Saturday 19th October 2019

Resource Clips

Posts tagged ‘liquefied natural gas’

Casino, Selwyn Chihong sign MOU to power Yukon/NWT projects with B.C. LNG

September 21st, 2016

by Greg Klein | September 21, 2016

Liquefied natural gas would be the fuel of choice to electrify two potential northern mines, according to a memorandum of understanding announced September 21. Casino Mining and Selwyn Chihong Mining said the proposed deal with Ferus Natural Gas Fuels would cut costs as well as CO2 emissions.

Casino, Selwyn Chihong sign MOU to power Yukon projects with B.C. LNG

LNG could overcome diesel dependency
in grid-less regions of the North.

Through its subsidiary, Western Copper and Gold TSX:WRN has the Casino gold-copper-molybdenum project undergoing environmental assessment. Selwyn Chihong’s Selwyn zinc-lead project currently moves towards pre-feasibility.

The plan would have Ferus build an LNG plant at Fort Nelson, in northeastern British Columbia’s Peace River oil and gas region. Ferus built and operates Canada’s first merchant LNG plant in northwestern Alberta. A related company, Eagle LNG Partners, has an LNG plant under construction in Florida. Ferus stated it provides LNG and compressed natural gas fuelling services including liquefaction, compression, storage and delivery to the oil and gas, mining, marine, rail and power generation sectors.

The plan “may also benefit neighbouring mines, industries and communities currently powered by diesel, by making the LNG more broadly available,” commented Ferus president/CEO Dick Brown.

“Neighbouring” might cover a lot of ground. Casino’s located in west-central Yukon. Selwyn straddles the Yukon/Northwest Territories border.

But for the time being the Coffee gold project, Yukon’s likeliest new mine and located only about 30 kilometres northwest of Casino, sticks to a diesel-fuelled plan. Low diesel costs ruled out “the additional $1.5-million capital expense associated with LNG storage and vaporization,” according to last January’s feasibility study. “If in the future diesel fuel costs increase, significant power generation cost savings may be realized by substituting LNG for diesel.”

Goldcorp TSX:G subsidiary Kaminak Gold hopes to begin Coffee construction in mid-2018.

Backers of the Fort Nelson proposal anticipate two phases of development to be commissioned in 2020 and 2022.

From carbon tax to blood tax

March 23rd, 2016

Canada should reject American hypocrisy and Saudi blood oil, says Stewart Muir

by Stewart Muir, posted with permission of Resource Works

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Don’t miss a new PBS exposé out March 29 featuring human rights abuses in Saudi Arabia, which sold $100 billion worth of crude oil to Canada between 2012 and 2015. Those who have seen the documentary say the footage is shocking to behold.

It’s a mystery why Canada is content to import billions in blood oil from Saudi Arabia while at the same time pursuing policies at home aimed at eliminating Canadian oil from the market.

Canada should reject American hypocrisy and Saudi blood oil, says Stewart Muir

Which world leaders would be happy to
see Canada stop producing its own energy?
(U.S. White House photo by Pete Souza)

Just before Christmas, the Saudis beheaded Filipino Joselito Lidasan Zapanta because he could not pay a ridiculous $1-million fine.

Policies aimed at curtailing western Canadian energy development will only make us more dependent on bloodthirsty Saudi oil, while eliminating tens of thousands of our best-paying jobs.

If we are content to let eastern Canada source its oil from a country that executes citizens who question the government, and at the same time sell armaments to Saudi Arabia, what does that say about our own democratic system?

Yet if Ottawa has any particular concern over the soaring suicide rate among Canadian oilpatch workers, that would be news to me.

For those who don’t believe you have to give up the economy to save the environment, the resulting question is simple: What is the way to stand up for Canadian families and stop rewarding Saudi princes for their despicable practices?

One practical step we can take today is simply to ensure that every Canadian policy on fossil fuels applies equally to all of our energy imports.

Until 100% of our imported products are in compliance, no Canadian products should face domestic prejudice.

I understand we need international trade, but Ottawa’s eagerness to source oil from a savage regime while taking measures to curb the oilsands remains a sore point with me.

One possibility is imposing a blood tax, much like a carbon tax, that rewards social responsibility. Our Charter of Rights and Freedoms, our parliament and our courts provide a yardstick that we could use to measure others against.

Obama’s Arctic vision and what we could learn

On a similar topic, last week saw a major existing supplier of Canadian oil take strides to massively increase its own oil production. I’m talking about the United States and its decision to pursue a long-term exploration plan for the high Arctic.

Come again? Isn’t U.S. President Barack Obama a climate crusader working hard to end the burning of hydrocarbons and stop Canada from building pipelines?

No, actually, he’s not. In case you thought moral suasion from Canada on addressing climate change was having any effect whatsoever on the U.S., think again. The fact is, the U.S. is obsessed with its own energy security and there is no way it will jeopardize a long-term supply of the fossil fuels that provide about 80% of its needs.

