Natural Resources Committee on Oct. 20th, 2016

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I appreciate that.

To pick up a bit on Mr. Rusnak's theme, we've seen British Columbia mining companies that have done very well in building relationships with indigenous communities; we've seen companies that have had catastrophic failure to engage in a meaningful way with indigenous communities, which has, quite frankly, led to a lack of approval for some very big projects in the province.

I want to get your unique perspective. I've heard speakers at your conferences, and you have a parallel track at the AME BC conference dealing exclusively with indigenous issues. In our non-treaty environment, can you perhaps give some perspective on things that the industry can do in British Columbia and maybe, more importantly, what you believe government can do to ensure that we can achieve a level of certainty? Capital is very fluid; these companies operate in multiple jurisdictions. If we don't achieve some certainty, including with managing the indigenous industry relationship, that capital will continue to look for more secure markets to invest in.

Perhaps I could get your comments on that.

[Gavin Dirom]

Thank you. That is an important issue. As with many things in life, we tend to dwell on the dramatic or things that are negative, but there are actually many positive agreements between industry, government, and first nations in B.C. in particular. I think the one thing the Government of Canada could do, working with the province and working with associations and first nations, is to showcase and highlight all those great examples that rarely get any attention.

As you pointed out, that's what we try to do at our conference. At Roundup we have something called the “gathering place” at which we have first nations come together with industry and government officials to very openly and honestly explain the good, the bad, and the ugly about what's happening. That's a healthy discourse to continue.

Out of all of that, New Gold is a really good example. It has the New Afton mine in Kamloops, at which a large percentage of the workers are indigenous community members. Sharing those success stories and trumpeting them across Canada and around the world would attract even more confidence and investment in our projects and in our industry. They are real; they exist. We're just not doing a very good job of sharing those stories.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Cannings.

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

Thank you, Mr. Dirom and our guests in the Thunder Bay area.

I want to pick up on the Thunder Bay theme and ask Mr. Mason and Mr. Angus about Thunder Bay itself and the port. We've been talking about infrastructure. I just wondered if there's anything regarding the Port of Thunder Bay that might be of interest and importance to the mining sector and what we could do to help there.

[Iain Angus]

Thank you very much for your question, Mr. Cannings.

Certainly, in recent years, the Port of Thunder Bay has positioned itself extremely well in terms of being a way in which major equipment and major materials that come from outside of northwestern Ontario can be brought here and then transported, primarily by road, to the mine sites.

John, I don't know if you have any further information that you can pass on.

[John Mason]

Building on that theme, it's been a strategic advantage in terms of the location of the port. At MINExpo in Las Vegas, one of the largest mining conferences on the planet—some 50,000 people attended that event—when I articulated the positioning, that one can actually use seaway-driven goods, incoming goods that can be brought to the centre of a continent, that blew a lot of people away. Not to belabour the fact with New Gold, but we see other operations bringing in mine and mill equipment from Europe. Five to six different locations within Europe bring in that equipment. Four hours later, that can be on site.

One of our impediments—and this may be a broader transportation issue—is that we don't have a full port for handling containers. That particular piece is a bit of an impediment. Winnipeg and Toronto have to come into play on that in moving containers back to Thunder Bay and backhauling. That's not a very efficient way of moving goods. That's something we want to see improved with respect to providing those opportunities in terms of brainstorming a piece around that particular attribute. In general, I guess, regarding our northern transportation network, as one of the least-developed provinces in Canada, we do have challenges around general transportation in the north.

On logistics, we see grain. We've been fantastic the last four years on grain shipments east. With respect to incoming goods, the mining equipment may be an exception, or turbine parts, or the opportunity for engaging the potash, uranium, and oil and gas sectors. That's been very good, but a lot of goods also end up going to Chicago and to other locales in the Lake Michigan area. They come empty to Thunder Bay and backhaul with grain. If efficiencies around that can be created on the seaway, I think that would also be a great attribute if we could really explore that a bit more.

[Iain Angus]

Just to make a final point, there is no capacity whatsoever on the Great Lakes for transporting containers.

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

That's interesting.

I'm going to turn to you, Mr. Dirom. You brought up the subject of environmental assessments, and of course there's now an ongoing consultation process for another new system, a new process. You also mentioned the substitution agreement between Canada and British Columbia. I know that there was a legal issue around a similar substitution-type agreement with the Northern Gateway pipeline and the NEB, in which the courts found that British Columbia shouldn't have given that power to the federal government. I'm wondering if you could comment on whether that might come into play here.

