Evidence of meeting #21 for Natural Resources in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was infrastructure.
A recording is available from Parliament.
Liberal
Marc Serré Liberal Nickel Belt, ON
In the last two weeks there's been mention of a project called Metal Earth. It involves $110 million, seven universities, and the private sector. Are you aware of that project? How will that help us? It was funded by NSERC and CFREF. How will that...?
I have my opinion on it, obviously, but as a world leader to try and look at mineral exploration across the world....
Executive Director, Prospectors and Developers Association of Canada
Mr. Serré, I'm afraid I'm going to have to say I'm not up to speed on that particular subject, but in general Sydney, Australia, for example, has that kind of programming in place, and it has helped them greatly to become a world leader in mineral exploration.
Liberal
The Chair Liberal James Maloney
Are you finished? All right.
That takes us to the conclusion of the hour.
Lady and gentlemen, thank you very much, all of you, for coming out today and spending your time with us. Your presentations were very helpful and will go a long way toward helping us get our report done. Thank you again—particularly you, sir, who got up so early to be here today.
President and Chief Executive Officer, Northcliff Resources Ltd.
Thank you.
Liberal
Liberal
The Chair Liberal James Maloney
Thank you, everybody.
We'll resume our discussion. We now are joined by Susanna Cluff-Clyburne from the Canadian Chamber of Commerce. From the Northwest Territories and Nunavut Chamber of Mines, we have Mr. Joe Campbell, and from the Mining Association of Canada, we have Mr. Pierre Gratton.
Thank you all very much for joining us this morning. We'll leap right into things. If one of you wants to volunteer to start us off, that's fine.
Susanna Cluff-Clyburne Director, Parliamentary Affairs, Canadian Chamber of Commerce
I can start.
Director, Parliamentary Affairs, Canadian Chamber of Commerce
Good morning,
I am pleased to be able to be here with you this morning.
I am going to switch to English, in the interest of time.
It will be a lot more pleasant if I proceed in English.
My presentation is going to focus on the aspect of your committee's study that examines how to ensure indigenous peoples and communities are meaningfully engaged in all stages of development, be it in minerals or in other sectors of the economy.
Canadian businesses and indigenous communities often work in positive and mutually beneficial partnerships on development projects. These development projects not only benefit the businesses, but they also benefit the indigenous communities through jobs, infrastructure, and the creation of new businesses, just to mention a few.
This collaboration is usually the result of early engagement, consultation, and, if appropriate, accommodation.
However, these partnerships can run aground when they are subject to the constitutional duty of the crown to consult with and accommodate indigenous peoples whose rights could be negatively affected by a development project.
As was mentioned by one of the witnesses in the previous panel, Canada's legal and regulatory stability is a competitive advantage to our businesses and attractive to prospective foreign investors. However, a glaring exception is the opaque approach of the crown to the execution of its duty to consult and accommodate. This is unacceptable, unfair, and potentially harmful to businesses, indigenous peoples, and the crown.
Governments can delegate the procedural aspects of their duty directly to businesses, usually by mandating consultation with indigenous peoples as part of the regulatory process.
The lack of a clear framework for if, when, and how this delegation can occur and for the roles of the crown, business, and indigenous peoples often causes confusion, and this can lead to projects being delayed and even being cancelled. When this happens, businesses and often indigenous communities lose, and so does Canada.
Last week the Canadian Chamber of Commerce released their report, “Seizing Six Opportunities for More Clarity in the Duty to Consult and Accommodate Process”. I believe the committee clerk has distributed the report to you. The report was the result of nearly a year of consultations with more than 90 business and indigenous representatives, legal experts, and government officials. It encourages the federal government, as the primary interlocutor between indigenous peoples and other stakeholders, to take the lead in adding more clarity to the process in six ways.
The first is by working with indigenous peoples and businesses as well as other levels of government to develop a consistent duty to consult and accommodate framework. We're not saying one size fits all; we're just asking for a consistent framework.
The second is by bringing indigenous and business representatives together to develop a framework for engagement that emphasizes building relationships prior to the discussion of specific projects.
The third is by demonstrating it has skin in the game by establishing an arm's-length mechanism to measure and report on the crown's performance of its constitutional duties to indigenous peoples.