Canada should reject American hypocrisy and Saudi blood oil, says Stewart Muir

(Image: Resource Works)

Last week’s news from the U.S. Bureau of Ocean Energy Management will result in new oil and gas leases off the coast of Alaska. The map of the area that could be opened to drilling includes offshore territory Canada claims as its own.

Why is the U.S. doing this now? Simple: because Americans have a long-term plan for energy.

“If development starts now, the long lead times necessary to bring on new crude oil production from Alaska would coincide with a long-term expected decline of U.S. Lower 48 production,” reported the National Energy Council, which advises the U.S. government. “Alaskan opportunities can play an important role in extending U.S. energy security in the decades of the 2030s and 2040s.” (See page 13 of the report.)

So while the U.S. is taking pragmatic steps for long-term viability as an energy-intense nation state, in Canada we seem to be at risk of basing energy planning on “100% carbon-free” slogans that appeal strongly to some voters. The March 22 federal budget was heavy on climate and clean-energy promises that require (and deserve) focus. Yet as the budget also recognizes, our national future depends on the ability to evolve and improve the solutions we already have in place.

A National Energy Council for Canada

Much work is now required for Canada to figure out what it means to look for new ways to “expand and green” the economy and create opportunities for citizens. For now, the lack of a coherent Canadian energy strategy also means, as CBC pointed out last week, that questions are being raised as to whether U.S. energy development in the north threatens our very sovereignty.

Americans are no fools. They know that the longer time frame required for arctic projects is the result of remoteness, long supply chains, short exploration seasons due to ice, regulatory complexity and potential for litigation. The Americans know that it can take more than 30 years to line up all the necessary success conditions and that’s why they are getting cracking now.

In Canada, we also have the potential to ensure that beneficial energy sources, ones that will be subject to unwavering environmental controls, are developed.

What we totally lack is a coherent national political vision—one that acknowledges the need to green our energy supply and lower our impact on the planet, one that also recognizes the economic realities of the present day.

An attempt at a national energy strategy, developed by the premiers at the Council of the Federation, represents a weak vision compared to the clear path that American energy planners are following. Placing national sovereignty far down the list of priorities is not a mistake that other countries are making today. Also unlike most countries, Canada occupies an enormously privileged position when it comes to the natural assets it possesses.

Last week, the National Energy Board reported that a heretofore wallflower of Canadian natural gas plays, the Liard Basin, is suddenly the belle of the ball. This source of gas (the cleanest fossil fuel) now turns out to be one of the biggest in the world. It straddles the Yukon, B.C. and the NWT. The upgraded estimates say the Liard has enough natural gas to meet Canada’s needs at 2014 levels of consumption for nearly 70 years. Meantime, the NWT is sitting on 200 billion barrels of oil identified in two NWT shale formations alone.

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The road to reconciliation

October 22nd, 2015

B.C.’s native relations are complicated but positive news often gets overlooked

by Stewart Muir, posted with permission of Resource Works

The pundits suggest one result of the federal election will be, in time, clarity on our relationships with First Nations, and the impact on the resource sector.

Until then, most B.C. people see a confusing picture in the media, usually focused on protests and opposition to developments, on court challenges, and/or on divisions in the ranks of a First Nation.

Those things are happening, and are slowing development of pipelines and of the LNG sector.

But positive things are happening, too.

There was, for example, an example of harmony last week that offers one way forward for resource developments in First Nations territory.

B.C.’s native relations are complicated but positive news often gets overlooked

In it, the Squamish Nation, after conducting its own independent review of the Woodfibre LNG proposal, gave it an environmental OK.

As part of it, the Squamish Nation gets the final say over some key decisions.

Byng Giraud, Woodfibre’s vice-president of corporate affairs, pointed to this: “Fundamentally, we are putting ourselves in their hands, which is pretty ground-breaking. Given how things are going in British Columbia and Canada, I think any progressive company needs to take a serious look at this approach.”

The B.C. government held a “reconciliation” summit meeting with First Nations in September. The parties now will seek to negotiate a legislative framework and a policy framework covering First Nations.

Meanwhile, B.C. premier Christy Clark notes there are already 61 agreements with 28 First Nations along proposed pipeline routes. In all, the government and First Nations have more than 300 assorted agreements signed.

The resource industry’s relations with First Nations in B.C. are indeed complicated. Through the Calder court case in 1969, the Delgamuukw case in 1997 and the Tsilhqot’in case in 2014, the Supreme Court of Canada has held that First Nations do have land rights and that, while Aboriginals may not have a 100% veto over development, resource companies have a serious duty of “consultation.”

What does “consultation” with B.C.’s 203 First Nation entities mean? There is no easy answer.

Certainly the day has gone when a company could walk into a meeting with a First Nation and announce: ‘Here’s the plan. Now we’ll explain it.’—Stewart Muir, executive director
of Resource Works

Certainly the day has gone when a company could walk into a meeting with a First Nation and announce: “Here’s the plan. Now we’ll explain it.”

