Natural Resources Committee on Oct. 4th, 2016

[Sarah Fedorchuk]

Because yesterday's announcement is so new, our finance and sustainability departments are still doing the models to figure out what the impact and the different options would look like for Mosaic.

I think our biggest concern right now for our market is competitiveness. The Russians can produce potash a lot cheaper than we can because of where their currency is at. Anything that gives Canadian potash producers a competitive advantage is seen as a positive at this stage, just because pricing is so low.

Right now, we are still going through the models and trying to figure out what the impact to our business is, but we are concerned about the competitiveness of Canadian potash.

[John Barlow, Conservative, Foothills, AB]

You also mentioned how you need to find ways to not discourage investment to ensure that this industry can grow. We're talking about expanding our agriculture and ensuring that we're able not only to feed Canadians but also to have the potential to feed the world.

I'm assuming that this announcement yesterday certainly does not help or address your concern about discouraging investment. I would think that this punitive carbon tax is going to be a very difficult signal to industry in terms of looking at investing in Canadian mineral resources.

[Sarah Fedorchuk]

When the market is in a dip, as it is now, there is a lot of internal global competition for those capital dollars. For us to be seen as a less business-friendly environment would be a concern to us, yes.

[John Barlow, Conservative, Foothills, AB]

Thank you. I appreciate that.

I want to now ask Mr. St. Louis a couple of questions.

I was going through the minister's mandate letter again last night as we were preparing for today's presentations. I noticed that nowhere in the mandate letter did it say anything about maintaining the mineral exploration tax credit or the flow-through shares, and I find that very concerning. We've heard from several mining operations especially how important the junior mines have become in terms of taking on the burden of a lot of the exploration work. You're kind of the risk-takers.

There are a lot of comments in the letter about supporting green technology and that kind of thing, which is important, but I am concerned about the lack of direction in or the lack of commitment to maintaining those two programs. From a junior mining perspective, can you talk about the importance of the mineral exploration tax credit and the flow-through shares and what the potential consequences would be if those two programs were not renewed?

[Brian St. Louis]

Absolutely.

The flow-through share program is something we make use of very regularly to fund our operations, bottom line. That's one of the ways we raise funding. In a tough capital market, it helps to make it a little bit easier.

The mineral exploration tax credit applies more to earlier-stage work, so that would be drilling-type exploration work. As a diversified company, we still are always trying to look at new projects. We're doing some exploration in a few sites right now, including in New Brunswick, actually, where I think you're from, MP Harvey, where we could claim the mineral exploration tax credit. It's near your riding.

Ultimately, as we develop the green and clean industries, we're going to need raw materials to feed these supply chains. To get those raw materials, we're going to need to explore and see what we have in Canada.

In conclusion, yes, the flow-through share program and the mineral exploration tax credit are very important to the junior mineral development and exploration industry.

[John Barlow, Conservative, Foothills, AB]

We had a previous study on the oil and gas sector that asked many of the same questions we're asking here, but one thing that was interesting and came out of that study was the existence of a group called COSIA, an oil sands group where a lot of the major companies are sharing innovation and technology without patents and without having to worry about the economics on that side.

Maybe you or Ms. Fedorchuk can answer this question. Does a similar group exist on the mining side, where some of the major companies or juniors would be sharing technology and innovation as a goal of advancing your environmental stewardship and technology and innovation?

[Brian St. Louis]

Absolutely. I'm sure my fellow witnesses could talk about some of them.

A more sector-specific one that we're a member of is the Canadian Rare Earth Element R and D Initiative. We've worked with numerous players from industry, academia, government, and commercial labs, as well as some end-users, on developing technology, clean processing, and environmental regulations surrounding rare earths.

There are some higher-level groups. The Canada Mining Innovation Council I believe is one. There's a lot of work going on at the National Research Council that is related to energy storage, which of course goes into the raw materials mining sector.

I might be missing one or two, but yes, there are similar groups. They may not be as high profile as the oil sands group, but yes, there are such groups.

[John Barlow, Conservative, Foothills, AB]

Perfect.

Thanks very much.

[The Chair, Liberal, James Maloney]

Mr. Caron, welcome. I neglected to mention that earlier. Thank you for joining us today.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

This is a return to my roots given that, when the last Parliament ended, I was the NDP critic for natural resources and vice-chair of the Standing Committee on Natural Resources. I'm delighted to be here today. Thank you very much.

My first question is for Ms. Fedorchuk.

