Natural Resources Committee on Nov. 21st, 2011

[Robin Goad]

The partner, POSCO, a South Korean steel company, is actually 20%. This was part of a process where we wanted not only a financial partner, but also a strategic partner.

This is a very important metallurgical coal asset. Metallurgical coal is in very significant shortage of supply, so we're seeing a lot of backward integration types of transactions where steel companies are doing these kinds of agreements or joint ventures in order to secure their source of supply of key commodities.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is the remaining 80% of the capital entirely Canadian?

[Robin Goad]

Yes, 80% is Fortune Minerals Limited, our company.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In this case it is a Canadian company. Very well. That’s fine.

What kinds of metal will the Saskatchewan plant be transforming and to what end?

[Robin Goad]

The process plant in the Northwest Territories produces a concentrate, a bulk rougher flotation concentrate, which allows us to be able to inexpensively transport this material down to a lower-cost environment.

In Saskatchewan we will use hydrometallurgical technologies to convert the concentrate into separate cobalt and bismuth concentrates. Then we do further refining to produce gold doré, cobalt cathode, or a cobalt sulphate, for use in producing batteries, and we'll produce a bismuth ingot and a copper cathode material.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Once this material is transformed, is most of it used by Canadian processing companies, or is it mainly exported outside the country?

[Robin Goad]

We will determine that in the future, but we would expect that the market would be global. In particular, cobalt is in very significant demand for high-performance rechargeable batteries used in electric cars and hybrid electric cars, as well as portable electronic devices. So the market is global, but many of those batteries are produced in Asia. But there are also new plants being constructed in North America to use that kind of material.

Bismuth is a non-toxic replacement for lead, used in virtually everything lead is used in. It's also used in medicines, and we expect that the market would be predominantly in Europe and North America.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you.

Amongst your frustrations with development in the north, you mentioned the electricity issue. I believe one of you spoke of hydroelectricity, but obviously there’s also wind turbine generated electricity. It’s a pretty solid resource, up there, that could be useful.

Would you be in favour of setting up a solid sustainable energy development plan that would be of help to the communities up there, but would at the same time provide you with access to a stable source of electricity at a price less than what you pay for diesel?

[Robin Goad]

In my opinion, so-called green methods of generating electricity are not sufficient for baseload. The only way to achieve baseload is through nuclear, burning of fossil fuel, or using gravity and water, basically, to produce energy.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

This includes hydroelectricity? It could provide the required energy, correct?

[Robin Goad]

Hydro is the best form of energy and is adequate for baseload. For example, where Diavik is investing in a 9.2 megawatt wind farm, this would be used in conjunction with its diesel plants. In other words, when the wind is blowing it will be generating electricity, but it will still need a source of fossil fuel to generate its baseload.

In terms of investment, our project is only 22 kilometres from four hydroelectric dams, and those dams could be expanded and provide us with the electricity we need. That would reduce our dependence on burning fossil fuel and lower our energy costs, which would make our project more competitive.

[The Chair, Conservative, Leon Benoit]

Your time is up.

We go now to Mr. Lizon for up to five minutes.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Thank you and good afternoon.

Maybe I'll continue. I'll just ask a final question, if some of you gentlemen might comment on it.

What source of energy would you consider sufficient for your needs for the future? You mentioned fossil-fuel-burning facilities or nuclear. Do you have plans of using portable plug-in nuclear solutions that actually exist now?

[Robin Goad]

The mini-nukes that can produce up to 10 or 20 megawatts are fantastic technology, and I think there's a real place for them in the mining industry in the future.

I would not want to be a pioneer in trying to get a permit for one.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Therefore, if I understand correctly, from your point of view there's really no substitute for what you have: either diesel plants, coal-burning plants, gas-burning plants, or nuclear.

[Robin Goad]

In my view, both of our projects are quite proximate to hydro sources, which are clean, renewable sources of electricity. The problem in the Northwest Territories is investment in expanding those facilities. If we don't have access to grid power, then we have to put in some kind of independent power source, and in the Northwest Territories those are typically diesel plants, because that's the most efficient fuel, basically, from transportation.

However, we're also looking at the possibility of using compressed natural gas, which is significantly cheaper and also highly efficient, but it's not very good for variable loads. It's fine for baseloads, and when you're using mining equipment and you turn on a ball mill, for example, then you've got very significant demand loads. Diesel is the best alternative in that particular case.

I guess I'm coming back down to the issue of our thinking that there's a place for government to invest in basic infrastructure, whether it be roads or power, to enable development of resources in Canada and particularly in the north.

[Donald Bubar]

I can add to that point on power generation. Actually, we are looking at supplementing our power needs at the site with renewable energy. One of the attributes of our site is that we're at the end of Great Slave Lake and it's a particularly windy area. We think we may have an economic wind resource that could be used to supplement our power requirements at the site. We have a tower there now, testing wind speeds to see if that is a viable alternative for us.

Geothermal is another renewable energy source we're going to look at as well.

So there is scope for some creativity on energy in the Northwest Territories.

[Wladyslaw Lizon, Conservative, Mississauga East—Cooksville, ON]

Thank you.

I would like to change the subject to training, because Madam Jones had a presentation I'm really interested in, and I think the committee would be interested in hearing about future plans.

What's the involvement of mining companies in a training program? A training program works to everybody's benefit—the people who get trained and of course the employers who would employ people and are looking for skilled people. How does it work together?

[Hilary Jones]

I really appreciate that question.

We work in partnership with the industry. I've worked with every one of these mining companies in developing training. We have the skills partnership fund, and we're working with Canadian Zinc to help develop capacity, not only for the mining area but for the local community governments as well. We've targeted those. We've worked with Avalon ventures in developing diamond drillers for their site, as well as medical first responders. I'm really looking forward to working with Mr. Goad's company and the Tlicho, because the Tlicho government actually sits at our table as well.

When you look at the mine training organizations, their partnerships are made with the mining companies, the aboriginal governments, and public government. We all leave the politics at the door and we concentrate on developing the human resources that are needed for that area. It's been a very successful model that's been exported around Canada.

Our challenge is the funding, the ongoing funding. Our industry is coming to the table to actually supplement that funding.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Lizon.

We go now to Madame Day, for up to five minutes.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Welcome.

We all dream of a better world, by which we mean a better society, a better environment and a better economy. Our questions are based on our trying to find a balance in all this. We want our children and our children’s children to inherit sustainable development.

My first questions are for Mr. Kearney. I would like to know who owns Canadian Zinc Corporation and what percentage of the company’s investments are Canadian.

[John F. Kearney]

Canadian Zinc is a Canadian company that is almost 100% owned by Canadian shareholders. It is listed on the American bulletin board stock exchange, so we would have some U.S. retail shareholders, but percentage-wise, I would say that 70% to 80% of the shares are owned by Canadians, with perhaps 10% to 20% of the shares outside the country.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

Besides taxes, will Canada receive royalties?

[John F. Kearney]

Yes, there are royalties payable to Canada on all mine development in the north.

[Anne-Marie Day, NDP, Charlesbourg—Haute-Saint-Charles, QC]

When the mines will be in operation, what percentage of them will be operating?