Indigenous and Northern Affairs Committee on June 16th, 2009

[The Chair, Conservative, Bruce Stanton]

Good morning everyone and welcome to the 26^th meeting of the Standing Committee on Aboriginal Affairs and Northern Development.

We are continuing our study on northern economic development.

This morning we welcome an excellent panel representing the industries, particularly in the north, and the non-renewable resource sector, which we know is important to the northern economy.

Members, you'll recall that our consideration today is in anticipation of a more comprehensive study of northern economic development.

Our witnesses today represent four organizations. We'll go down the list. Each organization is welcome to provide a ten-minute opening presentation. Because there are four here today, we will try to be strict and adhere to the ten minutes, so try to gear it to that. I'll try to let you know if we're starting to get close or going slightly over. When we go to questions from members, we will try to stay with five-minute question and answer periods, if we can, to get more questions in, considering the size of our esteemed panel here today.

We'll start off with and welcome Mike Peters, representing the Canadian Association of Petroleum Producers.

[Mike Peters, Manager, Northern Canadian Operations, Canadian Association of Petroleum Producers]

Thank you.

I'd like to thank the committee for the opportunity to present today.

The topic of northern economic development is one of great interest to the oil and gas industry when considering the current and future opportunities before us. I'd like to share with you today what we see as some of the opportunities and challenges around doing business in the north.

The Canadian Association of Petroleum Producers represents 130 companies that explore for, develop, and produce more than 90% of Canada's natural gas and crude oil. CAPP members comprise the majority of companies that are active in the north, both exploring and producing.

CAPP believes this is a timely discussion. The oil and gas sector is poised to commit investment in the north, but it is still assessing returns and risks, among which regulatory risk is becoming the most daunting. Similarly, territorial and aboriginal regional governments are poised to make the most of economic development. Efforts to improve the system now could have much more impact than if they are deferred, and continuing with the status quo carries serious risks for the expectations and aspirations of northerners and all Canadians for northern Canada.

The most recent estimates by the NEB indicate that there are potential resources of 122 trillion cubic feet of gas and 6.7 billion barrels of oil in the north. To put these numbers in perspective, they are comparable to the remaining conventional reserves in the western Canada sedimentary basin. There remains an ultimate potential of 140 trillion cubic feet in the WCSB, and the potential of oil in the north is equivalent to the remaining conventional reserves in Alberta. There are significant resources awaiting development in the north, and more to be found through increased exploration.

Despite this, the north continues to see low levels of activity. On average, about 15 wells per year have been drilled over the last decade, with a corresponding annual investment of roughly $400 million to $500 million. These numbers in some ways understate the problem, as many of these wells are on existing fields and not indicative of new exploration. Certainly the numbers are disproportionate to the potential and compared to the provinces, where thousands of wells have been drilled and billions invested right up to the NWT border.

To date, industry growth has been stymied by various risks of doing business in the north. The risks I'll speak to today are regulatory complexity, an imbalance between surface and subsurface rights, incoherence in policy and decision-making, uncertainty related to benefits and consultations, capacity challenges, and planning initiatives that foreclose future industry activity. There are, of course, other factors that will affect industry investment. Geology, commodity price, and access to markets are all important, but the ones I've highlighted are ones where government can exert the most positive influence.

The effect of the political and regulatory evolution of the north has been to move from a unified system of oil and gas administration to a fragmented one. Each region has a different array of authorities and processes involved in decision-making and co-management of resources. This places a heavy duty on operators.

We understand that many elements of the regulatory system are tied to land claim settlements. We do not want criticisms of the regulatory system to be understood as criticizing those settlements. CAPP supports the land claims settlement process and respects the rights that have been enshrined in the land claims. However, in considering the regulatory system that has been established to implement those claims, we believe there are opportunities for improvement.

