Natural Resources Committee on June 1st, 2006

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chairman

Thank you very much for coming.

I'm going back to some of the HR issues, because it's intriguing to me that every industry that we've seen to come in and have a presentation, whether that be the energy industry, the utility industry, etc., they all point to these labour shortages coming out over the next 10 years and 50% of their resources retiring. What strikes me is that 60% of this workforce will require some level of post-secondary training, which means 40% does not, which is in some cases a positive thing for us.

What are some of the things the industry has been doing to work with educational institutions to give these projections? If I look at your cycle, R and D leads to finds, which leads to mining, which leads to human resource requirements. If we're looking at seven to ten years out, what have you been doing actively with the various educational institutions and provinces to give them these projections so they can move forward on them?

[Gordon Peeling]

I will start on that.

The Mining Industry Human Resources Council study looked at what the school system could deliver, and they were part of the study that resulted in those numbers. Because education is a provincial responsibility, a lot of the direct industry connection in Alberta, support for the University of Alberta, the school and training programs, are done at that level, just as they are done at that level in British Columbia, Ontario, etc. Sometimes the challenge is what is the roll-up of all of this and will it be adequate to meet the needs, and what is the labour mobility that results in being able to move labour to hot parts of the economy, as we see in western Canada and the north.

We are clearly working with the federal government and our aboriginal communities, because one of the real long-term needs is greater participation in post-secondary education at the aboriginal level in those skill areas such as mining engineering, geological sciences, environmental sciences, biological sciences, etc., if they're going to be part of a future workforce.

At the same time you've seen huge success, and I'll use Fort McMurray and the NWT as examples, where already through apprenticeship and training programs and even basic skills, reading programs, improving those sorts of skills simply for health and safety reasons in many instances, have resulted in entrepreneurial spin-off activities, which in and of themselves also create future job opportunities for our aboriginal partners. That's something we have to continue to assist and support.

But the educational side has been a tougher challenge just because of the nature of the responsibilities at the educational level, the fact that many operations connected in the first instances at the provincial-territorial level, and there is that sort of national overview that is sometimes a challenge.

[Anthony Andrews]

The exploration industry has a real concern about the supply of geologists graduating from Canadian universities. We are already experiencing shortages, and we have been for a number of years.

First of all, we are trying to create awareness of this industry---geology, earth sciences, the relationship between mineral resources and society---through a program we call Mining Matters. This program is designed by teachers and it assists grade 3 and grade 7 teachers in fulfilling their curriculum requirements. We're trying to create an awareness at that level.

But as I said, we're concerned about proper training of geologists coming out of universities. For a number of years we have had people graduating in geology who haven't had any experience in the field. When I went through the system many decades ago, we had a choice of jobs in the field during the summer, and by the time we graduated, we had some pretty significant experience.

So PDAC is contemplating a comprehensive program that looks at awareness and training. We're looking at the possibility of developing a centre that specializes in exploration in Canada--and Laurentian University is high on our list of consideration because it has already started to move in that direction--just to make sure at least one of the 45 universities in Canada to have a geology department can help us get the kinds of explorations we need graduating from geology.

[Gary Nash]

I have just a very quick statement.

Recently we've worked with the Ontario government, and a few months ago we produced a video about geology, mining, the whole process, for the benefit of aboriginal communities to stimulate some of the younger people's interest in the field. It's in six languages, not only English and French but Cree, among others.

The other thing we're completing with PDAC and the mining association is a toolkit for aboriginal communities. We've set up a small aboriginal group in my area, and in response to requests from aboriginal communities, this group is using the video to teach them about opportunities in mining.

[Gordon Peeling]

Could I make just one final comment very quickly?

Both universities and colleges are on the board of directors of the Mining Industry Human Resources Council. That's a direct connection to make sure we're all on the same page and working together.

In future, I might recommend Paul Hébert, executive director of the Mining Industry Human Resources Council, as a good witness to provide details of their study on the needs of the industry.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Do I have any time left?

[The Chair, Conservative, Lee Richardson]

Yes. Really short, Mike.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay. I could go on at length about my frustration with taking the trades out of schools across this country. But having said that, we're putting some practices in place to generate new apprentices coming out of the system.

Will apprentices be able to fit the mould over the next little while? One of the concerns people have is that we put them through this apprenticeship program, but nobody will hire them.

[Gordon Peeling]

I'll start. I think apprenticeship programs are going to be hugely important in meeting this challenge.

The other challenge that goes with that is things like the red seal program, so we have mobility and recognition of credentials across the country.

The challenge companies often have is that no sooner do they train apprentices than they're snapped away. We're robbing Peter to pay Paul at the moment, and this always calls into question the amount of money companies should put into apprenticeship programs if they can't retain the apprentices at the end of the day. The problem you allude to is equally challenging during tougher times.

But if we have people going into apprenticeship programs, they are certainly going to have jobs.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Ms. Kuyek, very briefly.

[Joan Kuyek]

I wanted to very briefly say that there is interest in a number of aboriginal communities for taking on this work, but when people get into the workplace, they often don't want to stay. There are a number of reasons for that.

