Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 3 - Evidence - December 11, 2007
OTTAWA, Tuesday, December 11, 2007
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C- 15, An Act respecting the exploitation of the Donkin coal block and employment in or in connection with the operation of a mine that is wholly or partly at the Donkin coal block, and to make a consequential amendment to the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act, met this day at 5:11 p.m. to give consideration to the bill.
Senator Tommy Banks (Chair) in the chair.
[English]
The Chair: Honourable senators, seeing a quorum, and it being five o'clock, I call this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources to order.
My name is Tommy Banks; I am a senator from Alberta. I have the honour of chairing this committee, which is now meeting to consider Bill C-15. Before proceeding, I should like to introduce the members of the committee and other senators who are with us today.
Senator Don Oliver represents the Province of Nova Scotia; Senator Bert Brown represents the Province of Alberta; Senator Willie Adams represents Nunavut; Senator Grant Mitchell represents Alberta; Senator Ethel Cochrane represents Newfoundland and Labrador; Senator Phalen represents Nova Scotia and knows a lot about the coal business; and Senator Wilfred Moore represents the Province of Nova Scotia as well.
Today, the committee will continue its examination of Bill C-15. In that regard, we will hear from two panels of witnesses. We will spend the second hour meeting with the Canadian Environmental Assessment Agency, but first we will hear from Xstrata, the company that is currently leading the feasibility assessment of opening the mine in the Donkin coal block.
Xstrata is a major global diversified mining group listed on the London and Swiss stock exchanges. It was created in 2002 and is now the fifth largest diversified metals and mining company in the world with operations and projects in 18 countries and the top five market positions in each of its major commodities. Xstrata is represented today by Jamie Frankcombe, General Manager, Xstrata Coal Americas; Darren Nicholls, Project Manager at Xstrata Coal Donkin; and Fred Dickson, a lawyer at McInnes & Cooper and a strategy advisor at Xstrata Coal Donkin.
Welcome to the Senate of Canada.
I wish to point out to members that we invited the Nova Scotia Minister of Environment and Labour to appear before us today, by video conference if need be. However, the minister was unfortunately not available due to pressures of business in Nova Scotia. That being said, Minister Parent sent us a letter presenting the point of view of his government on the issue.
If members agree, the letter could be printed in the issue of today's meeting, forming part of the record.
Is that agreed, honourable senators?
Hon. Senators: Agreed.
The Chair: Thank you very much. The letter will be distributed and become part of today's record.
(For text of document, see Appendix)
We would appreciate it, gentlemen, if you would make opening statements and then allow us time to ask you questions.
Mr. Nicholls, you have the floor.
Darren Nicholls, Project Manager, Xstrata Coal Donkin, Xstrata Coal: Mr. Chairman and senators, thank you for the opportunity to speak to you today. Mr. Frankcombe and I are both excited about this opportunity. We will give you an update on why Bill C-15 is of importance to Xstrata Coal and ultimately the Donkin project.
There are four areas I wish to address. I should like to give an introduction to Xstrata, Xstrata Coal and the Donkin project, the project to date, project planning and moving forward, and Bill C-15 in the context of the Donkin project.
Xstrata plc is the parent company of Xstrata Coal. Xstrata plc is the fifth largest mining house in the world, employing about 43,000 people around the world. We work in a variety of geographies and a variety of metals. We hold a good market position in many of the major metals we use in day-to-day activity.
Xstrata plc operates all its divisions through basic business principles — which I will touch base on. We work ethically, we work responsibly, we work openly and we work together with others. From my point of view, operating on the deck at Donkin, those are the principles we have applied on that project since we arrived on site.
As a division of Xstrata plc, Xstrata Coal employs about 11,000 people and produces and sells in excess of 110 million tonnes of coal a year. We are the world's leading exporter of thermal coal and a significant producer of metallurgical coal. The thermal coal is used for energy and the metallurgical coal is used in the production of steel. Xstrata Coal operates in Australia, South Africa, South America and, as of two years ago, in Cape Breton, Nova Scotia, on the Donkin exploration project.
The Xstrata Coal Donkin exploration project is a joint venture between Xstrata Coal Canada, which is 100 per cent owned by Xstrata Coal, and Erdene Gold, which is a 25 per cent joint venture partner in the project. Erdene Gold is a Halifax-based minerals exploration company, and they offer a Nova Scotian flavour to the business.
After a five-month planning process and the gaining of regulatory approvals, work on site commenced in November 2006 when the tunnels were breached and preparation work commenced for the dewatering and the rehabilitation works. To date, the Xstrata Coal Donkin exploration project has successfully reclaimed about 7,000 metres of tunnel, with the following key outcomes.
We removed 450 million litres of water from the tunnels. That water was managed on site, treated and then released into what is probably one of Canada's most lucrative lobster fisheries without incident. We worked very closely with the communities and the lobster fisheries to make that happen, and that process went extremely smoothly.
The project has now worked 85,000 hours without an accident or incident on site. We had one first aid treatment. Ironically, a gentleman received a cut to his face from a pair of safety glasses he was wearing. After 85,000 hours, that is a credit to the people employed there and the work they are doing.
The project has allowed 11 men from various parts of Canada to come back to work in Cape Breton. We have effectively had full-time-equivalent employment there of 23 people for the last 10 months. Eleven of those people were living away from their families and homes and have now returned to Cape Breton.
We established a community liaison committee, CLC, early in the project in excess of what was required by the regulatory regime. As soon as we hit the deck, we established that CLC. That CLC has been functioning very effectively and has allowed us to assume a predominant position within the community. We have strong community links and community interaction in the Donkin and Port Morien areas.
We have established a high level of community support that is referred to in Nova Scotia as a benchmark on how a project should move forward. Those are not our words; I am simply repeating the words of people in the community who are very happy with how we have moved the project along.
We have so far invested over $10 million into the economy of Nova Scotia in achieving those outcomes.
Physical work on the site continues with much of the work now based on project planning and report preparation. It is a large undertaking to move a project from a green field site, a set of sealed tunnels, through to the point where we can get a decision on whether we should proceed with this project.
Xstrata Coal has and will continue to prepare and execute sound business planning for all its projects, and Donkin is no exception. We have built our business on planning our projects well and executing those plans with a great degree of professionalism. That has allowed us to build our business successfully and rapidly in a short period of time.
We use three levels of review for project evaluation. I am mentioning this to update the members on where the project currently sits. We start with a concept level. That is where we have an idea or a vision on how something might look. We do our productivities, our costings and business assumptions to plus or minus 30 per cent. If we reach through certain hurdles, we will move that project to pre-feasibility, where it is reviewed in greater detail at a more finite scope. We are working at that stage at a plus or minus 20 per cent confidence rate, and it is expected that a pre- feasibility review will be delivered in March 2008. We are approaching that rapidly.
We expect to deliver that report back in Australia in March 2008. That is a critical gate for us. We have another gate to go after that.
If the project meets the approval of the pre-feasibility requirements, it will move to full feasibility, which is where a project is reviewed in greater detail and has a finite scope. We have now formed a clear view of how the project will look. We are doing our costing and our productivity levels to plus or minus 10 per cent.
It is expected that, should the project move through pre-feasibility and go to full feasibility, a final phase report will be lodged with Xstrata Coal in the fall of 2008. That is what we term to be decision point. If we reach fall of 2008, that is where we are aiming for a yes or no on whether to proceed to an operating mine.
If the project is approved, it has the potential to reinvigorate the mining activities in Cape Breton. It will offer upwards of 275 full-time positions, with a multiplier effect of 1.5 additional jobs for each full-time position. The project will also require the expenditure of Can. $350 million in privately funded capital.
If we now return to the importance of Bill C-15 relative to the Xstrata Coal project, it is a given that any activities by or under the control of Xstrata Coal are carried out to highest standards of health, safety, environment and community performance. Bill C-15 enhances and complements the absolute commitment to safety of Xstrata Coal and its operations. The successful passage of Bill C-15 removes ambiguity and will enhance what has already been a strong HSEC performance, health, safety, environment and community, on site. It will allow Xstrata Coal Donkin management, its workforce and potential contractors to clearly understand the occupational health and safety system they will be required to operate under.
Having a clear understanding of the regulatory framework will allow the requirements to be factored into the planning process from an operational and expenditure aspect. This will allow a direction correlation between Bill C-15 and the evaluation of the business case for the Donkin project.
Bill C-15 can be summarized as offering certainty, clarity and regulatory control that is the best of both regulatory frameworks.
The Chair: Gentlemen, would anyone else like to speak before we begin questions?
Jamie Frankcombe, General Manager, Xstrata Coal Americas, Xstrata Coal: No, we are fine, thank you.
The Chair: One of the reasons this committee has a particular interest in this project is that part of our sad history was making the final determination, in effect, shutting down Devco and shutting down what were for centuries operating coal mines in Cape Breton. When those mines were in operation, they required, in order that they operate and in order that they provide employment, a very substantial subsidy.
