RNNR Committee Meeting

    Good morning colleagues, and good morning in particular to our presenters today. We really appreciate your being here to tell us a little bit about the mining business. There's a lot we don't know, and we on this committee are trying to get a broad understanding of all facets of the natural resources sector in the country. We appreciate your coming.

    We have the department here. Natural Resources Canada is going to go first. Mr. Nash and Mr. Duke, you will have 10 minutes. Then the Mining Association of Canada and the Prospectors & Developers Association will have a combined 10-minute presentation, and then Mining Watch Canada will have 10 minutes as well.

    Mr. Nash, if you would like to begin, we'd appreciate it.

    First of all, does everybody have a copy of this deck that was circulated? Good. I'll go through this as best I can.

    As you can see from the first chart, the value of production is about $60 billion. It's one of the largest industries in Canada when you work it all out. If you were to compare it, say, dollar for dollar with the forestry sector....

    The forestry sector includes forest products; we don't. We go only as far as the primary metal stage, which is the material that goes into the manufacturing process. If you were to do that in forestry, you would probably do it with pulp, not paper. It's a manufactured product. So this is one of the largest natural resource industries, if you compare apples to apples, even with the oil and gas sector as opposed to energy.

    You'll notice on the next chart that it is a large investor of capital abroad. In fact, that alternates between energy and our sector, the mining sector.

    They are in over 100 countries. Between the exploration industry and the mining industry, it is indeed the face of Canada internationally. Whether you like the face or not, it's there. They are all through South America, and if it hadn't been for the mining industry, which invested over $10 billion in Chile, and they're investing more in South America.... It's opening doors to free trade agreements. It's one of the major factors that opens those doors. It opens doors as well for the suppliers of consulting services, equipment, and other types of supplies.

    Currently, the industry is investing nearly $6 billion in Africa, with plans of another $15 billion over the next five years. It's global. You're dealing with a global industry.

    As you can see from the next chart, right now the total amount of Canadian direct investment is roughly $50 billion, but there will be a lot more.

    The next chart, on page 5, shows you a cluster that says the mining industry supports activities in all these other areas. One of the most important areas is the financial community--the Toronto Stock Exchange, the brokers, the banks. I've met with them two to three times. They are very much tied to our mining industry.

    If you go to the next chart, you see on page 6 the Toronto Stock Exchange. It's one of the most important exchanges in the world, and they will continue to be as long as we have support for the mining industry.

    Page 7 gives you just some flavour of some of the most important centres that relate to mining across Canada, including Toronto. Toronto is the headquarters of most of our major companies. It's our financial community. It's a number of other things.

    If you look at R and D, on page 8, there are R and D centres across Canada. We have found out that there are nearly 1,200 aboriginal communities within a couple of hundred kilometres of a mine. One point that is extremely important is that the aboriginal communities have a young population. They need jobs. The mining industry, the forest industry, and others can provide opportunities for them as long as they have the capacity to meet the skill requirements within those industries, because the mining industry and the forestry industry are in those areas where they live.

    If you go to the next page, page 10, you see all these little dots. Those are aboriginal communities--just to give you a feeling for it--right across the country.

    The Canadian mining industry is largely Canadian controlled. That is an important factor. As long as it's Canadian controlled, it means the following: we will use largely consulting services from Canada; we will purchase largely from Canada in terms of supplies or equipment. It also offers opportunities in terms of bilateral relationships with many countries, because they see Canada as having the expertise and the wherewithal to make investments in their countries, and so on. So they're always coming here. It's a very important factor. I have enough experience in the field to tell you that this is indeed the case.

    I don't have to go into a lot of detail, other than to say that if you look at the question of inorganics, we produce an inorganic material from an environmental point of view. Metal is one material that can be recycled ad infinitum, as long as you can capture the material. Gold is a perfect example; you never throw that away. Copper can be recycled ad infinitum, and so on. It's a very important factor.

    R and D in Canada has been falling badly. Consequently, I consider this one of the shortcomings with what is happening today in Canada with regard to R and D.

    There are a number of international issues set out on page 15.

    Concerning market access, Europe is continually putting up constraints to our markets. They did it in lumber, but they're doing it in metals as well. They have a number of risk assessments that are saying you shouldn't use nickel for this and maybe you shouldn't use zinc for that, etc. They don't say get rid of everything, but they restrict your market access incrementally. It's a big issue.

    Today we have competition from China, India, and Brazil. So the question I hope you would think about is, what is the strength of Canada? How do we build for the long term? What is our greatest strength? Is it in manufacturing, or is it in natural resources? If so, how do we use our natural resource industries to provide for a longer-term, competitive future? If you lose the natural resources industries, what do you have left in terms of a meaningful future for Canadians?

    There are investment restrictions, and of course we have a problem with image. Last year I met with the Standing Committee on Foreign Affairs and International Trade, and they were very concerned, and rightfully so, about some of the problems that occur in some of the developing countries.

    There are a number of domestic issues. We have a number of problems in Canada. First of all, we do have the question of mergers and acquisitions. What does this mean? Regulatory burdens: they're rather complicated and long, and we're hoping they'll be streamlined. We have problems with skilled labour shortages. We need our geoscience base. That is an extremely important factor for exploration. There are infrastructure shortages, notably in the north. As for base metal reserves, again we need exploration and geology. Then there are the issues of declining mining R and D and aboriginal involvement in the industry.

    That's a general overview. You have an annex, and I know the time is short, but I want to give you a feeling for some of the areas where we play fairly significant roles.

    Canada, and our group in particular, established the Intergovernmental Forum on Mining. I am the international chairman, and developing countries from around the world are members. It's an opportunity to position Canada, to try to influence the regulatory system over mining, because many of our companies are very concerned about how arbitrary the situations are in many developing countries, and so we are working on that.

    We helped established the African Mining Partnership, which is 26 African governments that now meet annually. Canada is the only other country invited to their meetings. As I mentioned before, we have big investments in Africa, and there are opportunities in Africa over time.

    Also it shows you federal-provincial responsibilities. We play a very significant role with the provinces. I co-chair a federal-provincial committee of all provinces and territories. Last year we had at least 10 meetings, and we are holding our next meeting for mines ministers in Whitehorse, Yukon.

     I hear, “You're in an area of provincial jurisdiction.” No, we're not. We're dealing with international matters. We are dealing with issues of national concern, national standards. We deal with science that complements theirs. We are not in their jurisdiction.

    There is the question of environmental assessments. A very good ruling in Alberta not too long ago said we have the option now of complementing each other during an environmental assessment, and that's the way to go. So we are working things out.

    Page 18 gives you a feeling for some of the work we do with some of the provinces. The average wages give you an idea. In the last 20 years nearly 60% of transportation in this country has been tied to mining. We have a number of relationships with various countries, and you get a feeling for it on page 22.

     Canada is still the big source of equity financing, certainly for our exploration industry. This industry can do an awful lot for Canada, if it's done right.

    You will notice we have over 7,000 properties in different countries worldwide. That tells you of the opportunities. On page 25 we list projects that show you the relative importance of different regions.

    That, Mr. Chairman, is a general overview of the mining industry, as I see it. I hope it was within 10 minutes.

    Thank you very much. It was well within 10 minutes, and I'm sure we could have gone on for half an hour even to get through this deck. Thank you for rushing this through. I hope we have adequate time for questions.

    First of all, let me apologize for being a little late getting here. I'm glad Mr. Harris was able to get things started.

    I don't know if it was established early on, but in the interest of the committee we will hear all the presentations. We'll do it that way, because often one question is supplemented by one of the other witnesses.

    With that, I thank you, Mr. Nash. We will go to the next one and try to keep it at 10 minutes each.

    The next witness is Mr. Peeling from the Mining Association. Thank you for coming, and please proceed.

    My pleasure.

    I am President and Chief Executive Officer of the Mining Association of Canada. I am very pleased to be here and have this opportunity to discuss issues of importance to our industry.

    Because we are splitting this slot with our colleagues from the Prospectors & Developers Association of Canada, although we have common views on many of our elements, I'm going to leave some of the key issues on geoscience and exploration to my colleague and I will focus on a few key issues that are important for the mineral producers and metal producers in Canada. I'll try not to duplicate the information that Mr. Nash and the department have put in front of you.

    One of the things we're particularly proud of as an association is the fact that we were the recipient in 2005 of the GLOBE Award for Environmental Performance, and one of the key activities that we've taken on through our sustainable mining process is to become, in the area of both social and environmental performance, a responsible corporate citizen of Canada. That is an ongoing program.

    Mr. Nash has mentioned a number of the key mineral facts,and I won't go over those again in detail, although I will make one distinction on R and D, because we have agreed that we'll put together a small working committee on research and development. You will note that the numbers in my deck on slide 3 are slightly different. They comprise for 2005, from Statistics Canada, $54 million in extraction research and development, $274 million in primary metals research and development, and $176 million in metal manufacturing R and D, for a total of just over $500 million.

