Thank you very much, and good morning everyone. Thank you for the opportunity to be here.
My name is Pam Schwann, and I am president of the Saskatchewan Mining Association. Our association consists of mining and exploration companies that are active in Saskatchewan, and the names are indicated on the screen.
I want to give you a snapshot of the current Saskatchewan mining industry. We're a global mining leader. The annual Fraser Institute Survey of Mining Companies has identified Saskatchewan as the number one jurisdiction in Canada, and number two in the world in terms of investment attraction, based on the factors of the region's geological and policy framework.
We have the world's highest grade potash and uranium deposits that offer us a clear geological advantage. However, a number of policy factors, including ongoing regulatory reviews and related regulatory uncertainty, land access, political stability, and lack of clear policies, are resulting in a decrease in confidence that Canada offers an attractive environment for mineral investment.
In terms of mineral production, Canada is the world's leading miner of only two commodities, uranium and potash, and 100% of both of those commodities now come from Saskatchewan. We produce 30% of the world's potash, and 22% of the world's uranium. Within Canada, Saskatchewan is the number two jurisdiction in terms of the value of mineral exports, and we are leading in terms of indigenous employment and business development.
In terms of exploration, Saskatchewan is number four in Canada for mineral expenditures. In 2015 we had $213 million in expenditures, dominated by uranium and potash, with only minor base metals, gold and diamonds.
Mining, short and simple, is a pillar of Saskatchewan's economy. There are over 30,000 people directly and indirectly employed by the industry, and it comprises 6% of provincial GDP.
The map really shows the jurisdictions where uranium mining occurs in the Athabasca Basin, where potash is located, coal mining is along the south border of Saskatchewan with North Dakota and Montana, and base metals and gold are in the middle.
In terms of mining and public support, one of the refrains we are regularly hearing is the need to regain public confidence. I felt it was very important to share with you public polling data from Saskatchewan that indicates that nine out of 10 residents are supportive of the mining industry, including 50% who are strongly supportive. Additionally, 84% think that the mining industry is very important to Saskatchewan. That's based on a poll of 1,000 Saskatchewan residents.
Certainly, a key to this support is that EA reviews and licensing hearings in Saskatchewan are inclusive. Indigenous communities and leaders are encouraged and supported in participating, and no community or individual has been denied the opportunity to participate. Short and simple, there is confidence in the regulatory process in Saskatchewan throughout the life of a mine.
With respect to indigenous relationships and economic outcomes, mining is one of the few sectors that delivers jobs and economic growth to indigenous people in Canada. A recent paper by Blaine Favel and Ken Coates offered that the resource sector is at the vanguard of reconciliation with indigenous people in Canada. We think this is particularly true in Saskatchewan where there is a decades-long constructive relationship with indigenous people.
Mining provides wealth creation, economic development opportunities, and improved educational outcomes in the communities that have systemically high poverty rates. In 2015, 45% of all northern Saskatchewan mine workers, 1,526 people, are of first nations or Métis heritage. This represents a payroll of $107 million a year. One in every five jobs in northern Saskatchewan is directly related to mining.
In 2015, $388 million worth of goods and services were purchased from indigenous-owned northern companies or joint ventures. That represents 41% of all goods and services purchased. Mining operations in southern Saskatchewan have also more recently focused on engaging indigenous people as employees and as suppliers in building educational economic capacity in indigenous communities.
With respect to indigenous relationships, environmental stewardship, and community engagement, community engagement is a continuum throughout the mine life cycle, from exploration to EA reviews, to mining and decommissioning. Community participation occurs through monitoring vehicles such as collective benefit agreements, IBAs, surface lease agreements, northern environmental quality committees, the eastern Athabasca regional monitoring program, and the eastern Athabasca working group.
In terms of the state of mining in Saskatchewan, between 2008 and 2015 over $25 billion was invested in the Saskatchewan mining industry. However, I think everybody is aware that we're shifting gears right now and we're seeing a retraction in commodity prices resulting from reduced growth in China and India and also undisciplined global production from state-owned enterprises that has produced surpluses and driven commodity prices down.
The graph shows you this significant decrease in commodity prices for uranium, from a high of $138 U.S. a pound in 2007 down to $25 a pound today. Prices for potash declined from a high in 2008 of $873 per metric ton down to $213 per metric ton today.
