Evidence of meeting #14 for Natural Resources in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was project.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Hilary Jones  General Manager, Mine Training Society
Donald Bubar  President and Chief Executive Officer, Avalon Rare Metals Inc.
Robin Goad  President, Fortune Minerals Limited
John F. Kearney  Chairman and Chief Executive Officer, Canadian Zinc Corporation
Richard Schryer  Director, Regulatory and Environmental Affairs, Fortune Minerals Limited

3:30 p.m.


The Chair Conservative Leon Benoit

Good afternoon, everyone.

We're here today to continue our study on resource development in northern Canada.

We have four groups of witnesses here today. We have, from the Mine Training Society, Hilary Jones, general manager. From Avalon Rare Metals Inc., we have Donald S. Bubar, president and chief executive officer. From Fortune Minerals Limited, we have Robin E. Goad, president, and also Richard Schryer, director, regulatory environmental affairs. And from the Canadian Zinc Corporation, we have John F. Kearney, chairman and chief executive officer.

Welcome to all of you.

We'll have the presentations. If you could keep it at around seven minutes, that would be preferred.

We'll start with Hilary Jones from the Mine Training Society. Go ahead, please.

3:30 p.m.

Hilary Jones General Manager, Mine Training Society

Thank you, Mr. Benoit and members of the standing committee, for your kind invitation.

Rather than reading a prepared brief, I provided a deck earlier and I will guide everyone through it.

There are three major challenges to resource development in the north. One is lack of infrastructure, second is challenges presented by the regulatory process, and the third is labour force. I'll be concentrating on this third challenge of labour force development.

We talk about job creation and the numbers needed, but when it gets down to the fundamentals it's all about people, and I would like to share two stories with you. Being from the north, we are natural-born storytellers, so I'd like to tell you about Katrina Stiopu. Kat was about 18 when I first met her in 2009. She had had to quit high school when she was 16 in order to support her family, because her family house burned down and there was no insurance. Kat is a young lady from the Yellowknives Dene.

The moment she turned 18 she came into our offices—18 is the legal age when you can be in a mine in the Northwest Territories. We did some career counselling with her and discovered she really liked to drive big trucks. So we had her trained as a haul-truck driver and now, almost three years later, she has a new home, a new car, and more importantly, a new family.

Mike Fraser had a hard life and did a few things he shouldn't have done and landed himself in jail. While he was there he had a few days or a couple of years to figure out what he was going to do with the rest of his life. When he came out and finished his court-mandated counselling, he came to visit us and we did some work with him and got him trained as a class 1 driver. We also helped him get a job with Robinson's trucking. In October Mike came to visit me at the office just to say thank you for all the support he got from the Mine Training Society, because now he owns his own trucking company and has a longstanding contract to haul contaminated soil down to Zama. He just wanted to acknowledge the support he received from the Mine Training organization.

These are the topics I'm going to cover over the next while with you: a brief history of the Mine Training Society, and the assistance in the development of three other mine training organizations; a typical employment profile for the mines; information on existing labour market; successes in training to date; our industrial and aboriginal partnerships; and the advantages that mine training organizations bring to the table in resource and workforce development.

I would note that I'm going to include data both from Nunavut and Yukon mine training organizations. We like to take a collaborative approach, and this way you get a three-for-one deal.

The Mine Training Society started way back in the nineties. In the early nineties, the Northwest Territories was undergoing a tremendous boom in mineral exploration, which led to the opening of Canada's first diamond mine. The Ekati Diamond Mine, owned by BHP, was commissioned and made operational in 1998.

At that time the giant Con Mines in Yellowknife was facing its closure, the Northwest Territories was undergoing political division with the creation of Nunavut in 1999, and the unemployment rate was 13%.

Diavik Diamond Mines didn't have the luxury of drawing on that same labour pool when it started constructing its mine in 2001 and on its eventual commissioning in 2003. It needed a bit more of an innovative approach to developing its own workforce. Working with the department of education and Indian and Northern Affairs Canada, as well as the Yellowknives Dene First Nation and the Chamber of Mines, Diavik sought to create an ad hoc training committee. The committee looked at creative ways of delivering community-based training that would meet the labour force needs of its own operation.

It was a successful model that was used later for the development of the Mine Training Society and was further replicated in northern B.C., the Yukon, and Nunavut in the Kivalliq Region.

As you can see from the table entitled “Typical HR Profile for a Mine”, the careers in mining are not pick-and-shovel jobs any more. The workers have to be skilled, especially when you're driving a Cat 777, which costs on average $2 million and takes a year and a half to replace. Fully 50% of any of the jobs in a mine are trades-related, with another 28% being semi-skilled. Mining is no longer the primary avenue to employment for unskilled, uneducated, or untrained people.

I have also provided a quick slide on the types of jobs in a mine. There are literally hundreds of different types of jobs in mining and mine services.

I have also presented three slides that were obtained from the chambers of mines in the Northwest Territories, Nunavut, and the Yukon. Those potential jobs are projected, based on what Tom Hoefer, the executive director from Chamber of Mines in the Northwest Territories, calls his magic-wand scenario. He will be appearing before you at the end of the week.