    This is an ongoing issue for many people, as to whether the industry is pulling its weight in R and D or not, like other sectors of the economy. This is a moveable feast that changes over time. In fact, a large part of our discretionary expenditures obviously have to go to defining the next ore body, and Tony is definitely going to talk about that. That is the primary draw on our discretionary expenditures, and you always have to bear that in mind when you're looking at the research and development numbers.

     I have also put in place the same map as Mr. Nash has shown you, and that again is to simply remind you of the east to west, north to south breadth of this industry.

    Before I go to challenges, I do want to stop for a moment and thank you very much for creating a natural resources committee. This is something we have not seen for many parliamentary terms. It is something that I think we badly need at a parliamentary level, to have a focus on the requirements of this industry and to recognize that there is no distinction between parts of the economy and that our resources are central to the future economic health, growth, and social, educational, and environmental programs of this country. If we are to seize the opportunities in front of us, we need a healthy and growing industry that meets all its responsibilities.

    Let me turn to the challenges. First, and probably the most important for us over the immediate five-year to ten-year period, is in the skilled labour area. The Mining Industry Human Resources Council, formerly the Mining Industry Training and Adjustment Council, just released a two-year study that indicated that we are going to be in need, even under modest growth scenarios, of between 57,000 and 81,000 new people over the next 10 years. These are skilled people. These are mining engineers, they are metallurgists, they are lab technicians, and the system as we currently understand it, in terms of post-secondary education, geological schools, engineering schools and technical schools, is only going to deliver 9,000 to 12,000 of that requirement.

    As Mr. Nash has indicated, this is the highest wage sector. We're ready to deliver on those jobs and we're going to need your help. We're going to need the government's help, both on the immigration side and on the skills recognition and upgrading side. We need to do a better jobs of gender balance in the industry. We need to do a better job in partnership with governments and first nations. In our aboriginal communities there's a future workforce for this industry, and that's a growing part of the Canadian demographic.

    These become extremely important issues for us, and many of those solutions are beyond the control of the mining industry itself. They can only be achieved through partnership with government and our indigenous Canadians.

     I would also put down another note there, that because the front end of many of the oil sands producers' businesses is open pit mining, their numbers are not included here. You could add another 35,000 to that total for oil sands alone.

    So you can see that the challenge in front of us over the next years is really quite significant, and the implications of not meeting it means a slowdown in progress of development and inability to achieve the economic opportunity of the Chinese market and, following that, the Indian market, etc.

    The sound solutions that we see are as indicated in a report done by the Mining Industry Human Resources Council, and indeed we would like to see support for that council and its work. We need the continuous investment between industry, government, community training, and education partnerships, and as I mentioned, we need to enhance our aboriginal participation in mining and we need to make it easier for skilled immigrants to come to Canada.

    Another key challenge in front of us that I want to touch on today is project review, which is a multi-sector priority. I am currently the chair of the Resource Association Group, which is an informal gathering of the Mining Association, the Canadian Association of Petroleum Producers, the Forest Products Association, the Canadian Energy Pipeline Association, the Canadian Electricity Association, and the Canadian Gas Association. We are all like-minded on this issue and on the need for improvements in this area, which stands in the way of billions of dollars of new investment. We need a more efficient process. We don't need less regulation; we need the regulation to work better and more efficiently.

    Some of those key challenges that I indicate in those dashes there are multiple changing scopes of projects in terms of environmental assessment, lack of coordination between departments and between governments, oversight gaps. Amendments that were agreed on in 2003 both by first nations, us as an industry, and NGOs are not implemented yet. So this is one where solutions can be quite straightforward through better administration and can be more cost-effective.

    This is also a key point that's been raised by the regulatory advisory committee, which is multi-stakeholder, to the Minister of the Environment. They passed a unanimous resolution calling on the government to implement the 2003 improvements.

    Some of the key things here that we would like to see in how this could be improved are the passage of a new Canadian Environmental Assessment Act cabinet directive by the new cabinet; allocation of necessary funds to carry out the cabinet directive--the previous government allocated an additional $5 million per year; the creation of a central project office, similar to the Australian government model, to oversee and coordinate the project approval process; provide assistance to proponents navigating the system; and implement regulations to set schedules and timelines. Changes will enhance the rigour and quality of environmental assessment processes.

    One of the key opportunities that we see for a natural resources committee is that this committee can become a champion of a booming resource sector that in previous decades was seen to be out of favour. However, now it is at the heart of the economic opportunities that confront Canada, and those opportunities we need to look at carefully. If we are going to seize them--and my colleagues will spend a bit more time on this--we need support for a geoscience strategy at the front end of the business, the jobs and skills agenda that I've outlined, and improved regulatory processes.

    Merci beaucoup.

    Thank you, Mr. Peeling.

     Again, I'm sorry for the shortness of time. We were able to let you go a little longer. We're going to have you split your time with Mr. Andrews. This is a lot of information, and I appreciate your trying to boil it down as tightly as you did. I'm sure that it's going to generate a lot of questions.

    I'm going to go quickly now to Mr. Andrews of the Prospectors & Developers Association. Do the best you can at keeping it tight. Thank you.

    Thank you, Mr. Chairman and members of the committee. I appreciate the opportunity to be here today, and I'd like to add my voice to Gordon's to say that we really appreciate the reformation of this committee. It will be a very useful venue going forward.

    My presentation is supplemented by a deck and a brief that was submitted to the clerk last week.

    All I need to say about the PDAC is that we represent the Canadian exploration business, and our members include pretty well everyone who has anything to do with this business. Since they're all around the world, our activities are not only in Canada but extend internationally as well.

    I'd like to begin by making a few key points about the fundamental nature of the exploration business. Exploration is the R and D of the industry. We've heard R and D mentioned a few times this morning. This is the way we look at it. A manufacturing company will invest in R and D to generate a new product. The mining industry will invest in exploration to develop a new mine. There's an interesting distinction here. A new mine creates new wealth; a new product primarily redistributes wealth. I think that's important.

    In addition, exploration activity on its own stimulates economic activity in northern and rural activities. It creates employment, and that employment can include aboriginal people and students. That is an important thing.

    The second point is that Canadian juniors are very significant in the exploration business, both at home and abroad. There are over 1,000 of these small enterprises, and they consist of three to five highly qualified, experienced people. They depend primarily on the capital markets to fund their exploration efforts. These are our modern prospectors, if you will. At the present time they account for no less than 60% of exploration that's spent in Canada, and about 30% of worldwide exploration.

    The third thing is that exploration is a high tech business, but discovery is very challenging. The problem is that most of the deposits lie beneath the surface, and we have limited direct access to that third dimension. That's why the GSI database is extremely important to exploration.

    To illustrate the challenge, only one discovery in about 10,000 will become an operating mine, and it takes about seven to twelve years to go from discovery to an operating mine. In the process, most of the time we'll spend tens of millions to billions of dollars. So it is a high-risk and capital-intensive business.

    Important factors of competitiveness in our industry include the fact that we are price takers, not price makers. Commodity prices are cyclical and can dramatically affect the availability of exploration capital. Exploration funds are extremely fluid and flow toward the best opportunities around the world, wherever that may be. Right now there are about 100 countries competing for the global pool of exploration capital. So it's not only a high-risk, capital-intensive business; it's also very competitive.

    The global context in which we find ourselves today, if you want our current reality, is characterized by unprecedented opportunity and some challenges. We are in the midst of a global commodity boom, as you know, and this could be sustained for quite a long period of time--we estimate maybe two or three decades. Canada, as one of the world's leading mining jurisdictions, should be able to derive significant economic and social benefits from this. In order to position Canada to fully benefit, we have to deal with two key realities. One is declining reserves of commodities, in particular, base metals. The other is a shortage of new discoveries in the pipeline.

    In recent years Canada's reserves have been declining, particularly base metals. It's been a gradual decline over a couple of decades, but it is now at a point where we're very concerned about our mining infrastructure and the communities that depend on it. We're also looking at a potential lost opportunity here in the context of the global commodity boom. Given the long lead times from exploration through to production, as I talked about before, we'll not be able to take advantage of this global commodity boom unless we address our declining reserves pretty quickly.

    The shortage of new discoveries in the pipeline is more of a global nature. The mining industry suffered a very serious downturn from 1997 to 2002. The severity of this was unprecedented in recent times. As a result, there was little investment in exploration and discovery rates declined dramatically. Since 2002, as you know, there has been a strong recovery, driven by demand from China, but not enough time has passed for the exploration efforts to produce the fruit and generate significant new discoveries. We need an extended period of strong exploration to recover.

    The PDAC has proposed a strategy to address these challenges. Basically, it focuses on two fundamental elements that have served us well in the past. One is a reinvestment in geoscience, and the other one is to maintain tax incentives for exploration. The details of this are included in our brief. I won't go into them now. But it's important to note that this strategy was unanimously supported by all the mines ministers from the territories, the provinces, and the federal government at the last mines ministers conference in September 2005.

    The super flow-through share program was extended in the last budget, and we very much appreciate that. We now await the federal government's decision to initiate the other elements of that strategy. Probably the most important one is the reinvestment in geoscience through the cooperative geological mapping strategy.

