Human Resources Committee on Feb. 29th, 2012

[The Chair, Conservative, Ed Komarnicki]

We will start with this particular session.

I should mention that there are some technical difficulties with respect to the video conference from Saskatoon. They are working on that. What I plan to do is start with the presentations we have here. We may be interrupted when the signal is working. We will then complete with that presentation.

We have with us today a representative from the Canadian Nuclear Association, John Stewart. He will present for five minutes. From Vale Canada Limited, we have Wayne Scott, who is the general manager of the human resources process, and Ryan Land, who is the manager of corporate affairs. They will present as well.

Gentlemen, you will have questions from each of the parties following your presentation. With that, I would invite whoever is going first, perhaps Mr. Stewart.

[John Stewart, Director, Policy and Research, Canadian Nuclear Association]

Thank you, Mr. Chairman. It's an honour to be here before your committee today. I'm John Stewart, and I'm representing the Canadian Nuclear Association, which is a national association of well over 100 organizations. We're involved in bringing the benefits of nuclear technology to Canadians.

The Canadian nuclear industry employs 71,000 people in sectors that are directly or indirectly related to all aspects of nuclear technology, including uranium exploration and extraction, electricity production, advances in nuclear medicine, technological development and advanced research, the creation of highly-skilled jobs and the export of products and services internationally.

Our members all work in very close partnership with our host communities. We need them and they need us. The uranium extraction industry is a major employer of Aboriginal people in northern communities. We provide well-paying jobs, especially in industrial sectors where the majority require highly-developed skills and qualifications, to about 2,000 people in remote communities, almost half of whom, 900 of them today, are Aboriginal.

Mr. Chair, just one of our members, AREVA Canada, anticipates growing its workforce by over 60% over the next three years. Half of those new hires will be aboriginal.

Another of our members, Aurora Energy Limited, is working on a large-scale uranium project in Labrador. If the regulatory hurdles are cleared, Aurora anticipates needing up to 700 construction workers to build the facilities for the mine mill complex. After that, it should employ about 400 workers on an ongoing basis. Many of these jobs could be filled by employees from the surrounding communities, which are small, widely separated, and primarily Inuit, with very low rates of other employment.

Aurora's project will be a tremendous opportunity for people of the Labrador coast to find long-term, meaningful employment near home. Government training funds and assistance will enhance this opportunity. The several years before the Michelin project starts in earnest should be used to provide secondary school upgrading, which will make it easier for potential workers to be involved in the higher-level operator skills training opportunities the project is going to bring.

This project is only an example. The quality of the uranium resource in Canada is excellent. The government has been working with us and has made real progress in opening major new markets for uranium in China and elsewhere. Many more jobs are expected if the regulatory environment permits them to be realized. Companies like Cameco Corp., AREVA Canada, Aurora Resources, and Denison Mines also buy products and services from aboriginal-owned businesses and locally owned businesses to the tune of hundreds of millions of dollars per year.

This amplifies the economic benefits in each of these towns and helps aboriginal people make a move from employee to owner, which is a crucial step in sustained economic development. If you look at Cameco's website, on the community investment page you'll see details of 11 scholarship programs Cameco supports. One example is the northern scholarship program, which is open to young people who have lived in Saskatchewan's north for 10 years, or at least half their lives if they are under 20. There are also scholarships in business, geological sciences, and engineering. In addition to post-secondary scholarships, our member companies offer direct training to employees and even to their suppliers.

But the starting point has to be sound primary and secondary education. While obviously it's not our company's mandate to provide that, we certainly do want to align and partner with the people who do provide it, so that these young people face as few barriers as possible. Mr. Chair, we strongly urge governments to collaborate with communities and businesses to pull down those barriers and make optimum use of available investment dollars for education in these places.

In such small communities there is very limited infrastructure and local capacity. Projects face a lot of challenges. We all need to wear several hats. We all need to be both students and teachers. We all need to join each other's committees and go to each other's fundraisers, sponsor each other's events. So the partnership I'm talking about is really on a person-to-person level.

My final point, Mr. Chairman, is that motivation matters. Allowing young people to see the link from school to work and letting them taste some of the rewards of working can be powerfully influential in their choices. They can see the employer not so much as a corporate entity but as a group of people. Internships and similar programs let young people get a first-hand look at the career opportunities and benefits of education and perhaps let them earn a little money while they're in school. This can inspire them to work and succeed.