Those projections are based on the projects coming into minehood—and hopefully those of my colleagues here today—as well as the advanced projects. At its height in 2019, Nunavut may have as many as 5,000 mining jobs. In the Northwest Territories, we would have 2,000 jobs, but we also have the added challenge of our regulatory system. In the Yukon, it would be about 2,500 mining jobs.

I picked a moment, 2017, when several projects will be under way. You will note that I have calculated the annual payroll for each project based on their calculated number of employees. I used the mining industry average wage of $1,600 per week to calculate the payroll value of the projects, which comes to some pretty amazing numbers when rolled up.

The total annual payroll in 2017 for mining alone, if all goes well with the world markets, would be in excess of $789 million for just those three territories. The total number of mine employees would be 9,500 people. And as I like to remind all our partners, we are turning our trainees into future taxpayers, and the potential payroll tax would be over $157 million.

Please keep in mind that for every one job created in mining, three other jobs are created in mine services and services in general to support the miners' families.

Our population is our challenge. The three northern territories, the future for Canada, have less than one third of 1% of the population of Canada, but we take up 40% of the land mass. Although we are small in population, Canada's north contributes significantly to Canada's national GDP. Our reality for the workers in the labour force follows.

Yukon has over 5% unemployment, or just over 1,000 people not working. The Northwest Territories has a 7.4% overall unemployment rate, close to 2,000 people, with a “not in the labour force” population of 6,100. The Northwest Territories tracks this number on a monthly basis, but I was unable to obtain that information for Nunavut or Yukon. “Not in the labour force” is comprised of working-age people going to school, families who have no access to child care, people who are ill or are looking after a family member who is ill, retired persons still eligible to work, and the category that is most disturbing: there are people who want to work, but do not believe jobs are available.

This is supported by the recent Conference Board of Canada report on building a labour force capacity in Canada's north. This report has a survey of northerners' outlooks and wants, and indicates that 60% of the respondents who said that jobs are hard to find in their community are northerners age 35 or older, and those who have not graduated from high school.

Nunavut has the highest unemployment rate of all three territories, officially at 17%. The problem is not unemployment or lack of jobs. The problem or challenge is that the people who are available for jobs do not have the skill sets to meet the requirements for employment in the mining industry. Let's keep in mind that 78% of those jobs in the mine site are for skilled and semi-skilled workers. Fewer than 5% are for those individuals who would qualify as labourers.

This is where the mine training societies come in. The three MTOs are the Northwest Territories Mine Training Society, the Yukon Mine Training Association, and the Kivalliq Mine Training Society, which we hope soon to be the Nunavut Mine Training Society. They have been working to ensure that the local aboriginal populations are able to take advantage of the economic opportunities presented by employment with the mining sector.

We have been very successful to date. Since 2008 we have exceeded the targets laid out between ourselves and the aboriginal skills and employment partnership program. I presented the aggregate numbers for your consideration. We have far exceeded our training targets by 145% and our employment targets by 165%. Please keep in mind that the training delivered is not for entry-level positions. These are skilled and semi-skilled positions such as underground miner, heavy equipment operator, and mineral processors, to name a few.

Training in the north is expensive. However, we have developed an innovative method to train people for underground mining and one that we would like to continue but for a lack of guaranteed funding. The underground miner program, delivered in partnership with Aurora College, has several components that allow aboriginal participants to transition from remote communities to the work site. The program has won the Premier's award for excellence and collaboration, given the numbers of partners involved in the development and the delivery of this program.

The training is 32 weeks long and begins in the home community. In the introduction to underground mining, the participants are given two weeks of employability skills training followed by four weeks of safety and mining modules that follow the common core curriculum. This allows the participants to make informed career choices when entering a career in mining. The successful participants are then invited to submit to the underground miner program.

The participants are assessed against a number of criteria, and they also receive input from the instructors. The community-based instructors teach the underground miner program. This allows the participant from the remote community to already have a point of personal contact when they arrive in Yellowknife.

In this program we have embraced the teachings of the medicine wheel. We deal with participants as a whole person, not just a learning brain. We support the mental, physical, emotional, and spiritual dimensions of the person.

They then follow a 12-week training portion at the mine site. We also use simulators and hands-on training.

What makes this model so successful? It's because it's made up of partnerships of like-minded organizations. The Conference Board of Canada has noted that none of the industries, public governments, or aboriginal governments have gone it alone to build labour force development capacity. They have created partnerships to build labour force capacity, and the most successful vehicle to date is the Mine Training Society.

I'm going to skip through the actual structure of the three different societies.

We did a five-year evaluation of our work since 2004. We came up with some pretty interesting data on the outcomes in four areas: our clients, industry, our communities, and governments. We found that as well as providing assistance in skills training and attachment to the workforce, one of the most telling and interesting impact was on the actual face of the workforce. On our trainees, 25% are aboriginal women, which is much higher than the national average of women overall in the mining sector of 5%. I like to think we're changing the face of mining, and it wears mascara.

Women are an under-used resource in the mining industry, and there are definite challenges in child care.

While we work with industry, we also have a significant impact on--

3:45 p.m.


The Chair Conservative Leon Benoit

Ms. Jones, I have to ask you to wrap up in 30 seconds so we can get to the other witnesses.

3:45 p.m.

