Introduction

As 2007 draws to a close, we compile this article by collating and editing our postings from the past year on the British Columbia mining story of the year, namely the Kemess North Mine.

This project captures these significant issues that face society and the mining industry in 2007:

  • Employment and mining development.
  • First Nation rights.
  • Acid Rock Disposal Options and Alternatives.
  • Risk analysis and the ability of technology to foretell the future.

And then there is the fascinating sight of a body of three ordinary people sitting in judgment on a project, a province, a nation, a country, and an industry.


Kemess North

For those unfamiliar with the background to this story, here is my summary. Somewhere far up in the interior of British Columbia is a marginal mine. Its original owners went bankrupt well before metal prices started to climb. Northgate took over and restarted mining. Now work is humming along and about 400 people are gainfully employed. But the ore body is limited and if they do not open the proposed North pit, the mine will close and the 400 will have to migrate to Alberta.

Northgate proposed that the tailings from the new North pit would go into a nearby lake. The lake is not actually big enough so they proposed to increase lake capacity by building some of those magnificent engineering structures, namely earth dikes and embankments. The local folk who have lived and fought for thousands of years around the lake, consider the lake sacred. They do not want their fishing and trapping around the lake disturbed. So they and a number of environmental groups protested.


January 2007: the Start

The story started innocently enough in January 2007 with a news release:

“Northgate Minerals Corporation reports that Ministers of the Environment for Canada and British Columbia have amended the schedule for the completion of the Joint Panel Review for the Kemess North Project…..to permit time for the federal and provincial governments to resolve outstanding issues relate to First Nations participation in the review process.”

Thanks to the internet we can access original documents that may shed a faint light on this announcement. The University of Northern British Columbia in October 2006 summarized the issues thus:

“Peter MacPhail of Northgate Explorations says the Kemess mine will shut down in 2009 if they are unable to receive a go ahead for the development of Kemess North. Speaking to the opening session of the Kemess North Copper-Gold Project environment review today in Prince George, the company said the new mine will operate until the year 2022, but can only operate profitably if they are allowed to put their tailings into Duncan (Amazay) Lake."

The company proposes three dams to store tailings from the new mine. The Panel hearing the matter is comprised of Carol Jones, Chairperson, along with Dr. Malcolm Scoble of UBC, and Mark Duiver. Chief John French of the Takla Band …. called on the Board to consider that no funding agreement is in place with the First Nations, nor has any separate consultation taken place. Northgate he said is not looking at any options for the project other than to destroy Duncan Lake. “I welcome you” he said “but I am not happy with what you bring.” “Everything that we take from Mother Nature we put back.” said Chief French., “In ten years the mine will be gone and then the jobs will be gone along with Duncan Lake.” Chief French says there be no net gain “That is when the Government will be called upon to fix the problems of the lake and they will need to spend all the money that they received from the project. These hearings should be suspended until the land claims issue has been settled.”

Northgate says that of the 475 people that work there, 51 are First Nations, 30 from the immediate area. An additional 19 First Nations’ people work for contractors doing work at the mine. Northgate says the company at present has a payroll of 27 million and there are 125 jobs from contractors working at the site and the spin off from the mine accounts for a further 950 jobs.”

In November 2006, the First Nation Summit Task Group made a submission to the Kemess North Joint Review Board. I summarize from the Executive Summary:

“This fundamentally flawed review process is a collaboration between the federal and provincial governments and the mining proponents to (1) completely destroy Amazay Lake (also known as Duncan Lake) as a viable freshwater ecosystem by turning it into a mine waste disposal site; (2) solely for the sake of economic convenience, provide rationale to the mining proponent and its shareholders for their preferred option for mine waste management (and the only alternative presented); and (3) run roughshod over the First Nations peoples’ constitutionally recognized and affirmed Aboriginal title rights to Amazay Lake and the surrounding area, including downstream."

On the Northgate Minerals Corporation site is this comparison of an alternative tailings disposal scheme, called the Multi-storage sites option:

“Lowest environmental risk: The environmental risk of losing Duncan Lake is offset by the cumulative risks associated with the five facilities required for the Multi-Storage sites. The long-term closure risks of Duncan Lake are significantly less than those of


Heroes or Villains

Then the report was issued. The panel recommended that the North Kemess mine not go ahead. The share price of Northgate the company seeking to develop the mine fell by 45 cents to $2.78, effectively reducing the paper value of the company by $740 million. That is nearly a billion dollars knocked out of existence by three brave (or foolish) people.