The investment has to be not only in providing opportunities, but in making sure things don't suffer at home. There are opportunities for things to be done in a culturally appropriate manner. Instead of being given what I would allege is somewhat propagandistic information about how mines operate, it should be more realistic about how it's going to be in people's traditional territories and what that's going to mean for them. It would mean that when people get into the industry, they are less likely to drop out again.

As far as providing education in the school system goes, some of the work that has been done around Mining Matters is extremely good, with a very good geological component. There are pieces of it that are again propagandistic and that I think need to be analyzed and looked at properly.

When we're talking about education, we want people who have critical thought and can look at things in a balanced way. I think part of the problem in getting people interested in the industry in a way that's going to last and provide lasting sustainable development in people's communities is in making sure that different points of view are presented to people at the time.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to proceed with the second round. I would again ask for everybody's cooperation in trying to keep it tight in terms of the questions and answers so that we are able to cover a broad range of questions and get everybody in.

I will now go to round two and begin with Mr. Tonks.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you, Mr. Chair.

Thank you to the deputation for being here.

Mr. Chair, would the committee be interested in exploring, if you'll pardon the pun, the capital side of exploration and the interface with refining and processing?

The issue that has more recently evolved is related to “patriating” capital. In a global situation, we have more recent examples of Chinese state-owned corporations that are vying to use capital to take a large percentage of the refining and processing of national resources. Would you like to take the opportunity to give us some direction?

I note that while you've been concentrating on exploration, you've looked at extending the investment tax credit for exploration, modernizing Canadian exploration expenses, and introducing a tax credit for deep drilling. But I don't note any application with respective incentives that could deal with the issue of capital investment. It seems to me, and I hope to the committee, that we have limited reserves, but we should be extracting, if you'll pardon the pun again, the highest value-added in terms of jobs and economic multipliers.

Do you have a concern that it isn't happening? Do you have a concern that there isn't a level playing field, for example, with state-owned Chinese corporations that don't have to abide by the same international competitive regimes as Canadian firms do?

[Gary Nash]

I can try to answer part of it.

With regard to the question of value-added, I think there are two ways to look at it. There's the downstream approach, where you look at the processing of the material and convert it into various products. Another form of value-added, as I was saying earlier in my presentation, stimulates a lot of companies that feed into the mining industry. You can stimulate a lot of smaller companies. For example, we know that Syncrude spends about $50 million a year in terms of aboriginal businesses. In the north, Diavik spent roughly $600 million out of $1.3 billion in terms of supplies, services, etc., for aboriginal communities. It's another form of value-added in the sense that you get a horizontal impact.

Going downstream is far more difficult. What do you have to do? The mining industry very quickly tried to go downstream years ago. Mining is very different from manufacturing. The mining industry doesn't really have to sell its metal. There are international exchanges, and you can sell all that you can produce. You may not get the price you want, but you can get rid of everything. It's not a marketing type of arrangement, whereas manufacturing, with product differentiation and marketing with salesmen, is a very different business.

Inco tried to go into the battery business; they failed. Noranda went into the manufacture of wire; they got out of it. Alcan tried to go downstream and they were into the field; they got out of it. They found out that they couldn't make profit because it was not their field. The question then becomes, how do you stimulate investment?

I agree with you in concept. In principle, I'd love to see a lot more use of our materials within Canada, but it may not be realistic from a commercial point of view.

[Gordon Peeling]

I'd just add a couple of comments to that.

It's true, rather than a vertical chain approach to value-added, you need to remember that in actual fact the real capture of value-added in Canada in this industry has been on a horizontal basis. It's all the engineering service companies, the environmental technology companies that are now supplying this industry and that are now also global in their business and follow the industry around the world that have been the real success story. It's the financial community, the legal community in Toronto, the Toronto Stock Exchange, and so on.

So the actual value-added has manifested itself in many different ways that even those of us who worked in government a long time ago didn't concede, because we were locked into that downstream value chain approach, which had not been terribly successful.

There are exceptions to that, but I want to talk about some of the other incentives. I won't call them incentives, in actual fact, because in many ways they are simply regularizing the ability of industry to invest appropriately. The recent moves within the budget, and even in the previous budget, to remove the capital tax and to remove the surtax on capital had been disincentives to productivity improvements. They're disincentives to innovation in a capital-intensive industry like this. So those developments for removal are hugely positive.

The removal of the jewellery surtax makes it easier for the jewellery industry to capture perhaps the benefits that ultimately might flow from the diamond industry in Canada, if we can get there, as Aber is getting there, and Tiffany, and so on. Those are positive developments.

As a related comment to an earlier question about taxes that flow, the mining sector, in four stages in 2005, paid $1.6 billion in corporate income tax. The oil and gas sector paid $2.3 billion, according to the preliminary numbers from the government. Now, of course, during down times and when we're losing money, we aren't paying tax. But in addition to that, there's personal income tax, royalties, and so on, at the provincial level--and the bulk, in a way, because the province's only resources, the primary tax flows, are the provincial government's.

But that's just a reminder to an earlier question.