But what about the company that has tried more than 50 times to set up a consultation on one B.C. project only to be told that the chief in question simply does not want to meet?

A recent judgment from the Federal Court of Appeal (in the Clyde River case) seems to apply there. The court said: “Good faith is required on both sides in the consultative process…. Aboriginal claimants must not frustrate the Crown’s reasonable good faith attempts, nor should they take unreasonable positions to thwart government from making decisions or acting in cases where, despite meaningful consultation, agreement is not reached.”

All in all, we have to be encouraged by our own landmark study, Becoming Partners. It found: “There has been a great deal of progress in Aboriginal-industrial relations in B.C. that has not been widely reported.”

We are encouraged, too, by those First Nations leaders who have come out in support of responsible development.

Among them are Ellis Ross of the Haisla Nation. He started out as no fan of industry but came to see responsible development as a way to lift his people out of “poverty, suicides and the hopelessness.” He has offered to share with other nations the Haislas’ 10 years of research on LNG development.

There is Karen Ogen of the Wet’suwet’en, who sees revenue from a natural gas pipeline as an alternative to “administering poverty.” She has formed the new First Nations LNG Alliance to “facilitate a balance between protecting the environment and increasing economic opportunities within First Nations communities.”

And among them there is John Jack of the Huu-ayaht First Nations, who wrote in a column about responsible development: “First Nations want in, and they want in meaningfully.”

What you can do

If you have First Nations friends and contacts, let them know that you favour responsible development—i.e., development that cares about the environment and views First Nations as working partners.

Let your MLA know that too, as the B.C. government works toward the desired “legislative framework and a policy framework.”

Stewart Muir is executive director of Resource Works, a non-profit society that encourages “respectful, fact-based dialogue on responsible resource development in British Columbia.”

Public affairs consultant Roger Harris recounts how Chevron’s Kitimat LNG project cleared B.C.’s regulatory process

June 12th, 2015

…Read more

Canvest ’15

May 28th, 2015

Commodities, tech, trends converge at Vancouver’s Canadian Investor Conference

by Greg Klein

The event takes place in familiar surroundings at the Vancouver Convention Centre West from May 31 to June 1. But while Canvest ’15 has become an annual institution, it’s one that adapts to the times. That gives mining and exploration investors a chance to not only catch up with companies’ progress but learn more about the convergence of commodities with energy and technology. Nearly 40 speakers will present talks, panel discussions, corporate presentations and workshops, along with almost 100 exhibitors ready to meet investors one-on-one.

Commodities, technologies, trends converge at Vancouver’s Canadian Investor Conference

Shown here at last year’s Canvest, Chris Berry emphasizes
the importance of learning about energy minerals
and their supply chains.

Considering the challenges of resource markets, Chris Berry credits Canvest organizer Cambridge House International for this new approach. “I think a lot of stakeholders in the natural resource space are searching for the new model,” says the Disruptive Discoveries Journal co-editor. “My sense is that Cambridge House may be on to something by trying to broaden its scope and provide opportunities for investors to get some insights into how natural resources and technology are converging.”

With such a broad range, not every sector links up with each other. But topics include mineral exploration, oil and gas, liquefied natural gas, agriculture, life sciences, energy metals, technology and—appropriately for a city where weed wafts ubiquitously—marijuana.

Canvest’s opening day promises to keep Berry busy with a keynote talk and four panel discussions. “My presentation will focus on disruptive technologies, not so much in the mining space but in the economy, taking a macro view of some of the forces I think are converging right now that make learning about disruptive business models and the potential for metals demand very, very important,” he says.

Even with minerals markets facing a prolonged downturn, Berry sees signs of hope. “I think the really optimistic and bullish case has to do with how quickly energy technologies, and technology in general, are being adopted and advanced. Longer-term, you want to be looking at a country like India. It’s much less urbanized than China, which served as the engine for metal demand.”

Among Berry’s Sunday panels will be an 11:30 a.m. commodities forum with reps from four holdings of prospect generator Zimtu Capital TSXV:ZC. On board will be Commerce Resources TSXV:CCE (rare earths, tantalum, niobium), Equitas Resources TSXV:EQT (nickel), Electra Stone TSXV:ELT (jade, industrial minerals) and Lakeland Resources TSXV:LK (uranium).

Cambridge House describes its speaker line-up as “top industry analysts, newsletter writers, c-suite executives, hedge fund managers, trends forecasters and finance celebrities.” Twenty “young” clean tech companies will take their places at the new PowerHaus Pavilion. Events that aren’t formally on the agenda but remain well-entrenched Canvest customs include networking, schmoozing, gossiping and maybe just a bit of rumour-mongering.

Commodities, technologies, trends converge at Vancouver’s Canadian Investor Conference

Gianni Kovacevic says Canvest offers exposure to bold
new technologies as well as essential commodities.