General Manager, Mine Training Society

Hilary Jones


Earlier this year HRSDC advised that funding for all aboriginal skills and employment partnerships will cease on March 31, 2012. Organizations such as mine training organizations in each territory will have to prepare to wind up activities and, if necessary, their organizations.

There is a compelling business case for continued human resource investment by the federal government in northern people, not the least of which is the healthy and growing return on investments for resource royalties. Mining growth, however, will be curtailed if successful MTOs are not funded. They have been the lifelines for northern mines over the past eight years, and in the last three years we have placed 1,400 aboriginal people in well-paying jobs.

We're also looking at developing a pan-territorial northern natural resource work development strategy. The purpose of the strategy is to develop a pan-territorial strategic framework that would outline the need for and the benefits of a multi-year workforce development strategy. This strategy will be used to align territorial and partner visioning and goal setting; develop broad strategic and costed initiatives; and attempt to leverage ongoing funding for training and skills development from provincial, federal, and territorial governments and other strategic partners.

We will be looking at all aspects of resource development, from community engagement to remediation, and we want to build on the successes and experience of the past eight years. We want to continue measuring success one person at a time, especially for the Katrinas and the Mikes of the north.

Thank you very much, sir.

3:45 p.m.


The Chair Conservative Leon Benoit

Thank you, Ms. Jones.

I just want to explain to the members of the committee what we're facing today. We have three more presentations. We have to shut down this part of the meeting 15 minutes early so we can discuss future business of the committee. Then we will hopefully have questions and comments from all members of the committee. So if you can keep your comments to the 10 minutes the clerk has indicated you have, that would be very much appreciated.

Mr. Bubar, from Avalon Rare Metals Inc., please go ahead with your presentation.

3:45 p.m.

Donald Bubar President and Chief Executive Officer, Avalon Rare Metals Inc.

Thank you, Mr. Chairman.

Avalon Rare Metals Inc. is one of the few mineral developers in the north with an advanced development project. It's called Nechalacho. It's a unique deposit. It's one of the highest-quality mineral deposits of its kind in the world, enriched in the rare earth elements. It's an emerging commodity group that is proving vital to new technology, especially clean technology. This particular mineral deposit represents an opportunity for Canada and the Northwest Territories to lead the world in a new supply source of these key raw materials.

Today I'd like to share with you some of the challenges we have been facing in moving this project through the regulatory process. Generally, the Northwest Territories is seeing some of the lowest levels of investment anywhere in the world, even though we are experiencing a global boom in investment in the mining sector as the whole world searches for new sources of commodities.

Why is that? Speaking as a geologist, I can assure you it's not to do with a lack of endowment in mineral resources in the Northwest Territories. This is arguably one of the most mineral-rich terrains in the world. It's certainly no less endowed than its neighbouring jurisdictions in Nunavut and the Yukon, which are seeing strong growth in investment in mineral development. Clearly, the finger has to be pointed at the regulatory process, which we would characterize as very inefficient. Also, some of the complications are related to unresolved land claims and a complicated consultation process that offers developers no clear rules of engagement with first nations.

In our case, the community consultation process has actually gone quite well. We recognized this as a challenge when we first started working up there in 2005. By being diligent in our consultation, we've managed to reach good working relationships with all of the community leaders of the aboriginal groups we are working with. We've had 165 consultation meetings since we started up there in 2007. It has generally been appreciated. In fact, the chief of the Yellowknives Dene First Nation, Ted Tsetta, said publicly on several occasions that when it comes to consultation, Avalon does it right.

That's not the problem we're facing. Our problem is an inefficient permitting process related to the environmental assessment process. I'll give you some specifics. This is an advanced project. We filed for our initial permit applications with the Mackenzie Valley Land and Water Board in April 2010. It was immediately referred for environmental assessment. There was no surprise there. That's fairly routine for a project of this scope. However, it took eight months just to complete the initial community scoping sessions to establish the terms of reference for the environmental assessment process.

After that, we produced our developers assessment report, which was some 1,000 pages long, and filed it within three months of receiving the terms of reference. It then took five and half months for the review board to determine that our report was in conformity with the terms of reference. This wasn't to review the technical details. This was just to make sure it was in conformity with the terms of reference. It was five and half months. This should take only a month to 45 days to complete.

What's happening to us is that each one of these slow response times is accumulating into setting the whole process behind the schedule we need to work to. It's very important with this project, because, basically, we're in a race against other producers of these commodities around the world to get to market with our product. These are non-traditional mineral commodities. You have to develop your markets for them and find customers, and we're competing with other potential producers around the world to serve that need outside China. If we fall behind in that race, it may not just delay development—it may ultimately frustrate it from ever being developed. It's important to keep to these timelines.

We're having a lot of difficulty getting that message across to the regulators with the review board in Yellowknife. Some of the specific concerns that we can pass on are that we find the staff generally unresponsive. They're unwilling to work in a collaborative way. All communications have to be in writing; we can't simply sit down and talk things through and find a solution to moving the thing forward. We're not allowed to do that. They do not seem to have the manpower they need to do the job and get things done quickly. There's no accountability on decisions and timelines. There are no specific timelines laid out and there are no consequences to not moving these files forward at a reasonable pace.

Lastly, what we are particularly frustrated with is that there's a clear lack of impartiality in public meetings. The officers with the review board clearly have an anti-development bias, and it's just not appropriate when these projects are being presented in public meetings for consideration by the public as an opportunity.