Before I go to questions, I have a question of my own: As part of your assessment as to determining feasibility, do you anticipate that the mine that might be undertaken by you would be able to operate without any subsidy?
Mr. Frankcombe: It has been one of the underlying bases for Xstrata's involvement in the project that we do not wish to enter into that sort of arrangement. We see this as a private undertaking. We have entered into a joint venture arrangement with Erdene Gold, a local company. It is not the practice of Xstrata in any of its practices to look for government subsidy. We do not see Donkin as an exception to that rule.
The Chair: Therefore, it would be a project in your feasibility decision that would stand or fall on its economic merits?
Mr. Frankcombe: That is correct.
The Chair: I will go to the list of members with questions. If it is agreeable, I will go in the order in which senators have raised their hands, as opposed to going first to members of the committee. I propose this because we have some senators here who are not members of the committee but who have particular experience and expertise in this area.
Senator Phalen: I have heard all kinds of numbers in respect to the coal in the Donkin area, the Harbour seam. I have heard 100 million tonnes, and I have heard 300 million tonnes. Could you tell us how much coal there is in that specific region?
Mr. Nicholls: In terms of our current pre-feasibility mine plan, there are around 85 million tonnes in that mine plane. There is upwards of 300 million tonnes in the lease area. However, we are talking about the area we are targeting to mine, which at this point in time has 85 million tonnes within it.
Senator Phalen: Does the quality of the coal from the Donkin coal block differ in any way from the coal commonly used in the Nova Scotia coal-fired power plants?
Mr. Nicholls: All coals differ. There are no two coals that are exactly the same, unless you take them side by side. You can go 10 metres away and have a variation in coal quality. I am not aware of what Nova Scotia Power currently is burning in its boilers, so I cannot speak to that.
Senator Phalen: Your December 2006 newsletter indicated that another of the top concerns was a potential increase in truck traffic through local communities. Can you tell this committee what your options for moving coal to the International Coal Pier in Sydney might be?
Mr. Nicholls: We have been working closely with the community liaison committee. We have done community surveys, feedback forms and held community open houses. One of the top concerns listed was the trucking of coal through the community. We have given an undertaking that we will not be trucking coal through the community on a long-term basis.
However, we also made it clear that until our infrastructure is built, either a railway or direct-loading at Donkin, there would be the potential to have trucks. We are working on the best way to manage that; we are working on trucking times and routes, and looking at sidewalk evaluation areas within Donkin.
Senator Phalen: That is not long term. What is your long-term option?
Mr. Nicholls: That depends on your transportation options. We are reviewing two specific transportation options for Donkin coal: One option would be to transport through the International Coal Pier at Sydney, Nova Scotia, which would require the construction of a rail loop; the other option would be to build a direct ship-loader via marine terminal at Donkin.
Senator Phalen: Your September 2007 newsletter said that, in a recent series of public open houses, had given the community an update on the environmental assessment process, including mapping of the environmental factors in and adjacent to the Donkin peninsula. Can you give this committee some details on what Xstrata equates to in relation to the environmental assessment? Also, what do you mean by mapping the environmental factors?
Mr. Nicholls: We began approximately two years ago with our environmental mapping. In preparing an environmental assessment, it is necessary to understand the baseline to which you are working. The baseline to which we are working cannot be a snapshot in time. It has to be taken over a couple of summers and winters to build up a database of information — in an understanding of what our environmental considerations are.
Mapping for us relates to cultural heritage issues, understanding First Nations use of the site, plants and animals mapping — flora and fauna mapping — inner tidal surveys, et cetera. We run the entire gamut of the requirements for an environmental assessment.
The Chair: I will take Senator Phalen's second question further. I presume you have, as a matter of course — given the proximity to the prospective mine — considered whether or not Nova Scotia Power will buy the coal coming from the Donkin mine. Have you made any determinations in that respect?
Mr. Frankcombe: We have had discussions with Nova Scotia Power, but they have been preliminary in nature. In terms of the marketing strategy for the Donkin project, it will be both an export and a domestic marketing strategy.
To answer Senator Phalen's question, my understanding would be that the sulphur levels of the Harbour seam that we would extract from the Donkin project would be higher than the coal that is imported into Nova Scotia Power now. That is a consideration that would need to be taken into account in the use of the Harbour seam coal and Nova Scotia Power's plants currently.
The Chair: One of the things that we learned during the consideration for the Devco question was that Nova Scotia Power had declined in the last few years to buy bituminous coal coming from mines that are in proximity there, that, instead, they were importing coal from Virginia, I think. You have answered my question.
Senator Oliver: Thank you for your excellent presentation. You gave a very good overview.
One of the main reasons for Bill C-15 is that there are two jurisdictions — the federal government and the provincial government — both claiming jurisdiction over this area. I would think if you went ahead without having some conclusion brought to who has power and jurisdiction over what aspects of this project, it would be a nightmare for you.
How important is it to you in either your concept phase or pre-feasibility stage to have some finality to the regulatory framework?
Mr. Nicholls: It is very important for us. As we continue to better define all aspects of the mine and its potential operation, that is another aspect that needs to be better defined. We need to pull that into the scope; it allows us to tighten up on understanding what framework we will be working under.
Senator Oliver: In your remarks, you referred to a March 2008 deadline. Is there a decision point that has to be made sometime early in the year 2008? If so, what is that?
Mr. Nicholls: That decision point in March 2008 is when we arrive at the position where we have costed and designed the mine to a plus or minus 20 per cent factor. We will then make a decision, based on that, whether this project should move to full feasibility and whether we should continue to spend the money to move it forward.
Senator Oliver: It is important to have some finality to the regulatory framework before spending another $10 million, is that correct?
Mr. Nicholls: Certainly.
Senator Mitchell: My question is a general one, but I would like to get your feel for this. Clearly, given the global climate changes issues, and considering the meetings in Bali right now, a company in your business must have to face global climate change issues more and more because there are increasing pressures. Do you have a program or policies that you are developing to confront the issue of methane emissions when you are taking the coal out of the ground and to anticipate what might happen in the sense of marketing coal to an increasingly sensitive world?
Mr. Nicholls: We will be leaving some documentation at the conclusion of today's presentation for you to look through at your leisure. It contains a fairly extensive update on some things Xstrata is doing relative to clean coal technology around the world and the money we are currently pumping into it. It is relevant to us and, as a company, we are moving to address those issues.
Senator Mitchell: You operate in many parts of the world. I did not hear that you operated in Europe, where there are specific cap and trade issues. Have you given some assessment to the issue of carbon offset markets? Do you participate in them or have you studied them? Do you see them as a viable economic mechanism to support the kind of revenues you will generate with selling coal? It is conceivable, for example, that you could sell credits if you can capture methane.
Mr. Nicholls: In our operations throughout Australia, we are actively capturing methane.
Mr. Frankcombe: To further answer that question, Peter Coates, who is the CEO of Xstrata Coal, sits on the prime minister's task group looking at emissions trading schemes. In Australia, it is still fairly new days in the political and commercial area in terms of carbon trading and offsetting schemes. Certainly, it is something that Xstrata Coal has recognized to say, as we are, that this is not acceptable. We are in a position of transitioning from business as usual into a regime of lowering emissions in the future.
We have taken a global perspective in terms of engaging and being actively involved in a number of projects that I can name. There is the oxy-fuel project, which operates in Queensland, Australia. It is a $150-million demonstration plant and we contribute to that financially. There is a FutureGen Alliance project that is a collaboration between private industry and the U.S. government, which is the first of its kind in the world. Xstrata is one of the board positions on that alliance — I am the board representative on that project — and that is a U.S. $25-million investment. Annually, in one of our operations, we spend $25 million in terms of methane capture. I can go on.
Senator Mitchell: That is fine; I appreciate that.
Mr. Frankcombe: We have a substantial program in place to look at reducing emissions in the future, and we take an active role in all of those programs.
Senator Mitchell: Did I understand you to say that your CEO or chairman sits on a group with the prime minister?
Mr. Frankcombe: That is correct.
Senator Mitchell: That is developing a carbon market?
Mr. Frankcombe: That is correct.
Senator Mitchell: Does one exist there now? I am talking about Australia.
Mr. Frankcombe: No, not at the moment.
Senator Mitchell: That will be covered in some of your documentation.
Mr. Nicholls: We have a new prime minister as well, so our CEO will be sitting with someone else now.
The Chair: Speaking of methane, you mentioned the tunnels. I think you said 7,500 metres, is it? How far is it to the coal face?
Mr. Nicholls: The two tunnels are 3,500 metres each, so that is 7,000 metres in total.
The Chair: There is 3,500 metres of tunnel added to the face of the coal.
Mr. Nicholls: That is correct.
The Chair: In harder coal — this was explained to me by Senator Phalen — you can drill in front and deal with the methane relatively easily. Does the fact that you probably cannot do that with this kind of coal, and the fact of that 3,500-metre distance, pose a particular difficulty in dealing with the methane's safety and environmental issues?
