Indigenous and Northern Affairs Committee on Nov. 19th, 2009

[John F. Kearney]

Concerning the agreement on the expansion of the boundaries of Nahanni National Park, which was resolved, there was significant involvement by the territorial governments in the initiative from both the Northwest Territories and the Yukon government. The final boundaries were determined by negotiation involving the two territories and the federal government.

As to the current regulatory environment, as a mining industry we have simply lobbied the territorial government to make their views known; to add their weight, if you like, to the calls or the requirements for regulatory reform and regulatory improvement.

I want to emphasize that I believe everybody believes they're necessary, including the first nations. We deal a lot with first nations now, and they are equally frustrated with some of the delays and some of the processes that are going on—at least in our project, and I can only speak for our project. But the territorial government is not directly involved in the regulatory process, because it's a federal act.

[Earl Dreeshen, Conservative, Red Deer, AB]

What suggestions would you have for this committee, then, in order to streamline that process to minimize some of those barriers?

[John F. Kearney]

It's a large question. The view is that it requires the re-opening of the land claims agreement. But there are many areas in which improvements could be made without doing that. If the federal government asked the boards to develop their own regulations voluntarily, and if the boards agreed to impose timelines on the process, that would help. It would be a huge help if the federal government or the minister turned to the water board and the review board—and there is a way of doing this through the board forums—and suggested that they develop regulations with timelines.

The Auditor General, in her report, criticized the Department of Indian Affairs and and Northern Development for taking a hands-off approach to the boards. Having set them up, they didn't give them enough resources, and then they just left them to figure it out for themselves. They cast them adrift. She said they needed to get more involved, to help more. A number of things could be done by encouragement.

I would emphasize the importance of the political message. It doesn't cost anything to say it. It's a cheap solution, but it's one that needs to be heard.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Dreeshen.

We will now go to Mr. Gaudet.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chair.

Mr. Dreeshen suggested that you forward your recommendations to the committee clerk. I think that is a good idea. It's much easier when we have these recommendations in hand.

Mr. Kearney, early on in your presentation, you mentioned a zinc mine. You said your permits lapsed in 1988 or 1990—I can't recall the exact date— and that you had to reapply for permits in 2001. You now have seven operating permits, but the process isn't yet over. It makes no sense having to wait 20 years for a permit to operate a mine. What is the problem? Either there is a problem, or I'm missing something.

[John F. Kearney]

We agree.

[Roger Gaudet, Bloc, Montcalm, QC]

Could you give me a quick explanation?

[John F. Kearney]

The mine was built in 1980-82, and I believe you may have photographs of the mine as it exists today. In 1980-82, $65 million was spent in building the mine, which is a couple of hundred million dollars in today's money. For financial reasons, the mine did not go into production. It was abandoned for a number of years in the 1980s. During this time, the old permits expired and weren't renewed.

When our company acquired the property in the late 1990s, we carried out explorations. The new act came into force in 2000, and we then had to get permits under the new act. Our old permits had lapsed and it was necessary to get new ones, so we went through a process of exploration.

Our first permit was a permit for exploration, our second one was for exploration, our third was for underground development, and the next one was for a road. We had to keep going back for permits at every stage of the process. Each stage of the process required an environmental assessment, and each one took a long time. It took much longer, in our view, than it should have taken, particularly as the mine was already built.

Unfortunately, we got caught in a legislative problem. The new act dealt pretty well with new projects. It dealt fine with projects that already had permits—they kept going. But we fell in the middle—we had a mine already built and no permit. We got bogged down in having to re-permit, and we're still have to re-permit.

Part of it was because of the proximity of our mine to the Nahanni National Park. We got that resolved in June of this year. The mine is not in the park—it is excluded from the park. This has changed the permitting environment. For four or five years, there was a debate about whether it was going to be a mine or a park. At one stage, people wanted to stop the mine and build the park. But finally, as a result of a lot of negotiation and compromise by everybody, including Parks Canada, we got to a good solution. I'm hoping that with this out of the way, with new legislation and settled policy, we will be able to move expeditiously through the remaining parts of the permitting process. But it's still a long process.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you. We wish you the best of luck.

In your opinion, Mr. Balsillie, what type of investment should the federal government make to help you successfully carry out your green infrastructure project?

[Donald Balsillie]

Starting at $120 million.

[Roger Gaudet, Bloc, Montcalm, QC]

That's all right.

[Donald Balsillie]

A project of this nature has so many benefits to the region, to the community, to the governments. Any types of investments that we can acquire from the governments on this project would be very much welcomed. I indicated in our presentation that the economic benefits that are going to accrue to the north, and specifically to our region, during the phase of construction, as well as the injection of new dollars to the partners in this region from a project, is going to be such a welcome that's well needed in our part of the region. When you do have a project of this nature, it brings such benefit to a region that there's less dependency on government in the long run for different types of financial injections. So a front-end injection of a financial resource is going to have long-term impacts in our region for many years.