As I said, we're in a race now, but there are a number of ironies associated with this too. While the regulatory process is frustrating us, it's not because there is a lot of organized public opposition. There is no organized public opposition to this project in the Northwest Territories. The aboriginal groups support it. The municipal government supports it. The GNWT supports it. The only people who don't support it are individuals within the review board apparently.

Furthermore, we have a pretty good track record in working with the aboriginal groups, who have complimented us on our consultation. We have a land use permit. We are inspected on a regular basis for compliance with the terms of that land use permit—which are fairly rigid. We've been inspected 25 times since we initiated drilling operations on the site, and we've been consistently found to be in compliance with those regulations. So we're not a bad actor in terms of demonstrating our willingness to comply with the rules as they exist right now.

No substantial environmental concerns have been identified with this project, and it will actually have a relatively small development footprint compared to many such opportunities, mining operations, being considered for development around the world.

I just wanted to share with you our frustrations with this inefficient process. It really needs to be looked at carefully for how it can be improved to better serve developers and the public generally. We've invested some $45 million to date in this project; we're committed to seeing this through to the finish line. But I'm often asked, “So you're a pretty big stakeholder in the Northwest Territories now that you've invested a lot in this project. I'm sure you're looking for other opportunities to develop projects in the north.” Frankly, I have to say no, we're not. We're going to look elsewhere for the next opportunities if we have to continue to endure as inefficient a regulatory process as we are now experiencing in the Northwest Territories.

Thank you very much.

3:55 p.m.


The Chair Conservative Leon Benoit

Thank you very much, Mr. Bubar.

Now we have Mr. Goad from Fortune Minerals Limited, along with Richard Schryer. Go ahead, please, with your presentation--for up to 10 minutes, shorter if possible.

3:55 p.m.

Robin Goad President, Fortune Minerals Limited

I'll do my best, but I've never been known for being short.

Thank you very much for this opportunity to speak to you, Mr. Benoit, and also to the members of your committee.

I'm going to be speaking in this presentation. I have Dr. Richard Schryer, who is our director of regulatory and environmental affairs, with me today. Although I'll be doing the presentation, he will be available for detailed questions on the permitting process up in the Northwest Territories and the other jurisdictions that we're operating in.

Before I begin my presentation, I want to speak very briefly about Hilary's and Don's prior presentations. I'm not going to be dealing a lot with labour issues, but this is clearly an issue we're dealing with in the Northwest Territories, the lack of skilled trades. I support very much what Hilary had to say.

I also support Don's major concern with the length of time it takes to navigate the permitting process. We initially filed our applications in 2007, so we've been in the process for about four years and still have another year to go. We're building a process plant in Saskatchewan for which we will completely navigate this permitting process in 13 months. Clearly, there is a big disconnect between these jurisdictions.

What I'm going to do right now is to introduce to you my company. We're going to talk a little about our projects and some of the issues that are impacting us, particularly with direct case examples of some of the challenges we're having. I'm going to talk about transportation infrastructure and energy infrastructure, which is also very important to developing in the part of the world in which we're operating.

First of all, here is a very brief introduction to Fortune Minerals Limited. We're based in London, Ontario. We're building projects in the Northwest Territories, in northern British Columbia, and also in Saskatchewan. We are a mineral development company making the transition to a vertically integrated mining and refining company. We have a very experienced board and management team with proven records in building mines and also in operating mines.

From there, I'm going to give you a brief introduction to one of our projects, called the Mount Klappan anthracite coal project in northwestern British Columbia. I know this forum is principally focused on the north, but this is in the northern part of British Columbia, and it involves issues with infrastructure, with first nations, and with red tape; these are also important.

This is a world-class asset of 2.8 billion tons. There is $87 million of work already completed, and we just secured a world-class partner in POSCO. The third-largest steel company in the world, from South Korea, is now our joint venture partner.

This project generates a very attractive rate of return, with over a billion dollars in net present value, based on initial capital of $768.4 million. The major issue, which we'll be talking about later as a case example, is that we're building a railroad extension costing $317.8 million to connect this project with the Port of Prince Rupert. We have infrastructure issues: building infrastructure, the cost of that infrastructure, and also access to port facilities. I'll be speaking to these more specifically later.

This project is in the environmental assessment process.

Our Nico project is also an unusual deposit, containing specialty metals; it's gold, cobalt, bismuth, and copper. It's a very advanced project, with $95 million of work already completed, including a positive, bankable feasibility study indicating a $361-million net present value.

The project is in the environmental assessment process. One of the major impacts we're going to talk about with this project is the cost of doing business in the Northwest Territories, which required our company to relocate the downstream processing facilities in Saskatchewan, which has a lower-cost environment. This is due to the lack of skilled labour up in the Northwest Territories to operate this process facility, but more importantly to the cost of energy. The cost of energy is of extreme importance in the Northwest Territories; we are using diesel-powered generation, at a cost of about $0.20 to $0.30/kWh, versus $0.057/kWh in the south.

Our hydrometallurgical process in Saskatchewan is a $200-million project. It's going to employ 85 people, and the major issue is shipping of concentrate from the Northwest Territories down to Saskatchewan, mainly because of the cost of doing business up in the Northwest Territories.