    Thank you.

    I'm going to have to spend an hour studying this afterwards. It's a lot of information. Thank you for that.

    We're now going to hear from Mining Watch Canada. Ms. Kuyek, you have 10 minutes. Thank you.

    Thank you very much for the opportunity to present our views to this committee on the key issues related to mining.

    We have submitted a brief that I believe is in your documents.

    Mining Watch Canada is a coalition of 21 different organizations--aboriginal, environmental, development, and social justice groups, including churches and some labour unions. We work to support communities affected by mining, to do research about issues pertaining to mining, the environment, and health, and to advocate for responsible mining practices. Our work deals with mining in Canada and with Canadian mining companies that operate internationally.

    I need to make it clear from the beginning that we are not opposed to mining. What we are interested in is seeing some proper respect for the huge ecological, social, and cultural costs that mining entails and in making sure that mining is done in a responsible fashion.

    We're keenly aware that NRCan sees its role as an advocate and supporter of the mining industry in Canada and the Canadian industry that operates abroad. The Canadian mining industry includes suppliers of services and equipment.

    NRCan includes CANMET, the Geological Survey, and an economics division, all of which provide research that is driven by the needs of the industry. They see the mining industry as their primary client. We've often said that it would be a lot better if Natural Resources Canada saw its clients as the public as well as industry, because it would mean a broader perspective on matters.

    What I will address with you is what we see as being the key issues at this time. It's in contrast to some of the presentations by my colleagues, although I don't disagree with anything they're saying.

    From our point of view, ensuring that the Constitution is respected and that aboriginal rights are protected with regard to mineral development and access by mining interests to aboriginal territories is of primary importance.

    There are increasing conflicts between aboriginal governments and communities and mining companies over the use of aboriginal lands all over Canada and internationally. In Canada, court decisions such as Mikisew, Musqueam, and Haida and Taku make it clear that aboriginal peoples must be consulted and accommodated before any third party interest is created on lands of their traditional use and interest. Mineral claim-staking is the moment at which that third party interest is created. It's now squarely on the table of the Ontario government, because the case over Platinex has just been filed in court in Thunder Bay.

    We need to prevent the depletion of our mineral resources through staged mineral extraction. Unfortunately, that isn't how mineral extraction gets planned. We need to be concerned about the depletion of mineral resources in Canada and in other parts of the world and about the protection of natural capital and the services provided to us by nature in the lands where those mineral deposits are found.

    High commodity prices are resulting in irresponsible pillaging of mineral resources, with no regard to the needs of future generations. Many of these mines will last only 10 to 15 years. They are taking resources that have been there for thousands of years, and they won't be there for my great-grandchildren or yours.

    Staging mines that come on stream will ensure resources for future generations, the long-term survival of those mining communities that have grown up around mines and depend on them, adequate supplies of labour and equipment for developing mines, and balanced economic development.

    When you have a commodity boom, communities like Attawapiskat are rushed to development when it's clear, even from the proponents' documents, that it will be five to ten years before they are ready to take the contracts or get the jobs from that mine.

    Shift taxes and subsidies away from prospecting for new ore bodies and towards research and development of recycling and conservation. If we properly respect the ecological, cultural, and social costs of mineral production, we will reuse, recycle, and conserve mineral products as long as we can.

    Investment in product stewardship will also ensure long-term jobs in mining communities, use a lot less energy and water, and provide a greater return to governments. The latest report from the OECD supports this tax shift. There is one small part of Natural Resources Canada that investigates recycling. It's vastly underfunded and much too small.

    At present, workers in smelters have a number of concerns about health and safety hazards associated with recycling--beryllium poisoning and other things like that--because there's not enough knowledge, enforcement, or control.

    If we are to look at seriously recycling and conserving these precious minerals, we need to look at not renewing focused flow-through shares, providing a recycling innovation program through Industry Canada, providing more resources to the NRCan recycling program and providing incentives to economic development opportunities in recycling to mining-dependent communities.

    Ensure that Canadians benefit from Canadian mineral resources and get a return on the investment they make in subsidies to the industry. In Canada, our four biggest diamond projects, Ekati, Diavik, Snap Lake and Victor, are all owned by companies that are controlled outside of Canada. Companies like Glamis and Ivanhoe have no directors in Canada and no real office here but are considered Canadian for tax purposes. Our taxes on mining companies are lower than those in the United States, and in 1997, the last year for which data that disaggregates these figures was actually available, the federal government only received less than $251 million in mining taxes.

    On controlling Canadian mining companies operating abroad through legislation at home, some of you will have heard about this and it's been raised with me by some of the members of this committee. Canadian mining companies operating in the third world are often predatory in terms of local economies, resource rents, indigenous and traditional rights, and the environment. We don't have a good reputation abroad. There are mines of note where this is a particular problem: Barrick Gold in Tanzania, Glamis and Inco in Guatemala, TVI in the Philippines, Begoso and IAMGold in Ghana, Gabriel Resources in Romania, Inco in New Caledonia, Ivanhoe in Burma, First Quantum and others in the Congo.

    NRCan has been opposing the regulation of the behaviour of Canadian mining companies operating abroad and, with the mines ministry in South Africa, is supporting a global mining activity, which Gary referred to, that brings together mines ministries of governments around the world to promote legislation and policy that will enable Canadian mining companies to expand in those countries. That doesn't mean that it's necessarily good for the economy or the regulatory framework in the countries where those companies are operating.

    Provide adequate environmental and human rights controls on mine financing institutions, such as Export Development Canada and the World Bank, and on mining investment. EDC and the World Bank enable some of the most egregious mining projects to take place, and the screens are not adequate. This has been brought to the attention of members of Parliament over a number of years now, and the documents are there.

    Clean up abandoned mines and prevent their occurrence with adequate mine reclamation and closure policies, including polluter pays and full reclamation bonding on mines in Canada and abroad. Mining Watch, along with the Mining Association of Canada, PDAC, industry, and governments have been part of the National Orphaned and Abandoned Mines Initiative since its inception.

    A few years ago, $3.5 billion was allocated by the federal government to clean up federal contaminated sites, but this program effectively left the polluters, who had made the profits from these sites, off the hook, although recent court decisions indicate that historic polluters would be forced to pay if they were taken to court.

    At key federal abandoned mines like Port Radium, Giant, Faro, Colomac, Conn, Ketza, Mt. Nansen, the taxpayer is paying for the cleanup. There is no policy or program for the cleanup of sites of shared jurisdiction, such as Lorado at Uranium City, Brittannia, or Devco Mines in Nova Scotia, or for sites on lands of aboriginal use and interest. This is actually a key point. There is no policy or program for this, and it should be established.

    The National Orphaned and Abandoned Mines Initiative secretariat is housed at NRCan, but it should be staffed to a level that makes it work-effective. Right now, it's funded year to year by mines ministers.

    Ensure that all mines receive a full environmental assessment. With devolution in the north and the harmonization agreements, the role of CEAA in properly evaluating mining projects has been greatly diminished. Most mines now go through environmental assessment with no participant funding.

    In the past few years we've seen enormous projects, like the Victor Diamond Mine, to be found to have “no significant environmental effects”. Red Chris has only received a screening, although it's on the list, and mines of that size are supposed to receive a full environmental assessment and comprehensive study. The Prairie Creek Mine is being permitted through a series of environmental assessments for roads, drill holes and ramps, with no opportunities to review the entire project.

    Other projects are approved for mitigation measures that may or may not be included in the permits and are rarely followed up. This is particularly true of Fisheries' letters of authorization, which are often based on inadequate science or ignore the science that is there. There's a damning study that's just been done by Steve Samis for DFO about environmental assessment and fisheries authorizations of diamond mines in the north. DFO itself admits that it has no idea of the success of its habitat compensation measures over the long term. In addition, there's a demonstrated lack of commitment to public participation in environmental assessment.

    We need to ensure that the impact of uranium mines and their closure are properly evaluated. Uranium is a dangerous substance. It leaves behind radioactive materials that need to be monitored in perpetuity. It can cause problems thousands of years down the road. But there's nowhere that the lack of adequate environmental assessment is more obvious than with uranium mines.

    The Canadian Nuclear Safety Commission, which reports to the Minister of Natural Resources, has been systematically avoiding full environmental assessment of its projects. No environmental assessment was undertaken to study the impact of breaching the dike at Wollaston Lake. The Cogema McLean Lake JEB uranium tailings pit in northern Saskatchewan was approved without a full EA. Cluff Lake was decommissioned without proper public participation in the comprehensive study. Even the community role in monitoring closed sites has been undercut with the closure of the Elliot Lake Field Research Station this year.

    We need to insist on the public right to know about the dangers from mine wastes. Mining’s releases of CEPA toxins to tailings, dumps, and waste rock have not been included in the National Pollutant Release Inventory. With the end of the mining exemption in February 2006, mines should be reporting this year, although we understand there is a strong lobby to avoid this. Even when companies do report, we will still not have information about what has accumulated in these tailings ponds and waste dumps through history. Just to give you an idea of the size of some of them, Kidd Creek has 64 square miles of tailings.