However, the long-term fundamentals that underpin the Saskatchewan mining sector are strong. They are simply that the world's growing population needs more quality food and clean energy on a reduced land base. That's how potash, uranium mining, and carbon capture and sequestration technology being developed in Saskatchewan are part of the solution to feeding the world and providing clean energy to the world.
That's a snapshot of where the Saskatchewan mining sector has been. What I'd like to talk about is what the future holds, which is what you're interested in now, as well.
We believe the Saskatchewan mining industry can be a primary contributor to the government's key priorities of developing a clean energy economy and indigenous reconciliation.
Nuclear power generation currently provides 11% of the world's electricity. Saskatchewan has the highest grade uranium mines in the world. We have a natural advantage in contributing to nuclear power generation. The McArthur River and Cigar Lake mines provide 20% of the world's uranium—two mines provide 20% of the world's uranium—to fuel clean energy and reduce global GHG emissions.
A recent study has also confirmed that uranium mining and milling activities contribute only a very minor amount to the total GHG, making nuclear one of the cleanest energy options for the world's growing population, particularly in densely populated countries.
In terms of carbon capture and sequestration, we do mine coal in Saskatchewan. It's used for thermal power generation, and it's our primary baseload power. When the federal regulations with respect to coal thermal generating stations were introduced a few years ago, our governments invested heavily in carbon capture and sequestration. It's successful. It's working. In Saskatchewan, one million tonnes of CO2 was captured from Boundary Dam just this past year. That's the equivalent of taking 240,000 cars off the road. Saskatchewan has a population of just a million people, so that's a very significant amount.
With China building one new thermal coal plant every seven to ten days, as well as additional nuclear power generation capacity, CCS technology will be required in the world.
In terms of indigenous relationships, as a Canadian and global leader in the participation of indigenous people and communities in mining, Saskatchewan has a portfolio of best practices to help close the economic and social gap between indigenous and non-indigenous people. The best practices are exemplified by the recent collaboration benefit agreements signed by Cameco and AREVA with northern communities impacted by northern mines and include workforce development, business development, community engagement, environment stewardship, and community investment.
In the slides, you can see some of the high-tech mining that occurs at Cigar Lake. You can see as well an individual from the Hatchet Lake Band doing some water quality sampling that's part of the eastern Athabasca regional monitoring program.
In terms of clean technology, Saskatchewan mining operations continue to reduce the energy and water intensity usage as well as GHG emissions through initiatives such as heat recovery cogeneration. We're also early adopters of technology, such as continuous mining—all our potash mining is done by continuous mining—remote control mining, such as is done at Cigar Lake and McArthur River with the high-grade uranium mines, and the use of electric vehicles. All the person carriers, used by the potash companies for their underground mining are electric now. We have a manufacturer of electric vehicles based right in Saskatoon, with Prairie Machine and Parts.
Challenges to our sector that might prohibit it from being able to contribute to its potential in the future include a number of items. Regulatory review is one. We've undergone constant review of federal environmental legislation in the past decade, and it's contributing to investor uncertainty. This includes multiple reviews of CEAA, the Fisheries Act, metal mining effluent regulations, and navigable waters legislation.
Mining activities are bearing a disproportionate amount of regulation compared with their footprint and with other sectors. For example, mining contributes less than 4% by sector of GHG, yet it's being identified as something that's required in the CEAA reviews.
As to the Species at Risk Act, there are conflicting recovery strategies with a species-by-species approach, and no permanent mechanism is available. It's in the regulations, but the bureaucracy has not developed any way that a permit under SARA can be utilized. We have at least one mine in Saskatchewan that has decided not to proceed due to uncertainty with respect to the Species at Risk Act. That represents over $2 billion in investment, and 400 long-term jobs.
Access to land is important for us as well, and there are challenges on that front.
Regarding access to capital, flow-through financing is critical for junior companies. It has led directly to mine discoveries in Saskatchewan, such as the Santoy gold mine, or discoveries with additional investment, all the while creating employment and business opportunities in a robustly regulated environment.
There is a need to continue to develop indigenous relationships within a constitutional framework. The duty to consult and accommodate is supported by the mining sector, and while there are challenges with it, we're managing to work our way through it. However, introducing concepts such as UNDRIP and FPIC into the CEAA review process introduces confusion and uncertainty with indigenous communities, governments, and industry. Nobody knows what they mean, everybody has a different understanding of what they mean, and they are raising a lot of uncertainty. Ultimately this may result in an erosion of the progress made with the mining sector and indigenous communities, as we've seen in Saskatchewan.