The first issue we have brought up is transportation infrastructure. Fortune's projects require significant investment in basic offsite infrastructure that require capital cost, reduce the economics, and make it more difficult for projects to attract project financing.

As I mentioned, Mount Klappan requires $317 million in investment for an extension of a railway. This railway right-of-way has already been constructed. It provides a brownfield transportation corridor to extend the railway to the site and will provide access to this world-class coal project through the port of Prince Rupert.

I think there's a role for government in providing for basic infrastructure, including roads, in facilitating other infrastructure developments, and in subsidizing those projects.

We're also going to be exporting our product through the port of Prince Rupert using the Ridley coal terminals. Ridley has planned an expansion, from 16 million tonnes to 24 million tonnes, which will be inadequate for accommodating the new mines planned in the northern part of British Columbia. Also, mines are planned in the Yukon.

New users are being asked to pay for the expansion, while the current users are not. I would argue that the expansion should be funded from cashflows and should be recovered from rates charged to all users of this facility.

The Nico mine also requires a 120-kilometre access road for shipping our concentrates south to Saskatchewan for processing, for providing access for employees, and for receiving supplies and services. This road will provide reliable year-round access to nearby Tlicho aboriginal communities, which are currently serviced by winter roads only. It will improve the quality of life in those communities and will reduce the cost of living. The road would also provide reliable year-round access to promote additional economic activities in mining, tourism, and power development, which is going to be the theme of my next point about operating in the Northwest Territories.

The Government of the Northwest Territories proposes to fund a significant portion of this road, but the aboriginal government and the Government of the Northwest Territories are arguing over jurisdiction. This is one of the other problems we have: just who is actually in control of things up in the Northwest Territories? Is it the federal government, the territorial government, or the aboriginal governments?

Roads generally provide basic infrastructure required by communities and provide access for sustainable economic development and investment in natural resources. They should be supported by all levels of government.

We talked a little bit earlier about energy. Both Mount Klappan and NICO require diesel power generation, even though they're proximal to hydroelectric power dams and potential new sources of supply. The cost of generating electricity using diesel power generation is about 20¢ to 30¢ per kilowatt hour, depending on the cost of getting fuel to the site. Escalation in the cost of energy forced our company to relocate the downstream processing facilities for our project to Saskatchewan, where we pay only 5.7¢ a kilowatt hour and where we have access to a skilled labour pool that can operate this facility.

Notably, the Diavik diamond mine in the Northwest Territories has just now decided to build a 9.2 megawatt wind farm to mitigate the rising cost of fuel. There are opportunities for expanding hydroelectric infrastructure in the Northwest Territories, including expanding the Snare hydroelectric facilities and the Taltson power facilities. But the Northwest Territories do not have the capacity for expansion, and their laws currently preclude forward investment in new projects. There are no plans for developing additional energy capacity that would attract industry. Power is one of the largest costs in developing mineral deposits in the north.

The Taltson expansion is currently on hold, primarily because one aboriginal group does not support the route and also because the power rates being proposed are not attractive for the diamond mines because of the high capital cost of installing transmission lines for this new source.

The Tlicho, the first nations group operating in our mining area, are interested in building a run-of-river hydroelectric project. This would supply power not only to our mine site but also to their communities, which are running on diesel.

It's important to note that both the B.C. and Canadian governments are currently funding extension of the electrical grid in northwestern British Columbia. I think this is a good template for other investments in basic infrastructure by the government.

Land claims continue to be a significant concern in the Northwest Territories and British Columbia. First nations are typically frustrating mineral development to achieve their objectives. The permitting process is being used by first nations to highlight land claims issues.

Settled land claims have implementation issues that have not been addressed. For example, our project is in the area of the Tlicho settlement, which has a settled land claim with the federal and Northwest Territories governments. But there's a moratorium on development on the Tlicho fee-simple lands while land use planning is in preparation, and this continues to get delayed because of a lack of capacity.

Right now the Tlicho First Nation is litigating the Mackenzie Valley review board to determine who has the right to make decisions in their territory. There's a lack of capacity to participate in the permitting processes. That is a concern for first nations and causes delays in the permitting process. The issues of consultation and accommodation are typically passed on to companies.

I want to quickly get to the last issue, which is government red tape. We have been in the permitting process now for four years. It takes too long, and expectations for work are escalating in both British Columbia and the Northwest Territories, while jurisdictions like Saskatchewan and Quebec are quite efficient.

The recent Red Chris court decision requires integration of federal and provincial processes, and that is compounding the inefficiencies. Boards are inconsistent in their administration of project files and constantly raising the bar. Boards are limited by a lack of staff and funding. Federal and Northwest Territories departments are understaffed and often not experienced with mining. The level of effort and procedures for aboriginal consultation and community engagement are unclear and becoming increasingly onerous for developers. Timelines for the entire permitting process need to be defined and adhered to so that project planning can take place with certainty. The entire permitting process needs to be defined: protocols and timing of access, socio-economic, environmental agreements, etc.

There are some case studies in my deck, and you can read them separately, but I want to conclude by stressing the importance of mining in the Northwest Territories. The vast majority of mineral projects in Canada are developed by junior mining companies that must raise funds in capital markets to advance their projects. The lack of certainty and permitting timelines are the greatest concerns to potential investors.