That's it for my comments today, Mr. Chairman, and I will be pleased to answer questions.

[The Chair, Conservative, Ed Komarnicki]

Thank you for those comments.

We certainly have been hearing that primary and secondary education is pretty important, and it's good to see the movement from employee to business owner and partner. We certainly like to hear it's developing along those lines.

Mr. Scott, are you going to present? Please go ahead.

[Wayne Scott, General Manager, Human Resources Processes, Vale Canada Limited]

Thank you, Mr. Chair and committee members, for the opportunity to present today.

To give you a quick overview of Vale, it's international and it's the second-largest mining company in the world. Currently here in Canada we're a major producer of nickel, copper, cobalt, and platinum group metals. Skills development in remote communities are critical to our business. Two of our four operating sites in Canada are in what you would consider remote communities: Thompson, Manitoba, and Voisey's Bay, northeastern Labrador. However, given the time constraints, Ryan and I will focus only on the Thompson environment.

Here are some of the challenges that we experience in the Thompson environment, which is about 740 kilometres north of Winnipeg, the major centre closest to it. We operate three mines, a mill, a smelter, and a refinery in Thompson. We have a significant gap between the jobs available in those operations and the skills of the workforce most readily available to us in that particular region. One of our biggest challenges is the ability to attract skilled workers to remote communities. Most of those skills come from outside the region.

Currently at our Thompson operations we're consistently 12% short of our full staff complement—that's about 150 people at any one time. Our employee turnover, unfortunately, is 50% in the first two years of employment, which is quite an alarming number, again attributed to individuals who come from outside that northern region.

Some of the other challenges we have are the following. To staff our plants in 2012 alone, we expect to hire upwards of 388 people, and upwards of 886 individuals over the next five years. Some of the specific skills particularly challenging for us to find are mining engineers, geologists, and, no surprise I'm sure, the trades, skilled trades, at pretty well all levels. Our ability to attract and retain that workforce to assist that is the viability of Thompson itself, that it remains prosperous and there's a critical mass of population and services. That's an attraction in and of itself.

In support of that, we at Vale have sponsored the Thompson economic diversification working group. It's a multi-stakeholder group designed primarily to identify and foster new types of economic activities in the city of Thompson. Education and training are a couple of the primary ones that group is focusing on.

Despite those challenges, there are plenty of opportunities within the Thompson region. We have an untapped potential, which I'm sure you've heard before, of upwards of 35,000 people in the surrounding communities. Sixty-five per cent of northern Manitoba's residents are aboriginal, and this population is young and growing. The challenge is that in order to maximize that potential, those aboriginal communities and the youth require capacity building, primarily education, and training assistance.

For us, developing that skilled northern workforce is critical. Our experience in Voisey's Bay will speak volumes to this, and it's no different in Thompson. If we recruit from the north, we're more likely to retain those individuals for the long term. In fact, in the Thompson area we have found that if we recruit from the north, 80% of those individuals stay with us. So some of our efforts are focused on the challenges. We're trying to achieve an 80% local hire rate.

In support of that, we've put together a northern employment strategy for Thompson. That's in partnership with the province, as well as with the first nations group in Manitoba. The strategic focus of that group is in four areas: aboriginals, newcomers to Canada, women, and youth. It has a comprehensive framework for providing non-traditional pathways to the workforce.

We’ll give you a couple of examples on the inward looking that we did concerning some of our hiring criteria within Thompson. We found that we ourselves were creating barriers. For example, we had a mandatory high school, grade 12 graduation requirement, which immediately ruled out a lot of potential applicants. We've now changed that to a preferred qualification. We had a mandatory level of experience in light and heavy industry. We've now changed that to a preferred arrangement, considering more experiential learning. So we adjusted ourselves to try to respond to that untapped labour pool.