Sunday’s 8:30 a.m. opening features a keynote presentation by Gianni Kovacevic, chairperson of CopperBank Resources CSE:CBK and author of My Electrician Drives a Porsche? His talk covers emerging markets, their “new spending class,” the merger of technology and energy, and other aspects of “the new energy renaissance.” He’ll also discuss his book, in which Kovacevic expresses his ideas through the interplay of two fictional characters, a boomer-generation doctor and a younger tradesman who became a canny investor by studying new and emerging trends.

Kovacevic will be giving away free copies of the novel.

He sees positive signs for the minerals sector through the simple necessity of supply. “Nobody’s building anything new of significance—I mean big, big new mines,” he says. “Ultimately you need a stronger underlying commodity price or nothing’s going to get built, so it’s a matter of time.”

A veteran of previous Cambridge House events as well as other investor shows, Kovacevic expects to see a lot of new faces among Canvest’s new diversified exhibitors. As for returning companies, he says they’ll offer investors a report card on their progress.

“The hard core resource investor talks to the 30 people he always talks to, he meets five or 10 new guys, he kicks the tires,” Kovacevic explains. “Even if you’re not going to invest right now, you’re going to see a company you like and you’re interested in, and if that sector moves or that company moves, you get very interested very quickly.”

Canvest ’15 runs May 31 to June 1, from 8:30 to 5:30, at Vancouver Convention Centre West. Avoid the $20 door charge by registering in advance.

Disclaimer: Zimtu Capital Corp, Commerce Resources Corp and Lakeland Resources Inc are clients of OnPage Media Corp, the publisher of The principals of OnPage Media may hold shares in those companies.

Ten years into B.C.’s new era

May 15th, 2015

Challenges remain, but native-industry co-operation continues

by Greg Klein

Not even a billion-dollar offer could win native support for the Pacific NorthWest liquefied natural gas proposal in British Columbia. News that the Lax Kw’alaams band rejected Petronas’ 40-year, $1.14-billion deal suggested aboriginal agreement constitutes an insurmountable barrier to development. But, as a non-profit advocacy group points out, what the band actually opposed was the terminal location. The Lax Kw’alaams council stated it’s otherwise still open to the project. Further accentuating the positive—while acknowledging the challenges—Resource Works released a new report on May 14, Becoming Partners: A Decade of Progress in Aboriginal-Industrial Relations in B.C.

Challenges remain, but native-industry co-operation continues

A map shows some of B.C.’s 86 proposed and ongoing
projects with native participation. (Image: Resource Works)

Speaking with eight people active in native negotiations, author David Jordan found several success stories, lots of room for improvement and an understanding that the province has entered a new era of development. Courts led the way, although with inadequately explained admonitions to “consult.” Governments followed by rejecting projects when consultation failed. That left industry and aboriginals to sort matters out themselves, a problem intensified by B.C.’s unresolved land claims. Maybe the most important lesson learned is the importance of aboriginal engagement right from the outset.

With natives on side, regulatory hurdles fall, stated one source. Referring to an agreement between northern B.C.’s Haisla Nation and Chevron Canada, Roger Harris told Jordan the project sped through the regulatory process. “Once the Haisla and Kitimat LNG agreement was in place it was less than six months, by the feds and the province. The bureaucrats couldn’t sign it off fast enough when they knew that there were no longer any first nation issues to deal with.”

A partner in the public affairs firm Harris Palmer and former B.C. forestry minister, he added, “The value the band will bring to the table by getting them to support you will save you millions in the regulatory process, both in the beginning and on the ongoing operation, because you’re always needing a permit to do something. And having these guys as partners makes the government just go away.”

The bureaucrats couldn’t sign it off fast enough when they knew that there were no longer any first nation issues to deal with.—Roger Harris, of public affairs firm Harris Palmer

It’s thanks to its government, however, that B.C. leads Canada in direct revenue sharing. An initiative that helped win support for a number of mining projects, the program began in 2013 with an agreement between two native bands and New Gold’s (TSX:NGD) New Afton mine. Joint ventures or other partnerships often accompany the agreements.

While Harris blames any failure to agree solely on industry, other respondents acknowledge challenges from the native side too. One problem is that band administration “can be cleared out” when a new council gets elected, said Bruce Falstead, manager of aboriginal initiatives for FortisBC.

“People who have institutional knowledge and have been around for a while get shuffled out in favour of nepotism. We couldn’t possibly do business if at Vancouver City Hall half the people got fired and other people got put in every four years. That’s exactly what’s going on and it’s not being addressed.”

Another challenge is inexperience, which holds back some native communities from taking part in projects themselves. Some “have set aggressive targets for developing industrial capacity,” Jordan stated, “but the vast majority of the approximately 200 first nation communities in the province have no experience in resource development; some have chosen not to actively pursue developing that capacity, and those that have made it a priority face the daunting task of building industrial capacity from scratch.”

Among the success stories is the McLeod Lake Indian Band, which runs the Duz Cho group including a road-building company and the province’s third-largest logging outfit. McLeod Lake has now partnered with two other bands to pursue even bigger contracts.