Fortune's projects will make significant contributions to the economies of Canada, British Columbia, Northwest Territories, and Saskatchewan, with a total investment of $1.143 billion planned for these three projects. They will also result in 650 full-time jobs. Base-case commodity price assumptions will generate combined revenues of $682 million per year, with a cash operating cost of $440 million per year.

Nico in the Northwest Territories is the smallest project and will generate significant benefits to the Northwest Territories and the Canadian economy.

We want to make it clear that there are some issues impacting mineral development in the Northwest Territories, and they're causing a lot of harm to junior developers. The government basically needs to address issues of infrastructure and first nations, as well as a clear regulatory environment.

Thanks so much.

4:05 p.m.


The Chair Conservative Leon Benoit

Thank you, Mr. Goad, for your presentation.

We'll go now to Mr. Kearney from Canadian Zinc Corporation.

4:05 p.m.

John F. Kearney Chairman and Chief Executive Officer, Canadian Zinc Corporation

Thank you, Mr. Chair and members of the committee.

In addition to my role as chairman of Canadian Zinc Corporation, I'm also a director and the immediate past president of the NWT and Nunavut Chamber of Mines and a director of the Mining Association of Canada. Both of these organizations represent the Canadian mining industry.

Canadian Zinc owns the Prairie Creek Mine in the Northwest Territories. This is a unique project. It's already built. It's 30 years old, but it has never operated. The mine is a major Canadian resource. It is one of the highest-grade base metal deposits in the world. When it's in production the mine will employ about 220 people, and our objective is to employ about 60% northern residents, of whom a total of 25% would be aboriginal first nations.

The mine has a projected life of 20 years. We enjoy a very good relationship with the local communities. In 2008 we signed a memorandum of understanding with the two closest aboriginal communities, and in 2011 these were converted into impact benefit agreements, which we signed with the Nahanni Butte and the Fort Simpson communities.

In June of this year we signed an important socio-economic agreement with the Government of the Northwest Territories, under which the company and the Government of the Northwest Territories agreed to work together to maximize the beneficial opportunities—job creation, business opportunities, and socio-economic opportunities—that will accrue from the development of the mine.

Recently Human Resources and Skills Development Canada, a department of the Government of Canada, approved the commitment of $3 million for a three-year period under the skills and partnership fund to fund the “More than a Silver Lining” program to provide aboriginal participants with training and employment opportunities in a variety of mine-related occupations. That program has already started.

However, the mine is not yet into production, largely because of the regulatory and permitting regime that exists in the Northwest Territories today. You've heard my colleagues comment on that earlier. When this mine was first built in 1980 it had all the permits necessary, but unfortunately those permits were allowed to lapse, so that in 2000 we had to seek new permits under the new Mackenzie Valley Resource Management Act.

For the last 10 years, Canadian Zinc has been slowly and gradually working its way through the Mackenzie Valley permitting process. During that time we've applied for and obtained seven exploration permits, two water licences, four land use permits, and a road permit.

Various aspects of this project have been the subject of five different environmental assessments by the Mackenzie Valley review board and during all that time we have encountered very significant delays in the issuance of permits. For example, we applied for our water licence in March 2001 and it was finally issued four years and eleven months later in February of 2006. In May 2003 we applied for a land use permit for a road. This was deemed exempt from an environmental assessment by the Supreme Court of the Northwest Territories. The permit was issued four years later, in April of 2007. However, we had to do some repairs to that road, which required a water licence, which was issued in March 2008, making the total period four years and ten months from application to when we could begin work.

In June of 2008 we applied for the permits for operating. These applications have been working their way through the Mackenzie Valley process, and we're hopeful we will get a decision from the review board before the end of this year. But that's not the end. The permits have to come after that, so again, we're looking at another process in excess of four years.

Let me tell you, members of the committee, that were it not for the quality of this ore body, any company would give up and walk away. These delays, which are not unusual as you've heard from my colleagues, are impossible to explain to the investment community in Toronto from whom we have to raise funds. They just do not understand that the Northwest Territories is not an attractive place to invest dollars.

You've heard from my colleagues that mining is and has always been the major economic driver of the Northwest Territories. It contributes more than $2 billion annually and represents about 50% of the GDP of the Northwest Territories. It is a very important industry, but it is an industry that is threatened today. Mines are finite. The diamond mines are probably past their peak and mineral exploration is not strong; in fact, it's in decline in the Northwest Territories.

So if the Northwest Territories is to maintain the considerable benefits that mining brings, we must create an environment that attracts mining and investments. Both public governments and aboriginal governments need to create an environment of certainty for investors. In our industry we operate in a global world. Money is mobile and it will go wherever the reward is best. We must take into account not just the price risk but the project risk and also the social risk. Canada needs to compete for the investment dollars worldwide.

There's no certainty that we can get those investment dollars. We must improve certainty. We must reduce and eliminate the barriers to entry. As you have heard, there are significant challenges with property in the Northwest Territories. The federal government has recognized a need to reform the northern regulatory regime. In the Speech from the Throne of March 2010, the government committed to support responsible development of Canada's energy and mineral resources. The minister said our government would untangle the daunting maze of regulations that needlessly complicate project approvals and replace them with simpler, clearer processes that offer improved environmental protection and greater certainty to industry.