Ensuring a culture of safety is of utmost importance to our members. The legalization of marijuana is regarded as a very serious safety issue within the mining sector. I can't really underscore that enough.
Regarding rail transport capacity and service, Saskatchewan potash is a leading customer of the rail service, and ensuring rail capacity as well as timely service has been an issue in the past. Unless it is addressed in the current CTA review, it will continue to be an issue when potash exports increase.
Finally, in summary, mining is a pillar of Canada's current and future economy. Multi-billion dollar investments are made by mining companies with long-term vision. While this is a particularly challenging commodity cycle, the long-term fundamentals remain positive for Saskatchewan's mining industry. We have a natural advantage because of our geological framework. Mineral resources can't be shifted to other jurisdictions like manufacturing opportunities can.
Saskatchewan contributes to the government's clean energy priority both within Canada and globally through uranium mining and CCS development. Let's make sure our policies enable us to leverage our natural resource advantage while at the same time reducing global GHG emissions.
Saskatchewan mining addresses the government's priorities of indigenous reconciliation through our demonstrated and leading practices. To achieve the government priorities of clean energy and indigenous reconciliation and to capitalize on our natural mineral resource advantage, it is critical to develop and implement a competitive policy and legislative framework to complement our geological framework.
The committee's work in advancing this position is welcome, to ensure the sector continues to contribute to Canada's economic and social well-being for generations to come.
Thank you very much.
Thank you for this opportunity, Mr. Chair, to address the committee today.
My remarks today will focus on Goldcorp's Borden gold project, and specifically our plans to build Canada's first all-electric underground mine.
I have information in the deck concerning other topics and areas, which Pamela has also touched on, in terms of first nations and our overall approach to sustainability. I would plan to touch on some of those things briefly and move through, so I might just direct you to specific slides.
I will move to slide 3. I'm not going to touch on the executive summary. Just quickly, on Goldcorp's vision and strategy with respect to sustainability, at Goldcorp safe, sustainable, and responsible mining is a company-wide commitment rooted in our values as an organization. We are committed to creating social and economic benefits for all of our stakeholders at every phase of the mining life cycle, from early exploration through the productive life of the mine to its eventual closure and reclamation. We are committed to being responsible stewards of the environment and performing to the highest applicable health and safety standards. These are core values that guide our decision-making everywhere we do our business.
I like on the hexagon where we have sustainability, people, and safety across the top, and across the bottom, margins, safe production, and reserves. You can see that the people side of our business only exists with the support of the production side, or the economic drivers. The economic drivers wouldn't exist without the sustainability, people, and safety of our business, as well.
I will quickly go to slides 4 and 5. I'll just mention where we are in Canada.
In Ontario, we have over 3,000 people working for Goldcorp at three operations. Starting from west to east, one is in Red Lake, where we have about 1,000 people. There is one in Musselwhite mine. That's a fly-in and fly-out camp. There are about 800 people who work at Musselwhite, with over 200 first nations employees. Another one is at the Porcupine gold mines. We have been operating at Porcupine, in Timmins, Ontario, for over 100 years.
Our newest project in Ontario is the Borden gold project. It's about nine kilometres from Chapleau. That is a district that is brand new for mining, not just for Goldcorp but, in fact, for mining. The community of Chapleau itself has been reliant on rail and timber up to now, so it's an exciting opportunity both for the community of Chapleau, and for the first nations in that district. We see a lot of potential for what we call a jurisdiction place, so we may be finding not only the Borden deposit, but there might be other deposits in that region, as well.
In Ontario, there is $1.4 billion in GDP created and over $300 million in government revenues.
I will move to slide 5, in terms of Goldcorp in Quebec. In April of 2015, we brought into commercial production our newest mine in Canada, which is the Éléonore mine on James Bay in Quebec. That mine will ramp up to be one of Canada's largest gold mines. Since 2007, there have been over $683 million in goods, services, and supplies purchased from the Cree.
We have an agreement with the Cree grand council, which we have referred to as a collaboration agreement in place there. Over 25% of our employees come from those Cree communities.
Our newest project, which was acquired about six months ago, is the coffee gold project in the Yukon. It's about 130 kilometres south of Dawson City. Discussions with the local first nations are under way. Goldcorp has not had any projects in the Yukon or the Northwest Territories before, so we're excited about that.