Companies and first nations want to see the same thing happen. They want to see value generated off of land that doesn’t see value being generated yet.—John Jack, Huu-ay-aht
First Nations councillor

A former mines minister now working for a number of resource companies including the Duz Cho group, Blair Lekstrom attributes McLeod Lake’s success to merit. “Many feel entitled to the work because they’re first nation commercial entities,” he said. “We’ve never taken that approach; we will earn the work through quality of work and competitive price.”

Should a band lack experience to negotiate, Falstead stated, FortisBC will pay the community “to hire the expertise that you need in order to engage with us.”

But he calls on government to help those who find themselves swamped with offers. Falstead knows of bands getting 2,000 inquiries a year. “When you get that many requests you can’t effectively respond, so it creates a risk for the company, it creates a risk for the government, and first nations don’t get to be properly heard because they don’t have the ability to respond.”

Overlapping land claims present further problems. But they’re not insurmountable. That fact was demonstrated by what Jordan calls an “historic watershed,” the 2013 agreement between 15 bands and Apache Canada over the 463-kilometre Pacific Trail pipeline proposal.

“Companies and first nations want to see the same thing happen,” explained Huu-ay-aht councillor John Jack. “They want to see value generated off of land that doesn’t see value being generated yet…. Why and whether it gets done is a question of will and communication and relationship-building.”

Jordan credits LNG proponents with bolstering B.C.’s new era of co-operation. He calls last year’s completion of B.C. Hydro’s 340-kilometre Northwest Transmission line “a major infrastructure project that wouldn’t have been possible without the co-operation of the Tahltan and Iskut first nations.” His report notes several native-owned logging companies as well as native participation in 28 clean energy projects. Jordan also lists at least 15 native agreements for mines and mining proposals.

Download the Resource Works report.

Read more about aboriginal engagement.

Quebec’s distinction

May 8th, 2015

Both interventionist and capitalist, the province’s mining-friendly policies defy ideology

by Greg Klein

Quebec’s provincial government might buy rail and port facilities that serve Bloom Lake, as well as invest taxpayers’ money in the iron ore mine. Economy Minister Jacques Daoust didn’t commit to anything, but Bloomberg reported he’s open to the idea. Even that shows Quebec’s distinctive approach to mining, a strategy that eludes political stereotypes but suggests long-term vision based on confidence that commodities markets will improve.

Making that confidence all the more remarkable is the iron ore collapse which shut down so much Labrador Trough activity. Rio Tinto NYE:RIO so far shows no sign of relenting on its price-slashing tactics, although Axis of Iron fellow travellers BHP Billiton NYE:BHP and Vale NYE:VALE are reportedly backing off.

Both interventionist and capitalist, the province’s mining-friendly policies defy ideology

But not after driving prices down and mines out of business. Some of the casualties have littered both the Quebec and Newfoundland sides of the Trough. Last year Labrador Iron Mines TSX:LIM didn’t bother resuming seasonal operations at Schefferfield. Later that year Cliffs Natural Resources announced impending closures of its Wabush and Bloom Lake mines. Then the Iron Ore Company of Canada announced plans to lay off part of its Labrador City workforce, in keeping with majority-owner Rio’s cost-cutting craze. But at least the mine’s surviving, as is ArcelorMittal’s Mont-Wright operation, although that company has alluded to some kind of future “restructuring.”

Cliffs’ exit from eastern Canada will “end the flawed expansion that has cost Cliffs and its shareholders billions of dollars,” president/CEO Lourenco Goncalves said in January. Handed the job after activist hedge fund Casablanca Capital gained control of Cliffs’ board, Goncalves takes a dim view of other operations as well.

“I can’t wait to get out of Australia,” the Sydney Morning Herald quoted him last month. “As soon as I get to the end of life of mine in Australia, I’m out of there … I can’t wait to get out of the seaborne trade and let the Australians take that horrible business on their own hands.”

Yet Bloom Lake, with “its high-quality ore,” still has hope, Goncalves suggested back in January. But “the potential investment is not achievable within a time frame acceptable to Cliffs.” Talks with Investissement Québec had already been underway for several months, he stated.

A government-run investment and financing agency, Investissement Québec’s subsidiary Ressources Québec has taken positions that include, for example, nearly $600,000 in an April private placement with Quest Rare Minerals TSX:QRM. A $3-million injection into Matamec Explorations TSXV:MAT last January brought Ressources Québec a 28% interest and joint venture partnership in the Kipawa rare earths deposit.

A much bigger Investissement Québec outlay was the $50-million stake in an estimated $118-million plan to increase Gaz Métro’s liquefied natural gas production. The government sees Plan Nord synergies, with the LNG fuelling transportation and operations in remote areas.

Quebec government investment is hardly new, although the previous Parti Québécois government shelved some resource-friendly policies.

I am not in a subsidy mode, I am in a partnership mode.—Quebec Economy Minister Jacques Daoust, quoted in
the Montreal Gazette

Now a branch of Ressources Québec but dating back to 1965, SOQUEM Inc has participated in over 350 Quebec exploration projects. Among its success stories is Renard, where Stornoway Diamond TSX:SWY plans 2017 production. In 2011 the company issued shares to acquire the 50% held by a SOQUEM subsidiary.