[Gavin Dirom]

I really couldn't comment, but I imagine it's part of the motivation or the rationale for having the discussion now. We're a completely different sector and I don't think we're directly implicated in that, but I understand the question.

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

I'll stay with environmental assessment. I know that some of the big projects.... Prosperity mine was involved with the Chilcotin decision in part, but the Red Chris project also was delayed in the courts because of, I would say, confusion over the environmental assessment process. I think that specific issue has been settled now.

I wanted to know if you could comment on the EA process as it involves first nations. Now the State of Alaska is very concerned about a lot of B.C. projects in terms of environmental assessment. How could we develop a process that would give everyone confidence and make the whole process smoother for the industry and the public at large?

[Gavin Dirom]

That's a very good question. Thank you.

There seems to be some confusion among all the parties as to the level of detail required for environmental assessments with respect to some of the projects you mentioned and some of the changes that have been made. It's an evolving process. I think it's very important that we do continue to work hard to get it right, to be both effective and efficient, and as always, to garner public trust in the system.

At the Red Chris mine, for example, ultimately it went in a very positive way, having received a vast majority of support from the Tahltan First Nation.

I think there are opportunities to poison-proof things for sure, but there's a level of detail, a level of science required in any review in order to arrive at a basically well-educated outcome or decision. I think that's what's important to keep in mind with respect to an EA, and not to allow it necessarily to move into very highly detailed, very site-specific—what I would call—permit-level valuations. For the most part, those are the responsibility of the provinces or territories where these projects may exist.

I think I'll stop there. Thank you.

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

Quickly, we've been talking about New Gold—

[The Chair, Liberal, James Maloney]

Sorry, we're out of time.

Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair.

Thank you, witnesses, for all the work you're doing in the mining industry across Canada. As we know, and as we have heard from many industry experts and executives at mining companies, it's cyclical. The positive news is that mineral prices are rebounding, so we have to get ready for the next cycle of growth.

I want to focus on clusters and ecosystems, and creating more jobs around one mining job. Many studies have shown that three to five jobs are created around one mining job. Today it's great, because northern Ontario and B.C., two of the largest centres, have clusters already in place.

We heard in the last session from Canada's Oil Sands Innovation Alliance. They look at exploration, financing, R and D, operations, and commercialization, which are very important and also lead to innovation.

In the mining sector, we do not have a coordinated effort across Canada. I wanted to get from each of the three of you some specific recommendations, for the industry and the federal government, to expand and strengthen clusters and ecosystems in the mining industry, as Australia has done.

[Gavin Dirom]

One quick observation is that even if you take one or two differences in British Columbia, it does have a cluster built on experience in the backyard, as it were, with respect to exploration and mining development. For technical, legal, and accounting matters, there is a cluster that has formed there. It has taken decades, and so forth, but I would suggest and argue that you can never take that for granted. There is a disconnect, as you say, and we can strengthen not just that cluster but also others across Canada.

One very positive initiative is the Canadian Mining Innovation Council, the CMIC. I think that body and others like it are working across Canada in a much more coordinated way these days. If we all get behind it, support it, and focus, indeed, not only do we support its initiatives and efforts but that also strengthens all the sub-clusters, as it were, right across this nation.

You're quite right. Australia is regularly observing and borrowing the great ideas that Canada has worked hard to implement, and the Australians are succeeding at it. They tend to be out-coordinating and out-organizing us and our efforts thus far. We have some room to improve.

I think part of it means acknowledging and recognizing that you can never take a business cluster or any kind of industry cluster for granted. It needs constant support and nourishment in so many different ways over time. That includes through academic schools and training facilities, which over generations can improve technologies, be innovative, and pass on great learning to the next generation.

[Iain Angus]

I'm going to let John from Thunder Bay start, and then I'll follow up.

[John Mason]

Thank you for the question. I appreciate the opportunity to talk about clusters and opportunity.