Some suggestions or recommendations from our perspective for the committee to consider—and we certainly appreciate that this is a time of fiscal restraint—are to continue to focus on those initiatives that are working well at the moment. From our perspective, the partnership by the Western Economic Diversification department in Manitoba with industry has worked quite well. We see simulators in Thompson as well as in Flin Flon. Programs for aboriginals have also worked well—for example, providing skills directly linked to the job market, which is critical. The Centre for Aboriginal Human Resource Development has a program in Winnipeg. It's a model program. It has more than 600 graduates, all aboriginals, and a 94% retention rate for industry.

The two industry sector councils that have worked quite well with us in partnership and cooperation are the Aboriginal Human Resource Council and MiHR, the Mining Industry Human Resources Council—all very critical to us.

I think we would encourage that the northern college structure get more involved in the development and offering of curriculum for the skills we need within our particular industry.

I have just a couple of concluding remarks, if I may. Our reality is that we have a large need for a highly skilled workforce, and obviously we want them to live and work in our remote location. We know from our experience, as I said before, within the Voisey's Bay environment, and even from our own experience currently in Thompson, that if we hire from the north, we're more likely to retain them and have a longer lifetime employee.

As we move forward with our large capital projects—it's more than a $10 billion investment within Canada in the next few years—that skilled workforce is critical to us achieving that growth and supporting those initiatives.

Needless to say, the economic impact of hiring a large number of highly skilled aboriginal and northern residents has such a strong, positive impact on that northern environment and the communities in which those folks live.

Thank you for the opportunity, and I certainly look forward to taking a few questions.

[The Chair, Conservative, Ed Komarnicki]

Thank you for that presentation. It's certainly interesting to note your retention rate if you hire from the north or take that extra initiative.

We have with us Pamela Schwann and Gary Merasty by video conference from Saskatoon.

Can you hear us?

We still have some technical glitches, I guess, and we'll work on those in a bit.

What I might do, as we try to sort this out, is commence some of the questioning here and then move on to Saskatoon, unless we're able to fix it with one flip of the switch.

You can hear us. Can you say something on your end?

[Pamela Schwann, Executive Director, Saskatchewan Mining Association]

Hello, Chair Komarnicki.

[The Chair, Conservative, Ed Komarnicki]

I think we're good to go.

We have with us Pamela Schwann, the executive director of the Saskatchewan Mining Association. It certainly represents the mining associations in Saskatchewan very well, and we've heard from her on a number of occasions. And Gary Merasty actually appeared and presented before this committee on another subject matter. I think it was on behalf of Cameco, perhaps.

I'll turn it over to you, and you can present for five minutes and share or not. We will then have some rounds of questioning. Go ahead.

[Pamela Schwann]

Thank you very much, Chair Komarnicki and committee members, for this invitation.

As you noted, I'm joined by Mr. Gary Merasty, vice-president of corporate social responsibility with Cameco.

I'd like to commend the chamber for the insightful report that they had done up that precipitated the study you're working on. It adeptly recognizes many of the challenges that are reflected in northern remote Saskatchewan in particular.

We'd like to really echo many of the comments from Mr. Scott from Vale today.

Saskatchewan mining companies have developed a number of best practices for inclusion of northern communities in both the workforce as well on the business development side. We'd like to share some of those with you as well.

I'll talk just a little bit about the Saskatchewan mining industry. We're in a period of expansion right now. There's a lot of demand for the commodities we produce. Over the next five years, it is anticipated, mineral production by Saskatchewan will double. Companies have committed to spending over $50 billion over the next 20 years to expand existing mines that are in production or development.

Slide 6 of the presentation has a map of northern Saskatchewan. We're really focused on the area in the top third of the map. It represents northern Saskatchewan's 47 communities that would be considered remote according to the chamber report. It covers 46% of the province's land mass but only 4% of the population. It's a very dispersed population of 40,000 people, 86% of whom are of either first nations or Métis heritage. The population growth rate in the north is higher than it is for the rest of the province.That is actually a competitive advantage for our companies as local communities represent a great untapped workforce pool for our companies.

The yellow oval in the map is the Athabasca region of Saskatchewan, which hosts the world's largest uranium deposits. There are also two producing gold mines and a large silica sand operation in the region.

Slide 7 looks at the northern economic benefits from the mine.

In 2010, the northern mine operations purchased over $916 million worth of goods and services. Businesses owned and operated by communities or businesses from northern Saskatchewan made $361 million worth of purchases. A number of these companies now are in the top 100 companies within Saskatchewan, including Kitsaki Development Limited Partnership, which is the economic development arm of the Lac La Ronge Indian Band, the largest band in Saskatchewan.