It should be possible for an operator to gain familiarity with the process so that requirements can be understood and met, and authorizations approved, without undue effort by the operator, the community, or the regulator. Too often we find that this not the case. Similar applications receive different treatment, not only among regions but even within them, such that operators cannot anticipate how their applications will be handled and plan effectively. This increases the risk inherent in northern resource activities. This risk is out of proportion for a Canadian jurisdiction and is not contributing to better or more effective and efficient decision-making. The economic impact is magnified in northern Canada, because locating and monetizing non-renewable resources remains the primary and in some areas the only opportunity for wealth creation.

Current arrangements create an imbalance between surface and subsurface interests. Applicants have no recourse when negotiations come to an impasse, for example, over benefits or terms of access. Proponents are trapped in a process where there is no way to advance resolution, other than by making concessions. Dispute resolution was provided for in the land claims settlements in the Mackenzie Valley, but no such mechanism has been introduced.

Obviously northern governments serve a wide range of interests. However, there are risks created when resource management policy becomes a secondary concern in processes driven by other priorities and interests.

Both INAC and the Government of the Northwest Territories have stated positions in favour of sustainable economic development, with a prominent role for non-renewable resource activity. In many processes sponsored by government, however, resource considerations are absent, and decisions made at the operational level do not reflect the broader vision.

Proponents continue to face onerous and variable demands from the communities and from boards regarding benefits. We believe that a lack of transparency with respect to benefit arrangements does not engender confidence in the process nor a complete understanding of the overall burden placed on industry. Benefits accrue to communities and regions in multiple ways, through benefits agreements, direct and indirect employment, access fees, and revenue sharing under the terms of land claim settlements. Communities are not always well informed on the full range of benefits, and this leads to circuitous discussions and escalation of demand. At the same time, companies need to appreciate their obligations.

Further, consultation requirements are onerous and inefficient. Consultations are required for so many matters that communities are easily overloaded and confused; neither are consultation requirements in proportion to the scale of the proposed activity. A common complaint about northern processes is that the system does not have the capacity to handle more than a few applications at a time. CAPP's view is that capacity is not simply a matter of resources, but has to do with available expertise, flexibility, timeliness, and how resources are deployed. Industry can attest to indications that capacity is inadequate, in that the time required to process applications is increasing rather than decreasing, as would be expected; there seem to be more frequent delays and interruptions attributable to problems of availability--for example, getting board quorum; and there is a poor understanding of industry practices among northern regulators.

Various planning processes are under way across the north, be it through land use planning or other initiatives. Industry supports the concept of land use planning, except too often in the north it has been framed as a conservation process, not as one about balancing land uses.

Various reports have been prepared recently that outline some of the solutions to the problems identified above, be they the Auditor General's reports or the recent McCrank report called The Road to Improvement. I'd be happy to provide your clerk with a copy of our submission to Mr. McCrank, which outlines some other actions that we feel are worth consideration. I won't repeat all the good recommendations that have been made over time with respect to improving the system, but the following are a few that I believe are worth highlighting.

First is a commitment to implementing a better and more functional system. A range of opportunities exist to improve the system through both small-scale change, such as administrative arrangements between regulators, and more fundamental change that may require legislative change. Various reports have identified them. What is needed is a commitment to the implementation of recommendations that have been identified over time and the accountability to deliver on them.

Balance surface and subsurface rights. There is an opportunity for the federal government to introduce surface rights legislation in the NWT, provided for in the land claims of the Mackenzie Valley, that will give companies increased certainty and confidence that they will be treated fairly and transparently.

Build coherence between objectives and practice, and create accountability within the system to deliver on those objectives. Too often the message of enabling economic development is lost, or the assumption appears to be that it will happen inevitably. This is not the case, as the last several years have demonstrated. Leadership is necessary to drive change and enable the opportunities for development that exist.

Clarify benefits and consultation expectations. Clarity of roles, responsibilities, and expectations for all stakeholders would be beneficial.

Address capacity challenges. In addressing capacity, the challenge is not only to provide additional resources through funding or training, though these are beneficial. What is needed is consideration of ways to consolidate and streamline such that the technical resources and expertise available are used to greatest effect.

Balance land use planning. Planning processes need to be as much about enabling responsible access and development as they are about conservation, if economic development is desired.