Mr. Nicholls: It would be lovely to have no gas, but it is inherent to any coal-mining operation. We are currently doing an awful lot of work for Donkin relative to methane capture. In fact, I have got a world-leading expert on the team who has been with us for the last three months working out of England. He is designing our methane-capture system for Donkin, and also the methane-reuse system.
What we are looking at is basically gas-fired turbines to generate our own power. It is very speculative. It is not new technology, but integrating it into Donkin is, and that is part of our planning process.
The Chair: And part of your feasibility, I presume.
Mr. Nicholls: Yes.
Senator Milne: I apologize for being late. I was caught in a snowstorm, or at least the bus was.
I asked the minister when he was here last week precisely what sorts of powers were being relegated in this bill. I understand clause 8 of the bill allows the minister to delegate power for the administration of the exploitation of the coal block. What assurances are you giving to the minister, or to the Government of Nova Scotia, that you will pay attention to these delegated powers? Do you know if the federal government will retain any oversight capability on this?
Mr. Nicholls: In answer to your second question, not that I am aware of. However, I am not answering from basic knowledge other than to say that that is how it has been explained in general terms.
In terms of whether we follow the rules, of course we will. We are a responsible mining company and that is how responsible companies do business.
Senator Milne: That is always encouraging.
I also asked about how far ahead you are looking. You are a responsible company around the world; you look as far ahead as you possibly can. One of the questions that I have is about Sydney harbour.
If you are going to be shipping out of Sydney harbour, will there be dredging required there to be able to do that? What kind of ships do you foresee coming in there if this project goes ahead? Have you approached the federal government or the Government of Nova Scotia to do what must be done if the harbour needs to be dredged?
Mr. Nicholls: We have made no approaches to any governments relative to dredging the harbour. Our position is that we are sitting off. Relative to the harbour, in short and dirty terms, a typical coal ship that we would use is 65,000 tonnes, which is called a Panamax. They are so known because they fit through the Panama Canal. The other type of ship we use is a Cape, which has to go around the cape, as it cannot fit through the Panama Canal.
Our target ship would be a Panamax. At this time, Sydney Harbour can only take a ship of about 53,000 tonnes. Nova Scotia Power imports its coal in those Panamax boats of 65,000 tonnes, but it does not fully load them, so it squeezes across the bar by short-loading the ships.
Relative to our planning, at this stage we are working on the assumption that we would be using short-loaded ships and Donkin will have to stand on its own two legs relative to a non-deepened harbour. That is the financial base case.
Senator Milne: Thank you. You know more about it than the minister did.
Senator Moore: Thank you for being here, gentlemen.
Does your local partner, Erdene Gold, have a percentage of the operation?
Mr. Nicholls: Yes, they have 25 per cent.
Senator Moore: Are their principals local people?
Mr. Nicholls: Yes.
Mr. Frankcombe: It trades on the Toronto Stock Exchange.
Senator Moore: Senator Milne asked you a question about shipping out of Sydney. Has that decision been made? I understand you were looking at two things.
Mr. Nicholls: We are still actively looking at two options, the first being to ship through Sydney Harbour and the second being our own marine terminal built directly off Donkin.
Senator Moore: To go through Sydney, would you have to truck to their terminal?
Mr. Nicholls: Ultimately, for our long-term tonnages, when we reach our full production profile, we will use rail, but in the very short term, as the mine develops a bit of area to put the long wall in to take the bulk of the coal, we are looking at trucking that coal into the Sydney International Pier. We have been open and honest with the community about the need to do that. You would not bring on line a $50-million railway to handle a very small amount of coal until your main coal production started to flow in.
Senator Moore: I believe you said that the current depth of the harbour in Sydney is sufficient to take the vessels that you would envisage using to ship your coal.
Mr. Nicholls: Yes, but under-loaded.
Senator Moore: They could take a maximum of 65,000 tonnes but you would only load them with approximately 53,000 tonnes.
Senator Cochrane: What is the reaction to this coal mine from the local people?
Mr. Nicholls: We have run an extensive community consultation program for Donkin.
Senator Cochrane: Could you tell us about it?
Mr. Nicholls: Yes. I have attended over 50 face-to-face meetings with various groups in the Donkin and Port Morien communities. We regularly meet with our community liaison committee. We keep a log of our meetings and the people who attend, and I have spoken directly to over 900 people. We have not had meetings of 200 people. We have presented to very small groups of 10 or 15 people, various church groups and PTA groups. We have kept it in small, intimate groups where we can sit down and talk and have a cup of tea at the end of the meeting, and that has been a great success for us.
The community has been and continues to be extremely positive about this project.
Senator Cochrane: Are there no negative reactions whatsoever from the people?
Mr. Nicholls: Trucking has been listed and the fishermen have expressed concerns about building a marine terminal. Those have been the two single biggest issues, and we have addressed both of those directly with the community, and they have appreciated our honesty. In fact, I had a community liaison committee meeting last week to review the environmental assessment document. They have been involved in our planning process right throughout. They have had input into all our major submissions. We have invited them to sit around the table to read through the environmental assessment document to make some changes and critique it for us, and that was very well received.
Senator Cochrane: Have you had any comments from people who have encountered tragedies in coal mining over the past years?
Mr. Nicholls: Yes. The father of the lady who cuts my hair in Cape Breton was killed in No. 26 colliery when they sealed it. We do encounter a lot of those people. I move throughout the community extensively. I am always out and about doing something with them. We are involved in community events. We have our last pre-Christmas community event on December 21st. We host a seniors' dinner for the Donkin and Morien communities for those less advantaged who might have to spend Christmas by themselves. Due to that, I get a lot of community input. People love to tell war stories; they like to talk about the old days, and mining was such a large part of their lives there that everyone has a story to tell.
Senator Milne: Mr. Nicholls said something that tweaked my interest.
You said that you invited community input into the environmental assessment document, but you have not had an environmental assessment done, have you? If you have had, is the community affecting the criteria demanded in a federal environmental assessment?
Mr. Nicholls: The potential surface layout of the mine was done with input from the community. We took community members down on the site and walked the headland and various other areas looking for the best positioning for our access roads in order to have minimal impact on the headland in the peninsula. The Donkin peninsula is a major recreational area for the community so we have tried to set our surface area up to have minimal impact on the use of that peninsula.
Senator Milne: You were only talking about the surface area, not the actual process of mining?
Mr. Nicholls: No. They are great people, but they do not have the ability to offer us value in underground mining, but they certainly assist from a surface perspective with things that you can only get with local knowledge. They have been great in that regard.
Senator Phalen: You spoke about how the people of the community feel about the mine. Do you envisage any problem in hiring miners for your project?
Mr. Nicholls: As I have said publicly, Devco had 10,000 employees. If I cannot find 275 good ones, I will give the game away.
Senator Phalen: I understand that the miners' union has 600 people lined up.
Mr. Nicholls: We do not anticipate having any trouble finding people with a want to work and a want to do the right thing. There will be some skills issues. Things have moved considerably since the Devco days, and even during the Devco days there was a lag in some areas of technology. Certainly, give us the raw materials and the raw people with the want to do, and we will do the rest.
Senator Cochrane: We hear today of clean coal, and we hear that to get clean coal you use scrubbers to get rid of the sulphur. Will you have clean coal, if there is such a thing?
Mr. Frankcombe: The stage where you can clean coal is a term that we like. The reality is that it is, as you say, a process to remove the impurities in the coal and it is a post-process. It is not something that is done at the mine. We purify or beneficiate the coal as best as we can to reduce the free sulphur as much as we can. When the generation of electricity takes place for the burning of coal, you either remove the sulphur, the mercury and chlorine, et cetera, post- burning, through scrubber systems in the stacks, or you now look at some more recent technology where you can do that pre-burning of the coal. We actually gasify the goal and then capture the sulphur, nitrogens, mercury, chlorine, and so on, pre-burning, which is the most efficient process. For the people to whom we sell the coal, some will and some will not. That is the best answer I can give you.
One of the inherent characteristics of the Harbour seam is that it is a relatively high-sulphur coal. We envisage that the markets that we will sell into will need to have sulphur scrubbers or some form of purification of the gases prior to being emitted or need to have some purification systems pre-burning of that coal.
The Chair: Mr. Frankcombe, you have talked about those markets and you mentioned electricity generation as one of them. You will have had some idea now about what those markets are and where they might be. You have talked about shipping to them. Can you give us any kind of characterization of where and what those markets are for this coal?
Mr. Frankcombe: In an international market, the obvious market for us would be the east coast of the United States, and potentially Europe, for export. We also see there is a potential for metallurgical coal from the Harbour seam as well. It was mined and produced metallurgical coal previously at the other operations in that same region from that seam. We certainly are assessing that potential as well.
The other market we see is domestic.
The Chair: In Canada?
Mr. Frankcombe: Correct.