As I said, I'm here really to discuss our GHG and our approach to energy, specifically at the Borden gold mine. We've had an energy and GHG strategy since 2012. It sets out our reduction targets for consumption and GHGs, and has an objective as well for renewables.
We've had quite a lot of good success in terms of what we've been able to achieve.
I will skip ahead, just to give you an idea of what energy means to a mine. Our overall spending on energy is $98 million. That would be natural gas, diesel, and electricity, predominantly. That's about 15% to 17% of our overall operating cost. That's a very big number in terms of gigawatt hours; it's a lot. The CO2 equivalent from the various sources of energy is 120,000 tonnes.
What I want to illustrate is the impact, from a financial point of view, of the cap-and-trade framework in Ontario, as it will be from January 1, 2017 onward. Of course, cap and trade, practically speaking, puts a price on carbon. What I'd like to point out is the diesel consumption. It's over 20 million litres of diesel, which makes up more than half of the overall carbon footprint in Ontario.
One of the two most critical levers for reducing GHGs is energy conservation, which we are actively doing all the time through efficiency projects, trying to do our business and trying to essentially produce more with less.
The big one is fuel switching. In that way, really, our carbon footprint at Goldcorp is similar to my carbon footprint as an individual or a consumer—i.e., largely from how I travel, or in the case of Goldcorp, how we move waste rock and the rock that contains gold, and how we heat our buildings on the site. Fuel switching—particularly away from diesel, because its carbon content is quite a bit more than that of natural gas and other forms of fossil fuels, including propane—is the single biggest GHG-reducing strategy, in particular in gold mining, which is not a heat-based process. Our processing is a water-based process, so we don't emit GHGs from processing.
It turns out that there are many other associated benefits of fuel switching, which I would be happy to elaborate on further, such as the health and safety of our employees, productivity, and eventually competitiveness of mining—in our case, the competitiveness of our operations.
Last, we abide by the highest international standards set out for our industry, in our operations both domestically and abroad. You can see in the list here the number of external standards that we have committed to and that we practise, including commitments to industry associations and membership organizations. Goldcorp has been recognized by NASDAQ and S&P a number of times for our performance with respect to sustainability.
Our internal system is referred to as “sustainability excellence management system”, and it is our integrated management system for achieving performance in safety, health, environment, corporate social responsibility, and security.
We have extensive experience working with first nations in Canada, and they make up approximately 20% of our employment. We can go back to 1996, to the Musselwhite agreement. Maybe it was the Rio Tinto mine in the Northwest Territories, but I think our Musselwhite agreement was the first comprehensive agreement between first nations and a mining company. In other companies they are known as “impact and benefit agreements”, but we prefer to refer to them as “collaboration agreements”, and that is how we see it. That collaboration agreement has now been in place for over 20 years, and we are currently in the process of renegotiating it.
At Porcupine gold mines, in Ontario, we have a resource development agreement or a collaboration agreement with four first nations; at Red Lake gold mines, with two; and at Borden gold project, we are in proximity to four indigenous communities.
The Éléonore mine on James Bay in Quebec is close to Cree grand council communities, mostly Wemindji and Eeyou Istchee.
As to what the future holds in mining—and this is the immediate future—we're moving quickly towards commercializing and adopting clean technologies at our Borden gold project, and I'd like to share our plan to build the first all-electric underground mine. An electric mine improves maintenance costs, eliminates fuel, and reduces GHGs. We use personnel carriers, scoops, bolters, and heavy equipment. That's a major challenge for mining. It's not so much the personnel carriers. You can practically see those on the road now—it's just a heavier jeep using a battery or electric equipment.
The real challenge is when you start to move tremendous volumes of rock and weight. If you think you have problems with your iPhone battery, try hauling 20 tonnes of rock up a 4% or 5% grade. You're going to have some problems with the life of the battery and the charging cycle. This is a big opportunity and it's where we're focusing our efforts to reduce GHGs. By implementing battery-operated equipment at our Borden mine, we will reduce our GHGs by 75% off a baseline. While I showed you that it was 53,000 tonnes and more than half in Ontario, depending on the design of the mine...because we are fairly carbon-light in terms of natural gas and heating—we don't actually have natural gas at that site—in this case, 75% of our carbon footprint will be eliminated.