Certainly on the service and supply side, out of Thunder Bay and northwestern Ontario, the Thunder Bay Chamber of Commerce, the northwestern Ontario chamber, or NOACC, and the Thunder Bay Community Economic Development Commission have worked hard on the supply and service side for not just mineral exploration but the full mining cycle, I would say, or mining sequence—exploration, development, production, and closure—and have companies aligned under that particular set of opportunities, driven by specific projects, either the existing mines or the new mines that are breaking through.

There is also a strong cluster through Lakehead University and their Centre of Excellence in Sustainable Mining and Exploration. That centre has just been formed in the last three years. It is designed to look at opportunities. To give you one example in which I see innovation going and research through their engineering department—and this is one of dozens of examples, but let me just highlight the one—they're adapting forestry-based chemicals now to replace petroleum-based chemicals in a number of the mill flotation operations within certain aspects of circuits for North American Palladium and the Goldcorp Musselwhite mine as well.

That engineering department is pushing on that piece. They've also signed a strategic alliance with Queen's University to grow that particular hundred-year-old-plus school and roll it into opportunities in northwestern Ontario, to work in a collaborative sense around that piece of clustering.

I might also mention that one of the pieces we see—and this fits into the opportunities for indigenous communities in the business world in general—is having communities, including first nation communities, take advantage of the mining readiness strategy that Thunder Bay and Fort William First Nation are partners on, this particular piece that rolled out in 2013.

We live and breathe through that in a variety of themes, including cluster development, on a regular basis. That's our template, our model for moving forward. We're now seeing other jurisdictions, including Colombia, Ecuador, and other parts of northern Ontario modelling the same type of strategy. We're hearing this through consulting groups, etc. To me, it's the ultimate form of flattery. It's an opportunity to position oneself for a path forward.

I would also mention that we were very successful just in the last two months under the First Nations-Community Economic Development Initiative, CEDI, put out by the Federation of Canadian Municipalities. We, the Fort William First Nation and Thunder Bay, were successful in a bid with a regional footprint into the northwest, as one of four of 82 paired applications for that program. We're now starting another three-year journey on that particular piece, which will fit nicely into our mining readiness strategy and give us a plan forward specific to industrial lands.

The focal point is 1,100 acres of industrial land called the railway lands, part of the first nations settlement that straddles the community of Thunder Bay and Fort William First Nation as an urban first nation community. That's the target area to develop industrial land. We already have six tenants on that particular site, on those 1,100 acres. That number is going to grow over the next three years as we become more strategic. We're very excited to work with FCM; we see this as a huge opportunity.

There are other specifics as well wherein we're seeing innovation. North American Palladium is using an example from northern Quebec—again this case example piece is powerful—to look at replacing propane, a significant cost. I'll remind the panel that about 35% to 38% of costs for an operating mine in Canada can be energy costs, and those can be for heating underground, typically with propane; they can be for electricity to run your mill, your crushing components, and your mine trucks, etc. It's a big price tag. If you can reduce some of that and use biomass to replace propane—and it has been done at the Hecla mine, Casa Berardi, in northern Quebec, and in northwestern Ontario. We're looking at it as well.

As well we're looking at opportunities around battery usage, another cluster piece that has come out of Sudbury, a very mature sector of various research groups. From that cluster we're learning in northwestern Ontario as well about the opportunity to use battery power to replace diesel underground, to deal with emissions, to deal with costs, and to push through that piece.

[The Chair, Liberal, James Maloney]

Thank you, gentlemen.

[John Mason]

Thank you.

[The Chair, Liberal, James Maloney]

Ms. Stubbs, we go over to you for five minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here and for your comprehensive and eloquent presentations.

I have a pre-political background in policy development around the full value chain of oil sands and heavy oil development, and skilled trades education. I've really valued learning more about mining, specifically.

This might be a little weird to say, but I find the mining industry to be inspirational. I'm astounded at the pioneering spirit, the risk-taking, and the benefits that are developed in the sector. I speak, I think, for all of my colleagues here. I want you to know, at least on my part, I'm committed to doing anything I can as a legislator to help further the sustainability and all the benefits the mining sector provides in Canada.

I appreciate the comments on the extension of the METC. I had the opportunity to rise in the House of Commons prior to the budget and ask them. I urged the government to extend the METC and the flow-through share provisions, so I was happy to see that. Thank you for your comments. That is an important fiscal measure.

I would welcome all of the witnesses to make any brief comments about any additional tax incentives or fiscal measures that might be helpful for investment and mining development.