The fourth is by showing its progress in its commitment to a new, respectful relationship with indigenous peoples. This includes addressing fundamental quality-of-life issues for indigenous peoples, such as clean drinking water, adequate housing, education, and health care.
The fifth is by assisting indigenous communities in building their capacity to review and assess development proposals, to accumulate access to capital so they can become partners in development projects, and to develop inventories of their skilled workers.
The final opportunity we identified is aimed at Canada's businesses. They know that their projects stand better odds of success if they regard engagement of and consultation with indigenous peoples as an investment rather than an expense. Indigenous peoples' traditional knowledge, relative youth, and proximity to project sites can be a definite competitive advantage. Project proponents also need to manage their relationships with the crown effectively and keep it updated on their engagement and consultation activities. It was the view of the people we spoke with that this would help reduce the number of last-minute surprises, surprises that can often be unpleasant.
As Canada fights to improve its economic foothold in the global economy, we can no longer afford internal disputes that delay and even terminate projects that improve not only our international competitiveness but also the quality of life of indigenous peoples and all Canadians.
Thank you once again for having given me this opportunity to be with you today.
Liberal
Pierre Gratton President and Chief Executive Officer, Mining Association of Canada
Thank you very much, Mr. Chair, members of the committee, Clerk, and fellow witnesses.
Thank you for this opportunity to speak to you today and contribute to this important study.
I'm Pierre Gratton. I'm the president and CEO of the Mining Association of Canada, representing Canada's mining producers. You heard earlier from Andrew Cheatle, who represents the exploration side of the business.
Before I get into my comments on the state of the industry, I would like to speak quickly about MAC and one of our members' key obligations. We have a program called Towards Sustainable Mining that is mandatory for our members. It involves annual reporting against a suite of rigorous performance standards that touch areas such as aboriginal and community engagement and energy and greenhouse gas management. Third party verification is conducted to ensure this performance.
Third parties have evaluated it as best in class across industry sectors in Canada. Last year we were very proud to see that Finland, in its search for a program of this kind for its mining industry, adopted our Towards Sustainable Mining program. We have conversations going on presently with Botswana, Argentina, Peru, Ecuador, and elsewhere.
Rather than reading through the brief that was sent to you, I'll just emphasize a few key points.
The first is that we have been going through a protracted downturn, as you know. Some have commented that this is a structural downturn. That comment has often been made about the energy sector. People point to Iran's oil coming onto the international market. They look at self-sufficiency in the United States and so on. In the mining sector, however, it's our view that this is a cycle like any other cycle. There isn't a structural change under way.
I'm pleased to tell you that there's a general emerging consensus now that the cycle is turning and that commodity prices are starting to rebound. We're seeing strength in some key commodities, such as gold and other precious metals. Metallurgical coal is on a bit of a tear at the moment; zinc is doing very well. Some base metals are still struggling, but overall the sentiment is that we're about to enter a new positive cycle for minerals and metals, all of which means there's a great opportunity ahead of us for the next few years to continue to build Canada's mining industry.
Second, we've identified the potential of about $145 billion in new investment that could come to Canada, but there are a number of factors that will influence whether or not that money comes here. There is a general sense that Canada's competitiveness vis-à-vis that of some of our key competitors, such as like Australia, is declining. In the last few years Canada's ranking in the Fraser Institute's survey of mining jurisdictions has slipped to Australia, with Australia occupying three of the top 10 spots and Canada occupying only two. That used to be very much the opposite.
We're also seeing Australia overtake Canada as the top jurisdiction for mineral exploration investment, so this is not just perceptions but hard data. Canada had occupied the number one spot since 2005, but lost it last year, and this is continuing. There's certainly evidence that we're slipping, and we need to figure out why and try to turn things around.
In terms of why that might be, I'll touch on a few areas.
The first is Canada's regulatory system. If there's one thing the mining industry values most, it's certainty. If there's one thing we haven't had from the federal government in the last number of years, it's certainty. A constant review of environmental legislation is challenging for our sector.