I'd like to thank the committee for the opportunity to present today. The resource potential exists for a viable and productive industry in the north that contributes to a sustainable economy while protecting the northern environment, contributes to the development of northern communities, and helps promote Canada's sovereignty in the north, but these opportunities may not be realized without addressing the challenges identified above.

I'd be pleased to take any questions from the committee.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Peters.

Now we'll go to Mr. Randy Ottenbreit. Randy is the development executive with the Mackenzie gas project.

Mr. Ottenbreit, did I pronounce that correctly?

[Randy Ottenbreit, Development Executive, Mackenzie Gas Project, Imperial Oil Resources Ventures Limited]

You're pretty close.

[The Chair, Conservative, Bruce Stanton]

Thank you. Please proceed. You have ten minutes.

[Randy Ottenbreit]

Good morning. As the chair said in his introduction, I am with Imperial Oil and working on the Mackenzie gas project.

Imperial leads the group of companies that have proposed this project. The subject of northern economic development and the opportunities and challenges associated with development are of particular interest to the proponents of the Mackenzie gas project. I'm pleased to be able to provide you our perspective on this subject, based on our experiences.

The Mackenzie gas project would develop natural gas found in the Mackenzie Delta region of the Northwest Territories and transport it to existing pipeline systems in Alberta for transport and use throughout North America. The project consists of five components.

The first three components are natural gas wells and field production facilities at three natural gas fields discovered in the 1970s. Natural gas production from these three fields would total 830 million cubic feet per day.

The fourth project component is the Mackenzie gathering system, which consists of 190 kilometres of buried gas-gathering pipelines, a natural gas processing facility near Inuvik, and a buried natural gas liquids line to Norman Wells that is 450 kilometres long and 10 inches in diameter.

The fifth and final component is a buried natural gas pipeline to northwestern Alberta that is 1,200 kilometres long.

The amount of natural gas transported through the Mackenzie Valley pipeline can be increased to 1.8 billion cubic feet per day to accommodate other discoveries of natural gas.

The proponents of the project are Imperial Oil, ConocoPhillips Canada, Shell Canada, ExxonMobil Canada, and the Aboriginal Pipeline Group, or APG.

The APG was formed in 2000 and represents the ownership interests of the aboriginal people of the Northwest Territories in the Mackenzie Valley natural gas pipeline. TransCanada Pipelines, which is funding the APG's participation in the current phase of the project, has an option to acquire a future interest in the Mackenzie Valley pipeline.

The Mackenzie gas project is an economic development opportunity that would provide a number of significant benefits. It would provide a new source of clean-burning fuel for North American consumers. It would open up a new geologic basin, the Beaufort Delta and central Mackenzie regions of the Northwest Territories, to exploration and development.

It would create an economic base in regions of the Northwest Territories that currently have none. It would provide future revenues to governments. It would create thousands of jobs across the country during each of the project's four-year construction periods and hundreds of jobs during each of the more than 20 years of operating life.

It would advance the interests of northern aboriginal people through the provision of preference for jobs and business opportunities as well as their participation in the project through the Aboriginal Pipeline Group. As well, it would increase gross domestic product during the life of the project, primarily in the Northwest Territories.

In advancing the Mackenzie gas project, we have dealt with a number of challenges. These challenges are not unique to the Mackenzie gas project and would be shared to some degree with other northern development projects. I shall speak to three of these challenges.

The first challenge to economic development in the north is the physical environment. The Northwest Territories is a remote, harsh environment that lacks infrastructure.

For the Mackenzie gas project, this means that a lengthy pipeline must be built to transport natural gas to southern markets. Over $2 billion in infrastructure, such as camps, roads, docks, airstrips, and granular sources, must be built. Most construction activities can only take place during the winter when the ground is frozen, lengthening the construction period and increasing construction schedule risks. Also, workers and equipment must be transported great distances.

The implication of these physical challenges is that they make the Mackenzie gas project more costly. This is significant, recognizing that Mackenzie gas must be delivered to North American markets at a cost that is competitive with other supplies of natural gas, including liquefied natural gas, shale gas, and natural gas from Alaska.

