Natural Resources Committee on Oct. 20th, 2016

[Geng Tan, Liberal, Don Valley North, ON]

What are the main barriers to making use of innovative technology in the industry? Are there any difficulties or other considerations?

[Gavin Dirom]

That's a good question. I'll probably have to think about that one a bit more. I would imagine resources just in a general sense are necessary, especially at the R and D stage. MDRU is fortunate to attract a lot of support from major exploration and mining companies. You want a program to at least look into whether the Government of Canada would be willing to provide more resources to make sure we can really move these efforts forward.

[Geng Tan, Liberal, Don Valley North, ON]

Thunder Bay, maybe you have some comments to add. I know you have Lakehead University. You mentioned the chemicals and the collaboration with Queen's.

[John Mason]

Yes. Thank you very much, Mr. Tan, for the question.

There are other examples that I would specifically like to speak to, and we're seeing a collaboration of industry, industry associations, and the Geological Survey, as well as the Ministry of the Environment.

With respect to looking at the largest footprint on most mining sites, whether it's a legacy site or an active mine, there is often a tailings and polishing pond area. There's opportunity to recycle water, but it is an opportunity that is often embedded within the environmental assessment anyway with their permit to mine. That's an ongoing challenge in being able to reuse that water. The bulk of mines are reusing the vast majority of the water over and over, and that's really an ongoing piece.

There's also an opportunity, I think, at Lakehead University with their Centre of Excellence for Sustainable Mining. They're doing a lot of work with Barrick. The Williams Mine at Hemlo is Barrick's only producer in Canada, as the world's largest gold company.

There's a lot of work regarding remediation with indigenous people around wild rice and the impact of these existing tailings. The mine has been in production, as many of you know, since about 1984, and the life of Williams Mine will likely continue for another five years. That's an ongoing piece. That's very much imbedded within the impact benefit agreement. We work with communities like Heron Bay and Pik Mobert, in particular, as they work arm in arm to look at opportunities around those particular tailings ponds and repurposing them, eventually.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Tan.

Mr. Barlow.

[John Barlow, Conservative, Foothills, AB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being with us today. It's great information. It's certainly much appreciated.

Mr. Angus, I wanted to ask you, as vice-president of the Northwestern Ontario Municipal Association, the following question. The Province of Ontario introduced the northern industrial electricity rate program to help reduce electricity rates for the mining sector and other northern Ontario industries. With the addition of a federal carbon tax on the provincial carbon tax, do you have any idea how much further subsidy you'd need on that electricity rate to remain competitive?

[Iain Angus]

Thank you very much for the question.

We're just starting to get our heads around the whole issue of cap and trade and carbon tax and what have you. I'll be honest with you. I don't fully comprehend the implications yet. I can tell you that the existing Ontario program, although it certainly was welcomed when it was initiated and we pressed hard for it to become permanent, is still inadequate in terms of major industries in northern Ontario. By this I mean that there is only so much money in the kitty, and it's all being taken up by existing operators.

Secondly, because it relates to a company's ability to initiate environmentally friendly processes to change what they're doing now, it really makes it more difficult for any new player, a new mine or a new forest operation, to actually access the dollars, assuming that the program was expanded, because anybody building something now is going to use the most efficient motors, the most efficient control systems, the most energy-efficient way of doing things, so they won't be eligible.

The other thing is that there is a restriction on who can participate. Any small producer, if they have a mine that doesn't require a lot of electrical power, may in fact not even meet the threshold. Irrespective of carbon taxes or cap and trade, there is still a lot of work to be done to make it more affordable to operate. As John mentioned before, a large percentage of the costs of operating a mine is for energy.

[John Barlow, Conservative, Foothills, AB]

That being said, one of the biggest frustrations I've heard about is the lack of consultations around this announcement of a federal carbon tax. This is being imposed on provinces, but that's going to trickle down to municipalities as well. From what you're saying, already the electricity rate program for northern Ontario is not sufficient when you have the highest electricity rates in North America in Ontario. We talk about the importance of these small to medium-sized operations. Those are the risk-takers, the ones that do a lot of the exploration in the mining industry.