At this link is the Executive Summary, and at this link the full report that is big and takes a while to download. It is compelling reading, and constitutes, in my opinion, an historic document. I predict this summary will be read and debated far and wide. This report will, I predict, impact mine development for a long time to come. After all, using the principles of sustainable development (which they do not really explain or articulate, and which I confess I still do not understand,) they reject the mine and recommend that it should not go ahead.

I conclude that the panel rejects the mine for this basic reason: At best the mine will last about a decade. Thereafter for thousands of years, the government will have to pay to treat water from the lake, now contaminated by the tailings. And the local folk will have lost a sacred site. Here is a quote from the Executive Summary to support my conclusion:

The Panel notes that the Project’s benefits accrue for only a relatively short period (two years of construction and 11 years of mining production). This period could be reduced if the Project, which is not economically robust, were to close prematurely. Key adverse effects include the loss of a natural lake with important spiritual values for Aboriginal people, and the creation of a long-term legacy of environmental management obligations at the minesite to protect downstream water quality and public safety. These obligations may continue for several thousand years, and include ongoing treatment of poor quality water from the open pit (the “North Pit”), and regular monitoring and maintenance of the waste disposal impoundment (the “Duncan Impoundment”) and its three dams, to preserve the desired water balance and water chemistry in the Impoundment and to ensure the health of its aquatic ecosystem.

Personally I got the impression in the report that the First Nations’ issues were not a factor in rejecting the mine. Seems the panel decided it’s a bad idea to stick future generations with the cost of perpetual treatment, regardless of whose offspring we are talking about–period.

I must applaud the courage of the report’s authors in making what is sure to be an unpopular decision. The BC Mining Association has already come out in criticism of the report. I repeat in full this report on the response of the BC Mining Association, because I believe the points they make are seminal to the start of an historic debate:

“It is unfortunate that a project of such considerable importance to the entire province has been essentially halted by untested subjective concerns. The fact is that the conclusions of the report state clearly that the test of environmental stewardship, the key aspect of the environmental assessment process, has been met and the project would not cause significant adverse environmental effects. It seems as if the unresolved social and cultural considerations of the region far outweighed the tangible economic and environmental factors being considered. This decision could potentially mean the loss of hundreds of high paying jobs and the flight of investment from an area desperately in need of economic activity.”

The report from which I lift the quote above goes on to say that the “Mining Association of British Columbia believes this ruling seriously calls into question the Canadian environmental assessment process, and not just as it applies to mining. This ruling sends a poor message to the international investment community and implies that matters that are political in nature and not specifically relevant to environmental assessment can undermine the process. In the future, it can be expected that, without significant changes, industry will look upon panel hearings as potential political roadblocks rather than opportunities for a balanced view of good science.”

I cannot but agree with the Mining Association of British Columbia that this report sets a dangerous and scary precedent; it makes a mockery of the concept of the environmental review process; it confirms that politics, not public debate control; and it undermine confidence in the virtues of a reliable judiciary. If the parties could not agree, then at least they should have appointed arbitrators, not academics and consultants.


A Bad Day for Mining

Recently I had supper with some senior folk in the BC mining industry. Their unequivocal opinion was that Scoble’s Kemess report constitutes a “bad day” for BC mining. When I explained that, in my opinion, the basis of the decisions was that ten years of mining income could not offset thousands of years of treating acid mine drainage, they observed that Scoble’s Kemess report constitutes the “ARD Full-Employment Act.” Hence over more self-made bottles of cheap wine, we passed to how the mine could proceed.

We agreed that analyses that say the Kemess report highlights the need to “funnel a guaranteed share of the resource revenues into Aboriginal coffers,” are far of the mark. While there is nothing wrong with financial funneling, and while land claims must be settled if BC mining is to prosper, the Kemess report is not ultimately concerned with funneling. Nor would full funneling have made a difference to what in essence is a simple equation: ten years of income is too little to offset the cost of water treatment in perpetuity. It makes no difference if you are First Nations, Second Nation (WASP/other born-Canadian), Third Nation (immigrant), or Forth Nation (illegal immigrant.) The conclusion is the same: elementary logic shows that ten years of income cannot provide for centuries of expense.

If the Scoble Kemess report prompts action in response to this type of report, then good may yet come of the report. I quote:

“Mining groups say it [the Scoble Kemess report] is evidence that new rules are needed to cut a piece of the pie for aboriginal groups. In 2005, the industry paid $1.57-billion in corporate income taxes — not counting royalties and other fees — and some of that could be diverted to local communities. That would both ease opposition to mining projects and lessen the need for companies to negotiate individual benefit deals, said Michael McPhie, president and chief executive of the Mining Association of B.C. “We would like to see some form of direct revenue transfer to provide [First Nations] with a long-term, predictable stake in what the project’s long-term economics might be,” he said. The Prospectors and Developers Association of Canada similarly adopted language this year calling for Canada-wide revenue-sharing deals, an idea it says is “in the national interest” and “long overdue.”