Having said that, we welcome the review that's planned for the Canadian Environment Assessment Act and the Fisheries Act, because our experience as a sector with the new amended CEAA and the Fisheries Act has not been the same as that of other sectors. We have found that federal oversight of mining is greater than ever, intrusion into provincial jurisdiction is growing, duplication with provinces remains, and coordination with provinces in environmental assessment has deteriorated.
Our most significant concern is how cumulative effects are addressed for CEAA projects, and the interplay with the Species at Risk Act. Some of the issues you heard from the Sisson project—they're not a member of ours, but I'm familiar with their project—relate entirely to the new CEAA 2012 and how it's being implemented. We're strongly engaged in the review of CEAA and are hopeful that as a result of this review, we will have a better environmental assessment act going forward—one that is timely, yet includes meaningful participation with indigenous groups and also looks at broader impacts when appropriate.
With respect to our industry's engagement with aboriginal communities and how it relates to the regulatory system, there are a couple of key points.
Unlike the National Energy Board, there has not been a single example in which indigenous communities, or any interest group, have been denied standing in a federal environmental assessment of a mining project. That issue, which has been very front and centre in the pipeline debate, does not exist in mining. As you probably know, mining is the largest private sector employer of indigenous peoples in Canada on a proportionate basis, and it's growing all the time. There are now over 350 agreements between mining companies and indigenous communities across the country.
What we're seeing is not just agreements concluded with new mining projects—and I think you'd be hard-pressed to find a new mine that doesn't come with agreements—but we're also seeing the industry conclude agreements in areas that have been mined for years, before this was common practice. You'll now have agreements in Sudbury, in Highland Valley in the Kootenays. It's emerging across the country. Our industry recognizes that these types of partnerships are critical to our future.
On infrastructure issues, there's no question that as our industry moves north, a key challenge is the cost of infrastructure. We published a report, along with the PDAC and other partners, that shows it's two times, and sometimes two and a half times, more expensive to develop a mine in the north compared to the south, and 70% of that is related to infrastructure. We're certainly looking, through the new government's infrastructure investments, to include some investments targeting the north to enable new mining development to take place.
Lastly, on the question of innovation, we're working very closely with the Canada Mining Innovation Council, CMIC. Our members are very active. This is an umbrella organization that's bringing together multiple partners to focus on key challenges in the areas of energy efficiency, tailings management, and other environmental challenges the industry faces. We're looking to the federal government to support CMIC's request for funding of $50 million over the next five years.
I'll give you an example of one of their projects, which is focused on underground mine equipment that's electric—and this is real. Goldcorp in northern Ontario aims to have its next mine fully electric, with no use of diesel at all. The health and safety benefits are considerable. The greenhouse gas reduction benefits are considerable. This is not pie in the sky. What CMIC is helping to enable is taking the electric vehicle technology that we have elsewhere and applying it to the mining sector, to the kinds of mining equipment fleets we need. This can be turned around in the next few years. We're working closely with the suppliers to make this happen. If Goldcorp does it, you can bet your boots that other companies will follow suit. Then I think we'll start to see a global transformation in terms of how the mining industry operates with respect to mining equipment and GHG abatement going forward.
It's a very exciting time, but we could certainly use the federal government's help. We often look at the forestry sector and the $2.3 billion in federal funding it has had over the last 10 years. Mining has not had a fraction of that, so we're asking for $50 million over the next five years in the upcoming federal budget.
With that, I will stop, and I look forward to your questions. Thank you.
Joe Campbell Director, Northwest Territories and Nunavut Chamber of Mines
Good morning, honourable members.
My name is Joe Campbell and I am president of TerraX Minerals, a publicly traded junior company. We're exploring in the Yellowknife area of the Northwest Territories. I am also a board member of the Northwest Territories and Nunavut Chamber of Mines and I represent them.
I'd be remiss to say that these are my words; they are not. It's a collection of words from notes of various members within the two chambers.
I want to open by saying that the mineral industry is good for the north. It helps provide thousands of jobs, fuels the economy with billions in business expenditures and taxes, and even helps contribute to the regional infrastructure.