What would be the impact on those businesses, many of which already don't qualify for the electricity rate program, when you put on an additional cost with a carbon tax? What would be the impact on some of those small to medium-sized operations? Will they be able to survive this if they can't access additional funding?

[Iain Angus]

John may be able to give a better response.

Just off the top I would say in a lot of ways it depends on what the commodity price is. If they already have a healthy margin or a healthy profit given where their particular commodity is selling on the market versus their costs, they'll be okay. If they're borderline.... I know that for some of the mines that we hope to see come to fruition, they're really challenged, given today's price of gold, for example, is they need the gold price to go up another $100, $200, or $300 in order for the mine to be profitable. The ongoing expense of operating costs will actually contribute to the decision of whether or not they will put a shovel in the ground.

John, do you have anything to add?

[John Mason]

Thank you very much for the question.

Just to frame an example here, I would suggest—and I track this on a regular basis, and picking up on Iain's point—the all-in sustaining cost that day for production at that particular mine, in U.S. dollars, ranged from roughly $700 to about $1,180 an ounce cost on the footprint of any given operation. That's for some of the largest to the very smallest operations in northwestern Ontario. In some cases there's very little margin, so if that additional cost is there, you may be generating red ink, and a mine general manager or a mine president each day monitors that exchange rate, that cost all-in sustaining, and the price of gold today as they plan forward. So that could be putting some projects on very tenuous ground.

I appreciate your comment about electricity prices in Ontario. The NIER program does help offset some of that. Some of the companies have had to go to other incentive programs like the IEI, which has helped a little bit as well. Any break helps. But, again, there's concern about carbon tax and cap and trade as this moves forward. Is it likely going to add to that additional cost and the bottom line, that all-in sustaining cost that morning when that mine continues on its path? It is a concern.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Barlow.

Mr. Serré, I believe you're going to take the next five-minute spot.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair. I didn't get a chance earlier, but I wanted to talk about the Ring of Fire with our Thunder Bay witnesses, and we all know the provincial lead for the Ring of Fire, Minister Gravelle, from Thunder Bay, with whom you've had, I'm sure, opportunities to discuss things.

Obviously the entire country and the mining industry want to move the Ring of Fire forward, and nationally now recently we have our Minister Bennett also getting involved to provide support regarding the first nations community. I wanted to know if you had any specific recommendations to the standing committee here and the federal government on how can we support, enhance, the provincial government to move this project forward.

[Iain Angus]

Thank you very much for the question. It's an extremely important one and it's one that has occupied a lot of us for a lot of years now.

How we move this project forward is a very complicated. On one hand, you have all of our desires to see economic activity, but on the other hand you have all of our desires to make sure the first nations are fully engaged in deciding about the future of their territory. At some point, someone has to decide that we need to put infrastructure in place. Once our consultations, by which I mean the formal sense of the obligation to consult and accommodate, have been completed, somebody needs to move forward. It's our understanding that of the four first nation communities in the Ring of Fire, only two at this point in time are interested in having a year-round road connection to their communities. And that's fine. The last thing we need to do is to impose any kind of new infrastructure on a community that doesn't want it.

However, there needs to be a way and the federal government with the fiduciary responsibility needs to take the leadership to say, okay, we've done all the consultation. We understand where it shouldn't go. Let's start doing the detailed plans to put the east-west road in place. I say east-west road for two reasons. One is that the winter road particularly follows that route, and the other is that the one mine that is ready to go needs a road as opposed to a rail line. As well, Pickle Lake and Sioux Lookout are already service centres for those areas, and it's logical to make the connection there.