[Gary Nash]

I would just add one comment on the importance of that horizontal industry. In an analysis done by the OECD and by the Export Development Corporation here in Canada, they say that every dollar invested abroad by a mining company brings a minimum of $2 back. Why? Because of all the services and supplies from these other companies.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Tonks.

We'll move along.

Mr. Ouellet, you have five minutes.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

With your permission, Mr. Chairman, I would like to digress for a moment. I want to ask Mr. Mariage whether it would be possible to have the documents in both English and French. I don't know whether that is the normal procedure, but I have difficulty following the debate when I don't have the material in English as well. Would that be possible?

[The Clerk of the Committee]

Yes, absolutely.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you.

Gentlemen, thank you for being here.

My first question is for Mr. Peeling.

In one of your documents, you state the following: “Changes will enhance rigour and quality of environmental assessment process.” I would like you to explain exactly what you mean by that.

I would also like to know whether it is common practice or a common occurrence for mining companies such as Alcan to have a sustainable development plan that they follow to the letter, as some cement plants do.

If not, then I have a question for Mr. Nash. Does NRCan do anything to encourage companies to adopt a sustainable development strategy? I'm talking about real sustainable development, real social development, and economic development as well, as opposed to just environmental protection.

I will close with a question for Mr. Andrews. You have demonstrated that in Canada, we will soon be experiencing an inventory shortage in our metal mines. You also talked about an awareness campaign aimed at young people, if I understood you correctly.

Are you already carrying out, or do you expect to carry out, an awareness campaign aimed at the general public? I am thinking in particular of city councils, mayors and aldermen, who send metals to landfill sites rather than recycling them; perhaps they're unaware of the fact that in a few years, there will no longer be any metal in Canada and that we will truly have lost this resource.

Indeed, in your brief, you say that action is required now to enhance base metal exploration in order to replenish reserve levels.

Is recycling one of the types of action you have in mind?

[Gordon Peeling]

I'll go first.

Thank you, Monsieur Ouellet.

Let me respond, first of all, to the question on environmental assessment. What we are looking for simply are that both the assessment and all of the authorizations and permits that the company needs to operate, once it gets through an environmental assessment process, be done in a more efficient manner. We're not asking for less, but we're asking for it to be done more efficiently, and for coordination in that process between all of the elements of the government, which is not taking place at the current time.

One of the key elements on which we were in agreement with first nations and environmental groups, in terms of the amendments to CEAA—which we are still waiting to see put fully in place—is that there should be more transparency for all who want to follow and engage in that process, and that the decisions with respect to scoping be upfront and be understood by all participants. This would lead to more rigour in that process and, I think, allow everyone, no matter what their point of view and concerns were, to come to the table and be heard appropriately and to have all of the documentation they needed. That's where we're coming from there.

With respect to sustainable initiatives, yes, the Mining Association of Canada, much like Alcan.... In fact, we've traded a lot of views with Alcan over the years, and they've looked at what we are doing as an association. You may have missed one of my early comments, that the Mining Association of Canada, on behalf of its members, won the 2005 GLOBE Foundation Award for Environmental Performance.

We have a set of guiding principles. We have a multi-stakeholder advisory body to help us implement those principles. We have reporting and transparency requirements, covering areas such as greenhouse gas emissions. We use the Brundtland definition of sustainable development. The requirements include community outreach and engagement; the management of tailings facilities; biodiversity issues, which we are now looking at; and appropriate aboriginal consultation processes with our first nations, Métis, and Inuit colleagues.

So those are there and will continue to progress in our sustainable mining approach. For many years we published an environmental progress report. We documented our releases, not only ones within the NPRI but also beyond the National Pollutant Release Inventory.

So all those things continue, and the members of the mining association are certainly committed to sustainable practices.

[Anthony Andrews]

Mr. Chairman, maybe I can just talk to a small—

[The Chair, Conservative, Lee Richardson]

Yes, very briefly, because the answers are getting a little long.

Gordon, if you wouldn't mind, just speed up a little bit when you answer.

We're going to have to share it and have everybody's views. In terms of balance, it's nice to be able to hear from each of you on these answers, so perhaps each of you could keep your responses a little tighter. Thank you.

Mr. Andrews, and then I'll go to Ms. Kuyek, and then we'll move on.

[Anthony Andrews]

Maybe I can answer the question with respect to smaller companies, starting with sustainable development programs. What the association, or PDAC, has done is to develop a program that we call environmental excellence in exploration. This is a web-based manual, if you want, of exploration good practices and how you do community engagement. It's about 1,500 pages long, so it's a comprehensive manual. The fact that it's web-based means that explorationists can access this wherever they are, in the field or in the head office.

Most junior companies do have sustainable development policies and they try to apply them. I think they do a pretty good job in most circumstances—and they find themselves in a whole bunch of different circumstances. I think what they're lacking, though, is some kind of overall benchmark or standard against which they can measure what they're doing. The PDAC is working in that direction to go beyond E3 and generate something a little bit more than that.

In terms of declining base metal reserves and whether other significant people are aware of this, like mayors of towns, they are very well aware of this. I think one thing we haven't done is to have mobilized those types of people to support our message about this to the federal government, a message we have been communicating for the last few months.

So that's my short answer to that one.