8,000 jobs be entirely staffed by local residents or will you have to import workers?

Should there be migrants from the south who go to work in the north, how will all of this work out? We are talking about two seasons.

[Anil Arora]

The 8,000 jobs are everywhere and each project is unique. It will depend on where the minerals are found and where workers are available, because there aren't enough communities everywhere.

As you said also, the level of competence varies. Some companies took the initiative of training people themselves. There are many examples of companies who invested a great deal in the training of workers. In our sector, we are currently the biggest employer of aboriginal people in Canada. There has been an increase in that regard.

[Patrick O'Neill]

Certainly north of 60 in Nunavut, as part of the Nunavut Land Claims Agreement, there's a requirement for IIBAs. These are Inuit impact and benefits agreements that cover things such as job opportunities within the mine operations, and also touch on training and development. It's a formalized process that's part of the land claim.

There are some 160 IIBAs or MOUs across the country, whereby the mining industry is entering into formal agreements with local communities. A lot of mineral potential is within 100 kilometres of a first nation community, and the industry is addressing the interest of those communities to get engaged in the sector. In many cases, industry is are specifying the number of hires it will make in a community. I think, as Anil said, the mining sector is the largest employer of aboriginal people in Canada and some 60,000 jobs need to be filled over the next 10 years. They're certainly looking for local people to fill those positions.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Today, during question period, the issue of the ozone layer was raised. We know that in the far north, they use mostly diesel fuel. With development, that use will increase even more. You referred to alternatives, to wind energy in particular. The fact remains that the use of diesel will increase as well as the risk of pollution and problems related to the ozone layer. A thinner ozone layer means that workers may suffer the consequences, such as skin cancer among others. That means that there will be social costs and health costs involved. We are talking about workers who are going to have to agree to work under such conditions.

Given this new problem, are you doing research and development to position yourselves and find solutions? What is the situation currently?

[Anil Arora]

Of course, that is a reality. But there are also some strict standards concerning waste, air quality, and so on. Because of these standards and the fact that in some cases, there is no real alternative, several projects will not go forward. We are not going to lower our standards to further development. The standards are there, whether we are talking about air or water quality, the safety of workers, etc.

So certain projects will not see the light of day. From time to time, when solutions considered within the context of a project are deemed unacceptable, the governments reject that project even if it has positive economic aspects.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Day.

We go now to Mr. Allen for three minutes, if you could.

We've reached an agreement, I think, to take about 10 minutes for future business at the end of the meeting.