The Chair: One of the criticisms that this committee had with respect to shutting down Devco concerned the advice that had been given by the union that then represented the miners who worked in some of those mines with respect to their pension plans.
Do you anticipate that the miners that will work in your operation will be unionized miners?
Mr. Nicholls: We do not have a position either way; however, we expect that everyone who works in our business will add some value.
The Chair: However, you would not preclude the people who are working underground in your mines from being members of a union, whatever union that might be?
Mr. Nicholls: No. Ultimately, the men will make that decision.
The Chair: Would you give us an understanding of two things? First, we are very aware of residual difficulties that concern the repatriation or fixing up of abandoned industrial sites of all kinds. I understand that the mine itself is way out under the ocean, 3,500 metres away, but there will be stuff happening around it. Can you tell us what commitment your company has with respect to the rejuvenation of that, when you leave it?
Second, and in the same line, would you tell us what your concept and understanding is of the environmental assessment process that will obtain to the question of your mine operation?
Mr. Nicholls: Relative to Donkin, I can certainly confirm already to the committee that as part of our planning on opening Donkin and part of that pre-feasibility and feasibility we also design to close it from day one. Part of the Xstrata standard is designed not only to open the mine but also to close it. Our consideration is now on the siting of buildings and the disturbance of land, and to take into account how we want that site to look as an end use when we are finished with it. We are starting to formulate a plan as part of our pre-phase documentation to understand what we want the peninsula's use to be when Donkin is no longer there. That really drives your planning now, namely, to have a clear vision in 25 years' time as to what that site will be used for. If it will be returned as a full public recreation area, then your plan should be built around tree planting, remediation, drainage, run off, and those considerations.
The Chair: What is your concept now of the environmental process that would obtain with respect to the opening of the mine and then its operation after that?
Mr. Nicholls: My understanding of that process is that the environmental assessment is lodged at a provincial level. The federal level will take a look at the environmental assessment and make determination if there are any federal triggers that will require their involvement. That sets the path forward. It is a matter of what triggers are within that document from a federal perspective and then it moves within the Nova Scotia department environmental process.
Senator Cochrane: I want to ask a question about when you are finished with this mine. I have seen so much devastation within the environment with regard to the offshoots of mining, and so on.
Is there anything that you will put in writing to the Nova Scotia government to say, for example, that when you are finished with this mine, you will leave it in a pristine state?
Mr. Nicholls: I do not know whether anything is required per se, so I would like to not shoot from the hip and say that there is something out there. I do not know of it. If there is, I apologize to the committee. I am not sure whether there is something sitting out there that demands that.
Senator Sibbeston: I am generally aware of the dangers of coal mining. I live in the Northwest Territories, where there has been gold mining, but it is in the Canadian Shield, in much harder ground, as it were. There has been a history of mine accidents in the coal mines. Are you doing anything or do you plan to do anything with respect to that factor? Has technology changed over the last decades to make coal mining safer than it has been in the past?
Mr. Nicholls: Certainly. The industry has come a long way. If you look at the background that myself and Mr. Frankcombe are from, the Australian coal mining industry, it is by far the safest coal-mining industry within the world. Fatality rates within the Australian industry are roughly one third of that of the U.S. Excluding some of the other developed countries mining coal, the U.S. is often held up as the benchmark relative to safety performance.
Relative to the technology available, yes, huge advances have been made in technology that has improved the health and safety performance of mines. To take our position from an Xstrata viewpoint, we clearly say that health safety and the environment of the community are our number one priority with the way the operations function and it is a commitment to those four key areas.
Senator Brown: If I heard you correctly when you first started, Mr. Nicholls, you said that Xstrata is currently capturing methane. Is that correct?
Mr. Nicholls: Correct; yes.
Senator Brown: What do you do with captured methane? Do you pump it into the ground?
Mr. Nicholls: Looking at the operations that we are capturing methane in, they have sets of gas-fired turbines set up on the surface. They capture the methane and generate their own power. It is a twofold advantage. One is that you are taking the methane and not putting it; the other advantage is that you are drawing less power from the grid. Therefore, the power stations do not have to work as hard.
Senator Brown: Does your company have a policy that would prefer to reduce pollutants or buy carbon credits and continue to emit pollutants?
Mr. Frankcombe: It is a combination of both of those. It is part of our policies to actively look to reduce the emissions that we make from operations. We actively look to reduce our greenhouse footprint in terms of using more efficient motors and processes, use of renewable energy where we can in our own immediate operations.
Senator Brown: That is what I was hoping you would say.
Senator Mitchell: I have a supplemental to that. Are you saying that you believe there can be credible carbon markets that can allow you to credibly buy offsets to supplement whatever you do to reduce?
Mr. Frankcombe: Yes.
Senator Mitchell: Mr. Nicholls, you mentioned ``men'' a couple of times in reference to the workforce. You are not ruling out the possibility that women will be hired as well, I assume.
Mr. Nicholls: Absolutely not. We are definitely an equal opportunity employer.
Mr. Frankcombe: We do have women working in our operations.
Senator Mitchell: What price does coal have to be to make this project viable commercially?
Mr. Nicholls: That is a question we would rather defer on, given that it is a competitive advantage at this point in time.
Senator Mitchell: I can understand that. You inferred in your answer to Senator Brown that there are some projects where you capture methane and some projects where you do not. What would precipitate that decision? Is it economics or is it something else?
Mr. Nicholls: Generally, it is to do with the amount of methane available. Some seams are very low in methane and do not have enough gas coming off to be able to do anything with. Purity is also an issue.
The Chair: Gentlemen, thank you very much for agreeing to our very short-term invitation and for appearing here today. Your testimony has been very helpful.
We are now joined by representatives from the Canadian Environmental Assessment Agency. These representatives include Peter Sylvester, President, Canadian Environmental Assessment Agency, and Steve Burgess, Acting Vice- President, Program Delivery, Canadian Environmental Assessment Agency.
Gentlemen, I presume you have something to tell us about the Donkin mine and its prospect.
Peter Sylvester, President, Canadian Environmental Assessment Agency: Thank you, Mr. Chair. Honourable senators, it is a pleasure for us to be here to provide a short presentation on environmental assessment aspects associated with the Donkin coal block project. We are also happy to answer any questions you might have.
I should say that this is my first week on the job as President of the Canadian Environmental Assessment Agency. I had been the vice-president at the agency, specifically in policy development and delivery, so I am well acquainted with the agency's mandate and business.
I am accompanied by Mr. Burgess, who has the benefit of many years of experience in the field of environmental assessment.
We have a short slide deck — and I understand members have a copy of that presentation with them. The idea is to give you the fundamentals of our process. We will then turn to the application federally and to the project at issue.
Slide 2 essentially sets out the general framework for federal EAs, environmental assessments. There are two components. The first is the statute-based component under the Canadian Environmental Assessment Act. The act applies to proposed projects — namely, physical works, where a federal authority, whether a department, agency or a Crown corporation, has a decision to make as the project's proponent, as the source of financial assistance, or a decision related to the disposition of land or as a regulator issuing permits. These are referred to as the ``triggers.'' It is these types of decisions that attract the application of the Canadian environmental assessment process decisions with respect to physical works.
The second element of the framework is the cabinet directive on environmental assessment of policy plan and program proposals. This is a non-legislated process that requires the assessment of policy, plans, programs and proposals that are not physical works.
This type of assessment is referred to as strategic environmental assessment, simply because it deals more with programs and policies than concrete physical works.
Both processes are based on the principle of self-assessment, where the federal body with the decision to make about the proposal — issuing a permit or funding a project — is also responsible for the environmental assessment.
Slide 3 speaks to the role of the agency as the guardian of the EA process for projects. Our role is one where we advise the Minister of the Environment on policy, legislation and the various decisions that he would make under the act. We also provide guidance to other departments and work to ensure a coordinated approach to federal environmental assessment. This is done with a view of providing high-quality environmental assessment across the board.
I gather from testimony from previous witnesses you have had some discussion of the Major Projects Management Office initiative. Soon, under this new initiative, my agency will be taking on the role of leading the EA portion of the regulatory approvals of major resource-sector projects on behalf of the responsible authorities. I would be happy to take questions on that. This will provide us with greater leverage than we have had to date to meet our goal of timely and high-quality environmental assessments.
Slide 4 provides an overview of how federal EA requirements will apply to the Donkin coal block project. The first point to note is that Natural Resources Canada conducted a strategic environmental assessment related to the development and introduction of Bill C-15. They did so as per the cabinet directive I mentioned. That assessment pertained to the legislative initiative and not to the project, per se. It is considering the environmental implications of the legislation.
There was a key consideration in that strategic EA. The decision was informed by the certainty that there would be a requirement for a provincial EA, at the least, and the possibility of a federal EA if triggers were identified later on in the process.
There is no regulatory gap and environmental considerations will be factored into both provincial and federal decisions about the project.