Looking at slide 8, you'll see a bar graph that shows the value of expenditures that have gone into northern Saskatchewan directly from the mines since 1991. Between goods and services and payroll, over $3.39 billion has been invested in northern Saskatchewan.

The next slide is slide 9. In terms of employment opportunities in the north—and we heard from the CNA already—there are more than 3,615 individuals who are working directly at the mines; 46% of these are residents of northern Saskatchewan, predominantly of aboriginal heritage. Their payroll last year was over $90 million, which was injected into northern Saskatchewan.

[The Chair, Conservative, Ed Komarnicki]

Pamela, could you just hold for moment?

Is there a point of order?

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Yes.

You're mentioning these slides as you're flipping through this fairly quickly, but the slides aren't numbered. If you could perhaps tell us what the title is at the top of the page, that might be more helpful to us.

[The Chair, Conservative, Ed Komarnicki]

If you identify the top portion of the slide, I think that might help us.

You just finished the bar graph, and I think you're moving to “Northern Mine Economic Benefits”, are you?

[Pamela Schwann]

Chair, I'm going to skip ahead to a slide that talks about best-practice programs. It would have been the 11th slide in the program.

[The Chair, Conservative, Ed Komarnicki]

I think we have it.

Go ahead.

[Pamela Schwann]

There are best-practice programs showing how the mining industry has achieved their employment results. One of these is the multi-party training plan, which is a partnership program between government, industry, educational institutes, and first nations and Métis representatives. It's 50% industry-funded, and it's been going on since 1993, with $52 million invested. So that's one successful program.

Another successful program—on slide 12—has to do with the Northern Career Quest. I believe that was identified in some detail in an earlier presentation that Cameco was involved in. It's a highly successful program that achieved over 100% of its employment targets. It's an ASEP program that will be finished in June of this year.

The slides do go into additional detail, but perhaps you can address that in the questions.

The next slide looks at the key challenges; it's slide 19, which is quite a bit further down in your deck. This is about the partnership investments that government and industry should be looking at working on together in northern Saskatchewan and indeed in remote Canada. They are identified in the chamber report. These are investments in human infrastructure, skills, and training. There is also hard infrastructure—roads, power, development. And something that is very important is investment in regulatory infrastructure, which would improve the regulatory efficiencies that companies are investing in.

Slide 21 talks about the key positions required; it's a table. Working with the Mining Industry Human Resources Council in 2008, we prepared a study of the positions that were going to be required in the next 10 years. In the mining industry in Saskatchewan, we'll need 18,000 additional workers in that period. This study breaks down some of these broad occupations into finer ones, so that we know exactly what type of tradespeople will be required in what time period. We had good labour market intelligence on what our needs for training are going to be.

With respect to investing in remote hard infrastructure—slide 25—investments in power and roads are critical and are an excellent way to promote economic development. For example, the power in northern Saskatchewan right now is pretty much at capacity and a lack of growth will limit economic development opportunities. The mines lose revenue when there are power outages and that revenue is also lost to government.

Another example is roads. We would like to connect two mine facilities 52 kilometres apart, through a partnership with government. The cost for the road is $33 million and $14 million in annual operating expenses. The return on investment, though, would lead to 2,500 new jobs, with the deposits identified in those regions, $165 million in salaries, and $125 million annually in royalty and surface lease payments. You can see there's a substantial return on investment in building road infrastructure in the province.

Next is slide 26, looking at the business case for investing in efficient and competitive regulatory infrastructure.

Could you take this one for me, please?

[Gary Merasty, Member, Saskatchewan Mining Association]

Investing in the regulatory infrastructure would help us speed up a lot of the processes. There's a lot of duplication at present, and this has resulted in a lot of time being consumed. Overlapping issues between the province and federal processes has cost time and a significant amount money. It has also reduced royalties and eliminated opportunities to get into production quicker and share benefits with other northern communities.