In May 2010 the minister announced an action plan to improve northern regulatory regimes to ensure they would be more effective and predictable and would provide greater certainty to the industry, northerners, and all Canadians. He said potential investors in northern resource projects have faced complex and overlapping regulatory processes that are unpredictable, costly, and time-consuming. These have become barriers to economic investment in the north and economic growth in Canada.

The government has recognized that there are problems and difficulties with the current system and that investment in the north is threatened. The action plan is a step in the right direction, but in my opinion this needs to go faster and further. There are proposals under way to amend the Mackenzie Valley Resource Management Act. I would ask members of the committee, when this legislation comes before Parliament, to make the parliamentary time to get this legislation enacted. It is very urgent.

Industry is anxiously awaiting the enactment of the Nunavut Planning and Project Assessment Act. This bill came before the house but died on the order paper last spring with dissolution. Again, we would ask you to please find the time to get that legislation enacted as soon as possible. It's very important to mine development in Nunavut.

Mr. Chairman, one of the challenges facing resource development in the north is the absence of a champion—an arm of government with the responsibility to promote resource development. For many years, the north has been the only region without an agency responsible for economic development. In 2009 the government announced the creation of the Canadian Northern Economic Development Agency, or CanNor. Inside CanNor, there is a northern projects management office, which is intended to help industry navigate the regulatory process to ensure timely reviews of projects. Here, again, there has been progress, but unfortunately that progress is slow. CanNor does not have any meaningful budget. It is simply taking resources from Aboriginal and Northern Affairs Canada, which continues to be the main regulator in the north, and which continues to have a conflicting mandate with regard to its economic development and its aboriginal responsibilities.

There's no minister for economic development in the north. There's no minister for mines in the north. In fact, there is no minister for mines in all of Canada. We really think there is a need for a champion. This is necessary to ensure resource development in the north.

There government of the Northwest Territories tried to move the investment, and is very supportive of the Canadian Zinc's project and all mining projects. As I mentioned, we have signed a socio-economic agreement with the government of the Northwest Territories. The likelihood of imminent devolution means the responsibility for resource development will fall to GNWT. Perhaps such a situation would be a good thing, but it probably needs to happen quickly. The GNWT does support a balanced approach to developing and advancing economic growth. Devolution, should it happen, will allow the GNWT to make resource development a priority. They should have management control of public lands, water, and mineral resources. Also, they can become the champion for development.

There's an urgent need for action. It's one on which we need to see meaningful progress. My concern is that if there is no improvement in the investment climate in the north for mineral exploration and development, and if there is no significant reforms of the regulatory and permitting process in the Northwest Territories, mining investment capital will decide that the timelines are too long and that there is no certainty, and that capital will go elsewhere. As you've heard today from Avalon—and we'd be the same—those resources, which are undoubtedly there, will be left unexplored and undeveloped, and nobody will reap the benefits.

I have sought to demonstrate today that Canadian Zinc's project offers many benefits to the aboriginal communities, to the Northwest Territories, and to Canada. However, the successful development of this mine, and indeed all mines, requires the active support of government, political leaders, and politicians. Support is needed to improve the regulatory permitting regime, to upgrade infrastructure, to educate and train, to have social programs, and to assist aboriginal communities to avail themselves of the many employment and business opportunities.

The mine industry will play its role. We will do our part. I believe that governments—federal, territorial, and aboriginal—must play the leading role. The successful development of resources in northern Canada needs the active participation of all levels of government and all members of Parliament.

We need champions in providing political support and encouragement and in repeating and delivering a very simple message of support for economic development and support for resource development in northern Canada.

Thank you.

4:20 p.m.


The Chair Conservative Leon Benoit

Thank you very much, Mr. Kearney.

Thank you, ladies and gentlemen, for your very concise and helpful presentations. It's very much appreciated.

We have 55 minutes for questions and comments, starting with a seven-minute round.

Mr. Calkins, go ahead, please.

4:20 p.m.


Blaine Calkins Conservative Wetaskiwin, AB

Thank you, Mr. Chair.

Thank you, guests, for coming here and providing these presentations. I found it quite informative and helpful.

I've been on record asking questions about this kind of stuff for a very long time, when it comes to the timelines, and I'm horrified again to hear that some of these permits and so on seem to be taking so long.

As somebody who represents municipalities that recently went through the construction process through our economic action plan, I was horrified to learn that project funding would be on hold until environmental impact assessments were being completed. Because those were time-sensitive funding packages, somebody could simply miss getting several million dollars of project funding because somebody doing the environmental impact assessment had no motivation, no incentive, no framework whatsoever to get that file off their desk. If it wasn't for a member of Parliament trying to light a fire—it doesn't matter what member of Parliament happened to represent that municipality—it didn't seem to get done.

Now, I'm not trying to put myself out of work here, because I appreciate people knocking on my door and asking for my assistance, but the reality is we shouldn't have to go through this kind of a process. So to start things off, my question is what has Saskatchewan done recently? Have they changed things? I believe the example I was given was 13 months to get something taken care of in Saskatchewan, versus the horror stories that we're hearing of four years to five years to get through the permitting process.

That's going to be my first question. Can you tell me...? I think you mentioned Quebec was doing something well on that front as well.

4:20 p.m.