Over port, we agreed that Scoble’s Kemess report does highlight the issue of how to address local opposition to a new mine. Galore Creek is down the same watershed and it is proceeding with full support of the local community. Montana, down stream of local communities who support new mines, opposes new mines. Pebble Mine raises vociferous support and opposition from local people: do you give preference to the rich ranch owner, the impoverished fisherman, or the out-of-work immigrant? Luckily the port was so good we did not need to answer these questions.


AMEBC

As 2007 draws to a close, the verbal knives are out and the rhetorical slashing has begun in earnest. Stepping into the fray with a particular vehemence is the Association of Mineral Exploration of British Columbia (AMEBC). In an extraordinarily widely distributed letter they plead for continued consideration of the mine. In the letter and an accompanying brochure they say that mining is good for British Columbia (true); that the Scoble Report does not have to be the final word (it never purported to be); that relations between First Nations and Subsequent Nations could be better (too true); and then they urge the mayors and other to whom the letter is address to write to the politicians and urge them to promote the project. Actually the list of letter recipients and suggested targets of a letter campaign makes fascinating reading in and of itself.

Predictably the First Nations shoot back with equal vehemence. Here is their opening paragraph:

We strongly oppose your harmful campaign to undermine the Kemess North Mine Joint Review Panel and its central recommendation to government Ministers that Northgate Minerals Corporation’s Kemess North Project not be approved.

They make no bones about what they consider the inadequacies of the AMEBC letter and brochure:

We reject your brochure as bitter rhetoric. It provides nothing more than slanted economic statistics, selective information, and out of context statements. It combines this with fearful statements about the economic uncertainty that will overcome the province if the project is not approved and the specter of the mountain pine beetle. Sadly for industry it comes across as a feeble interpretation of all the highly complex submissions made to the review panel, with a predictable claim that the project should proceed for strictly economic reasons. Missing from the brochure are the unacceptable environmental, cultural, social and heritage risks the project poses to the Tse Keh Nay.

And I thought the Scoble Report rejected the project on the basis of “strictly economic reasons.”

This rather sad and silly spectacle of decision-making by political campaign raises these questions:

  1. Is there no one authority to make a final decision?
  2. Who actually “owns” the land on which the proposed mine is situated?
  3. What weight do we assign to the recommendations of “expert” panel reports?
  4. Is the project economically viable if it involves perpetual mine water treatment?
  5. Why is it necessary or even appropriate for an industry association to wade into the fray; surely they should be impartial in such matters?
  6. Where are the regulators and politician in what should be an interaction between sovereign nations?

I suspect this is one of those cases that highlights the confusion that surrounds the law of First Nations right to land, the role of provincial and federal regulators, and the processes of environmental impact. It is often said that bad cases make bad law. Maybe this is ainstancewhere bad law makes a bad case.

I suggest that we put the Kemess North Mine issue on the back burner, and first sort out the laws that govern and/or should govern this kind of situation. Maybe the law already exists and the parties are ignoring it for their own perceived potential advantage. But even if the laws are in place and clear, I submit they are clearly inadequate to the situation.Maybe with the mine on the back burner, all parties should turn to the process of revamping the laws to make them clear, certain, transparent, and implementable. And ifthis means recognizing First Nation title to the land (derived from treaty or logic), recognizing that Subsequent Nations have to treat with First Nations in this type of case as one sovereign authority to another, and making the mining company and their industrial organizations (like the AMEBC) act as the supplicants they are, then so be it.

Maybe all that is needed is a decent environmental impact assessment procedure that minimizes the multi-party process that now seems to prevail. Maybe all that is needed is a brave politician or simply a brave regulator to tell the truth or lead the way.

I suspect none of this will come to be, and we will see this muddled process blunder along for years to come. Meanwhile communities will grow poorer or richer according to how they decide to act and develop. Companies will come and go. Metal prices will go up and down. And projects will go through ups and downs just as is the analogous Galore Creek project.

In this skirmish, I confess I believe the winners are the First Nations, if only because of their concluding paragraph:

We conclude by asking the BC mining industry to engage with First Nations in a respectful manner, and to recognize and respect our Aboriginal Title and Rights. A first gesture would be for the industry to publicly stop and retract its campaign to undermine the Kemess North Mine Joint Review Panel’s central recommendation. Then once the project’s rejection has been confirmed by government we invite industry to work with us on land and resource planning and on developing exploration programs and mines that are environmentally sustainable and respectful of our rights, title and culture. We would welcome an opportunity to work with you in this way.