    The last point is just to stop the promotion and use of chrysotile asbestos in Canada and Canada’s opposition to including it in the Rotterdam Convention on Prior Informed Consent. NRCan has been the key lobby for the asbestos industry and provides over $250,000 a year to their operations. It also promotes a federal directive promoting the use of non-friable asbestos by the Department of Public Works. Chrysotile is a known carcinogen. What is required is a just transition and community economic development programs for workers in asbestos mining areas of Quebec.

    That concludes what we consider to be the significant issues. I'm sorry, I went a little over.

    No, let me apologize on behalf of the committee to all of you. This is a tremendous amount of information and all remarkably well done. I appreciate that we've asked you to condense it and I'm sorry we haven't had more time. But we do now have time for questions.

    Mr. Nash, do you want to comment first?

    Yes, I can't sit here and let some of the assertions go by. Let me address one or two quickly.

    With regard to opposing the regulation of the behaviour of Canadian mining companies abroad, as far as I know we've never opposed it, but we would argue that there is a legal issue of the extraterritorial application of domestic law. That is one fact.

    The second point I would make is that much of what we do is in the public policy context, and I have the evidence to prove it. I don't make assertions without evidence, and I think there's a problem with regard to the assertions that have been made. I have evidence; others should be able to produce their evidence.

    The other issue is with regard to the matter of chrysotile asbestos. We have every bit of evidence—scientific, all evidence—to demonstrate that it can be used safely. The fact that it's a carcinogen doesn't mean very much, and I'll tell you why. Under the International Agency for Research on Cancer, alcohol is a proven group one carcinogen; wood dust is a number one carcinogen; silica—sand—is a number one carcinogen.

    What does that mean? They base it on what they call a hazard assessment. A hazard assessment is looking at the potential to do damage. It's different from risk. Risk is its actual, shall we say, operational aspect in terms of whether it does pose a risk and under what circumstances. So there's a big difference. The fact that it's a carcinogen doesn't mean very much.

    The other issue is that with many of these environmental groups, the question has to be this. There's a huge legal community in the United States that makes a fortune on asbestos litigation, and I can show evidence after evidence for how bad it really is in terms of misinformation. We know that some of these groups are funded by people—

     Mr. Nash, I'm sorry, but I'll have to interrupt you there.

    This is slighting, Mr. Chair.

    Excuse me, Ms. Kuyek.

    I'm sure this would develop into a fascinating debate, and if members of the committee want to pursue that in their questioning, they're at liberty to do so.

    I didn't mean to cut you off, but you all had an opportunity to present cases, and the committee will then ask questions. Again, I'm sorry we don't have more time to get into this sort of debate and perhaps even allow Ms. Kuyek to respond to you, but hopefully that will come up during the questions.

    We are going to go to questions now. We've established a round of questioning, and we'll try to give five minutes to each side so we get through this. I will try to keep close to it, so we can get everybody on by 1 p.m.

    We'll begin the questioning with Mr. Cullen.

    Thank you very much, Mr. Chairman.

    Thank you to all the witnesses.

    On the geological mapping strategy of the geoscience database, in this last budget the super flow-through shares were extended, but I didn't see anything on the geomapping or this database. My understanding is that for the department it would mean an expenditure of some $5 million a year over five years. Could you help explain the kinds of resources that would be required by the department to fully implement this? And maybe someone could answer why that isn't being done.

    Maybe Gary could answer the latter question.

    I'm Murray Duke with the Geological Survey of Canada.

    Firstly, the cooperative geological mapping strategy is proposed as a cost-shared program with the provinces and territories. An implementation plan was developed and approved unanimously by all jurisdictions in 2004. The incremental federal investment in the program would be $250 million spread over 10 years, roughly $25 million a year, and that would be matched by the provinces and territories.

    Instead of $5 million a year, it's $25 million, which would come from NRCan. Does the department not support this? I know resources are not unlimited. In going through the priorities, through the department or Treasury Board, does this not come up as a priority? Can't you find the money internally? Why is this not being funded?

    The $250 million over ten years is the incremental investment over and above what we're currently spending, which is roughly $20 million out of our existing budget. It's a substantial increase.

    In other words, the department doesn't support this additional effort?

    The department supports it, and I believe our minister is on record as supporting it, but there aren't sufficient resources to increase it to that level.

    Those resources would come from within the department. I'm sure that's what the Treasury Board would say: that there's no new money that would necessarily come.

    I think the department's position is that without new funding, the program cannot proceed.

    Okay, maybe he'd switch.

    I think when the minister comes we should ask him why he's not finding the money to do this within his overall set of priorities. You've made the point, all of you, that our reserves are shrinking, and that to get companies interested, they need to have a good sense of where the opportunities are the biggest, where the yield is potentially the greatest. This kind of work needs to be part of that, it seems to me.

    Gary, you talked about the split, this silo. I brought it up with the deputy minister, but I never had a chance to get into it. If you look at NRCan, it takes the natural resources up to the point where they're sort of manufactured, or this...call it upgrading or value-added. That comes in, I guess, to Industry Canada, and once they're exported or about to be exported, that would be International Trade. But it encourages a silo mentality.

    I'm wondering, does NRCan have a mandate within, let's say, the mining sector in terms of the economy? Let me give you an example. If we look at diamonds—and I think the other witness brought this up as well, Mining Watch Canada, Ms. Kuyek—I think it's something like 99% of our diamonds that are going offshore without much value-added being done here in Canada. It seems to me that's an area we should be looking at.

    The case has been made to me that we should be setting up a diamond exchange in Canada. Where you set up a diamond exchange, the tendency is for the value-added sectors to cluster around it. Right now, of course, all the diamonds, or the vast major of them, go to places like Antwerp and what have you.

    I think the federal government has it in our jurisdiction to mandate that some of that volume that is now going offshore would be directed to, let's say, a diamond exchange in Canada, and for the value-added to be done there. Could you tell me if that is the case?

    Also, Gary, could you touch on the question of this silo mentality? Where do the different departments pick up? And shouldn't NRCan have some economic mandating capability?

    With regard to the latter point, while International Trade Canada does indeed take care of the trade aspects in general, and while Industry Canada has the legal responsibility or statutory responsibility, shall we say, for the manufacturing industry, the actual on-the-ground practice has been--certainly in our group, and I'm talking only about the mining sector--that we have been fairly involved in promoting the area of equipment and supplies internationally. Industry Canada seems to have vacated the area, and it seems as though International Trade Canada is not truly involved, other than providing funding for trade shows and matters along those lines.

    One of the reasons we get involved is that in order to fully appreciate the use of certain materials or certain equipment, and so on, you have to have some in-depth expertise. We have mining engineers, metallurgists, and people who understand the operational aspects, so it makes it a little easier to communicate and to be able to promote some of the equipment and supplies or, for that matter, some of our interests, because they're able to communicate more effectively with their counterparts in whatever country they're dealing with.

    I will give you another good case. When there was a problem in Guyana with the Omai tailing spill, we actually sent a team down there to look at the problem, to analyze it, and to give ideas on how to solve it--and the same thing in Kyrgyzstan. Although we don't have a full capability to do these types of things, we did try to respond.

    On that aspect, though, in a way, those responsibilities are spread out in the context of statutes, but in reality we're very much involved, although in a very limited way. In fact, as a result of our budget cuts, I had to eliminate the business development division, which is the group that was taking care of the equipment. So it's gone. We just can't do it anymore.

    In relation to the diamond issue, yes, you're absolutely right, almost all of our diamonds are rough diamonds. The Northwest Territories did try to establish a diamond cutting and polishing operation. That has been extremely difficult, and in fact, I think they went into deficit and I believe the company has closed. But there are a few in Canada, and the question of an exchange is on the table right now. I know the Government of Quebec has been promoting it very strongly. On the other hand, we don't necessarily have everybody onside. But it is an issue currently being considered and discussed, at least up to a point. That's all I can tell you.

    If I were to talk about a strategy, I'd have to look at Aber Diamond. Aber bought downstream. They bought into the jewellery business. When you start at that end, if you look at your cost allocations within all of the activities, then the fact that you cut at a more expensive rate within Canada becomes a very small percentage of the overall price of the final product. So Aber actually is in the position to do what I would call diamond cutting, but because they went way downstream, it becomes a small portion in terms of affecting their profit.

    Even though they can cut for $70 a carat in Antwerp and we cost $400, that's peanuts in terms of the overall jewellery. It depends on how we approach it.

    Anyway, the issue of a diamond exchange is something.

    I'm going to have to move on. I would appreciate it if we could try to tighten up the questions a little bit and also the answers, just so we are able to get around and do it all. Thank you very much.

    We are going to proceed next to Monsieur Cardin.

    Thank you, Mr. Chairman.

    Ladies and gentlemen, welcome to the Committee. I, too, was in favour of establishing a Natural Resources Committee. I remember that when that happened, some of my colleagues on both sides of the House had serious questions about the mining industry and wondered just how important the government really believed it to be.