President, Fortune Minerals Limited

Robin Goad

Those were only two examples.

4:20 p.m.


Blaine Calkins Conservative Wetaskiwin, AB

Two examples. I'd like to know whether those examples are being looked at.

Now, Mr. Kearney, you brought up the task force that's been created and has been working. I'm hoping that these things are being looked at, the nuances and the differences.

I apologize for stealing this question from some of my Saskatchewan colleagues here, but I'm curious to find out. I'll ask a couple of questions and then leave the floor open for those of you who want to answer.

Mr. Bubar, you said you've basically got all-stakeholder approval, that there was no resistance in any of the projects that you had.

Mr. Goad, I believe in your testimony you said, if can use the words, that aboriginal governments were doing something to suit their own purposes, which sounds to me like it's not quite as clean-cut as what Mr. Bubar said. I'm wondering what the nuance differences could be in that. I'll let you take your shot at that first set of questions.

I'm from Alberta. The Rocky Mountains is where I like to go fishing and hunting and so on, but most of the roads that I come across out there, other than the public roads, have a gate across them because they were built by an oil and gas exploration company or they were built by a forestry company, and those roads are owned by those companies. This is a public safety issue, because those roads were built and designed for hauling out logs, for big service vehicles and so on. When those leases are up or those cut blocks are taken care of, then there's public access into those roads. Those roads are obviously paid for by the company on a cost-recovery basis for access to the resource.

If you're going to ask me, as a politician, to make a recommendation that the Government of Canada or other levels of government should be partnering and paying for some of this public infrastructure, which is the case, that money's going to have to come from someplace. It's going to have to come from the tax base. That means I'm going to have to increase payroll taxes or increase corporate taxes and so on, to balance off those needs.

I guess I'm putting the question directly to you: would you rather pay more taxes to have roads built by the government, or would you rather have less government and build your own road and get the permitting done quicker?

4:20 p.m.


The Chair Conservative Leon Benoit

It was directed to Mr. Goad, I believe.

4:20 p.m.

President, Fortune Minerals Limited

Robin Goad

The first question I think Dr. Schryer will answer, and then I'll deal with the other two that were directed at our company.

4:20 p.m.


The Chair Conservative Leon Benoit

Go ahead, Dr. Schryer.

4:20 p.m.

Dr. Richard Schryer Director, Regulatory and Environmental Affairs, Fortune Minerals Limited

Thank you.

The question was, why is the permitting scenario different in Saskatchewan?

The steps, essentially, are the same in any permitting program in Canada. The difference is that they adhere much more closely to the timelines and they're far more efficient in getting things done.

I'll give you an example. As Robin mentioned—

4:20 p.m.


Blaine Calkins Conservative Wetaskiwin, AB

They're no less thorough, just faster?

4:20 p.m.

Director, Regulatory and Environmental Affairs, Fortune Minerals Limited

Dr. Richard Schryer

Just faster.

We submitted our initial applications to the Wek'eezhii Land and Water Board in November 2007, and we submitted our applications in Saskatchewan in August of 2010. Both projects are essentially at the same stage now. We've submitted environmental assessments and we're at the information request stage.

The processes give you an idea of the difference. We're at the same place, even though in Saskatchewan we started about two and a half years later. As I said, it's simply a difference in approach and a difference in efficiencies, in terms of getting through the process.

4:25 p.m.

President, Fortune Minerals Limited

Robin Goad

I'll now the address the issue of the first nations.

We actually have very good relations with our first nations group as well. In the Northwest Territories we have three agreements that were recently executed with the Tlicho government. One of the problems we have, though, is that we have a settled land claim with the Tlicho, but the Tlicho sort of lack a capacity to really administer their lands. They have just been going through a process where they're now basically in charge of these lands. They've been working on a land-use plan for four years. They're also dealing with some implementation issues.

One of those issues is just who has the authority to make decisions on the land. This isn't just endemic with our particular project. It's a problem with the Northwest Territories generally, who has the authority to make decisions. The first nations, in our particular case, have fee simple lands, and they're actually the landlords. We also have a right of access, and there are also overlapping issues with authority between the federal government and the Northwest Territories governments. I would very much support devolution as one of the ways of simplifying this process.

Also, just implementation of land claims jurisdictions is a real problem. The land-use plan process that the Tlicho are currently undergoing has now been four years or five?

4:25 p.m.

Director, Regulatory and Environmental Affairs, Fortune Minerals Limited

Dr. Richard Schryer

It's five. They've just extended it to 2013.

4:25 p.m.

President, Fortune Minerals Limited

Robin Goad

It's been five years. We've essentially had a moratorium on development in their lands while they undergo this process.

4:25 p.m.


Blaine Calkins Conservative Wetaskiwin, AB

The argument has always been made to me that because there is a lack of these agreements in place, there are land claims that haven't been resolved. What we're seeing here in this particular example is that the land claim has been resolved, yet it doesn't seem to be providing any further efficiency than where there's an unresolved land claim dispute causing the same frustration.

What is the incentive to move forward to resolve land claims? I mean, if it is frustrating to develop it from a development perspective—that's what I'm hearing—am I hearing you correctly?

4:25 p.m.


The Chair Conservative Leon Benoit

Mr. Calkins, you are out of time.

Maybe you can have a ten-second answer, Mr. Schryer.