Over the past 25 years, with the discovery of diamonds in the Northwest Territories, the mining industry has made even greater strides in aboriginal communities, creating thousands of person-years of employment, supporting a wave of new aboriginal businesses, and producing a flow of millions in taxes and royalties, not only to public governments but now to aboriginal governments too. Mining has significantly catalyzed the creation of a middle class in the aboriginal communities in the north.
Mining is the north’s economic advantage, and as a result, today it is the largest private sector contributor to the GDP in both the Northwest Territories and Nunavut. In doing all of this, the industry has essentially been your contractor, doing what governments cannot do, converting seemingly worthless rock into valuable jobs, business, and tax revenue. We do that at great risk, for finding a mine is not easy, nor, as I can tell you from personal experience, is finding the money, for we do much of that with other people’s money. We do all of that following the ever-changing regulatory blueprints that you have asked us to follow, but there are limits to what we can deliver by ourselves. Our mines won’t last forever, and we must continue to work to sustain what we have and to explore to find new mines so that our efforts to date don’t slide backwards.
How do we sustain such a good thing? It is primarily by keeping investment interest strong. We live in a competitive world, and investors have a host of countries to invest in. To keep investment strong requires an attractive climate that provides reasonable security for investors, since finding mines is already risky enough. We very much need you to help us if we are to create a strong foundation for future growth.
With that, let me speak to three broad areas for improvement.
First, improve access to land. Access is the lifeblood of exploration and mining. Without it, we cannot find and develop mines. Land access is problematic today, and we need Canada to help remove the challenges that I will now describe.
The first is settling aboriginal land claims. The southern half of the Northwest Territories is still subject to unsettled land claims, and negotiations have been under way for over 30 years. Besides removing lands from development during negotiations, not clarifying who the land owner is creates tension between public and aboriginal governments. Investors can get innocently caught in the middle when, for example, the government says the land is open to exploration and a company begins its work, and then an aboriginal government says the land is not open and threatens legal action. As a result, much land is officially off-limits to development, and much more is effectively put off-limits.
Second, we need to reduce the amount of land being proposed for pure conservation with no allowance for mining forever. The footprint of our current Northwest Territories mines is about 0.005% of the Northwest Territories; the area of all of the mines from all of our history is less than 0.03%. This is a very small footprint. Our exploration is short-lived and it has low environmental impact, yet we are the recipients of the largest national parks in the country. The most recent federal proposal for Thaidene Nëné national park is for 15,000 square kilometres, three times the size of Prince Edward Island. Mining is not a threat in this highly regulated world, and our mines operate to very high standards. We can coexist with the environment. We can have both.
Third, we need help with the proposed land use plan for Nunavut that is moving dangerously and strangely towards the most protective in the country. I say strangely for, if it is allowed to proceed as it is, it will compromise even the Inuit, the largest landowners in the world, from developing many of their land's hard-negotiated mineral rights. Since INAC will need to sign off on the final plan, it is time for Canada to scrutinize the work that is being done before taxpayer money is wasted and Inuit economic future stymied.
An efficient regulatory system provides certainty of cost and process for investors. Unclear, uncertain, and untimely regulatory processes frighten investors away. The previous government opened the door to regulatory cost recovery in both the Northwest Territories and Nunavut. These two territories have the most progressive and transparent regulatory systems in the country. While they are models of aboriginal and public governments sharing responsibility for the regulatory regime through board processes, they are also expensive processes. Please don’t hinder investment by imposing cost recovery on already high-cost processes and jurisdictions.
We also need your help with regulatory capacity. Regulatory boards are not fully staffed, which causes process delays and adds pressure and cost to the system. The office overseeing Nunavut mineral tenure continues to be woefully understaffed. Simple things like phone calls are not returned. More importantly, tenure maps are not updated, and what we call assessment reporting is delayed.
We need Canada to modernize Nunavut’s tenure system. INAC has promised for years a modern tenure system in Nunavut, called map staking. The transition from ground staking to an online system would represent transformative change and would increase business and investor certainty, reduce costs, and support the participation of local prospectors in the industry. This could lead to a resurgence of the mineral industry in Nunavut. Our industry strongly supports the map-staking initiative developed by INAC, but we are weary of the long implementation dates that have come and gone numerous times. We would like to see an end product implemented, particularly at a time when the industry could use a boost.