    At the present time, what kind of budgets and tax benefits is the federal government giving the mining industry?

    A tax shelter? I'm not sure I can answer that.

    Gord, can you?

    Certainly not in the sense of tax shelters. If you're looking at the cost of the enhanced flow-through share program--and Tony, you might have more information on this--the actual cost of those programs has been quite minimal in terms of tax revenues foregone by the federal government--maybe $40 million to $60 million at best. But I'm not in that particular end of the business, so maybe Tony can bring greater clarity to it.

    Is that the tax shelter you're talking about? It's not a tax shelter; it's an incentive to encourage investment in a high-risk area. Since those companies have no taxable income because they are not producing companies, the investor gets the flow-through to other income sources.

    Mr. Andrews.

    Mr. Cardin, are you referring to flow-through shares?

    I'm talking about government interventions as a whole, whether it is in terms of tax benefits, direct investments in various programs, or other activities. Is it also involved in research and development? What is the total federal budget for all the areas affecting the mining industry? I would even go so far as to ask you what kind of taxes and/or royalties are being paid by the mining industry.

    I thought that departmental officials would automatically tell us there is money coming in and going out and that they are promoting the mining industry in such and such a fashion. Maybe this is confirmation, in a way, of the notion that the mining industry is almost the poor cousin of both the natural resources industry and the government itself, because you have made it clear today that reserves are declining.

    A little earlier, someone said that at the Department of Natural Resources, sustainable development and protection of natural resources are discussed from every angle. That includes mining resources. For all intents and purposes, the goal is to accelerate development.

    In the mining industry, what do sustainable development and resource protection mean, both for the government and for the associations?

    Ever since the concept evolved, many mining companies have moved into the field of trying to develop guidelines for their own behaviour. They have policies in place now. They have environmental audits. They have what I would call occasional external people doing audits of their environmental performance.

    When it comes to the social side, personally I'm not sure how well equipped they are. I'm not that close to it. But I do know of some companies that have become, shall we say, a lot more sensitive to the social aspects. We have a long way to go. In this context, I would tend to agree with some of the comments of our friend from Minewatch, that there needs to be a lot more effort, particularly in developing countries, with some of the companies. They tend to be the smaller companies that don't necessarily have the resources or the wherewithal to be able to do things.

    Thank you.

    Ms. Kuyek, would you like to comment on that?

    I'm going to have to wrap it up now.

    I wanted to respond to the question about taxes and incentives. We did undertake a study with the Pembina Institute in 2001, called Looking Beneath the Surface: An Assessment of the Value of Public Support for the Metal Mining Industry in Canada. It includes a section on certain provinces, including Quebec.

    We looked only at metal mining. It was before diamonds were a major factor. We separated it out, looking at various departments and so on. Pembina did the part that they thought would be...particularly metal mining. The subsidy annually was about $561 million.

     It's available on our website, if you want to look at it en français aussi.

    In terms of sustainable development, we've argued for a long time that any subsidy should be tied to the ability of the industry to deliver environmental and social sustainability indicators and that those should be monitored and enforced from outside the industry. We have a real concern about self-regulation. That's our position on that.

     It is a study that comes up frequently, the study you did with the Pembina Institute. It's perhaps one we should direct around to the committee, so they can be aware of it, because there are often a lot of questions about it.

    It is slightly out of date because it was before the commodity boom.

    Yes. Thank you for that.

    I'd like to proceed now to.... I'm sorry, Monsieur Cardin, maybe we can catch you on the next round.

    Mr. Bevington of the NDP.

    Thank you, Mr. Chairman.

    I just want to mention, Mr. Chairman, that my colleague will be taking over for me, because unfortunately, I have to leave now.

    Thank you, Mr. Chair.

    I'm interested in the issues surrounding human resource development at the mines, because it is becoming clear in western Canada, now that we do have a serious situation and a shortage of labour throughout the country, that it's impacting on various things.

    I note that in your presentation you didn't mention organized labour as a partner with the mining industry in achieving some of the goals of human resource development. I would like you to comment on that and to give me a sense of where the mining industry is going in that regard.

    Yes, I'd quite happy to.

     Labour is a direct participant in the management of the Mining Industry Human Resource Council. They have been a partner in research on the future labour needs, including skilled labour needs, of the industry. They are certainly a partner with us, as we go forward in looking at an expansion of apprenticeship programs and training within the context of mine site and project development and operation.

    Even within our sustainability initiative at the Mining Association of Canada, labour is a key participant; they have two seats on our community of interest advisory panel. Most of the issues we deal with have a labour component as a partner in our multi-stakeholder discussions. They are an absolutely key partner going forward, so we can bring to bear a voice from the industry. We look to organized labour to bring forward the organized voice of labour on many of our issues.

    What percentage of mine workers are unionized?

    I probably can't tell you, off the top of my head, exactly what percentage that would be.

    If you look to the two new operations, I know that Voisey’s Bay, owned by Inco, is going to a union operation. I think they're in final negotiations at BHP Billiton Diamonds at the Acadie site. So it may well depend on the particular circumstances of the individual operations.

    Ms. Kuyek, did you want to comment briefly?

    Just very briefly, to say that older mines historically tend to be unionized; most of them are. Of the newer miners, there's a huge fight going on in two places right now over the first contract, and it's certainly a very difficult issue. One is with a Canadian company and another with a company from outside Canada. In terms of the junior sector, I don't think there's any unionization because the operations, as Mr. Andrews said, are small.

    Thank you.

    Mr. Bevington.

    On that topic, do you want me to move on, or should we continue the round?

    No, you've got another couple of minutes, if you want.

    I would like to touch on the diamond industry. My concern, as with a colleague here, is with the ability to maximize return to the Canadian economy from the diamond industry. I see your chart here, where it's 4%. Of course, in this chart you include the oil sands. I think if you take them out of the equation, the diamond mines right now, in the traditional mineral sense, with two more mines coming on stream in the Northwest Territories and one in Ontario, are going to be a very large chunk of the mining sector in Canada. We had the previous Liberal government working on a national strategy for diamonds, which really didn't amount to much.

    You mentioned Aber Resources. Yes, they're in a good position, because they negotiated their arrangement and ownership in terms of supply of diamonds. We also have Tiffany up there, which is more advanced in terms of bringing on a jewellery industry.

    So I think there is a real need to re-examine the national strategy on diamonds. I don't think it went anywhere, and it needs to be carried forward.

    Perhaps you want to comment on that.

    Certainly that's a live issue, as Mr. Nash has indicated, that we expect a number of provinces, particularly Quebec, will be bringing back to the discussion at the mines ministers conference.

    It's a bit unfortunate that the previous effort to develop a national strategy was done first in isolation of the federal government, and you may recall that such issues as the Kimberley Process are a federal government responsibility for ensuring that we don't contribute to the blood diamond process, etc. So there are certain global initiatives that go to the heart of the responsibilities of the federal government. Consequently, in any re-examination of a national strategy, the federal government, in our view, has to be an equal partner in that process.

    That being said, the real opportunity is in the future, because we will indeed have more diamond production in this country. We're already the third largest by value in terms of production. The ability to achieve further value-added is probably down in the jewellery end of things. We do have some cutting and polishing in Vancouver and we do note the Tiffany connection and Aber Resources' success in this area, and perhaps less success on the part of some of the operations in the Northwest Territories supported by the NWT government, at least to date.

    The difficulty in all of this is how you do this without disrupting the normal customer connections that companies have, and how you manage this in a manner that will create the economic efficiencies and opportunities that are going to be sustainable, as opposed to subsidized and unsustainable. That's the key to this, and I'm sure those will be key questions in front of any future national diamond strategy discussion.

    Thank you for that, and thank you, Mr. Bevington.

    Maybe that's a policy question we may want to direct to the minster when we have the minister appear before the committee a week from today.

    I'm going to move on now to Mr. Allen.

    Thank you, Mr. Chairman

    Thank you very much for coming.

    I'm going back to some of the HR issues, because it's intriguing to me that every industry that we've seen to come in and have a presentation, whether that be the energy industry, the utility industry, etc., they all point to these labour shortages coming out over the next 10 years and 50% of their resources retiring. What strikes me is that 60% of this workforce will require some level of post-secondary training, which means 40% does not, which is in some cases a positive thing for us.

    What are some of the things the industry has been doing to work with educational institutions to give these projections? If I look at your cycle, R and D leads to finds, which leads to mining, which leads to human resource requirements. If we're looking at seven to ten years out, what have you been doing actively with the various educational institutions and provinces to give them these projections so they can move forward on them?

    I will start on that.

    The Mining Industry Human Resources Council study looked at what the school system could deliver, and they were part of the study that resulted in those numbers. Because education is a provincial responsibility, a lot of the direct industry connection in Alberta, support for the University of Alberta, the school and training programs, are done at that level, just as they are done at that level in British Columbia, Ontario, etc. Sometimes the challenge is what is the roll-up of all of this and will it be adequate to meet the needs, and what is the labour mobility that results in being able to move labour to hot parts of the economy, as we see in western Canada and the north.