Currently, as Mr. Nicholls suggested in his response to one of your questions, federal authorities are waiting for greater detail about the project, which will enable them to determine whether the Canadian Environmental Assessment Act is triggered.
Slide 5 describes how we typically cooperate with provincial jurisdictions. In Nova Scotia, we have a very positive record of good collaboration with our provincial counterparts. If a federal EA is required, we work to ensure there is a single EA that meets the legal requirements of both the federal and provincial jurisdictions.
This is normal practice. Recent examples of this type of approach include joint assessments at the panel level of the Sydney tar ponds remediation project and, more recently, the Whites Point Quarry in the Digby Neck area. Another example of collaboration between the federal and provincial entities is the Deep Panuke offshore gas project, where we twinned our efforts with the Canada-Nova Scotia offshore board.
If there are no federal decisions to make and no requirement to apply the Canadian Environmental Assessment Act, CEAA, Environment Canada and Fisheries and Oceans will nevertheless contribute their expertise to the provincial process. This, too, is typical. Even where there is not a federal requirement for an assessment, federal officials are often part of, and participate in, the provincial environmental assessment.
In fact, in the case at hand, Environment Canada has already done so. They have been participating during the registration phase of the provincial process that is currently under way.
In conclusion, slide 6 summarizes the current status of the project in terms of the environmental assessment. The first point to make is that a provincial environmental assessment is a certainty. A federal environmental assessment is a possibility; we will only be able to determine that once we have more information and greater details about the project, to determine whether there is a decision that will be made by a federal entity that will trigger our federal process.
Regardless, both orders of government will work together under either scenario to ensure a thorough review of the potential environmental effects of the project.
We will be pleased to answer any questions you might have.
The Chair: Before we go to the questions, can you give us a thumbnail on the criteria that would formulate the triggers that would bring about a federal environmental assessment?
Mr. Sylvester: In order for us to identify whether there is a trigger, we need enough information from the proponent about the nature of the project. Once we have those details, the federal government departments — ``responsible authorities,'' as they are termed under our legislation — are able to determine, for example, whether a navigable waters permit needs to be issued.
I think the representatives from the company mentioned a couple of options around rail transportation or marine transportation. Once we have details on those components of the project, federal government departments are in a position — Fisheries and Transport Canada, for example — to determine whether those activities contemplated in the proposal would require the issuance of a permit.
The Chair: Navigability would be one. What are some others?
Mr. Sylvester: The two at issue here that I am aware of are under the Fisheries Act — provisions dealing with the protection of fish habitat. For example, if a road were to be built for transportation and that road crossed over streams where there are fish and fish habitat that fall under the responsibility of the Department of Fisheries and Oceans, then a Fisheries Act authorization may have to be issued. That would constitute a regulatory decision that would trigger the application of our statute.
The Chair: Is that pretty well the list of criteria that would bring about a federal assessment — Fisheries and Oceans' questions?
Mr. Sylvester: The whole thing is delivered through a structure in the ancillary regulations that are under the statute. You have four key regulations that allow our act to work, and one is the law list regulation. In that regulation, you have the inventory of all of those triggering decisions that would attract the application of the act.
You will see there that the Fisheries Act provisions around issuing those permits are mentioned in the regulation. There is no mystery or uncertainty about the types of decisions that trigger the application of the act in a regulatory sense. The others, around funding and land transfer, et cetera, are just fact-based.
The Chair: Environmentally speaking, are these things listed in a schedule of the act?
Mr. Sylvester: They are listed in a regulation — that is, the law list triggers. Those permits are decisions that are regulatory in nature. The navigable waters permit or a Fisheries Act authorization, for example, are specifically mentioned in a regulation called the law list regulations, which is under the Canadian Environmental Assessment Act.
Senator Spivak: I noticed that this bill sped through the House of Commons. I have several questions about the environmental assessment.
Can you contemplate any situation in which this project would not be allowed to proceed because of an environmental consideration? You also did not mention anything about air. I am sorry that I was not here for the previous questions, but how about greenhouse gas emissions from this project? Given our current situation, is the federal government not thinking about what trigger might look at the air from the greenhouse gas emissions of this mining project?
Do you have a priority? I know navigable waters and fish habitat are very important, but are greenhouse gases and the air quality a higher priority? What is the federal attitude to this in terms of your agency, given that it whizzed through the House of Commons?
Mr. Sylvester: Thank you for those questions. I will take them one at a time, as I think there were three questions in there.
The first preliminary point would be that our process is designed to allow for information gathering at the planning stages of a project in order that government departments — and the government, ultimately — can make informed decisions that integrate environmental considerations into those decisions.
It is possible that a project will not proceed at the end of that process of environmental assessment, followed by government decision making. We have a recent example of that at the panel stage, with the Whites Point Quarry in Nova Scotia, where a federal-provincial panel was struck to consider the environmental impacts of that quarry activity and made a recommendation. That is the product of our process — a recommendation to government about the environmental impacts, which can lead to a project not proceeding. It is possible.
I hasten to add that the agency does not make that decision. The product of the agency and the process that it administers is the information to allow others to make those decisions.
With respect to greenhouse gases, it is important to understand that the assessment that we are speaking about today is an assessment of the project as it has been presented by the proponent. Essentially, we are talking about the mine. When we define the project, it is really the mine from cradle to grave.
As the company officials pointed out, it includes the construction, the operation and, ultimately, the decommissioning and the abandonment of the mine. When we do an environmental assessment federally, we consider all those stages in the lifecycle of the project.
The end use — and the greenhouse gas is associated with the use of the product coming from the mine — is not part of the project per se. That is not assessed.
Having said that, the agency led work in 2003, I think it was, under the auspices of the Canadian Council of Ministers of the Environment, to develop guidance on incorporating considerations of climate change in environmental assessment. The product of that is some guidance that has been used both federally and provincially in order to factor into environmental assessments considerations of climate change emissions and greenhouse gases; they are considered.
On the third question about the federal government's attitude and the sense of priority, I do not know that I can answer that. Our process does not rank, when we look at the requirements and elements that ought to be considered, one aspect of environmental impact above another. There is a fairly clear definition of the environment and of environmental effects, and then a series of elements that are required to be considered as factors in the environmental assessment. It is very neutral in that sense.
Senator Spivak: It is just that, Mr. Sylvester, you did not even mention air or climate change or greenhouse gas emissions in your presentation, so I was curious about that. Somehow I missed this. What amount of coal is down there? How much is this mine going to produce?
Mr. Sylvester: I believe that question was put to company officials. That is a level of detail of which I am not aware. As I perhaps have not mentioned, no federal environmental assessment has yet begun. We are waiting for details from the company.
Senator Spivak: Perhaps this question was asked earlier.
The Chair: It was, and they said proven was 85-million tonnes with potential for 100 million and maybe even 300 million in the whole reserve. They had 100-million tonnes in mind.
Senator Spivak: This will be a considerable addition to greenhouse gas emissions, prima facie, so my only question is this: How will you manage that?
Mr. Sylvester: I would suggest that there is a tendency at times to try to shoehorn into environmental assessment all of the requirements and to look to environmental assessments for the solutions to the many aspects of environmental protection.
Environmental assessment is the front-end planning process, but we must remember that there are regulatory tools available for the end-of-pipe situations. There is a regulatory regime under the Canadian Environmental Protection Act, for example, and the government will have strategies and policies for dealing with those emissions once the coal is taken out of the ground.
Our assessment at this stage really pertains to the mine, the activity of building the mine and the operation of it and eventual decommissioning.
Senator Spivak: Mr. Sylvester, your answer has been very helpful. Thank you.
Senator Milne: On page 2 of your deck, you speak of three things. You say that the Canadian Environmental Assessment Act applies to federal decisions about proposed project. That is a given. You speak about cabinet directive, which is more of a policy matter. The third is self-assessment processes, where a federal authority with a decision to make about a proposal is responsible for the EA.
I do not understand that.
Mr. Sylvester: That is a very important element of our statutory approach that is often overlooked and certainly not intuitive. The Canadian Environmental Assessment Act provides for a distribution of much of the decision making and the environmental assessment function out to the departments, agencies and Crown corporations that make those decisions that may have an impact on the environment.
Some intuitively would think that the Canadian Environmental Assessment Agency does the assessments for all these projects. Our model is a self-assessment one.
Senator Milne: The Fisheries Department has to assess itself?
Mr. Sylvester: That is correct. They are responsible for ensuring that an environmental assessment has been completed before a decision that allows the project to proceed is taken. The agency provides advice and guidance on how best to implement the process. You will often see departments relying on outside specialist consultants, and that may be the case in the project we are discussing today, but the point is that, at the end, the decision they make based on the assessment is their decision alone and they have to be sure that the requirements of the Environmental Assessment Act have been met in the conduct of that assessment
Senator Milne: You just take their word for it?
Mr. Sylvester: They meet the requirements of the statute and that is what Parliament intended, that they conduct an environmental assessment.