Finally, we need to reduce the infrastructure deficit. The Northwest Territories and Nunavut cover the size of western Europe, but with a tiny fraction of its infrastructure. There is no highway system in Nunavut and only a small one in the Northwest Territories. Similarly, there are no power grids in Nunavut and only three stranded, isolated grids in the Northwest Territories. There is no ability to bring cheap power from the south or vice versa.
As a result, remote mines must supply their own roads, ports, and airstrips as well as their own diesel power, adding cost that most competitors don’t face. Diesel is used because it's the only reliable source we have. This further un-levels the playing field in an already high-cost Northwest Territories and Nunavut, making them less competitive.
There are a number of infrastructure proposals on the table that all need federal financing. We are in desperate need of some visionary federal investment. The nation-building Grays Bay road would fit that bill nicely and give Nunavut its first road link to southern Canada.
In closing, our industry has made great strides in the past 25 years, particularly in aboriginal communities. Building a strong mining future matters. It will help sustain and grow benefits for those northern and aboriginal communities, and as a side benefit, it will make a strong statement for Canadian sovereignty in the north.
Thank you for listening.
Liberal
The Chair Liberal James Maloney
Thank you, Mr. Campbell.
I now turn the floor over to Mr. Erskine-Smith for some questions.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Thank you, everyone, for joining us today. I am here on behalf of MP McLeod, so I particularly want to thank Mr. Campbell for joining us.
Mr. McLeod has prepared three questions for you, Mr. Campbell. If you don't mind, I will put them to you.
First, you spoke about transportation infrastructure in particular. You mentioned that one of the three areas of improvement for mines in the territories is reducing the infrastructure deficit. Could you expand on the need for improved transportation development in the north and its particular importance to your industry? You mentioned one in particular, the Grays Bay road. Perhaps you could expand on that and other projects.
Director, Northwest Territories and Nunavut Chamber of Mines
Yes. Depending on where projects are, their need for infrastructure differs. In the case of my project near Yellowknife, roads are not a major factor; it's power. Certainly for almost any other project in the Northwest Territories and Nunavut, it's road access.
There are projects north of us, some of them 200 to 500 kilometres away, with no access, so you're looking at aircraft access or ice roads. It adds to the cost, and I think Pierre said it's about two and a half times the cost. That's not just a number that's made up. As an example, I can drill a drill hole in Yellowknife for about $200 a metre. If I'm a hundred kilometres north of Yellowknife, it's $500 to $600 a metre. That's the difference in cost. Infrastructure, road access in particular, is critical for most projects.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
You also spoke of settling land claims. You mentioned that there are a number of land claims that remain unsettled in the territories. Can you speak a little bit more about the uncertainty that this adds to the exploration companies' activities and your expectation that with land agreements finalized, there would be an uptake in exploration?
Director, Northwest Territories and Nunavut Chamber of Mines
The area where I'm working in particular is part of the Akaitcho land area. Most of that land is withdrawn and has been for a long time, so nobody can actually explore in those areas. Claims are grandfathered in those areas, so if a claim lapses, that land is taken out of circulation for any further exploration.
These are huge areas. They're not small spots of ground. If you look at a map of the Akaitcho land withdrawals, you'll see it's much larger than the area of some of the provinces in Canada.
If we don't settle these land claims, when I go out into the market to go look for money—and I'm heading to Europe in a few days—the first question people ask is, “Well, we've heard that there are no settled land claims. You'll never be able to get a permit to do a mine.” This directly impacts people's ability to raise money in a tough investment environment.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
My last question for you from Mr. McLeod is this: could you speak on the efforts of the mining companies in the territories to recruit, train, and employ indigenous workers?
Director, Northwest Territories and Nunavut Chamber of Mines
I can't speak very clearly for all the other members, so I'll give my own personal experience.
Again, we're a small company, and it's all exploration. Every dollar that I spend is taken out of other people's pockets, yet for the last three years we have participated in prospecting and geoteching courses within the Yellowknife area, in particular with an emphasis towards the aboriginal communities.
I'd like to say that those efforts have been highly successful, but they have not. We carried out three courses within aboriginal communities and we were hard pressed to get people to complete those courses. It's not a matter of just the company's efforts; there has to be a reach back from the other direction towards us.