    We are clearly working with the federal government and our aboriginal communities, because one of the real long-term needs is greater participation in post-secondary education at the aboriginal level in those skill areas such as mining engineering, geological sciences, environmental sciences, biological sciences, etc., if they're going to be part of a future workforce.

    At the same time you've seen huge success, and I'll use Fort McMurray and the NWT as examples, where already through apprenticeship and training programs and even basic skills, reading programs, improving those sorts of skills simply for health and safety reasons in many instances, have resulted in entrepreneurial spin-off activities, which in and of themselves also create future job opportunities for our aboriginal partners. That's something we have to continue to assist and support.

    But the educational side has been a tougher challenge just because of the nature of the responsibilities at the educational level, the fact that many operations connected in the first instances at the provincial-territorial level, and there is that sort of national overview that is sometimes a challenge.

     The exploration industry has a real concern about the supply of geologists graduating from Canadian universities. We are already experiencing shortages, and we have been for a number of years.

     First of all, we are trying to create awareness of this industry---geology, earth sciences, the relationship between mineral resources and society---through a program we call Mining Matters. This program is designed by teachers and it assists grade 3 and grade 7 teachers in fulfilling their curriculum requirements. We're trying to create an awareness at that level.

    But as I said, we're concerned about proper training of geologists coming out of universities. For a number of years we have had people graduating in geology who haven't had any experience in the field. When I went through the system many decades ago, we had a choice of jobs in the field during the summer, and by the time we graduated, we had some pretty significant experience.

    So PDAC is contemplating a comprehensive program that looks at awareness and training. We're looking at the possibility of developing a centre that specializes in exploration in Canada--and Laurentian University is high on our list of consideration because it has already started to move in that direction--just to make sure at least one of the 45 universities in Canada to have a geology department can help us get the kinds of explorations we need graduating from geology.

    I have just a very quick statement.

    Recently we've worked with the Ontario government, and a few months ago we produced a video about geology, mining, the whole process, for the benefit of aboriginal communities to stimulate some of the younger people's interest in the field. It's in six languages, not only English and French but Cree, among others.

    The other thing we're completing with PDAC and the mining association is a toolkit for aboriginal communities. We've set up a small aboriginal group in my area, and in response to requests from aboriginal communities, this group is using the video to teach them about opportunities in mining.

    Could I make just one final comment very quickly?

    Both universities and colleges are on the board of directors of the Mining Industry Human Resources Council. That's a direct connection to make sure we're all on the same page and working together.

    In future, I might recommend Paul Hébert, executive director of the Mining Industry Human Resources Council, as a good witness to provide details of their study on the needs of the industry.

    Do I have any time left?

    Yes. Really short, Mike.

    Okay. I could go on at length about my frustration with taking the trades out of schools across this country. But having said that, we're putting some practices in place to generate new apprentices coming out of the system.

    Will apprentices be able to fit the mould over the next little while? One of the concerns people have is that we put them through this apprenticeship program, but nobody will hire them.

    I'll start. I think apprenticeship programs are going to be hugely important in meeting this challenge.

    The other challenge that goes with that is things like the red seal program, so we have mobility and recognition of credentials across the country.

    The challenge companies often have is that no sooner do they train apprentices than they're snapped away. We're robbing Peter to pay Paul at the moment, and this always calls into question the amount of money companies should put into apprenticeship programs if they can't retain the apprentices at the end of the day. The problem you allude to is equally challenging during tougher times.

    But if we have people going into apprenticeship programs, they are certainly going to have jobs.

    Thank you, Mr. Chair.

    Ms. Kuyek, very briefly.

     I wanted to very briefly say that there is interest in a number of aboriginal communities for taking on this work, but when people get into the workplace, they often don't want to stay. There are a number of reasons for that.

    The investment has to be not only in providing opportunities, but in making sure things don't suffer at home. There are opportunities for things to be done in a culturally appropriate manner. Instead of being given what I would allege is somewhat propagandistic information about how mines operate, it should be more realistic about how it's going to be in people's traditional territories and what that's going to mean for them. It would mean that when people get into the industry, they are less likely to drop out again.

    As far as providing education in the school system goes, some of the work that has been done around Mining Matters is extremely good, with a very good geological component. There are pieces of it that are again propagandistic and that I think need to be analyzed and looked at properly.

    When we're talking about education, we want people who have critical thought and can look at things in a balanced way. I think part of the problem in getting people interested in the industry in a way that's going to last and provide lasting sustainable development in people's communities is in making sure that different points of view are presented to people at the time.

    Thank you.

    We're going to proceed with the second round. I would again ask for everybody's cooperation in trying to keep it tight in terms of the questions and answers so that we are able to cover a broad range of questions and get everybody in.

    I will now go to round two and begin with Mr. Tonks.

    Thank you, Mr. Chair.

    Thank you to the deputation for being here.

    Mr. Chair, would the committee be interested in exploring, if you'll pardon the pun, the capital side of exploration and the interface with refining and processing?

    The issue that has more recently evolved is related to “patriating” capital. In a global situation, we have more recent examples of Chinese state-owned corporations that are vying to use capital to take a large percentage of the refining and processing of national resources. Would you like to take the opportunity to give us some direction?

    I note that while you've been concentrating on exploration, you've looked at extending the investment tax credit for exploration, modernizing Canadian exploration expenses, and introducing a tax credit for deep drilling. But I don't note any application with respective incentives that could deal with the issue of capital investment. It seems to me, and I hope to the committee, that we have limited reserves, but we should be extracting, if you'll pardon the pun again, the highest value-added in terms of jobs and economic multipliers.

    Do you have a concern that it isn't happening? Do you have a concern that there isn't a level playing field, for example, with state-owned Chinese corporations that don't have to abide by the same international competitive regimes as Canadian firms do?

    I can try to answer part of it.

    With regard to the question of value-added, I think there are two ways to look at it. There's the downstream approach, where you look at the processing of the material and convert it into various products. Another form of value-added, as I was saying earlier in my presentation, stimulates a lot of companies that feed into the mining industry. You can stimulate a lot of smaller companies. For example, we know that Syncrude spends about $50 million a year in terms of aboriginal businesses. In the north, Diavik spent roughly $600 million out of $1.3 billion in terms of supplies, services, etc., for aboriginal communities. It's another form of value-added in the sense that you get a horizontal impact.

    Going downstream is far more difficult. What do you have to do? The mining industry very quickly tried to go downstream years ago. Mining is very different from manufacturing. The mining industry doesn't really have to sell its metal. There are international exchanges, and you can sell all that you can produce. You may not get the price you want, but you can get rid of everything. It's not a marketing type of arrangement, whereas manufacturing, with product differentiation and marketing with salesmen, is a very different business.

    Inco tried to go into the battery business; they failed. Noranda went into the manufacture of wire; they got out of it. Alcan tried to go downstream and they were into the field; they got out of it. They found out that they couldn't make profit because it was not their field. The question then becomes, how do you stimulate investment?

    I agree with you in concept. In principle, I'd love to see a lot more use of our materials within Canada, but it may not be realistic from a commercial point of view.

    I'd just add a couple of comments to that.

    It's true, rather than a vertical chain approach to value-added, you need to remember that in actual fact the real capture of value-added in Canada in this industry has been on a horizontal basis. It's all the engineering service companies, the environmental technology companies that are now supplying this industry and that are now also global in their business and follow the industry around the world that have been the real success story. It's the financial community, the legal community in Toronto, the Toronto Stock Exchange, and so on.

    So the actual value-added has manifested itself in many different ways that even those of us who worked in government a long time ago didn't concede, because we were locked into that downstream value chain approach, which had not been terribly successful.

    There are exceptions to that, but I want to talk about some of the other incentives. I won't call them incentives, in actual fact, because in many ways they are simply regularizing the ability of industry to invest appropriately. The recent moves within the budget, and even in the previous budget, to remove the capital tax and to remove the surtax on capital had been disincentives to productivity improvements. They're disincentives to innovation in a capital-intensive industry like this. So those developments for removal are hugely positive.

    The removal of the jewellery surtax makes it easier for the jewellery industry to capture perhaps the benefits that ultimately might flow from the diamond industry in Canada, if we can get there, as Aber is getting there, and Tiffany, and so on. Those are positive developments.

    As a related comment to an earlier question about taxes that flow, the mining sector, in four stages in 2005, paid $1.6 billion in corporate income tax. The oil and gas sector paid $2.3 billion, according to the preliminary numbers from the government. Now, of course, during down times and when we're losing money, we aren't paying tax. But in addition to that, there's personal income tax, royalties, and so on, at the provincial level--and the bulk, in a way, because the province's only resources, the primary tax flows, are the provincial government's.

    But that's just a reminder to an earlier question.

    I would just add one comment on the importance of that horizontal industry. In an analysis done by the OECD and by the Export Development Corporation here in Canada, they say that every dollar invested abroad by a mining company brings a minimum of $2 back. Why? Because of all the services and supplies from these other companies.