Outside of equity investments, Quebec last month announced $1.3 billion in government spending for Plan Nord over five years, part of an envisioned $50 billion to come from public and private sources for infrastructure and project development over 20 years.

It’s not a program to put off, the province maintains. As Energy and Natural Resources Minister Pierre Arcand told Canadian Press in December, Quebec “cannot wait until there is a mining boom and everything becomes uncontrollable.”

Quebec’s Bloom Lake investment, should it happen, could reach 20% of the operation, Bloomberg reported. “We’re trying to ensure the survival of the mine,” the news agency quoted Daoust. “If the last 20% is a problem, I will fix it.”

Last month the Montreal Gazette quoted him, “In a [typical] mining project, the bill is at least $1 billion. The problem you have in a mining project is financing the last 10%. If we invest $100 million in a mining project worth $1 billion we’re okay and we can close the deal…. We can go up to $200 million, but normally we should not invest more than 10 or 15%.”

Daoust added, “The kind of return we would get is the same as for any other shareholder. I am not in a subsidy mode, I am in a partnership mode.”

Government ownership of Bloom Lake’s rail link and port facilities, however, could lower the mine’s operating costs by as much as $20 a ton, he told Bloomberg.

Regardless, policies like these have helped raise the province’s once-faltering reputation. As a mining jurisdiction the province leaped from 18th place globally to number six on the Fraser Institute’s Investment Attractiveness Index, part of the annual survey of mining companies released in February.

Quebec’s policies aren’t without controversy, though. Following the April announcement of a scaled-down Plan Nord, the Parti Québécois opposition noted that Ressources Québec planned to guarantee a $100-million mortgage for the Nunavik nickel mine, held by Jilin Jien Nickel Industry Co. As reported by the Nunatsiaq News, the opposition pointed out that Quebec Premier Philippe Couillard formerly held a board position with project operator Canadian Royalties, which was acquired by Jilin Jien in 2010.

And there’s further controversy from another angle. In December Strateco Resources TSX:RSC launched a nearly $190-million lawsuit after Quebec refused to issue an exploration permit for the company’s Matoush uranium project. With a moratorium on uranium activity now in place, the province is considering an outright ban.

Urban dependence

November 6th, 2014

The livelihood of city dwellers relies more on resource industries than many people realize

by Greg Klein

People in Dawson Creek, Sudbury and Val-d’Or get it. But what about those living in larger, southern Canadian cities like Vancouver? How many people realize how much we depend on resource extraction, and not just for the commodities we consume? As a new report points out, Greater Vancouver’s economy relies heavily on British Columbia’s resource industries.

That’s the message of Community Impacts: Exploring the Natural Resource Sector’s Economic Impact on B.C., Its Regions and Urban Centres. The study was released last month by Resource Works, which considers the campaigns for B.C.’s November 15 municipal elections an opportunity to influence public debate.

The livelihood of city dwellers relies more on resource industries than many people realize

Just how far removed is Vancouver
from British Columbia’s resource industries?

Even so, Resource Works executive director Stewart Muir says the organization’s “not choosing candidates.” Calling the study impartial, he tells, “We don’t believe it’s political in itself.”

The non-profit group was founded in March with seed money from the Business Council of British Columbia. It’s now looking for donations from individuals and organizations, he says.

The group is backed by an advisory board representing “a coalition of people who would advise and, through their participation, show their support for what we’re trying to do. They include leaders from first nations, labour, business, multicultural groups, academia and the environmental movement. They meet quarterly, advise us and are central to our success.”

Report author Peter Severinson emphasizes his study is illustrative, not representative. Without trying to estimate the full extent of economic impacts, his research presents some examples that might otherwise be overlooked or taken for granted. The three-part study, which underwent independent academic reviews, evaluated the impact of B.C.’s top three resource industries of forestry, mining, and oil and gas.

Severinson used BC Stats data to look at province-wide impacts, while using industrial property assessments to gauge the sector’s regional prominence. Part three focuses on eight Greater Vancouver municipalities “where the connection with the resource sector is least obvious.”

There, Severinson evaluated the spending of seven companies: Catalyst Paper TSX:CYT, Copper Mountain Mining TSX:CUM, Encana Corp TSX:ECA, New Gold TSX:NGD, Taseko Mines TSX:TKO, Teck Resources TSX:TCK.A and TCK.B, and Western Forest Products TSX:WEF. Alberta-headquartered Encana made the list due to its heavy B.C. expenditures.

Again, this approach gives illustrative examples that might otherwise be overlooked, not a fully representative study. “The economic impact of the entire resource sector will be greater than the impacts described in this report,” Severinson writes.

Those seven companies alone poured $1.3 billion into Greater Vancouver last year. More than half, $732 million, went to the city of Vancouver itself, mostly to “professional service providers including lawyers, accountants, engineers, consultants and educators.” That’s in a city whose incumbent mayor opposes local pipeline expansion.