State-of-the-art ventilation on demand drives further cost reduction and energy efficiency and is an indication of how you can manage ventilation. You might wonder why this is such a big deal. Well, ventilation represents the biggest single use of electricity. In Ontario, we spend $30 million a year ventilating our mine. If we use electric equipment, then the mine doesn't have to be ventilated nearly as much. You can ventilate the mine with one-third or potentially 40% of what you would otherwise. Not only that, you don't expose your employees to the pollutants and the diesel particulate matter you're trying to ventilate in the first place. That's why it's a big deal.
Digital mining, smart control, and teleremote equipment allow for more continuous mining. The digitization and bringing people away from the rock face allows you to operate the mine and produce 24-7. You avoid having to take breaks when your people have to leave the mine to blast and break more rock. Operation is continuous from the teleremote on the surface.
As I had mentioned, in terms of the improvements to production, maintenance costs are now much lower. This is a huge constraint on production in mining. Your equipment is complicated. A diesel vehicle might have tens of thousands of parts, while an electric vehicle has significantly fewer. You have a huge battery instead of a motor that has all these different parts. I am not going to get into the specifics, because I don't know them. Not only do you have lower maintenance costs, but you have much less loss in energy. An electric motor doesn't lose energy through heat, whereas a diesel motor will lose a lot of energy through heat and waste, so you will essentially have a much greater number of efficiencies when you are trying to move rock.
Also, electric engines are quiet and result in a much better working environment. An electric mine allows an operator to minimize ventilation, as I had mentioned.
We are pretty excited. We're taking a leadership role and we are really on the verge of adopting near commercialized battery-operated equipment technology. You saw the pieces of equipment here. These ones now are basically nearly commercialized. There are other pieces of equipment that aren't there yet and this is really where I think there's a huge opportunity for Goldcorp, the industry, and for government to see significant improvements in mining's performance with respect to energy, clean technologies, and health and safety.
This really is the mine of the future. If I might go back very quickly to slide 9, because I think this is a very salient point, we were able to accomplish a significant amount of energy efficiency. We were able to take out all of our diesel backup generation, and this is at our Musselwhite mine in Ontario.
This was a mine that three years ago was on the brink of being closed, and would have cost first nations north of Thunder Bay, as well as the community of Thunder Bay, significantly. It's the largest employer in that area. With energy efficiency reducing our consumption of diesel we've been able to turn that mine around. We've reduced our all-in sustaining cost, which is the measure of competitiveness in mining. It's essentially the cost that you incur to produce one ounce of gold. We have reduced that by 30% and now—which is really exciting for the mine—we are actually reinvesting in that mine at Musselwhite. This year we're putting at $100 million back into that mine to create more employment.
To accelerate the commercialization and to spark innovation, and to continue to drive this type of economic growth that we've seen here at Musselwhite, we need government support and investment to make it a reality and to have this adoption and commercialization happen more quickly.
I think the way the federal government can help us, first on the sustainability question, is making sure there are clear policies and regulations in place, and also that there's a clear path towards implementation.
What we did see in the last regulatory review was a lot of regulatory changes, but the implementation of those changes was not very good. Whether it was because there was not enough capacity within the departments, or whether they weren't sufficiently involved in the regulatory change, I'm not sure. But the implementation, particularly on the fisheries, navigable waters, was not very successful.
In terms of first nations, I think you can help us by not helping us. We have a good process in place. It works for us. Don't complicate things. That's short and simple. We have a great relationship. There are a lot of expectations being raised out there right now, and a concern about whether they're going to be able to be met with the language around FPIC, and people not being sure what that means.
In terms of biodiversity, we're helping to support right now a $5-million study through our membership, actually through our own association, looking at the woodland caribou populations in Saskatchewan in a direct response to its listing as an endangered species under the Species at Risk Act.
We support science-based decisions. We wish Environment Canada would actually also work in a science-based environment. We have concerns about the way that the COSEWIC process works.
A lot of the recommendations coming out of COSEWIC are not science-based. There's a lack of data that supports a lot of the recommendations coming out. It's like a waterfall from that group. We wish they would actually work in a more science-based environment.
In terms of energy efficiency, a lot of times energy efficiency, and I think John has mentioned this, relates to cost savings as well. So it's a win-win on that, if we cannot just reduce GHG and reduce energy consumption, but also reduce water consumption. They are big factors moving forward.
I hope I've addressed your questions. Thank you.