Senator Milne: It seems to me that there is a lot of assumption in there. You are assuming that they meet those requirements. You never do an audit of that?
Mr. Sylvester: It depends on the level of assessment, too, which is something I did not introduce into this short presentation. There are three streams of environmental assessment. There is the assessment that is conducted as a screening, there is a comprehensive study for larger projects that have the potential for having more significant environmental impacts, and there are public participation elements in environmental assessment as well. There is a discipline, if you like, imposed through the involvement and the transparency that affords public participation.
Typically, departments strive, I would think, to meet the requirements of the statute. If they do not, in the past we have seen discipline imposed by judicial review where community groups or environmental groups that are not satisfied that the process has been met challenge the decisions and the implementation of the statute, and these issues are decided through litigation.
Senator Milne: That brings me to what Mr. Nicholls told us previously. They have prepared an environmental assessment document with input from the community. When my husband was in charge of building pipelines across this country, he had to come to Ottawa to appear before federal authorities and give them a nuts-and-bolts assessment of the entire length of the pipeline, including every stream it crossed and every beaver pond it went through.
It seems to me that the environmental assessment that the company has done with the people in the area, who are all eager for jobs out of this, is colloquial. How does this fall into your plan? How would it fall into any department doing a self-assessment process on it?
Mr. Sylvester: I am not sure I fully understood what Mr. Nicholls was referring to. The provincially mandated process is in the very early stages. I think they have a draft registration document and federal officials have been participating with provincial counterparts on that, but at very preliminary stages.
At the federal level, we still do not know whether the process is even triggered, so it would be fair to say that there has been no environmental process begun at the federal level and that it is in very early stages at the provincial level, mostly around the preparation of the registration document with a view to ultimately filing a final registration in the near future.
I confess that I am not sure about Mr. Nicholls' terminology when he referred to an environmental assessment having been done. I expect it had more to do with preparing the way for an environmental assessment and doing what many responsible proponents increasingly do, that is, getting out to the communities early to explain their plans.
Senator Milne: Getting them on side.
The Chair: That is fair.
Senator Mitchell: Mr. Chairman, I intend to ask a question specifically about this bill, but it may take me a while to get there. Given my experience last time, I thought I would let you know that it will be okay.
The Chair: I will watch your progress with interest.
Senator Mitchell: I will get there as quickly as possible.
We heard from the Minister of Natural Resources, from the Prime Minister and from the Minister of the Environment that Canada is taking real measures, making real decisions, doing real programs to reduce greenhouses gases, that we have hard targets. Yet, we never actually see any hard targets. We do not see any emission reduction targets. They talk about an overall target of some reduction by 2020, which is completely offside with world protocols like Kyoto. It is generally felt that whatever they are proposing will not come anywhere near reaching those particular targets.
Are you aware of any specific emissions targets, emissions limits, greenhouse gas reduction targets for this mine or for any of the plants that may burn its coal?
Mr. Sylvester: I personally am not aware of any targets, though I am not well versed in that area. This is the kind of question that perhaps ought to be put to Environment Canada or NRCan officials, who might be in a better position to respond.
Under the provincial process and under our federal process, as I mentioned earlier, the greenhouses gases emissions linked to the process itself are examined and an attempt is made to gauge or assess the impact of the project on the environment and then to make recommendations about mitigating those impacts once they have been better defined through the assessment.
Senator Mitchell: With respect to greenhouse gases in this assessment, how can you assess their impact? What needs to be done with them if you do not have any guidelines for greenhouse gas emissions limits or reduction targets? How do you tie it to 2020? Surely, if an environmental assessment were to do anything with respect to greenhouse gases, it would want to tie these emissions from this project and from the Canadian plants that will burn this coal to the 2020 greenhouse gas limits that the government says it will implement policies to achieve?
Mr. Sylvester: I cannot take issue with that reasoning. Environment Canada has already provided advice to the province on how the proponent might reduce the energy intensity of the project by converting methane in the drainage gas, for example, or waste product to produce energy. We are involved actively — at least some of the federal departments are — in giving them some advice on how to mitigate. Your point about thresholds is a critical one and it makes it very difficult.
Senator Mitchell: Mitigate, but to what? We have no way of knowing that, so there is no hard limit, no hard targets and nothing to drive us to 2020. I am not trying to put words into your mouth.
Mr. Sylvester: Again, I am not in a position to say whether that is the case or not. However, if it is the case, I would agree that it is a challenge.
Senator Mitchell: I was struck by Xstrata's comment that their senior most chairman or CEO is actively involved with the prime minister of Australia in a project to develop carbon markets. It seems to me that if Xstrata captures methane gas — they say they might in projects like this — they could have real carbon offsets that they will sell in Australia because we are not doing anything here.
Having said that, the Throne Speech did say that this government would set up a carbon market, a voluntary one I would think, because they do not have any caps. Are you aware of any effort being made to set up that market? I have not heard a thing out there in the markets.
Mr. Sylvester: Again, I appreciate the line of inquiry, but at the Environmental Assessment Agency our task is to ensure that we have a thorough and correct implementation of the assessment process. The questions around policy, thresholds and regulatory approaches to containing or limiting greenhouse gases emissions are questions that are more properly put to the Department of the Environment.
Senator Mitchell: Exactly. However, if that were happening out there in this government, with people you probably work with on a daily basis or closely on the environment, you would probably know about it.
Mr. Sylvester: Environment Canada, for example, participates in many assessments, even though they are not triggering departments. They do not necessarily have a permit to issue, but they often act as a specialist federal authority that provides advice on all issues that fall under the Minister of the Environment's purview.
Senator Mitchell: They have not consulted you about what limits might be reasonable or achievable, given your vast experience with environmental assessments and projects?
Mr. Sylvester: No. We are not currently engaged in activities around the setting of thresholds for greenhouse gases.
Senator Mitchell: I would conclude — I know that you cannot — that the government is probably doing nothing and what they are talking about in Bali is really hot air.
The Chair: To be fair, though, the interest of the Environmental Assessment Agency is circumscribed by the beginning and the operation and the closing of the mine and not with what happens to what comes out of the mine; is that right?
Mr. Sylvester: That is correct.
Senator Moore: Thank you, gentlemen, for being here. I wish to follow up on Senator Milne's question with regard to the third item on the second page of your deck. We have heard that this is a $350-million private capital project. We know that environmental issues must be addressed and standards met. If I were Xstrata, I would like to know how long self-assessment processes take. Who coordinates that? Who ensures that those assessing bodies are doing their work and are bringing their reports in on a scheduled time? Is that something that you do? Could you tell me a bit about that, please?
Mr. Sylvester: I can tell you something about that, and my colleague, Steve Burgess, can also add to that.
Regarding how long it takes, it varies from case to case. The agency does have a role stipulating the statute for certain projects, certainly for all comprehensive studies, for the larger assessments, and for environmental assessments that have multiple departments involved. You may have the Departments of Transport, for example, and Fisheries, both, issuing permits pertaining to the project. In that case, there is a federal environmental assessment coordinator role that is contemplated in the statute and the agency plays that role.
Senator Moore: You do that?
Mr. Sylvester: We do that. Mr. Burgess may wish to add to that role.
Steve Burgess, Acting Vice-President, Program Delivery, Canadian Environmental Assessment Agency: There are different levels of assessment federally. At the basic level, the simplest type of assessment that is undertaken is what we call a screening-level assessment. Those would apply to relatively straightforward, simple projects with relatively well- understood environmental affects with relatively little public concern.
There are also what we call comprehensive studies, which apply to much more complex projects with more significant environmental effects and more public concern.
At the highest level, we would have what we call review panels — that is, public reviews, public hearings, and so on, for major projects, which you would have seen in the case of the Whites Point Quarry, for example.
Our role in that varies, depending on the nature of the environmental assessment that is undertaken. In the case of screening-level assessments, our role is relatively minor for the most part.
Senator Moore: What does that ``screening level'' versus ``comprehensive study and review panel'' mean?
Mr. Burgess: The screening level assessment is an assessment that is undertaken, again, by what we call the responsible authorities, for example, the Department of Fisheries and Oceans or other departments.
Senator Moore: Federal or provincial departments?
Mr. Burgess: No; only federal. This is only the federal process.
There are situations, though, where a provincial environmental assessment might be required for a project, as well as the federal process. For example, that could be the case with respect to the Donkin project, should we have a trigger under the Canadian Environmental Assessment Act.
In situations where we have both federal and provincial reviews or assessment required, our role would be to coordinate the environmental assessment, both from the standpoint of coordinating the federal participation in the environmental assessment, where you may have a department that has a responsibility to do an environmental assessment, but you may also have other departments that have expert advice to contribute.
Our role would be to coordinate their activities in relation to the assessment.
Senator Moore: The provincial authorities as well?
Mr. Burgess: I will get to that next.
Our first job is to coordinate federal involvement in the assessment. Where there is also provincial review, we are responsible for coordinating the conduct of the federal assessment and coordinating that with the provincial assessment. The agency would be the point of contact between the provincial officials, the provincial process and the federal process.