A second challenge to economic development in the north is the regulatory process, which is largely the creation of federal legislation. It also reflects land claim agreement provisions. The regulatory processes that apply to the Mackenzie gas project overlap with one another. They are complex, and they have uncertain timelines. To address these concerns, 17 regulators developed a plan in 2002 to cooperate with one another and to coordinate their processes.

By way of example, they agreed to consolidate what would have been three separate environmental reviews of the Mackenzie gas project into one review conducted by a joint review panel. This was a positive development. However, while the time for the panel to conduct its hearings and write its report was to have been about 10 months, the panel's public hearings lasted 21 months and the writing of the panel's report looks like it will take another 24 months. As a result, the actual time for the hearings and the report writing will be more than four times what was originally expected.

In addition to environmental impact assessments, construction and operating activities will require thousands of permits from a number of regulatory authorities. The review processes for such permit applications range from simple and straightforward reviews to complex and time-consuming reviews. In addition, our experience with some of these permitting processes has been that they can be used to leverage non-regulatory matters such as the awards of contracts. On such occasions, a group dissatisfied with the award of a contract has initiated an environmental review of a permit application. This has delayed some of the planned activities. What this illustrates is that the northern regulatory review process can be used to leverage commercial matters, creating unique uncertainties and risks.

A third challenge to economic development in the north is the absence of surface rights legislation. Land claim agreements establish ownership of surface and subsurface rights. With respect to surface rights and the ability to access surface lands required for economic development, the land claim agreements provide for surface rights legislation and the establishment of surface rights boards. However, these provisions have never been put in place. As a result, proponents have had to negotiate agreements with private landowners, without access to a template or standard. The resulting process of obtaining surface access agreements can be protracted.

In summary, the Mackenzie gas project is a significant development opportunity for the north—it is located in a part of the Northwest Territories that does not currently have an economic base. Our experience in advancing the project highlights some of the challenges associated with pursuing economic development in the north.

Thank you.

I'm available to respond to questions.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Ottenbreit.

We will now proceed to the representatives from Yukon Chamber of Mines. Ms. Derome, are you leading off?

I welcome Mr. Kent as well. He's from the Yukon organization.

Ms. Derome.

[Claire Derome, Vice President, Yukon Chamber of Mines]

Thank you for allowing us to present these few comments on the situation of the mining industry in the Yukon.

The mining industry in the Yukon is experiencing a renaissance in 2009, which is expected to be the first year in a long time in which mining will be the number one private sector industry.

Mining now represents 6% of Yukon's economy, compared to 3% in 2006. Mining will continue to grow in the coming years.

We have only one operating mine, Minto, which exports copper and gold. There are two projects that are building their infrastructure in order to start production in 2010. Two more projects are very advanced and should be making production decisions in the next two years.

Placer mining continues to be a steady contributor to the Yukon economy, as over 100 operations provide employment for 400 to 500 Yukoners. There are a number of world-class deposits of coal, iron ore, precious metals, and base metals in the Yukon that are awaiting the right combination of proper market conditions and infrastructure to be developed.

There is significant employment in mining in first nations communities. The Minto mine, for example, has over 200 employees, and more than 30% of that workforce are first nations people. The Wolverine and Bellekeno mines currrently being developed are also setting very good standards for first nations involvement.

Relatively speaking, mining is more important to Yukon's economic future and self-reliance than fishing is for the Maritimes, the auto sector for Ontario, or oil and gas for Alberta, but at the same time that mining is making a strong contribution to Yukon's future, the industry is facing important challenges. We will focus on two of them today.

Land tenure and regulatory certainty are currently diminished by the land use planning process that is under way. Lack of planning and lack of significant investment in economic infrastructure, mainly for energy, roads, railways, and ports, are also curtailing the potential of Yukon.

[Scott Kent, Executive Director, Yukon Chamber of Mines]

I'll just take over at this point.