     Thank you, Mr. Tonks.

    We'll move along.

    Mr. Ouellet, you have five minutes.

    Thank you, Mr. Chairman.

    With your permission, Mr. Chairman, I would like to digress for a moment. I want to ask Mr. Mariage whether it would be possible to have the documents in both English and French. I don't know whether that is the normal procedure, but I have difficulty following the debate when I don't have the material in English as well. Would that be possible?

    Yes, absolutely.

    Thank you.

    Gentlemen, thank you for being here.

    My first question is for Mr. Peeling.

    In one of your documents, you state the following: “Changes will enhance rigour and quality of environmental assessment process.” I would like you to explain exactly what you mean by that.

    I would also like to know whether it is common practice or a common occurrence for mining companies such as Alcan to have a sustainable development plan that they follow to the letter, as some cement plants do.

    If not, then I have a question for Mr. Nash. Does NRCan do anything to encourage companies to adopt a sustainable development strategy? I'm talking about real sustainable development, real social development, and economic development as well, as opposed to just environmental protection.

    I will close with a question for Mr. Andrews. You have demonstrated that in Canada, we will soon be experiencing an inventory shortage in our metal mines. You also talked about an awareness campaign aimed at young people, if I understood you correctly.

    Are you already carrying out, or do you expect to carry out, an awareness campaign aimed at the general public? I am thinking in particular of city councils, mayors and aldermen, who send metals to landfill sites rather than recycling them; perhaps they're unaware of the fact that in a few years, there will no longer be any metal in Canada and that we will truly have lost this resource.

    Indeed, in your brief, you say that action is required now to enhance base metal exploration in order to replenish reserve levels.

    Is recycling one of the types of action you have in mind?

    I'll go first.

    Thank you, Monsieur Ouellet.

    Let me respond, first of all, to the question on environmental assessment. What we are looking for simply are that both the assessment and all of the authorizations and permits that the company needs to operate, once it gets through an environmental assessment process, be done in a more efficient manner. We're not asking for less, but we're asking for it to be done more efficiently, and for coordination in that process between all of the elements of the government, which is not taking place at the current time.

    One of the key elements on which we were in agreement with first nations and environmental groups, in terms of the amendments to CEAA—which we are still waiting to see put fully in place—is that there should be more transparency for all who want to follow and engage in that process, and that the decisions with respect to scoping be upfront and be understood by all participants. This would lead to more rigour in that process and, I think, allow everyone, no matter what their point of view and concerns were, to come to the table and be heard appropriately and to have all of the documentation they needed. That's where we're coming from there.

    With respect to sustainable initiatives, yes, the Mining Association of Canada, much like Alcan.... In fact, we've traded a lot of views with Alcan over the years, and they've looked at what we are doing as an association. You may have missed one of my early comments, that the Mining Association of Canada, on behalf of its members, won the 2005 GLOBE Foundation Award for Environmental Performance.

    We have a set of guiding principles. We have a multi-stakeholder advisory body to help us implement those principles. We have reporting and transparency requirements, covering areas such as greenhouse gas emissions. We use the Brundtland definition of sustainable development. The requirements include community outreach and engagement; the management of tailings facilities; biodiversity issues, which we are now looking at; and appropriate aboriginal consultation processes with our first nations, Métis, and Inuit colleagues.

    So those are there and will continue to progress in our sustainable mining approach. For many years we published an environmental progress report. We documented our releases, not only ones within the NPRI but also beyond the National Pollutant Release Inventory.

    So all those things continue, and the members of the mining association are certainly committed to sustainable practices.

    Mr. Chairman, maybe I can just talk to a small—

    Yes, very briefly, because the answers are getting a little long.

    Gordon, if you wouldn't mind, just speed up a little bit when you answer.

    We're going to have to share it and have everybody's views. In terms of balance, it's nice to be able to hear from each of you on these answers, so perhaps each of you could keep your responses a little tighter. Thank you.

    Mr. Andrews, and then I'll go to Ms. Kuyek, and then we'll move on.

    Maybe I can answer the question with respect to smaller companies, starting with sustainable development programs. What the association, or PDAC, has done is to develop a program that we call environmental excellence in exploration. This is a web-based manual, if you want, of exploration good practices and how you do community engagement. It's about 1,500 pages long, so it's a comprehensive manual. The fact that it's web-based means that explorationists can access this wherever they are, in the field or in the head office.

    Most junior companies do have sustainable development policies and they try to apply them. I think they do a pretty good job in most circumstances—and they find themselves in a whole bunch of different circumstances. I think what they're lacking, though, is some kind of overall benchmark or standard against which they can measure what they're doing. The PDAC is working in that direction to go beyond E3 and generate something a little bit more than that.

    In terms of declining base metal reserves and whether other significant people are aware of this, like mayors of towns, they are very well aware of this. I think one thing we haven't done is to have mobilized those types of people to support our message about this to the federal government, a message we have been communicating for the last few months.

    So that's my short answer to that one.

    Ms. Kuyek.

    I'm not sure this is really balanced, Mr. Chairman. I seem to be the only person speaking.

    We're not engaged in a debate here; it's really just an information session. If you'd like to comment on any question, please go ahead. I'm trying to get some balance.

    I would like to comment.

    Very well.

    We very much appreciate the hard work that the Mining Association of Canada and PDAC have put in towards sustainable mining in the E3 initiatives. They're very good initiatives, and there's some excellent work being done there.

    I would like to point out, however, that the initiatives remain voluntary. They're done as an agreement by the company, and the company monitors itself. So this doesn't do anything about the bad actors.

    As an organization that probably hears more mining horror stories than anybody else in the country, we're a bit jaded and cynical when it comes to the operations of mining companies. I would like to say that to some extent this is an argument for tighter regulation and more oversight of mining companies. We already have some excellent voluntary initiatives to level the playing field, but for the bad actors it would make sense to make sure those decisions are enshrined in law.

    Fine, thank you.

    Maybe a really short comment, thank you.

    A really short one. Every sector has its bad actors, and the mining industry is no exception. The NGO sector also has its bad actors and—

    We don't need that here. We're trying to impart some information to this committee, so we can decide where we want to go. If the committee decides that it wants to do a major study on the mining industry in Canada, we'll have you all back and get at this at that level. But for the time being, our members are interested in getting information to broaden their perspective on the industry as a whole.

    I appreciate this very much. I know how tough it is for you, because you're so passionate about what you do. But today we're just trying to get some information going.

    I should explain, Mr. Bevington, if you weren't aware of it, that we don't go the same way each round. In this round the next questioner is Monsieur Paradis.

    Okay.

    Thank you, Mr. Chairman.

    I would like to come back to chrysotile asbestos, an issue I am quite familiar with. I understand that the Government of Canada's current position is based on solid scientific evidence as regards chrysotile asbestos. The Department of Natural Resources says that its primary concern is the health of workers and the general public, and that their interests come before those of the industry. That's the reason why it has advocated the safe and controlled use of chrysotile for the last 20 years.

    The risks associated with asbestos are not limited to the mineral ore, but in fact include all fibres or particles that can be inhaled and end up in the lungs. The risk level varies on the type of fibre. Therefore, because of differences in that regard, the risks associated with chrysotile asbestos, which is the only one produced in Canada, are far lower than those associated with amphibole asbestos.

    To summarize, the Canadian scientific community believes that asbestos-related health problems can be attributed to inappropriate past use of the amphibole type of asbestos, which has nothing whatsoever to do with the use of safe chrysotile asbestos.

    The first of my three questions is addressed to Ms. Kuyek.

    When you say that chrysotile is a carcinogen, are you considering the government's qualifications of that information that I've just mentioned?

    Second, what is the relative risk of chrysotile compared to other fibres or particles, particularly replacement fibres, considering that the amount of available credible scientific evidence available is inadequate to determine the potential effects of these replacement fibres on humans?

    Thirdly, Mr. Nash, what do you have to say about the fact that Natural Resources Canada is the largest chrysotile lobby in Canada, according to Ms. Kuyek?

    I want to thank you for the question. First, this is an ongoing controversy and we, along with some national labour unions, purchased a two-page ad in The Hill Times a week ago, which has been turned into a pamphlet, in French on the other side, for distribution next week.

    We felt that it was important to challenge the claims of the chrysotile industry about the safety of using chrysotile. It has been proven to be a carcinogen. There is absolutely no doubt that it is a carcinogen. There is a debate about whether it is worse than amphibole or tremolite asbestos. This position has been refuted and challenged by the chrysotile industry on the basis that it doesn't bio-persist in the lungs.

    The argument about bio-persistence is in fact a red herring. There is no proof that the length of time it is in the lungs is what determines its effect on human beings, and it also is a serious question in people who have been exposed only to chrysotile and find that they have mesothelioma, which is a cancer that's caused only by asbestos.

    I would urge members of the committee to look carefully at the document when it comes out next week and we'll be glad to respond to that one.

