Natural Resources Committee on Feb. 16th, 2012

[Chief Elijah Moonias]

Anyway, I'm not done yet. I want to answer your question. You asked how we are going to benefit with this development if it occurs.

As I said in my submission, we don't want to be stuck with this system that we have there, but it keeps us breathing, you know. If you don't do away with it in the future eventually and set it aside as you should, then we want to go back to that country that has sustained us for centuries--nobody knows how long. We don't want that territory turned into a river of mercury and arsenic, which is what you're turning the Athabasca River into as I speak here.

We don't want that endangered environment. Should we have to return there eventually, when it's all said and done, when you say you'll no longer have this system for the Indians—that's what you call these native people, “Indians”—then we will have to go back to our lands and live there. The treaty guarantees us that we can return there.

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

Thank you.

[Chief Elijah Moonias]

Therefore, if you do have to establish a development there, then we want to be part of it, and we need the training to do that. We need education and educated people. We need the reserve school to work. Right now, that reserve school system is a failure. Our grade 8 in Marten Falls is grade 6 in Geraldton, in the provincial system. That's how far behind it is.

[The Chair, Conservative, Leon Benoit]

Thank you, Chief.

Thank you, Mr. Allen. Your time is up.

We'll go now to Monsieur Gravelle. You have up to seven minutes, sir.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

My first question is going to be to the City of Sudbury.

You said in your brief that “it is critical that the federal government ensures that Canada's natural resources are developed in a way that benefits the region and province in which they are found”. Generally speaking, can you speak about the economic benefits for a community in having this resource refined in the province?

[David Kilgour]

Thank you for the question.

In the northern part of Ontario--and I realize this is not a federal thing at this point in time--right now we're fighting issues such as representation at the provincial and federal levels. Our populations are going down. Literally trillions of dollars of resources have been taken from northern Ontario, and you can only imagine the number of tax dollars that flow through because of the resources that are taken out of the ground.

We have to maintain and we have to do a lot of things in the areas where a lot of these resources are taken from in order to prolong life and to continue further expansion and further development in those areas.

The City of Greater Sudbury is here today not to lobby for the refinery in Capreol--which is the town I'm from, by the way--but rather to lobby from the point of view that northern Ontario, as an entity, produces an awful lot of wealth for the entire country and for the province of Ontario. We think it's very fair that some of those dollars go back and continue to encourage development and further growth in those areas.

We realize there is going to be a corporate decision on the business case, especially for where the refinery is going to be set up, and there are no two ways about that. We stand on our strength as being a good location for it, but again, that's not why we're here.

I mentioned a couple of things in my talk. One was using the whole idea of the Ring of Fire not as an entity unto itself but as a pathway to the future for all of Canada. I've heard that the potential for wealth in the James Bay area is half again larger than in the Sudbury-Timmins area, or maybe twice as large, and that's huge.

If you take that area, and Attawapiskat and Moosonee and James Bay, and you take the sovereignty of northern Canada, then rather than treating this just as the Ring of Fire unto itself, treat it as a way for the northern part of Canada to protect sovereignty and perhaps develop even further resources in that area.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

My next question is for Mr. Hanson.

I have an email here that is far too long for me to read completely, so I'm just going to summarize it. Last year Sinopec, a Chinese company, bought part of Syncrude, and with their stake in the Syncrude oil company, they have a veto for refining oil in Canada. Now Hong Kong-based Baosteel Resources has purchased 9.9% of your company, and they have an opportunity to buy 19.9%. Can you tell me whether they have a veto right on refining minerals in Canada?

[Wes Hanson]

No, they do not at all. The Baosteel investment in Noront was a strategic investment. We used it basically so we could fund the completion of the feasibility study on our nickel sulphide deposit and increase our chromite resources at our Blackbird chromite discovery.

Ultimately about 50% of the world's chromite is consumed in China, and about 65% is consumed in Asia as a greater market. That's where it's all flowing right now. Twenty-five years from now, it will be India, and 25 years after that it will probably be Africa. That's the sort of globalization trend we're seeing, and Canada is just one of many contributors in a global market of raw materials.