My name is Scott Kent. I am a long-time Yukoner and a former cabinet minister with the Yukon government. As well, I currently am the executive director of the Yukon Chamber of Mines and the Klondike Placer Miners' Association.

As Claire mentioned, land use planning is an extremely important issue for our organizations right now, as two of the eight regions in the Yukon either have a land use plan recommended to the Yukon government or one that's at the draft stage at the planning commission. What we've witnessed is land use planning becoming a protected area strategy, leading to recommendations for large-scale withdrawal of land from responsible development.

With the North Yukon plan now before the Yukon cabinet, over 50% of the North Yukon region has been recommended for withdrawal from development. The plan for the Peel Watershed, an area the size of Scotland, currently recommends 63% of that land base being withdrawn from new mining exploration, which is of extreme concern to us.

We'd like to make sure that mining is respected in current and future plans and that it adheres to chapter 11 of the umbrella final agreement with first nations and the Yukon.

The YESAA process, or the Yukon Environmental and Socio-economic Assessment Act, is now undergoing a five-year review. It's important that class one exploration activities in the Yukon remain exempt from YESAA assessments, because this would continue to maintain a level playing field for Yukon mining companies. Canada is one of the three parties, along with the Yukon government and the Council of Yukon First Nations. We would like to ensure that any recommended changes are given full and fair consideration in terms of their ramifications for first nations, the environment, and the economy.

Now I'd like to speak a little bit about some of the infrastructure that is being planned or under way in the Yukon territory, starting with the electrical infrastructure, the electrification of Highway 37 in northern British Columbia, commonly known as the Stewart-Cassiar Highway. If we were able to connect the Yukon grid to British Columbia, that would certainly be ideal for us. It would allow the Yukon to develop power generation for a much larger market. It would also allow for the potential import of power to meet the needs of our expanding mining industry.

This current initiative to expand the B.C. grid to Dease Lake, if completed, would mean that connecting to the Yukon would become feasible; that is, a project that could be accomplished. The British Columbia government has committed $10 million to complete the environmental assessment process for the power line, and has committed a further $250 million to construct the line if additional partners can be secured.

I would expect the Government of Canada to hear from the project lead on that, the Mining Association of British Columbia. Canada could certainly play a significant role in helping the Yukon to partner with British Columbia in developing this key power infrastructure for the north.

I'd also like to speak briefly about the Alaska Highway pipeline project. About 760 kilometres, or 30% of the routes, would be in Yukon territory. There's a proposed 42-inch to 52-inch-diameter pipe, with a capacity to deliver 4.5 billion to 5.5 billion cubic feet per day of natural gas to southern markets, and also to gather Yukon gas along the route. Of course, we would be happy to see the Mackenzie Valley project proceed as well, as some of our natural gas basins are close to the Mackenzie Valley pipeline.

The construction and operation of the Alaska Highway project are expected to generate up to 375,000 person-years of employment within the Yukon and Canada over a 24-year period, and pump billions of dollars into the Canadian and Yukon economies. This project could benefit the Yukon mining industry by providing a lower-cost, clean source of energy to mines along the route.

One of the issues identified by the Yukon government, and certainly one that's shared with the Mackenzie Valley project, is regulatory certainty in Canada. It needs to be addressed to ensure that this project, as well as the Mackenzie Valley project, can move forward.

[Claire Derome]

Thank you, Scott.

On road infrastructure, I have some comments. Planning for and investing in road infrastructure serving multiple users and multiple mines is a required next step for the development of key mining projects under review in the Yukon. The continuation of the Casino Trail, started in the late 1980s, would reduce the operating cost and ensure the development of large copper and gold reserves outlying north of Carmacks. Investment in these mining projects would exceed multi-billions of dollars in capital, provide jobs at the mines to over a thousand Yukoners for many decades, and create multiple economic spinoffs.

A similar economic case exists for the world-scale lead and zinc, and for the tungsten deposit accessible from the Canol corridor in north-central Yukon. Here again, thousands of direct and indirect jobs in economic spinoffs would result from the development of these projects, which all are constrained by road access at this time. We would hope that Canada would continue to support the Yukon's investment in key road-to-resource infrastructure. Investing today would help leverage and would help direct significant private investment towards Canada and the Yukon, because we're competing in a world market for this kind of investment.