Next door, the municipality of Burnaby got $41.6 million from the seven companies. Burnaby’s entire city council sides with Vancouver’s mayor on pipeline expansion.

North Vancouver, a generally affluent mountainside suburb that sometimes approximates an urban ecotopia, got $162 million last year. Surrey, a ’burb that’s forecast to overtake Vancouver’s population, got $230 million. Richmond, where large new homes contrast with the remaining farmland, got $63 million.

As for Greater Vancouver’s Tri-Cities, Coquitlam got $13 million in 2013, Port Coquitlam got $19 million and even little Port Moody got $8 million.

Muir points to the “profound effect on the Vancouver economy” of an estimated 800 to 1,200 mining and mineral exploration companies headquartered in the city. “What we’ve got now is a real sense of what just seven companies can do in a year in terms of local impacts. What if next time we study 50 companies and look at their impact?”

With a $22.2-billion GDP contribution that took up nearly 12% of the provincial total, resources make up B.C.’s second-largest sector after real estate and leasing. 2010 numbers show about 184,000 jobs representing one-tenth of B.C.’s total jobs come from resources, the study points out. And that’s “only counting those jobs that are either directly within resource industries or that can be closely tied to outputs from those industries.”

We’ve got a high-tech economy because we’ve got a resource economy. And it’s also a green economy because these environmental technicians and people working to protect the environment and improve practices—guess what they’re doing? They’re doing resource jobs to protect the environment.—Stewart Muir, executive director
of Resource Works

So while people in Dawson Creek, Sudbury and Val-d’Or need no explanation, the value of resources can be lost on those living in bigger southern cities. Muir talks of “a divide between the real economy and what lots of people, for good reasons, wish the economy was. The economy we see people wishing for is high tech and green. It’s an economy that’s modern and a departure from the past. And for a lot of people, that’s an economy that’s post-resources.”

But, he says, of the FP 500’s top 50 companies, “15 of them are resource companies. And those 15 have 2013 revenues of almost $300 billion, which means they produce more revenue than all the finance, banking and insurance companies in the top 50.”

Nor does the resource economy fit another misconception.

“We see in British Columbia $250 million a year in R&D spending for mining and petroleum,” he says, citing a recent report from B.C. Stats. “That report is waved around by people who say we need this high-tech economy to replace the resource economy. But I look at the same data and say we’ve got a high-tech economy because we’ve got a resource economy. And it’s also a green economy because these environmental technicians and people working to protect the environment and improve practices—guess what they’re doing? They’re doing resource jobs to protect the environment.”

Muir portrays this high-tech, green resource economy as “a way of being a leader on the world stage. We can continue to export our regulatory know-how, our technical know-how, our strong ability to raise capital for mining projects, and develop not just our own resources but help other countries develop theirs responsibly. That’s modern Canada.”

What’s next for Resource Works? The group hopes to produce two to four papers per year, similar in substance to Community Impacts. A backgrounder on the B.C. government’s proposed LNG-backed Prosperity Fund will look at royalty schemes in Alaska, Alberta, Norway and Kuwait. Slated for December release is a detailed report resulting from eight discussion sessions involving 120 people with wide-ranging views on resources. The group also plans to present its findings to municipal council meetings across the province.

“Our most important issue is how the environment and the economy concerns the average person,” Muir says. “That’s where we have this great disconnect today and that’s where the work is needed.”

Not surprisingly, the non-profit hopes for more support from industry. “Our movement is directed at people who aren’t in the resource industries but we do need people who already get it, who already see the linkages that validate our work.”

Download Community Impacts: Exploring the Natural Resource Sector’s Economic Impact on B.C., Its Regions and Urban Centres.

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Commentary: Mount Polley’s lasting legacy

August 7th, 2014

by Greg Klein | August 7, 2014

The B.C. Day announcement said little: “Imperial Metals Corporation (TSX:III) reports the tailings storage facility at its Mount Polley mine was breached, releasing an undetermined amount of water and tailings in the early morning of August 4. The cause of the breach is unknown at this time.” It was up to the media to report an enormous toxic spill that uprooted trees as it swelled a river system, killing fish on contact just as a million sockeye were approaching. Residents, livestock and wildlife were deprived of water for drinking—or anything else for that matter. Within two days the Cariboo Regional District declared a state of emergency.

Mount Polley’s lasting legacy

As of August 7, Imperial Metals had not
explained how its tailings dam collapsed.

Apart from the environmental devastation which other media are covering thoroughly, there’s the devastation to British Columbia’s resource industries. Northern Miner editor John Cumming called it “the most depressing thing to have happened in Canadian mining since the Bre-X Minerals debacle in 1997.”

Mining Weekly reporter Henry Lazenby remarked on an “already clear and immediate environmental backlash from the incident for other projects in the northwestern Americas.”