I wonder, Mr. Dirom, if you might expand, for the benefit of all of our colleagues here, on one issue we haven't touched on yet.

When I met with your organization in March, in B.C., I learned about the concerns around some boundary issues with Alaska. My understanding is that the Alaskan government participates sometimes in regulatory reviews of B.C. mines and that they can put pressure on top of the already rigorous regulatory process. Of course, we know that the major industry players in the United States frequently put pressure on Canadian industries, and that the American government occasionally uses those conflicts to negotiate with the federal government.

I wonder if, for the benefit of all of us and for our information, you can provide us some context for that, and maybe just inform us about any of the issues your industry faces from American interventions in the regulatory review process.

[Gavin Dirom]

Thank you, Ms. Stubbs, for that question.

I would offer that the industry I represent is full of incredibly dynamic, hard-working, inspiring, and proud folks, but realistic. They are dreamers, but it's realistic optimism, I think, and that's the difference.

With respect to the transboundary relations between Alaska and B.C., obviously they're based on the transboundary waters. There are five major rivers that flow from B.C. into Alaska—so the Alaskans are downstream, as it were.

I think it's a very important and serious matter to be discussed. The reality is that there are potentially many mining projects in the northwest area of British Columbia; however, as I think was mentioned earlier by one of the other witnesses, projects move slowly. It's often a 10- to 15- to 20-year process, and it's not as if all those projects are actually going to come to fruition any time soon—certainly not all at once.

I think it's one of these things that we do engage in as a province, and of course, then, as a country, respectfully with our neighbours, and we work to understand what their concerns are. I think that has been happening. The Government of B.C. signed an MOU with Alaska over a year ago. Now it's a statement of co-operation, which I think speaks to that neighbourliness and working to involve neighbours in projects of concern. I think the concerns are reasonable, and they need to be addressed in an appropriate manner.

I know the companies involved in the area—for instance, Seabridge's KSM. They've had a very rigorous environmental assessment process that involved, of course, both B.C. and the Canadian government, and they had significant input from Alaskan regulators at both state and national levels.

There has been input in the past, and I think the statement of co-operation now formalizes, essentially, processes and efforts that had been under way. If there are improvements to be made, I think that's all the better. It's making sure we have a good dialogue with respect to first nations as well, tribes on the Alaskan side and first nations on the Canadian side. It's borderless for them in many respects, and it's important that we can take that into consideration.

l think it's heading in the right direction. I think the implementation of the statement of co-operation will be one to watch and one to be supportive of over the coming year or two.

[The Chair, Liberal, James Maloney]

Thank you.

Mr. Tan.

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

Sure.

The downturn of commodity prices has significant impact on the exploration companies and the mineral producers, and has even probably forced them to cut costs and stop investment. Places like B.C. have lots of mines and hundreds of exploration operations, as you just mentioned.

How is your association working with the innovative technology developers at universities to apply the innovation to your industry to improve the efficiency and the cost, especially for those junior exploration companies to make use of the innovation technology?

[Gavin Dirom]

That's a great question, Mr. Tan.

I think this ties back to the earlier question about the business or industry clusters that we've formed here in Canada. Vancouver in B.C. is a good example of that on the academic side, especially with universities and schools, whether we're talking about BCIT, the University of British Columbia, or SFU, and so forth.

If I can raise one example, at UBC, there is a body called the MDRU, or mineral deposit research unit. This unit was created decades ago by Dr. Peter Bradshaw, who was just inducted into the Canadian Mining Hall of Fame. The MDRU works with industry and government in the field to troubleshoot and perfect technologies that will give us an edge here in Canada and be applied elsewhere as well.

There are a number of interesting studies. I'll mention one quickly. I am a bit of a science nerd, so forgive me. Muons, which are charged particles hitting the Earth regularly, penetrate everything on a regular basis. There's a mine on Vancouver Island where they're studying the penetrations of muons through the rock in order to correlate that signature with a typical drill, and the assay results that would correspond with copper, zinc, and so forth. If you can do it with charged particles in a muon, it sounds very sci-fi, but it's real and it's happening. The Government of Canada is supporting that research between MDRU and the mining companies.

There are lots of examples like that. That's just one of many that we don't really hear about, that we're not showcasing, and we're not promoting. It's very good work. Our scientists and our industry are working together on a regular basis to improve things.