    It is true that people in the asbestos regions of Quebec, some of the women, have higher rates of mesothelioma than people in other parts of the country and in other parts of North America. It is certainly true that there have been major efforts made by the Quebec union movement over the years to try to handle this dangerous fibre safely.

     In unionized workplaces where people wear all the equipment and everything is monitored very carefully, then it probably can be used safely. However, we export it to other countries, where it may be handled safely and it may not. We have ample evidence of places in Peru, in Brazil, and in other countries where we export where the asbestos is not handled safely and where workers are exposed to it. It's made into asbestos cement, which is then handled by people at home, which deteriorates and causes problems. I understand that a number of the communities after the tsunami in Indonesia were rebuilt with asbestos cement.

    Certainly there are reasons to use it, but there are also a lot of reasons why it's incredibly dangerous, and we, along with 39 different countries and a number or organizations that are listed in this document, feel that it is dangerous, that it should be banned in Canada and banned abroad, and that the people who are dependent on this industry in Asbestos, Thetford Mines, and Danville should have the opportunity for other kinds of work, a huge investment to help them rejig their economy to enable them to have a just transition from this work.

    It's a danger to the people who live there. It's a danger to people who work with it and it's a danger to the people where we export it.

    Thank you, Ms. Kuyek.

     Is that answering your questions?

    Yes, I just wanted to...

     I'm a little concerned that we're running out of time. It's a very controversial matter and one that we could pursue at length.

    Before we go back to Monsieur Paradis, I did want to hear from Mr. Nash because he did comment on this matter earlier.

    And if you could, Mr. Nash--

    I'll do it as quickly as I can.

    --respond and then I'll go back to Monsieur Paradis. I beg the indulgence of the committee, because I think it's a very important matter for all of us.

    Very quickly, number one, there is very significant growing evidence that chrysotile is hardly associated with mesothelioma and there's a lot of science to demonstrate what I'm saying.

    Number two, Jacques Siemiatycki and Michel Camus and a number of others from Health Canada just finished a study looking at the female population issue. It's not what we heard.

    Third, I would say that the unions in Quebec, the FTQ, the Métallos, and the people living in the community beside these huge tailings piles...I'm sure that the workers there would not sacrifice their health for the sake of a salary. Consequently the people who are involved and living in those communities strongly support the federal government's position. We can demonstrate anytime that we have the science, and we're willing to put it before anyone internationally.

    By the sound of things, it may be that we will have that opportunity.

    Mr. Paradis, I will allow you to continue.

    The problem is that if you are advocating that asbestos be banned, you must know that this fibre has been studied over and over again by the Government of Canada. We know that, according to the scientific community, when asbestos is used in a safe manner, it poses no danger. On the other hand, we are not sure what the case is with replacement fibres.

    If asbestos were to be banned, what should we do about these replacement fibres when we don't know anything about the dangers they may pose for human health? Are we not placing ourselves in a precarious position?

    If I could, Mr. Chairman--

    Briefly.

    Yes. The safety of the replacement fibres should be studied, too. We are not arguing that they shouldn't. If they have been studied, then I'd like to see the comparison. I simply haven't seen it.

    The argument that chrysotile is carcinogenic has not been refuted. There was a study, a very good study--

    We are going to another question.

    Okay, sorry.

    Do you have a further comment, Mr. Nash, to conclude?

    I said before that the fact that something is carcinogenic does not say anything about risk.

    I quite agree, but we were referring to the second question. I'm sorry, we're out of time, but it's certainly one we can get into.

    I think we will have the clerk get your document and we can submit it. Then, Mr. Nash, you would perhaps respond as well to some of the items that were brought out. That would be useful to the committee, because it's something that has certainly got people's attention here.

    Mr. St. Amand.

    Thank you, Mr. Chair.

    Thanks for your cogent presentations. They were a little polarized at times, but still cogent, persuasive presentations.

    I have read Ms. Kuyek's brief, skimmed through it, and been alerted by it to a couple of points that I don't think have yet surfaced. So I'm not sure it's necessary for her to comment on it, unless she wishes to.

    Number one, what efforts has the industry taken to reduce its reliance on water, if in fact that can even be done? I understand the mining industry is a disproportionately heavy or large user of water. Secondly, what efforts, if any, is the industry making with respect to recycling? Can anybody comment on that?

    I happen to have brought someone with me who can comment on water.

    Tom, where are you?

    Could you state your name, please, for the record?

    I'm Tom Hynes from Natural Resources Canada.

    Thank you.

    The question was on water.

    What the industry may or may not be doing about lessening its reliance on water.

    I think Gordon can actually speak to that as well, but in fact there are a number of things.

    The industry has been looking to cut back on the use of water. There are limitations to what you can do. Many companies, where they can, are using recycled water from the tailings area. There are problems with some of that because of the high salt content in some sensitive applications. Most companies also look to divert water away from the tailings area before it becomes contaminated.

    So there has been a general reduction, say, over the last 10 or 15 years in the amount of water taken into an operation.

    The recycling issue, then, if somebody can respond to it.

    I can certainly respond to it.

    It is one of the major activities of the Canadian metals side of the mining and metals industry. We see companies like Falconbridge already integrated all the way downstream into the recycling of computers, joint ventures with Hewlett-Packard to take the end-of-life products off the market to make sure they don't go to landfill. The materials are stripped and appropriately dealt with, be they plastics, etc., then the metals are recovered at places like the Horne smelter in Quebec.

    I would make an offer to this committee. If at some point you felt you had time over the summer or during a recess, we would be delighted to take you through one of the most modern recycling plants in North America, in Brampton, Ontario, operated by Falconbridge. You might find, in seeing the reality of recycling, that it would be an important knowledge element.

    Thank you.

    Thank you, Mr. St. Amand. We're going to move on. I'm trying to get everybody in on the last question.

    Mr. Trost, if you would.

    Thank you, Mr. Chair.

    It's very interesting for me to listen to all the presentations. For those of you who don't know--I suspect most of you do--prior to coming to Parliament I was an exploration mining geophysicist, so I know a little about the R and D side of it.

    Mr. Andrews, you keep saying “geologists” in all the meetings we've had.

    Sorry about that.

    It's “geoscientists”.

    I have one quick question as we wind up here, on international competition. Ore bodies don't move across boundaries, at least on any real-time scale, but capital investment for mining does. Human capital can move, and it's very important. What is Canada's international competitiveness relative to other major competitors, what can we do to improve it, and what are some of our challenges?

    I understand we have certain political stability. Our Prime Minister is somewhat more friendly to mining exploration than Mr. Chavez has proven to be recently in Venezuela.

    So I'd like some general comments on international competitiveness, what Canada is doing and could do relative to attracting more and more exploration, rather than seeing it maybe migrate to South America, which it's going to do, in certain respects, for certain other reasons. What can we do, and what is our relative international competitive position?

    Mr. Chairman, I'll start, if I may.

    Thank you, Mr. Andrews.

    Right now Canada is in a very good competitive position, but it really looks back at what we've done historically to become like we are and gain that position. There are some really key factors there, and I'd say the first one is our geoscience database.

     A geoscience database is a real competitive factor. In the past Canada has invested significant funds to get a very good database that is primarily bedrock mapping. Companies that are looking for resources look very favourably on a country that has such a database. In Canada, it's a partnership between the government geological surveys and the companies themselves. They will take a map like that and immediately be able to define target areas that have geological interest, and that's where they invest.

    The other aspect of this system that's very unique to Canada is what we call the assessment system, such that whatever data the companies derive during their exploration has to be turned over, back to the government, and becomes public knowledge. So there's a very significant amount of information in those assessment files as well. I think geoscience is very significant.

    Flow-through shares are another major competitive aspect for Canada as it relates to junior companies. The junior sector is unique to Canada. No other mining jurisdiction has a junior sector like ours.

    The reason the junior sector evolved here is because of all the factors that led to entrepreneurialism in Canada, the free-entry system and flow-through shares, which have to be spent in Canada. Given that the whole business is so competitive and there is a big draw for companies that go abroad, flow-through shares make sure that some of that investment stays in Canada.

    I could go on, because there are a lot of factors here, but I think I'd better just end it there and focus on those three.

    I would just make a very quick comment.

    First of all, one of the other elements that one could look at is, for example, research in the area of deep mining. As years go by, we may have to look deeper and deeper for deposits. So deep-mining technology is one area where Canada can remain competitive.

    Processing technologies such as hydrometallurgical research and things like that hopefully would minimize environmental impacts, and also energy usage. Within the mining industry, there are a number of areas that could be examined in that context.

    Also, I believe reputation is very important in terms of getting access to resources in many countries. Reputation in terms of behaviour, and so on, on the part of our industry is extremely important in terms of being welcomed and being an investor of choice.

    I'm sorry, I'm going to have to wrap it up, because we are out of time.

    Mr. Trost, thank you for your question.

    Again, to our witnesses, thank you very much. I'm sorry, again, that we were so rushed today, but I think it went very well. We certainly opened a lot of avenues of interest.

    With that, then, I'm going to adjourn to the call of the chair. We will regroup on Tuesday at 11 o'clock. Thank you.