Thank you, Mr. Chair.
The Mining Association of Canada is the national organization of the Canadian mining industry. It comprises companies engaged in mineral exploration, mining, smelting, refining, and semi-fabrication. Member companies account for the majority of Canada's output of base and precious metals, diamonds, oil sands, and uranium.
As an organization, MAC was honoured by the GLOBE Foundation, winning the 2005 industry association award for environmental performance.
Canada is one of the world's leading mining countries. We rank among leading producers of uranium, nickel, magnesium, titanium, aluminum, and zinc, among other minerals. The industry employs 388,000 Canadians and contributes $10 billion in gross domestic product in mining and extraction, and a further $32 billion in gross domestic product in mineral manufacturing.
The industry is investing around $1.4 billion in Canadian exploration this year, and we're a main employer in over 100 Canadian communities, while we are world leaders in mining finance in large cities such as Toronto, and in exploration expertise in other major cities such as Vancouver.
The Canadian industry is also a major international player. For example, our TSX-listed mining companies have around 4,000 mining projects in play in foreign countries, and our industry has around $50 billion in direct investment stock in other countries.
I really wanted to make three points. Number one, we are responding as an industry to the challenge. Three groups of our members—smelters, iron ore pellet plants, and the oil sands companies—are subject to the notice of intent to develop and implement regulations and other measures to reduce air emissions, and will be affected by this committee's deliberations.
I note that for the purposes of the notice of intent the government has included oil sands production within the petroleum sector. I have grouped my remarks to the committee under these three headings.
First, it is important to note that our industry recognizes the need to reduce its impact on the environment. MAC member companies have been very active over the past 15 years, investing billions of dollars in process and environmental improvements. MAC's Towards Sustainable Mining initiative, to which all our members adhere, includes performance measures, targets, and externally verified reporting in a number of environmental areas, including energy use and greenhouse gas emissions.
In terms of specific improvements, MAC member companies have reduced the amount of mercury releases into the environment by 91% over the past decade. Cadmium and zinc releases have each been reduced by 71%, and lead by 68%. These reductions have occurred across all subsectors of the industry.
Even in the oil sands, where significant expansion has occurred, total releases of substances such as mercury, sulphur dioxide, lead, arsenic, and cadmium have declined significantly. Table 1 at the end of this paper provides further details regarding progress over the past decade by MAC members with respect to sulphur dioxide emissions. These significant improvements reflect the success of investment by mining companies in cleaner processes and technologies, in response to early-stage voluntary actions and Canadian laws.
The specific example of Inco in Sudbury is worth noting in this regard. The company is now known as CVRD Inco Limited and has recently commissioned a new facility that will reduce sulphur dioxide emissions from its Sudbury operations by 34%. This fluid bed roaster abatement technology is state-of-the-art and required a $115 million investment on CVRD Inco's part.
Beyond these improvements in specific key pollutants, the industry has also improved its energy management practices, and consequently its performance on greenhouse gas emissions. For example, the metal smelting and refining industry has reduced its energy requirements from 50 terajoules per kilotonne of production output in 1990 to 42 in 2004, or a reduction of 18%. These improvements reflect industry investment in energy management and efficient process technologies.
In terms of absolute emissions, the mining industry, not including the oil sands, has more than met Canada's 6% greenhouse gas reduction target commitment to the Kyoto Protocol. Table 2 at the end of this paper provides further detail regarding industry progress on GHG emissions and intensity.
The oil sands sector has been investing in innovative ways to reduce energy use. Between 1990 and 2004 Syncrude, for example, reduced per barrel greenhouse gas emissions by 14%, reflecting investments in new technology and equipment.
The second area I want to address is paying attention to what drives investment. It's important to keep this particular critical factor in mind, in terms of what drives investment in Canada. In this case, targets must be achievable, and harder targets can be made easier through an effective regulatory and tax regime. In a global marketplace, companies invest in those regions where there are market opportunities, where the government has an efficient regulatory system, where the transportation network is modern, and where smart tax incentives are in place.
So in deciding the type and scale of requirements to be placed upon Canadian industry, committee members should consider the broad range of criteria that influence where global investments are made. This is doubly important when one considers that major emissions reductions are generally achieved through fundamental technology changes. Investments will occur over long time periods as new technologies are developed, perfected, and implemented.
A stable and transparent investment regime is also very important to companies as they look to invest. For example, in fairness to those mining companies that have taken action to reduce greenhouse gas emissions, we believe that Canada's approach should aim to reward investment leaders rather than penalize them. In this regard, historical improvements since the Kyoto base year of 1990 should be recognized, and future targets should not be arbitrarily inflated by assuming that past actions to reduce emissions can be repeated in the future.
It is also important that the committee take an integrated and life cycle approach to its environmental analysis. Care needs to be taken to integrate emission reduction requirements, particularly sulphur dioxide and greenhouse gases, as in some cases an investment to abate the former may require additional energy and the associated greenhouse gas increases that would go with that. In other cases, the only feasible methods for reducing sulphur dioxide emissions may be the use of carbonate-based chemicals, again leading to increased carbon dioxide emissions. Emissions targets need to reflect relative risk so that pollutants exhibiting the highest risk are targeted.
Emissions reduction targets also need to take into consideration the impact of the value chain. For example, in the case of our iron ore sector, the production of value-added flux pellets increases relative greenhouse gas emissions at the iron ore stage, though it reduces emissions by a significant amount at the downstream steel blast furnace stage. One must be very careful about rewarding or punishing producers in an arbitrary manner without considering the inputs and outputs of the entire production continuum.
Taking the continuum and life cycle point to the next step, it is also logical for Canada to develop targets that consider how to encourage increased recycling of electronic and other secondary feeds in Canada.
My final point on the subject of investment is that accelerated capital cost allowance treatment for clean technology contributes to a positive investment environment. A number of industry associations, including MAC, have called upon the government to consider a two-year write-off of investment in clean processes and technology. This was also the subject of recent recommendations of the industry committee. Such treatment would further encourage our companies to invest in modernizing their smelters and refineries. Other opportunities exist in the areas of research and development, where current industry-government partnerships on issues such as carbon sequestration can be expanded and accelerated to improve the economics of new technological solutions.
My third and final message with respect to the climate change issue is to note that our industry is a global industry. Indeed, in terms of international presence, it is difficult to find a more global sector than Canada's mining and metals industry. The majority of Canadian output is sold abroad, and our leading companies are active investors and explorers in other countries.
Canadian mining, be it base metals, iron ore, diamonds, uranium, or oil sands, competes internationally with prices established on global exchanges in London and elsewhere. Companies compete on their ability to explore and access reserves and to control costs. Many of our international competitors operate in countries with significant competitive advantages and with less stringent environmental standards and without reduction targets under the Kyoto Protocol. In the case of the iron ore sector, for example, it is these competitors in Brazil and Australia, among other countries, who establish prices. Canadian producers are price-takers and unable to pass additional costs on to their customers.
In this sense, while we support progress on this issue, we ask the committee and the government to also consider the global context that surrounds each particular industry sector when establishing specific targets. Let's find solutions that are win-win, that improve our environmental performance without turning off investment and job creation.
Thank you very much for your attention. I appreciate the opportunity to be here today.