The reason China is consuming all of the chromite and a lot of the nickel is simply that they're currently the world's largest manufacturer of stainless steel. China and Asia produce probably about 70% of the stainless steel in the world, while North America produces about 3% to 5%, or in that range, so that's the market situation.

[Claude Gravelle, NDP, Nickel Belt, ON]

Where are you planning to refine your ore?

[Wes Hanson]

Well, hopefully it will be in Sudbury. There is excess capacity for our nickel ore in Sudbury.

Noront has always had the approach that we are going to mine our nickel ore first, simply because that offers us a greater return on our investment, because it's worth much more than the chromite is. In the future, if chromite is still available, and depending on what happens with the Cliffs development, Noront would look at trying to supply the North American market with chromite, because that would be a good fit for a company of Noront's size. Again, it would be produced here in Canada and shipped throughout North America.

[Claude Gravelle, NDP, Nickel Belt, ON]

Are you planning on using the same refinery or smelter as Cliffs Resources?

[Wes Hanson]

Well, we'd probably build our own.

[Claude Gravelle, NDP, Nickel Belt, ON]

You would build your own?

[Wes Hanson]

If that opportunity were still available, we'd probably look at building our own from cashflow from the nickel project.

[Claude Gravelle, NDP, Nickel Belt, ON]

Would it be in northern Ontario?

[Wes Hanson]

The most logical place to put a smelter is immediately on top of the deposit. Unfortunately, because of the soil conditions in the Ring of Fire, that's not going to be possible. As Chief Moonias has pointed out, it's like trying to build on a sponge.

That's one of the reasons Noront is focused on doing all of its development underground. That includes our tailings storage and the transportation of our concentrates. Placing it underground significantly limits its impact on the environment.

[Claude Gravelle, NDP, Nickel Belt, ON]

You just said something there that caught my attention. Are you going to store your tailings underground?

[Wes Hanson]

That's correct.

[Claude Gravelle, NDP, Nickel Belt, ON]

Is that so there will be no effect on the environment whatsoever?

[Wes Hanson]

That's correct. It will all be recycled underground and stored as a cemented paste backfill, so basically, after we create holes underground during the mining process, we'll place our tailings back underground in those holes.

[Claude Gravelle, NDP, Nickel Belt, ON]

Thank you.

Now—

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Gravelle.

Your time is up.

[Claude Gravelle, NDP, Nickel Belt, ON]

Is my time up already?

[The Chair, Conservative, Leon Benoit]

Time flies when you're having fun. You know that.

Mr. McGuinty, you have up to seven minutes.

Go ahead, please.

[David McGuinty, Liberal, Ottawa South, ON]

Thank you, Chair.

In Tuesday's testimony, we heard very different perspectives from private sector actors and from our first nations representatives.

Again today, Mr. Hanson, I hear you speak, and it's all hands on board, we're moving forward, we're in third gear, and we're making our application for environmental assessment. Chief Moonias turns to us and says that he doesn't have an IBA with you, that he was compensated for holes that were bored or drilled in his territory, but nothing's going to happen and that this is in court, so as they say in French,

who is telling the truth?

I'm reminded of the time I was training new Russian officers after the wall fell and the Soviet Union had to negotiate. A very bright Russian executive said to me, “Well, when you're negotiating with a mining company who is a foreign direct investor and you just don't think you can get any more, and your negotiator comes back and tells you there's just no more to be had, what do you do?” I looked at the young executive and said, “Well, the golden rule of negotiation is that you change negotiators and start again.”

Here we have a situation in which the first nations people are saying they're not moving forward without a joint review panel. Mr. Brodie-Brown has, I think properly, testified that we have to take these agreements to the next generation, which is equity participation.

What's going on here? What are we supposed to do? We've heard a couple of practical recommendations from Mr. McKinnon in terms of the federal role. You say we're moving forward and that this is happening, but the chief says it's going nowhere until this issue is resolved. What's happening here?

Maybe we can start with you, Mr. Hanson.