A couple of years ago the Yukon government, with the State of Alaska, undertook a $5 million study to look at the feasibility of a rail and port link from Alaska and B.C. to the Yukon. The economic impact combined for Alaska and Canada would provide a 50-year additional economic output exceeding $170 billion U.S. and over 25,000 new jobs. One should not forget that distance-wise, the Yukon beats Brazil and is at a similar distance from China as Australia or British Columbia. Yukon could export coal or concentrates in metals competitively to that market through Alaskan ports.

We hope that the Canadian government would maintain contact with the U.S. administration and the Alaska congressional delegation for this project for potential U.S. government funding that is already under discussion.

I'd like to conclude by saying we hope to see broad support for investment in infrastructure. Investing in northern infrastructure is investing in the north's future and in Canada's sovereignty. This type of investment would provide long-term benefits not only to the north, but to all Canadians. It would change the face of the north, similar to what the Klondike gold rush, the construction of the Alaska Highway, or the discovery of diamonds in the Northwest Territories have provided. We will be submitting a proposal to the new northern development agency in conjunction with our counterparts from the Northwest Territories and Nunavut to fund a study on the economic impact of infrastructure investment north of 60.

Thank you for your time.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Derome and Mr. Kent.

We will now hear from Mr. Covello.

Mr. Covello and his colleagues are here representing the NWT and Nunavut Chamber of Mines. I presume, Mr. Covello, you're going to lead off. If you want to acknowledge and bring your other colleagues into the discussion, you're welcome to do that as well. You have ten minutes.

[Lou Covello, President, NWT and Nunavut Chamber of Mines]

Thank you.

My name is Lou Covello. I'm a consulting geologist and president of the NWT and Nunavut Chamber of Mines. I'll be addressing the first four points in the handout, and Pamela Strand, who is a director and vice-president, will handle the last three items.

In 2008 there were five producing mines in the NWT and Nunavut, with a gross value of production of $2.16 billion. This represents about 45% of the GDP of the Northwest Territories. At the Ekati and Diavik diamond mines, direct and indirect employment totalled 2,250 people over the last four years. Of these workers, 70% are northerners, of whom 40% are aboriginal. Prior to 1996, none of these jobs existed.

Exploration and production within the mining sector spur education and economic development in the communities. An example of this is the community of Behchoko, one of those most affected through employment by the opening of the Diavik, Ekati, and Snap Lake mines. Prior to 1998, post-secondary education amounted to one or two high school graduates in that community. Ten years later that has grown to approximately 200 who are in one phase or another of post-secondary education.

The northern mining industry works to encourage northern aboriginal companies to participate in the mining business. One example is Tli Cho Logistics, a company that's wholly owned by the Tli Cho. It was formed in 1999 and is currently the recipient of the PDAC aboriginal achievement in mineral industry award.

In the 1920s and 1930s mining at Great Bear Lake and petroleum development at Norman Wells first opened up the north to industrial development. The development of most of the infrastructure is now in place in the Northwest Territories. The barge system on the Mackenzie River, which is the longest in Canada, the railway north from Alberta to Pine Point and Hay River, the highway to Yellowknife, and the Ingraham Trail east of Yellowknife were all built to serve the mines of the day. Currently there are no highways in Nunavut.

All the hydro power in the Northwest Territories--Bluefish, Snare River, and Taltson--comes from dams built by the mines to service their mines and the surrounding communities. Pine Point mine was responsible for the railway from northern Alberta and connects the port of Hay River. Pine Point also led to the development of the hydro dam on Taltson River and the distribution network that services the communities south of Great Slave Lake.