Senator Moore: When you start a project such as the one before us, given the nature of this coal mine-type project, do you have a timeline where you would expect to have the paperwork in and by which you would be able to make the final approval or disallowance? Are we talking about months or years?
Mr. Burgess: Our legislation does not specify timelines for the conduct of the environmental assessment process. Particularly in situations where we are coordinating an assessment with a provincial process, in some cases provincial processes have legislated timelines that they must respect. Our responsibility, our objective, is are to ensure that the federal and provincial processes are harmonized. This ensures that we do not have a situation whereby the federal process lags behind.
Senator Moore: They are both working on the respective processes in concert in order to move ahead.
Mr. Burgess: That is correct. We develop a joint work plan, which sets out timelines for the review to occur. We endeavour to ensure that only one environmental assessment report is produced that meets the needs of both jurisdictions. We need to work, obviously, with our provincial colleagues to ensure that the process respects both sets of requirements. Then, as far as timing goes, we work with the province again to confirm the timelines for the process match.
Senator Moore: Just to clarify things: The key thing now is for the proponent to get its information to you. Following that, the process starts in earnest in terms of the environmental assessment; correct?
Mr. Sylvester: Obviously, that is a very important milestone. It is important to get the information that allows the potential federal trigger departments to make a determination as to whether they will have a decision that triggers the application of the act. Having said that, the federal government has taken a fairly proactive approach; they do not wait for that information to become available. We will typically participate alongside the province in the early stages of their assessment process, on the chance that there will be a triggering decision. That way, we do not have to start from scratch when the provincial process begins.
We are always mindful of the need to synchronize when we have the regimes of two jurisdictions applying to the same project. We put a lot of effort into trying to mesh and harmonize those processes. We do not take a sequential process; we take more of a lockstep approach.
The other point I would add to Mr. Burgess's response relates to timelines. As he correctly pointed out, under our process there are no time frames legislated or prescribed. The Federal Coordination Regulations impose certain time frames on the potential responsible federal authorities with triggering departments to share information quickly. That helps them come to a determination about whether they are going to be in or not, and take cognizance of the project description and be in a position to make those decisions as early as possible.
The Chair: This is not happening in a vacuum. Everyone knows that a trigger could occur. Do you contemplate the likelihood that this will trigger an environmental assessment at a particular level? Are you now thinking in terms of screening, or comprehensive or in terms of the top tier? You have been thinking about this.
Mr. Sylvester: A couple of things come to mind. Assuming that there is a trigger and, based on the project description, it is likely, because of the size of the project, that we are looking at a comprehensive study. However, I am not certain of that. Again, I hesitate to say anything firmly without knowing the details.
There are provisions under the comprehensive study process. Mr. Burgess can give you more details on this, if you have any questions. At a certain point, the Minister of the Environment makes a decision based on information provided by the responsible authorities as to whether the assessment ought to continue as a comprehensive study — that second stream of assessment — or whether it ought to be referred to a public panel review.
The Chair: That is the higher level of the process.
Mr. Sylvester: Yes. It is the independent panel process whereby the minister appoints members from outside the government based on their knowledge and the absence of conflict, so that they can have an independent look, in a public forum, the environmental assessment of the project.
That tracking decision is one of the milestones along the comprehensive study process path where the minister takes into account public comments that he may have received and the potential for significant adverse environmental affects. The minister comes to a decision, bearing in mind as well the recommendation from the responsible authority, as to whether the assessment ought to continue as a comprehensive study or as a public panel review.
There are, obviously, some distinguishing features to differentiate a comprehensive study and a panel. However, I would not want to leave the impression that a comprehensive study is somehow less rigorous. We often use the terminology that the Cadillac of environmental assessments is the panel review. It is perceived that way because of its very public nature and because it is outside of government. It is an exception to the self-assessment process, if you like.
Comprehensive studies and, indeed, screenings can be very thorough assessments because the factors considered are listed in the act.
Senator Sibbeston: Would you not agree that a lot of the activity has to do with science? You are judging as to whether there will be adverse environmental effects because of a project. I am sure both the government representatives and the proponents will have their experts, and in the end you will have to make a decision. Do you have access to the best experts, scientific and otherwise, who would be needed to make a decision as to whether a project will go ahead?
Mr. Sylvester: I would say that given that it is a self-assessment process, the assessment itself can be conducted in a number of ways. Sometimes departments have the capacity internally to do their own science and generate their own environmental assessments. Mr. Burgess will correct me if I am wrong, but more often the case is that specialist firms with a strong scientific capacity will do the fieldwork — the meat and potatoes, if you like — of the environmental assessment process.
That work is then informed by the participation of federal scientists, where we have specialist departments like those at Environment Canada, Fisheries and Oceans Canada, Natural Resources Canada, Health Canada and others that bring to bear on the assessment process the benefit of their scientific capacity. The documents produced certainly at the comprehensive study level and the recommendations by officials at the Environmental Assessment Agency, as well, are then vetted. We have a capacity there to review the science that is integrated in these assessment documents.
The sum of all of those contributions I think makes for a fairly solid science-based EA.
Mr. Burgess: I would add that, in the case of a comprehensive study, certainly, as well as the panel, the process is accessible to the public. There are many scientific experts, environmental groups and so on that will have an opportunity to review the documentation and provide their input. That input is taken into account by the government in making its decisions regarding the assessment. At the end of the day, we normally end up with scientifically credible and solid reports. That is our intent.
Senator Sibbeston: I appreciate that the review is with respect to environmental matters. What about the economic and social aspects? Let us say First Nations are involved in the area and there are lands in question. Do you deal with that? Are there provisions under the law to look at those aspects in a project?
Mr. Sylvester: There are, although our statute gets at the social aspects indirectly. In other words, the social impacts that are related to the environmental impacts are examined. Certainly, the act also requires us to consider the impact on Aboriginal peoples and to consider, for example, the use of traditional ecological knowledge in the conduct of environmental assessments.
Senator Sibbeston: What about benefits? This is something that is fairly new in our country in terms of the federal government insisting that the proponents also deal with benefits that might accrue from a project. I know in the Northwest Territories, in the mines or the pipeline, the economic benefits are part of the whole review of the project. I am not exactly sure under which provision the minister provides for that, but he insists that the proponents, the companies, make a deal regarding benefits with the local Aboriginal people, so that the project can proceed in their area or in the lands that they live on.
Is that something that you have anything to do with? In this project that we are talking about in Nova Scotia, are the Aboriginal people being looked after at all? Is there anyone looking after their interests in the federal government?
Mr. Sylvester: Certainly, there would be a requirement. Under the Major Projects Management Office initiative that I mentioned, one of the things that cabinet has directed the Environmental Assessment Agency to do is take a leadership role in managing the integration into environmental assessment of consultations with Aboriginal peoples during the EA stream. The agency is very active in that regard.
We tend to separate out the negotiation of benefit agreements from the identification of environmental impacts and mitigation measures associated with those environmental impacts. In answer to your question, yes, absolutely, the environmental assessment process considers the impacts on Aboriginal communities and looks to mitigate those impacts.
In fact, there is a linking of constitutional duties to ensure that those consultations take place. The agency increasingly is playing a role in coordinating the federal government's approach to those consultations.
Mr. Burgess: I do not have much more to add. Typically, impact benefit agreements are negotiated between a proponent and the First Nation. Normally, the results of those negotiations are confidential. Certainly, we do not have access to those, as federal officials.
Our primary objective is to ensure that we understand what the potential effects could be to First Nations and their traditional use of lands, for example, as a result of a project, to ensure that those are taken into account in the environmental assessment and to ensure that we meet our obligations with respect to our duty to consult with First Nations on those issues.
Senator Sibbeston: I have one more comment. If the proponent, in its work in preparation for a project, is smart or conscientious enough to meet with the First Nations to try to come to terms with their involvement or the benefits that they get, it seems to me that that would take a lot of the environmental concern away.
When the diamond mines came North, I know of instances where the people, rather than challenging them on every environmental aspect, were able to come to an agreement. There is then no more of an environmental concern on their part. That takes away a big issue, a big impediment. It clears the way for a project to deal with what would be normal environmental concerns.
It seems to me that it is in the best interests of a company's proponents to deal with First Nations first, to avoid wrangling and all sorts of impediments that they may put up in the course of environmental hearings.
The Chair: If I were an investor, I might be shaking in my boots right now. Do you bear in mind the patience of the capital that is waiting to be brought to bear here when you are doing these things? Do you take that into account with the alacrity with which you arrive at the conclusions that you will recommend to the various agencies? Otherwise, there is a limit to the patience of capital. Have there been instances in the past where one has outlasted the other and the people have gone away?
Mr. Sylvester: I think, Mr. Chair, you have put your finger on an issue that has been front and centre for the last couple of years. What I can tell you is that, as Mr. Burgess mentioned, certain provincial processes do have prescribed timelines. That provides a greater degree of certainty and room for planning assumptions.