[The Chair, Conservative, Bruce Stanton]

Thank you.

Mr. Grabke.

[Daniel Grabke]

We're looking at some funding in order to make this a true infrastructure project. Rather than just putting up poles temporarily for the life of a mine, we're having something that's going to last at utility grade standards for future mines. We're having things that aren't financeable--you can't get the funding for that from a bank because there is no real customer--as well as developing the hydro plant to a size that maybe exceeds the customer base now, but would be available for the upside in the future.

[Roger Gaudet, Bloc, Montcalm, QC]

I'd like to know if that's included in the $120 million that Mr. Balsillie is requesting.

[Daniel Grabke]

That's in the $120 million.

[Roger Gaudet, Bloc, Montcalm, QC]

Thank you, Mr. Chair.

That answers my question.

[The Chair, Conservative, Bruce Stanton]

We have enough time left for two questions. Mr. Bevington will put the first one.

[Dennis Bevington, NDP, Western Arctic, NT]

Thanks.

Just getting back to this project, you're talking about a $120-million investment by the federal government. How much does a successful hydroelectric project increase the royalties from the mining that's going back to the federal government? Any investment that they put in the Taltson project is really a net gain for the federal government, is that correct?

[Daniel Grabke]

Yes, that's correct. We're looking at any of this as an at-risk investment, but there's definitely a payback. If no mines show up, if they don't last any longer, and that sort of thing, then it's a bit risky, it's certainly not financeable by conventional methods. But if a mine stays open one extra year, it's an incredible upside, both in taxes and revenue stream. We've heard from some of the mines that they're mining some of the high-grade pipes because their operating costs are so high. If they can ever get into the lower-grade pipes, they would be around for another 20, 30, 40 years—and power can do that change, that monumental shift in the lifespan of these mines—and then the royalties are for 40 years instead of dwindling down.

[Dennis Bevington, NDP, Western Arctic, NT]

Well, I think that's key. The federal government is not involved in this, and they're the ones that are making the money, likely, from the improvements to the mining operation.

This is the problem we have in the Northwest Territories. The Government of the Northwest Territories, if this were a province, would be very interested in investing in this project, because it's going to return more money to it. That's where the disconnect comes in advancing a project like this.

I wanted to ask Mr. Cazon a couple of questions. I understand how Nogha works now. Perhaps you could describe how you want your business to develop, what directions you want to take with the business, and how you see this matching up with the lifestyle of the community, because we've talked a lot in previous panels about lifestyle and the need to understand the human dimension of economic development.

[Gilbert Cazon]

Fort Simpson is a community of probably about 1,200 people in the wintertime, and it goes up to about 1,600 in the summertime. Most of our activities are in the summertime. We have a really good opportunity to capitalize on the Northwest Passage. It's going to be further north than where we are. It's going to be an opportunity in the future.

We're also going after green alternatives. We're trying to implement some of those green energy alternatives in some of the buildings and in some of our businesses. We're going in that direction because right now in our community the cost of energy is pretty high. The fuel they're using is fossil fuel. The plants are outdated. A lot of that energy is just going right back into the air through the pipes.

What we're looking at is capitalizing on the green alternatives, using some of those alternatives to make our energy a lot cheaper, and attracting businesses to our area. Once you have a lower cost for energy and a lower cost for food and transportation and whatnot, companies can come into our community and afford to wait for the big projects. Some of them have done that in the past. But right now the cost of living is really high. There is the cost of power and energy. Plus there are the services we need to access our community. Two times a year you can't access it. We have that infrastructure problem, because we have the river system.

There are major problems. We lack infrastructure. We need improved roads. The highways we have now are just for double axles. They're not for triple axles. B-Trains shouldn't be going down our roads. These roads should be upgraded significantly, because if you're going to be moving materials from the mines, you need heavy loads and roads that can hold the loads. We are going in that direction of green alternatives and anything that would enhance our business and make it more viable and environmentally safe and friendly.

[The Chair, Conservative, Bruce Stanton]

You have 30 seconds left, Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Mr. Kearney, I know you wanted to say something.

[John F. Kearney]

I just wanted to add to Daniel's response that from the mining industry's point of view, the mining industry will follow the infrastructure. If the power is already there, you will get more exploration, and that exploration will lead to more mines. It's the chicken and the egg. But the responsibility, the leading role, we would suggest, very much rests with the government. The federal government has to take a chance, I believe, and invest in infrastructure in the north. They have to move on and build roads and help build roads and help build power. The mining industry will play its part. I believe the mines will be found, but the lead has to come from government.