The Nanisivik mine on Baffin Island established a community, a jet airport, and a deepwater port. It is currently being used as a northern strategic base by the federal government. The Polaris mine was the most northerly mine in Canada and the most northerly metal mine in the world. It also flew the largest Canadian flag on its concentrator roof. Our ice flow technology is world-renowned and was developed to support northern mines at Great Bear Lake, Lupin, and the diamond mines. Port Radium mine on Great Bear Lake drove development of the Northern Transportation Company. It is now aboriginal-owned. It carries freight up the Mackenzie to the Arctic coast communities.

It's time for a new vision for transportation and power systems to serve the developing north. The few people who have it, the three northern territories, wouldn't fill a football stadium. They can't be expected to pay the cost of developing it. Imagine the north as the prairies in 1880. Only a few people had ever seen the prairies, but some saw the benefit of the railway as a way to join the populated east and west coasts.

There are currently over 30 undeveloped mineral deposits in Nunavut and the Northwest Territories. They have an aggregate gross value in excess of hundreds of billions of dollars. Some of these deposits could see production cycles lasting more than 100 years. All of these deposits would be in production today if they were located in Ontario or Quebec.

The north needs a major investment in hydro and nuclear power in order to facilitate the orderly development and maximize the benefits of Canada's northern mineral endowment. If we are ever to get beyond gold and diamonds and able to produce base metals, we need roads, ports, railways, and all of the other things that say we are joined to Canada. The NWT and Nunavut Chamber of Mines has met with the Yukon Chamber of Mines and we have agreed to jointly seek a study of northern infrastructure.

Pam.

[Pamela Strand, Vice-President, Nunavut, NWT and Nunavut Chamber of Mines]

Thanks, Lou.

I'm going to cover land claims and a few points on regulatory issues and then conclusions.

In Nunavut about 80% of the population is Inuit, and the land claim agreements were signed in 1993. Since then, industry has been actively engaged with the Inuit on their wholly owned lands, and several very successful benefit agreements have ensured employment, training, and business opportunities that flow to the Nunavut residents. We have seen a downturn in the major mining centres in Nunavut since 2000, such as the closure of the Nanisivik, the Polaris, and the Lupin mines. We have seen an exploration upswing. Last year more than $200 million was spent in the Nunavut Territory alone. Of course we have had a recent meltdown, but exploration is continuing. The Hope Bay and Meadowbank gold mines as well as the Baffinland iron mine are currently being developed. There are lots of other new excitements on the scene in Nunavut. That's the settled part of the two territories.

In the Northwest Territories about half the population is aboriginal, and there are four settled land claims. There are still two areas that remain to be settled. The Chamber of Mines believe that this is an important initiative to make progress on these claims and reach fair settlements. Not only will this provide comfort to the aboriginal people involved, but it will also clarify land ownership issues and greatly assist both the residents and the mining industry to form the necessary agreements to move these territories forward.

In order to maintain a positive investment climate for northern development and aboriginal participation, we need to talk about the regulatory environment. In the north this regulatory environment is complex. The NWT and Nunavut Chamber of Mines have consistently made it a priority to take a useful role in bettering the regulatory process for mineral exploration and mine development in the NWT and Nunavut by actively participating in a development and review of the applicable legal and regulatory structures.

Examples include our submissions to the northern regulatory improvement initiative study, authored by Neil McCrank, plus the recent Nunavut Land Use Planning and Assessment Act. I'd like to highlight a few of our conclusions that were included in the joint industry submission to the McCrank review.

Firstly, on board capacity, we need to ensure that the boards have structured plans for orientation, training, and continued education for each board member who is appointed.

Also, on aboriginal and community consultation, there is a need for clarity with respect to this issue.

Impact and benefit agreements continue to present significant challenges for proponents, communities, and regulators alike. The chamber believes an official policy on the scope, nature, and purpose of these agreements would clarify the overall process.

Also, adequate resources should be made available for legislative processes. We've recently seen a draft of the Nunavut Land Use Planning and Impact Assessment Act. We're very happy to see this move ahead, but we need to qualify that due consultation and consideration for the necessary amendments need to be included. This will need time and resources allocated, because the process is complex and challenging.

We also support what the previous speakers have talked about with respect to land use planning. Government needs to take a balanced approach. This is a multi-stakeholder process, and we believe there should be adequate representation from industry in this process from day one.