The Chair: Would that be a good idea to put in the federal regulations?
Mr. Sylvester: We do not have that currently. One of the challenges for us is that when we find ourselves in situations where both the provincial and federal regimes apply to a project, it is difficult to come up with a one-size-fits- all approach to timelines because we are trying to measure a process with a host of jurisdictions with different timelines.
Having said that, I think the Major Projects Management Office, as part of that government initiative to streamline the approval of major projects in the natural resource sector, does have as one of its ambitions the setting of timelines and performance standards to get at this issue of more efficient delivery of environmental assessment. I think most departments involved in environmental assessment and the agency are concerned about delivering a high-quality environmental assessment, but doing so efficiently and ensuring we are able to provide a predictable, consistent process that offers timely information about environmental impacts.
We recognize the need for that, but we also want to balance that against our desire to ensure we have quality environmental assessments and that we provide, as one of the cornerstones of our process, meaningful opportunities for public participation in the environmental process. I think those two objectives can be reconciled and we are well on our way.
If you had officials from the Major Projects Management Office, they would tell you that they have in mind consideration of different approaches that will allow us to come up with some reasonable time frames that provide that predictability for proponents. By and large, in my experience, proponents are communicating to us their desire to do good environmental assessment; but they also are communicating their desire to have some certainty around how long the various stages of the process will take. The Major Projects Management Office will provide much-needed help in that regard. It will track and provide some transparency about how these projects are moving through the system, where they are at and how long it is taking.
One of the features of that process, as we contemplate it at this stage — and it is still in development — is coming up with a project management plan at the early stages that would include timelines. This will impose a certainty transparency and discipline on all those — federal departments and our counterparts in the province — to try to meet those timelines in order to deliver a good product in a predictable way.
The Chair: Is the question of the resources that are at your disposal — money, people — any impediment in the efficient delivery of those assessments?
Mr. Sylvester: I would have said so prior to Budget 2007. However, as you may know, the government made what I would characterize as a significant investment in improving the capacity not only of the agency, but also of key partner departments that we work with in order for us to be able to deliver a more efficient and timely environmental assessment. We are on the cusp at the agency of transforming our organization so we can play a prominent leadership role in ensuring that we are delivering a more efficient product in a timely way.
The Chair: Such efficiency will be welcomed by all sectors of the economy.
Senator Brown: I have to say that you both have great patience. I think you have endured a lot of politically motivated questions, until Senator Moore got on board and started asking questions about the process.
If I understand correctly, a company has to come with a project and give information about how that project would go forward.
Senator Milne: Excuse me, Senator Brown. My questions were not politically motivated.
Senator Brown: I did not say yours were motivated by politics.
Senator Milne: I do not think you should be making remarks like that.
The Chair: We will not go there.
Senator Spivak: I do not think it is appropriate in committee to comment on the motivation of anyone, including Senator Brown. It is a gratuitous comment to suggest that questions are politically motivated.
The Chair: We try to avoid those things.
Senator Brown: When you start asking questions about the government's position, it is politically motivated.
The Chair: Sorry, we are not going to go there. Senator Brown, you have the floor for questions of the witnesses.
Senator Brown: If I can return to my comment, I think you had it right when you said that the company project has to come first. You have to have the information from the company and what the company is proposing to do — the size of it, the length of it, et cetera.
Second, the province has the right to become involved in an environmental assessment of its own. If that environmental assessment is not adequate, I guess the federal government, as the overseer, has the right to either agree or disagree with the requirements of that assessment.
My point is that the questions that were asked repeatedly were answered by you without the necessary information. You were basically saying that until the first two steps are taken, there is no way you can have the information to answer the questions.
Mr. Sylvester: Yes. For the purpose of clarifying, I might comment a bit on what you said, senator. As to the notion of oversight, I am not sure that I would characterize it that way. You are correct in stating that until we have certain essential information and some further details, which I am sure will be forthcoming from the proponent, the potential responsible authorities are not in a position to say whether they will have to issue a permit to allow the project to proceed. We are not in a position today to say whether the federal process will be triggered.
We can say with some certainty, based on what we know is currently happening, that the provincial process is applying, so there will be a provincial EA for sure. If there is a federal EA, we can say for sure that we will work, as is our habit, in concert the provincial process to harmonize the two processes through one assessment that will meet the requirements of both the federal and the provincial legislation.
Even if a federal assessment is not required, our habit is to participate by providing input from federal specialist departments like Environment Canada and Fisheries and Oceans in the provincially based environmental assessment.
Senator Brown: Thank you, Mr. Chair. All I was trying to get at was that questions were being asked that were impossible to answer until the information was available.
Senator Spivak: Mr. Sylvester, I was here when the Canadian Environmental Assessment Act was passed. There was a great deal of hope at the time about federal government leadership. By the way, it was a Liberal government in power and we were a Conservative opposition, and vice versa. It has nothing to do with politics.
At that time, we talked about the discretionary nature of the process. In terms of accountability, is it correct that the person who makes the final decision is the Minister of the Environment?
Mr. Sylvester: It depends on the stream of assessment that we happen to be in. Mr. Burgess walked the committee through the three streams of EA. When we are at an environmental assessment that is conducted as a screening, the agency and the Minister of the Environment have very little to do with the assessment. It is self-assessment in its purest form, in the sense that the federal department that has the permit to issue or that is funding the project does the assessment and makes the decision as to whether the project has significant adverse environmental effects such that it should not proceed or whether those can be mitigated to the satisfaction of the department. That is for screenings.
In comprehensive studies, there is a different approach. The Minister of the Environment receives a comprehensive study report, assuming that we have gone through the tracking decision and it proceeds as a comprehensive study from beginning to end, and then has a decision to make based on the recommendation in the report that is provided and the comments from the public as to whether the project can proceed in accordance with the conditions and the mitigation measures that are introduced in the document.
At the panel level, recommendations are issued from a panel and those recommendations go to the Governor-in- Council. The response to those recommendations is formulated by the responsible authorities — Environment Canada or Fisheries or Transport — and the cabinet ultimately makes a decision based on that report and the recommendations as to whether the project ought to proceed.
Senator Spivak: All these things are advisory, and the final decision, even in the screening process, is made by the department. Everything is advisory until it gets to the political authority.
Mr. Sylvester: It is fair to say that the product of the assessment is information and advice on the nature of the environmental impacts and a characterization of whether these impacts are significant — so significant that they cannot be justified or so significant that they cannot be mitigated to make them acceptable.
The Chair: You are not the gatekeeper? You do not say ``yes'' or ``no'' to projects?
Mr. Sylvester: No, the agency provides advice to the minister on decisions that he has to make, but we do not make ``yes'' or ``no'' decisions, that is correct.
Senator Spivak: I want to point out that that was originally a huge bone of contention in the vision of how the Environmental Assessment Act would operate. In the experience, many of the questions and problems have been borne out.
Mr. Sylvester: As the senator will know, Parliament built a five-year review provision into the statute. We had a review that resulted in amendments through Bill C-9 that are now in force that went to some of the issues. The statute also contemplates a seven-year review that is scheduled to be launched in 2010 where many of these issues that were very much at play at inception I am sure will be raised again for consideration by Parliament.
Senator Moore: Just to recap, could you run through the three streams of the process again?
Mr. Burgess: The first type of assessment, and the most commonly applied level, is called screening-level assessment. I should say that there are in the order of 7,000 or more assessments done every year across government and well over 95 per cent of those would be environmental screenings. The next type of assessment is a comprehensive study, and there are perhaps 20 to 30 of those initiated every year. There are then a dozen or so review panels on an annual basis.
Senator Moore: In the case of this project at Donkin in Nova Scotia, do you set up an office there? Do you do your work from Ottawa or are you on the ground there working with the various authorities?
Mr. Burgess: We have a regional office in Halifax with a regional director and a number of staff. They would do the coordination work out of Halifax. Our role in Ottawa would be to provide them advice and support on how to manage the project.
Senator Phalen: Mr. Sylvester and Mr. Burgess, being the senator from Cape Breton, I would like to take the opportunity to commend the work that your agency undertook on the Sydney tar ponds. It was determined to proceed with a full panel review as opposed to a comprehensive study. The recommendations were completed and presented on time and were very well received by the community. The project is proceeding and we believe that what was once referred to as Canada's worst environmental nightmare will be remedied in the future.
I want to recognize the good work of your agency on that file. We have full confidence in your work on this project.
Mr. Sylvester: Thank you very much, senator. I know that my predecessor, Jean-Claude Bouchard, had a great amount of pride in that accomplishment. We had a wonderful working relationship with the province. It was a joint approach and it stands as a testament to the fact that when the federal and provincial governments are determined to work together in an efficient way we can deliver a high-quality product in a timely way.
The Chair: Thank you very much for your valuable testimony. We have kept you longer than we said we would have.
The committee adjourned.