Natural Resources Committee on Feb. 14th, 2012

[David McGuinty, Liberal, Ottawa South, ON]

Thank you very much.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. McGuinty.

We'll go to the five-minute round of questions and comments, starting with Mr. Allen, followed by Mr. Calkins and Mr. Rafferty.

Go ahead, please, Mr. Allen.

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

Thank you very much, Mr. Chair, and thank you to our witnesses for being here today.

Mr. Boor, when you talked about your investment, you noted that the facility you're talking about would offer a distinct competitive freight advantage, and your website actually talks about this point. That's what it says on your website with respect to the development of the chromite facility.

You also indicated in talking about this highway that it would be a critical infrastructure investment. If that is the case and you're getting a significant freight advantage from the facility, are you open to being a partner in the investment in that highway?

[William Boor]

Yes, we have been. A number of different structures have been discussed, including public-private partnerships. I think a summary statement of our view is that we think our project has the ability to be a catalyst for getting that infrastructure in place. We're willing to be partners in that development, but we view it as Ontario and Canada infrastructure.

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

Okay. Would you be a partner also for the energy requirements? There's discussion about the several hundred megawatts of power that would be required to satisfy the facility. Is that the same type of thing? Would you be open to a public-private partnership in that type of thing as well?

[William Boor]

Yes. For us it's all project economics, so if we can put together the proper deal to make the project work, we're open to it.

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

Okay. Thank you.

Mr. Coombes, I'm interested in this streamlining of the EA process, and maybe Mr. Boor would have a comment on it as well. You indicated you have an open-pit molybdenum mine in B.C., and Mr. Anderson was just saying there were differences between Saskatchewan and Ontario in the approval process. In New Brunswick they're pursuing an open-pit molybdenum mine as well, and they're going through an EA process now through the province, which is the entry for that project. Are you seeing a difference in the jurisdictions across Canada, and does that provide you with some challenges?

[Ronald Coombes]

The harmonizing that's going on in British Columbia, although under way, is still a little convoluted, in that the actual policy guidelines themselves still show some challenges. They're a little ways apart from one another. In our case, for instance, we were entering into the EA process in British Columbia only to find out that the harmonization between the provincial and federal governments wasn't adequate for us to actually be able put in the application successfully. There are still some issues that ask us to put the cart in front of the horse.

In our case, we want to enter into the EA process prior to the completion of a feasibility study. Already, from the onset of starting our project, we've done climatology, ground sampling, and baseline studies. We've spent just under a million dollars to date on those studies; however, in the federal EA process, more issues require answers. We really can't answer some of the issues yet in regard to moving waterways, etc., until we complete a feasibility study. There are still some unique problems with streamlining in British Columbia that are unanswered.

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

We had some testimony previously in which witnesses talked about the major projects management office helping to facilitate some of that. In your view, has that helped? We did notice that there's a big difference between the major projects management office and the northern major project management office. Are you seeing some efficiencies being gained by that mechanism? What would you suggest as a way to streamline that process and make it better?

[Ronald Coombes]

I think the process itself—trying to harmonize interprovincial and federal government policies—makes total sense, because then you're dealing with the proponents at both stages together, instead of having to deal with one and then the other, and then finding out that the other one still wants further.... I think that at the end of day it is not only going to help make the whole system more efficient and productive but also help us to understand what our financial costs are going to be before making those commitments. I think that overall the process is actually going to be based on much sounder principles.

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

Mr. Boor, do you have a similar view?

[William Boor]

Yes. We're at the early stage of this project, but everything I've understood about the major projects management approach is very positive in regard to being able to coordinate the people who are involved. We're hopeful that it will be very helpful.

At Cliffs, in Ontario we actually volunteered for an environmental assessment process so that we could link it up with the federal process and run it as one seamless process. We're very hopeful that this will be an efficient way to go.

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

Okay. Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Allen.

Mr. Calkins, you have up to five minutes. Go ahead, please.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Thank you, Chair.

Thank you, gentlemen, for being here today.

I'm an Albertan. I'm going to put something into context. In northern Alberta, we have something called the oil sands and we have some adjacent first nations bands there.

One in particular is the Fort McKay band, which does hundreds of millions of dollars' worth of contracts from the entrepreneurs in the band itself. If you were to take a helicopter ride over the oil sands and you were to take a look, you'd fly over the Fort McKay band and you would think you were flying over a rural residential area somewhere near Toronto, with beautiful big homes being built and so on. That particular band seems to be doing quite well.