That doesn't mean we stop. As a matter of fact, as we speak right now, we're carrying out two more of those courses, again trying to bring people in. When those people go through those courses, we hire them.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Thank you very much.
With the three remaining minutes, I'd like Mr. Serré to pick up where I left off.
Liberal
Marc Serré Liberal Nickel Belt, ON
I want to thank the three presenters. It was very insightful.
I have a comment for Mr. Gratton. Thank you for bringing up the Goldcorp all-electric mine idea. I've had the opportunity to speak with them, and it's pretty exciting that we can lead this innovation worldwide.
I'd also like to mention that there have been companies in northern Ontario that have developed battery operation for heavy equipment underground, which reduces the dependency on diesel, as Mr. Campbell indicated. We have to continue doing that R and D research, as indicated earlier.
My question goes back to Mr. Gratton and the chamber. I know you've done some reports in the past related to clusters, but before I get to the question of clusters, let's look at infrastructure. Mr. Campbell indicated the need for infrastructure when we look at Nunavut, and when we look at the Ring of Fire in northern Ontario, we see that the infrastructure piece is also missing there.
I know there have been some studies in the past. Are you looking toward any future studies? Now we're waiting for that road study for northern Ontario from the provincial government. Have there been any further studies to see what the next steps are in developing the Ring of Fire?
President and Chief Executive Officer, Mining Association of Canada
I am personally not aware of new studies specifically with respect to the Ring of Fire. I wanted to flag to this committee, though, that there is a model from Alaska that we have brought to the government's attention to address the infrastructure deficit.
For the last several decades, Alaska has had an infrastructure bank, which has been a tremendously successful economic engine for the State of Alaska. It provides long-term, low-interest financing for major infrastructure projects that allow economic development that might otherwise not take place. They are not in the business of competing with banks; they help finance projects that banks won't touch.
We had Michael Catsi, vice-president with the Alaska infrastructure bank, come to Ottawa. I know he would come again. If this committee wanted to invite him, I am sure he would come, and he could tell you about the work they have done.
I will just give you one quick illustration. The Red Dog mine in Alaska is a world-class lead and zinc operation, half-owned by the NANA peoples and half-owned by Teck Resources, a Canadian company. It was developed some 20 years ago because the Alaska infrastructure bank helped finance the road and port on a 50-year payback period. It has generated billions of dollars in economic benefits to the State of Alaska and to the first nations in the state.
In Nunavut, we have a world-class lead and zinc deposit at Izok Lake. We have known about it as long, but it remains idle because we don't have the infrastructure.
Liberal
Conservative
Mark Strahl Conservative Chilliwack—Hope, BC
Thank you very much, Mr. Chair.
Thank you to everyone who presented today.
Mr. Campbell, I would like to speak with you. A couple of years ago, when I used to sit on the other side of the table, I had the honour of being the parliamentary secretary for Aboriginal Affairs and Northern Development and spent a lot of time in the north meeting with not only indigenous Canadians, but industry up there. I was obviously pleased to see the way they were often working together on common goals for common projects.
I want to talk about a couple of issues.
One of my trips there was travelling in February to Inuvik with the prime minister at the time to announce the completion of the Inuvik-Tuktoyaktuk highway, the completion of the road to resources. It was a great community celebration and a big investment in northern infrastructure. I know there is more to be done there, certainly.
You spoke about the threat of treating the northern territories as a national park, essentially. Often, south-of-60 NGOs, groups, and even politicians look at the north as a great white tundra that is pristine and that we should protect at all costs, because it is easy to do. There are no people living there, so you can meet your goals to protect land without displacing people and—from the perspective of a southerner—without having much impact. Certainly Leona Aglukkaq and others used to fight against that notion, the notion that we should allow the north to be turned into one big national park. We see it now with the marine-protected areas that this government has set targets for. The north, again, is seen as an easy target where we can set aside vast tracts of land that will never be developed.
Can you talk about what impact that has had, and expand a little more on your fear of what it might impact—not only resource companies and the thousands of workers who rely on that employment, but indigenous communities that are supported in large part by resource development and resource revenues in the north?