I'd like to pick up on the carbon tax issue, which was mentioned earlier. It's an option Canada has talked about for a while. I'm curious as to whether Mosaic has done any work in recent years to reduce its carbon footprint and lower greenhouse gas emissions, as other sectors of the industry have done.

[Sarah Fedorchuk]

Yes, absolutely. We have had a number of initiatives, for example, the automation project I mentioned that turns off our heavy equipment when it's not in use; and the water project we have with an industry partner near one of our facilities to heat the water using their steam, so that we are using less natural energy to heat the water we need to use in our process at that facility.

We've also done feasibility studies on using renewable energy in our process. Right now, it wouldn't be a question of us not being able to do it technically or the engineering being out of the realm of what we could do, but rather, it would be the upfront capital expenditure that we would have to put into switching some of our sites over to renewables.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

So you've made some progress there. In any case, you are going in that direction.

One could argue that this actually makes your processes more expensive than those of Russia, for example, with whom you're competing. Yet you're still doing it because you can find an advantage in it. Right?

[Sarah Fedorchuk]

We believe we definitely have a responsibility to the communities in which we operate to look at all projects that would make our mining operation sustainable while still remaining cost competitive.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You're a member of the Saskatchewan Mining Association. Are you a member of the Mining Association of Canada as well?

[Sarah Fedorchuk]

We are a member of the Saskatchewan Mining Association.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

And the Mining Association of Canada?

[Sarah Fedorchuk]

Through the SMA, we are a member. We're a member of the SMA, which is a member of the Mining Association of Canada. We're a member of Fertilizer Canada.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

You are aware that the Mining Association of Canada actually established a policy in support of carbon pricing back in the summer, the summer of 2016.

[Sarah Fedorchuk]

I wasn't aware of that. We are still discussing, thinking, and looking at what it would mean for Mosaic as a whole.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I'm just looking at the release here. It was issued actually on April 13, 2016, and is entitled “Mining industry supports carbon price to address climate change”.

[Sarah Fedorchuk]

I wasn't aware of that one.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

That's okay. Thank you very much, Madame Fedorchuk.

Mr. St. Louis, I'm going to go quickly.

One thing struck me in your presentation when you were talking about the relationship with aboriginal communities. You said, basically, if I recall, that the negotiations you have, the discussions you have, tend to be inefficient because you don't speak the same language.

You have projects all over the country. You have some in the Northwest Territories, New Brunswick, Ontario, and Nova Scotia. Is it the same everywhere? Have there been some differences where you were able to actually construct or engage in a meaningful dialogue? What could you take from those successful examples to translate that all across the country? Is it possible?

In addition, you gave us one possibility, which is to actually have business-to-business engagement with somebody from Natural Resources, somebody from the government with experience with first nations. What other advice would you give the government in that regard?

[Brian St. Louis]

I'll start with the first part of the question, the differences regionally. I don't think it's necessarily even just regionally; it's sometimes community by community. The capacity levels, the business development levels in some communities are quite strong, and there are some communities that are thriving based on that. I can't think of any example off the top of my head, but there are numerous communities that are thriving.

There are other communities where the unemployment rate is in the 90% range. The capacity isn't there. They don't have an economic development arm. There are big differences, basically, in some of the communities versus others.

With that in mind, as an observer, my recommendation to the government would be that in the communities where the capacity isn't there, where you can't even have the business-to-business conversation because they don't have any business expertise and don't have a development corporation, trying to build that up would be the forefront of creating economic development.

If one goes into a community and can't find someone to have a business discussion with, it's very tough for, let's say, us as a junior resource company to help them along in developing that capacity. It wouldn't just be from the perspective of a company like ours; those types of initiatives can help the community in all types of negotiations, in all types of business opportunities, even outside the resource sector.

I'll move on to the second question, which I believe is, what can the government do to help with the duty to consult?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

It's more, what advice would you have for the government in terms of negotiation? If we have this different language being spoken, it's actually hard. What should the government do about it?

[Brian St. Louis]

That's a very complicated question, I suppose. One aspect is the direct conversation between the government and the proponent, depending on the jurisdiction because, ultimately, a lot of this goes to the provincial government, so it depends on the region. But just a more active participation on the duty to consult kind of permeating the technical environmental side, where that makes it so the company or the proponent can have a more business-oriented conversation while providing the information to the government and the indigenous group on the regulatory permeating side....

Have that as a separate discussion versus the business side. I think keeping those two apart is wise, because commonly the two goals will frustrate the ultimate goal when the macro-level goals of the proponent, the government and the first nation are generally lined up.