Mr. Boor and Mr. Coombes, you've talked about jobs. If these projects are the long-term projects that we think they are, and if we think the Ring of Fire, when the development does happen and goes forward—and I'm optimistic that it will.... I mean, it's one thing to provide somebody with a job, but if you actually give a man a fish, you'll feed him for a day, while if you teach him how to fish, you'll feed him for a lifetime, so my question is from the perspective of training and so on.

Mr. Ferris and Mr. Louttit, you've talked about this as well.

What sorts of agreements are there and what sorts of discussions are going on, not just about providing jobs, but about actually making sure that various people get the training and the experience they need? We're talking about the long term here. The initial tranche will be to just hire people and give them jobs, but what kinds of plans are being put in place? Have any discussions happened with regard to making sure that first nations actually have the ability to start their own businesses and develop those entrepreneurial skills? Is there a utilization of Government of Canada programs in order to train for those entrepreneurial skills? Has any of that come up in any of the discussions?

[Raymond Ferris]

At this point in time, the first nations do not have any kinds of contracts. Maybe just recently I went through an old contract, but first nations building their own contracts is something that's been ongoing for the last 30 years. As far as I know, this is what we've been trying to get at: why aren't the first nations having contracts, as far as the camps go, in order to build that capacity and build that business knowledge? Then when it comes time for a mining project to happen, the first nations will be ready to take on a contract of that size, possibly for the lifetime of a mine.

So far the first nations don't have those kinds of contracts, other than maybe the Webequie First Nation, which did get some contracts, but they seem to be complaining that the significance or the role they play in those contracts is totally lopsided, and it isn't the kind of contract that I would be encouraging first nations to take.

In my own community of Constance Lake First Nation, we negotiated with a mining company right from the very beginning, when the mine started, so that everybody knew where we were and where all our roles would be throughout the life cycle of the mine. The idea was that if you want this, then you have to give us this.

We've taken a lot of these contracts throughout the exploration stage, and what it does is attract attention from the community that this mining company is going somewhere with us. Then in the end, we see that there will be significant benefits when the mine project itself starts.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

It sounds as though there are some folks in the area who do have some expertise with running a business, being able to prepare a contract, and establishing a business plan to go forward in concert. Is that true?

[Raymond Ferris]

Our ideal process is to work with the partners and to have the knowledge to be able to build up those skills and that capacity, especially with the contracts.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

I think it's a long-term plan; these things don't just happen overnight. Fort McKay First Nation didn't just dive right in there and start getting multi-million-dollar contracts from Suncor and Syncrude. These things happen over a long period of time.

I have a question for Mr. Boor or Mr. Coombes. We've heard a lot of concerns about the length of the regulatory process and about some of the roadblocks, which include dealing with the Government of Canada and, in certain situations and depending on the province, the uncertainty of dealing with some of the hurdles and obstacles when it comes to court challenges and so on.

I think you said in your testimonies that you're both publicly traded companies. Is that right?

[Ronald Coombes]

That's correct.

[Blaine Calkins, Conservative, Wetaskiwin, AB]

Every time you move forward, you have an announcement, a positive press release that says you've achieved another step in the hurdle, and so on. However, every once in a while you have a setback, whether it's a challenge or a regulatory setback. What does that do to investor confidence for your companies?

Can you guys speak to that?

[The Chair, Conservative, Leon Benoit]

One of you can give about a 20-second answer, please.

Go ahead, Mr. Coombes.

[Ronald Coombes]

It's an interesting question, because it's a double-edged sword. Since 2008, the international markets have basically blown up, and it's been much tougher getting dollars to finance projects. They want to see a lot more certainty in a project from the production end right now, rather than at the junior resource side, so it's been a lot tougher for the junior exploration side to raise capital.

Certainly their questions are very important. They want to know where the money is going, and the uncertainty of not knowing where certain dollars are going when you're talking to fund managers, etc., does create a difficult situation.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Rafferty, go ahead. You have up to five minutes.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you very much.

I'm pleased to be here today to sit in on this discussion. My riding, since it's in northern Ontario, is perhaps receiving some benefits from the Ring of Fire.

I have three sets of questions. I hope I can get to all of them.

Let me just say that I'm interested in education because of my background, but I also have lots of mining engineers in my family and I have a daughter, in fact, who works in mining in British Columbia, so I'm pretty up on the mining industry.

It can be a very quick answer to my first question, Mr. Boor. It concerns the process. I've seen it mentioned in your literature, and Sudbury was mentioned today, whether there is an all-weather road or not. Can I assume from those comments and from the literature I've read from your organization that Thunder Bay is not in the running for this processing?