The Mining Association of Canada (MAC), which bought into the Trudeau government’s plan to improve the federal environmental review process though Bill C-69, appears to be having some buyer’s remorse.
And it warns that this week’s decision by federal Environment Minister Jonathan Wilkinson to subject the Castle metallurgical coal project in B.C. to a federal review may send a cold shiver up the collective spine of the mining sector in Canada, as well as international investors.
Teck Resources (TSX:TECK.B) wants to extend the life of its Fording River coal mine by stripping nearby Castle Mountain for metallurgical coal, which is used to make steel. The project, considered an expansion of an existing mine, is subject to a provincial environmental review through the BC Environmental Assessment Act.
Given that it is an expansion of an existing, permitted mine, not a new one, no one in the industry thought that the federal government would decide to subject it to the additional layer of a federal review under the new Impact Assessment Act (IAA).
But on Wednesday, Wilkinson determined that the Castle project will have to undergo a federal review as well.
“It seems clear that this decision was political in nature, as there are many projects across the country with equal or more significant impacts that are not subject to the IAA,” MAC president and CEO Pierre Gratton said.
“This is a case of the government succumbing to pressure from political interest groups while also placating the US government’s EPA and the state of Montana.”
As far as the MAC is concerned, an expansion like the Teck proposal should not have triggered a federal review.
“This is an expansion of an existing operation,” Gratton said. “The threshold for an expansion for a coal mine is 50%. This project is 37% -- well below the threshold.”
By that he means that an expansion that increases production by 50% or less typically would not trigger a review.
But the project's increased footprint isn't the only thing considered when deciding whether or not an expansion project should trigger a federal review, according to Wilkinson's office. The volume of coal that would be produced is also a factor.
"While the project did not exceed the project size threshold to trigger a federal assessment, it does exceed the volumetric threshold of 5,000 tonnes per day," Wilkinson's office said in a written statement.
Of course, it is always the prerogative of the federal Environment minister – under both the CEAA or IAA – to order a review, especially if there are strong public and-or First Nations concerns about a project.
And in the Castle project's case, there appears to be considerable public concern over selenium levels in the Elk River valley – something that is a legacy of decades of coal mining in the area and which can be harmful to fish.
The MAC supported Bill C-69, which replaced the the Canadian Environmental Assessment Act (CEAA) – which had itself been revamped in 2012 by the Stephen Harper government -- and its agency with the new Impact Assessment Act (IAA) and agency.
Gratton still thinks the IAA is better than the CEAA, but doesn’t like the way it is being applied. He feels Wilkinson is bending to political pressure – from environmentalists, First Nations and the U.S.
“Our confidence in the ability of the Impact Assessment Act to be implemented well is very quickly eroding,” Gratton said.
He said CEAA2012 was actually quite problematic for the mining sector. Mainly, federal reviews had a pause button that was too often pushed, dragging out what was supposed to be a 12-month decision timelines to years.
“Your 12 months official timeline meant nothing,” Gratton said. “Twelve months could mean five years because a question could stop a clock.
“A bad law can be implemented well. And I would say CEAA 2012 was a bad law that the agency implemented as best as they could. This is a better law, and is being implemented badly, so far.
“It’s a real problem for Teck, but it’s a problem for every one of my members who wonders ‘what do those thresholds mean?’”
Gratton's counterpart at the Mining Association of BC (MABC), Michael Goehring, shares the MAC's concerns and expects the additional layer of review will lengthen the approval process.
"The decision will add more time and uncertainty to the mix at a time when we need more certainty for low-carbon projects and investment in B.C. and across Canada," he said. "We strongly encourage the federal government to work closely with the province undertake a coordinated review to avoid unnecessary duplication."
One other concern both the MAC and MABC have is a new subtext of the environmental review process in the form of the Strategic Assessment on Climate Change. Projects in environmental reviews will be expected to demonstrate how they plan to get to net zero emissions by 2050.
While some companies have already made those commitments, it’s worth noting that few, if any, Western governments have been able to hit the various climate targets they have set over the years, so expecting businesses to do so may be unrealistic.
“To know today what technology will exist in 2045 is impossible,” Gratton said.
The strategy sets out an offset system that could be used if companies can’t demonstrate how they would achieve their targets.
“Guess what – there is no offset system in Canada,” Gratton said. “The international treaty on offsets have not been agreed to. So they’re asking proponents to develop a credible plan, when Canada itself has not provided a credible plan to build on. It just is completely unworkable.
“We’ve got members now scratching their heads wondering if you can enter this regime and ever expect to get out, unless you load your application with, frankly, a lot of bull.”
"We question the ability of a new project to meet the requirement, to provide a credible plan for the project to achieve net-zero emissions by 2050," Goehring added.
"It will be difficult, if not impossible, for a project to credibly and meaningfully forecast measures it would use in 15 or 20 years, given where we are with technology, science, our energy portfolio and particularly our national and international carbon regimes."
This story has been updated with a comment from Jonathan Wilkinson's office.