The federal government needs to say, okay, we've done all of our consultation, but it's time to move forward and let's go hand in hand with the province. They've put on the table a billion dollars that needs to be matched, and as I mentioned in my opening comments, that's not just a road but it's a transmission line corridor, it's a fibre-optic corridor, it's a full service corridor, and that will open up the Ring of Fire to a lot more detailed drilling, detailed environmental assessments, and moving forward, actual development, which will be a boon to those four communities whether they're connected by the road or not.

The other thing, and I go back to an earlier comment from a member of the standing committee, is that the road must be built to service those communities as the prime purpose. The transportation of the materials in and the transportation of the ore out need to be accommodated, but the safety and the provision of services to those communities is uppermost.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

Mr. Dirom, we talked earlier about the clusters, the ecosystems. Obviously in B.C. they're strong, but there are comments about the commercialization aspect. When we look at the private sector, you do all the R and D, the universities and you do the research. When you look at the innovation component linked to the commercialization to support the private sector, that linkage is a bit broken. Do you have any specific recommendations for the federal government to play a more active role on the innovation side, with the commercialization, to get the clusters stronger and get more jobs in those areas?

[Gavin Dirom]

All I would offer and suggest at this point is to convene a meeting with CMIC, the Canada Mining Innovation Council, and the schools that are active in this area, whether the ones from British Columbia or the ones mentioned from Ontario, and have them offer up some of the recommendations and suggestions to make sure that part is considered and supported.

In the B.C. context, some of the great innovation has occurred in geochemistry, for instance, not to mention geophysics. Some efforts like that have in fact moved our industry forward, and we have then taken those technologies and methods around the world.

There are good examples. We could be doing more, absolutely, and perhaps I would suggest CMIC should work with the federal government and other stakeholders to come up with those recommendations for you.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

How much time do I have, Mr. Chair?

[The Chair, Liberal, James Maloney]

You're out of time.

[Marc Serré, Liberal, Nickel Belt, ON]

Do I have five seconds?

[The Chair, Liberal, James Maloney]

If we could do something in five seconds that would be impressive.

Mr. Cannings, it's over to you for three minutes, and that's our last segment.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I have a question for the Thunder Bay contingent. We've heard a lot about indigenous communities and how important that relationship is with the mining industry and how close a relationship it is. I'm wondering if you could provide some comments on what the federal government could do to perhaps further education needs in indigenous communities at all levels, from elementary school up to post-secondary that would give these communities a better capacity to take part fully in the mining industry.

[Iain Angus]

I'm nervous about providing a formal answer, because NOMA's position has always been that we do not speak for the first nations. They speak for themselves. They're very competent in doing so.

That being said, we need to recognize that the greater the ability of any of the indigenous communities to make decisions for themselves, the stronger those communities are.

We certainly see them as partners on an ongoing basis. In fact, we joke that they have more clout than we do when it comes to the federal and provincial governments. We want to work with them because it's in all of our interests to see them do well.

The more knowledge they have and the more resources they have access to, the better we all will be.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I have a quick question to Mr. Dirom.

We talked about New Gold and the New Afton project in Kamloops. That has been talked about glowingly here. There is also the Ajax project closer to Kamloops, which has attracted a lot of controversy. I wonder if you could comment on whether that controversy is simply due to the fact that the project is closer to Kamloops and perhaps a different sort of mine, or whether there's something in the process that the two companies have followed that has made that different.

[Gavin Dirom]

That's a good question and probably a tough one. I think you're quite right with your opening observation. Proximity is probably the biggest consideration with respect to that project and the level of community support.

I wouldn't suggest that it's a process factor or a company factor or anything else. I think proximity is the issue.

[The Chair, Liberal, James Maloney]

That takes us to the end of our time for questioning. I would like to say thank you to all three of our witnesses for joining us today whether in Ottawa of from Thunder Bay. The evidence will be very helpful and useful when we get to our report stage. We appreciate your taking the time.

[Iain Angus]

Thank you, Mr. Chairman and members of the committee.