The still-unexplained disaster happened in a province that both relies on resource industries and hosts Canada’s most powerful environmental movement. The BC Liberal government claims to support resource industries and has pegged grandiose economic goals on a liquefied natural gas industry that has yet to materialize.

Premier Christy Clark finally visited the scene on August 7 after being goaded by Vancouver Province columnist Michael Smyth. He also took shots at B.C. mining minister Bill Bennett, saying he “at first played down the severity of the spill, issuing a press release saying a mixture of water and ‘fine sand’ gushed into pristine waterways. No mention of icky stuff like arsenic.”

Mount Polley’s lasting legacy

PR Associates publicist Deena Tokaryk
now speaks for
Imperial Metals.

“He also cleverly stressed that government mine inspections have not been reduced ‘in the last five years’—conveniently ignoring cutbacks that took place earlier, when Bennett himself complained that government regulators were ‘starving for resources.’”

The tradition of Canadian governments to order a lengthy inquiry—and then cherry-pick its recommendations—might be considered to restore a measure of confidence. So far at least one retired biologist has called for an inquiry, according to a Vancouver Sun story that was promptly deleted.

But critics say the B.C. government itself has much to hide, with a lack of enforcement from understaffed environmental and mining ministries.

The first talk of a possible class action suit came on August 6 from law firm Sutts, Strosberg. But they propose to act on behalf of Imperial Metals shareholders, not Cariboo residents or other British Columbians. As for those who rely on resources for their income, some of them might be ready to form a lynch mob.

By late afternoon August 7, the miner had retained a public relations firm, PR Associates, that was handling the company’s communications.

Evidently the pros are in charge of damage control. But the damage—environmental and economic—has been done. Imperial Metals may well smear the full range of B.C.’s resource industries with an enduring notoriety worse than that of the Exxon Valdez.

Japan reinforces nuclear commitment, M&A speculation resumes

February 25th, 2014

by Greg Klein | February 25, 2014

Japan has strengthened its commitment to nuclear energy in a draft policy document released February 25, the Financial Times reports. While Shinzo Abe’s pro-nuclear efforts have so far focused on the short term, the document indicates a more far-reaching strategy, according to the FT: “The energy plan, expected to be approved by Mr. Abe’s cabinet by the end of March, could open the door to a nuclear revival, possibly even including the construction of reactors.”

The paper cautions, however, that the plan to recommission some existing plants “still faces hurdles and any restarts must be approved by safety regulators and local governments.”

While polls show a majority of Japanese oppose nuclear energy, a February 23 local government election saw a pro-nuclear candidate defeat rivals who campaigned against a proposal to build a reactor in the region, the FT states.

Abe’s predecessor Naoto Kan opposed nuclear energy but with only limited backing from his own cabinet. Business groups support nuclear power for its relatively low cost. Even so, Japanese industry minister Toshimitsu Motegi “sought to play down the degree of change in energy policy, noting that the energy plan still committed the country to ‘reducing its reliance on nuclear power as much as possible,’” the FT points out.

The paper adds that Japanese re-starts could affect global liquefied natural gas markets. Japan’s post-Fukushima imports pushed up LNG prices in Asia and Europe. “Any moderation in Japanese demand could take some of the heat out of the global LNG market.”

We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards.—Fission Uranium CEO
Dev Randhawa, as quoted by Bloomberg

Meanwhile anticipated Japanese restarts have renewed interest in mergers and acquisitions, Bloomberg reported on February 21. “The rebound in uranium demand may fuel takeovers as buyers try to get ahead of rising prices,” according to a Bank of Nova Scotia statement quoted by the news agency.

“Now is a great time for cherry-picking good assets,” Cantor Fitzgerald analyst Rob Chang told Bloomberg. “We think 2014 is going to be really the kick-off year for the uranium space. The timeframe for cheap acquisitions may be running out.”

Denison Mines TSX:DML and Fission Uranium TSXV:FCU figure prominently in analysts’ speculation. Denison holds interests in exploration and development projects as well as the Athabasca Basin’s McClean Lake mill, one of the world’s largest uranium processing facilities. Fission Uranium’s sole asset is Patterson Lake South, an early-stage sensation that has yet to produce a resource estimate.

David Sadowski, an analyst at Raymond James, told Bloomberg, “If you’re Rio Tinto [NYE:RIO], you just bought a bunch of pounds in the Athabasca Basin and you’ve got nowhere to process those pounds. Why not buy Denison right now?”

The news agency cited Cameco Corp TSX:CCO as another possible suitor.

Fission Uranium chairman/CEO Dev Randhawa told Bloomberg his company has signed three non-disclosure agreements, one with a Chinese interest.

His own company recently acquired joint venture partner Alpha Minerals, presumably to make PLS a more attractive takeover target. Even so, Randhawa said an acquisition of Fission Uranium might be premature. “We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards,” Bloomberg quoted him. “Our investors don’t want us selling with uranium at $35 a pound, but at the same time we don’t control the people who are buyers.”

See a roundup of last week’s uranium news.