[Pamela Schwann]

If I might draw a comparison, for example, the Australian environmental assessment process just approved the world's largest uranium mine in less than one year. If we look at an environmental assessment process for a uranium project in Canada, we're looking at well over six years. So you can see that when a company is looking at investing, that's a very significant difference. And it's not that the Australians have any lower standards in safety or environmental protection.

Another example of regulatory infrastructure impeding resource development would be the proposed national recovery strategy for woodland caribou, because the model they have would not allow any further development in northern Saskatchewan, and it's a faulty model based on poor science.

Slide 27 shows the business case for investing in remote communities and essentially boils down to this: it's a very positive return on investment for government, for industry, for the communities in the area, and for the taxpayer. We see this by the successes of the Saskatchewan mining industry.

Finally, our recommendations are on the last slide. Our recommendation is to continue looking at investment partnerships with governments and industry, especially with respect to training to employment programs. Reward the successful programs, such as the Northern Career Quest and multi-party training plan. You need good labour market intelligence to do that. We'd certainly look at supporting the national sector human resource councils, MiHR, and encourage the government to look at key sectors that would look at refunding those national sector models.

In looking at investments, partnership investments in road and power infrastructures have been very critical, but a very good return on investment.

Our last recommendation is looking at regulatory reform and the importance that has on return on investment and in investing in northern communities.

Thank you, Mr. Chair.

[The Chair, Conservative, Ed Komarnicki]

Thank you for that presentation. Certainly we have heard about the regulatory process before, and it's good to hear it again, and electricity, power, and roads are important infrastructure for sure.

We'll now turn to rounds of questioning.

Ms. Hughes.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Thank you very much. We got that last presentation just as we walked in here. It was pretty in-depth. If you have any responses to some of our questions, I would encourage you to make a little noise so that we know you want to say a few words.

I had a conversation with a couple of Vale representatives yesterday, and I'm wondering about Thompson. You talk about your commitment to sustainable value-added jobs at all the Canadian operations. Because of the announcement in 2010 to eliminate the value-added jobs at the Thompson operation by shutting down the smelter and the refinery, with respect to the people who work there, are their skills...? The shortage you're experiencing right now, is that in the smelter and the refinery, or is it in the three mines, or is it a combination?

[Wayne Scott]

It's across all operations, both underground and surface plants.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

What is the shortage in the mines themselves? If you're looking at the refinery and the smelter, how many of those jobs...? Would the workers have transferable skill sets to move over?

[Wayne Scott]

Yes, absolutely. It's no doubt a challenge, the decision to close the smelter and refinery—the lack of feed, a few other factors. A significant proportion of our workforce can be eligible to retire in future years. Through our workforce planning analysis we're expecting no net loss of jobs at the moment. We can employ everybody elsewhere who's in when the surface plants close, and we are prepared to invest in the training of those individuals to work underground and in the remaining surface plants. So that's one of our major strategies, to take that existing workforce and reallocate throughout.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

On that note, because a lot of the smelter and the refinery will be transferred to Newfoundland.... Is that not correct? That part of the operation is going to be sent...for refining up in Newfoundland?

[Wayne Scott]

I might need to look to Ryan to help me a little bit with that. There is a feed that comes to Thompson from Newfoundland. That's one of the feed challenges that we have. By previous agreements, that feed will actually revert from the Voisey's Bay environment to the refinery that is currently being built in Long Harbour. That's one of the challenges.

We still have an active exploration program within Manitoba. We're looking at....

Ryan, you can probably speak a little better to this. There's an underground mine.

[Ryan Land, Manager, Corporate Affairs, Vale Canada Limited]

We're looking beyond 2015 at expanding our mining and milling. While we haven't been able to keep our smelter going, we will definitely have expanded mining and milling in the future. One of the things that we're doing in the interim is transitioning that current workforce in the smelter and refinery into our mining and milling operations. It's retraining, if you will. We'll still have significant production surface operations in the future. It just won't be smelting and refining.

There's actually a point in the future where we may have a workforce larger than the one we have now. The immediate challenge is that we need to bring in people to transition mining and milling employees away. That's a whole other skills and training conversation that we're having right now. Between now and 2015, we may actually see that we have more employees historically, and we know we're chronically 150 people short. The biggest threat to future projects for us is workforce.

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

You also talked about non-traditional pathways. Could you just elaborate on that and how the skills training kind of goes into that.