Let's talk a bit about Arctic sovereignty and Canadian northern sovereignty. We believe that industry can play a key role in Canada's northern sovereignty. This comes at no cost to you, because industry is pretty much self-funding. We bring our own funding once a deposit is proven. The Polaris and Nanisivik mines, as we've heard, were some of the most northerly mines in the world. Believe me, these are ordinary Canadians doing ordinary things in Canada's north. It's part of our job.

In order to keep the companies there, we do have to address the regulatory issues I spoke about, but we also do need ongoing geoscience funding. We were happy to see the Government of Canada's investment in the gem funding, which amounts to about $100 million over five years for northern geoscience activities.

[The Chair, Conservative, Bruce Stanton]

Ms. Strand, can you wrap up, please?

[Pamela Strand]

In conclusion, we believe that the mining industry will be a sustainable industry for the north and that at this time it is the best opportunity for economic viability.

Thank you for your attention.

We welcome any questions.

[The Chair, Conservative, Bruce Stanton]

Thank you to all of you for your presentations.

We will now go to a first round of questions and answers. I would remind the members that they have only five minutes. The first question will be asked by Mr. Bagnell.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you all for coming.

I'm the official opposition critic for the north, so you all fall within my territory--all three territories. It's great to have you here.

Last fall, when people were talking about the budget, all they were talking about was manufacturing and the auto industry. I wrote to the Minister of Finance and said that in the north, mining and tourism are important, and I was delighted that those showed up in the budget. So it's great that you're all here.

I have one question for each group, so try to make your answers not too long so that I can get all my questions in within my five minutes.

Trevor and Lou, the day before yesterday, the Government of the Northwest Territories and the federal Minister of the Environment had a big conference announcing the Nahanni National Park. In fact, there's a celebration today at 5 p.m. at the Chateau Laurier and at 7:30 at D'Arcy McGee's, across the street. You should probably go.

Should we rush that through this week? Do you have any concerns about that? We haven't heard anything negative about it.

[Lou Covello]

I believe that the expansion of the park is a mistake. I believe that in the future we're going to regret it. We have to realize that national parks are forever, and they're taking an area away from the local people that is roughly two-thirds the size of Nova Scotia. Part of that area, at least, has a very high potential for mineral deposits. I think we've rushed into this.

Right now, the Northwest Territories has about 28% of its land area permanently alienated through parks or protected areas. The next highest jurisdiction is B.C., at 9%.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you.

Mr. Peters and Mr. Ottenbreit, a number of years ago the independent gas analyzers, the people who analyze demand, suggested that there was more than enough demand for both the Mackenzie Valley and Alaska Highway pipelines, especially with the demand in the U.S. for power. I'm assuming that the situation remains the same. As long as they're not both built at the same time, it doesn't matter. Whoever gets through the process first should just build their pipeline, and we should have both of them. Is that the opinion of both of you?

[Randy Ottenbreit]

We're of the opinion that the North American market is sufficiently large to accommodate gas from both northern sources, yes.

[Larry Bagnell, Liberal, Yukon, YT]

What do you think, Mr. Peters?

[Mike Peters]

I would agree with that.

[Larry Bagnell, Liberal, Yukon, YT]

Mr. Kent and Ms. Derome, can you tell us about taxation? What can the federal government do to help the mining industry?

I am thinking particularly of adding such things as consultation, the cost of environmental preparation for exploration, eligible exploration expenses, and other things the federal government could do, related to taxes, to help mining.

[Claire Derome]

As you know, in the north we have a very small base, and in the north we cannot provide a significant tax advantage to the people who live in the north, as Ontario or Quebec can. They can supplement flow-through, for example. At the start, when we're raising flow-through money for the north, we're at a bit of a disadvantage. Because consultation and the regulatory process are such a large part of the cost now of doing business in the north, if they were eligible for flow-through funding, that would certainly be a big help.

[Larry Bagnell, Liberal, Yukon, YT]

Thank you.

Could you comment on the Alaska Canada railway?