Thursday, February 24, 2011

Taseko's new plan shows B.C. too easy on mine approval

The Liberal government is looking a little inept in the Taseko Mines affair.
They certainly wouldn’t be a first choice if you needed someone astute to negotiate a good deal on a used car. They’ve proven to be too quick to believe the story about the former owner who only drove it to church on Sundays and too willing to pay the list price without asking any questions.
Since 1995, Taseko has been seeking approval for the open-pit Prosperity Mine 125 kilometres southwest of Williams Lake. The mine would make the company a lot of money and boost the economy, but there would be major environmental damage and conflict with First Nations’ interests.
The provincial government approved the project a year ago. The environmental damage would be significant, the provincial assessment process determined. A lake would be turned into a big tailings dump, for example.
But the provincial review process balances the damage against the economic benefits. Blair Lekstrom and Barry Penner — then the mines and environment ministers — decided the jobs from the gold and copper mine were worth the destruction.
But the project was big enough, at $800 million, that there also had to be a federal environmental review.
It was found the mine would have “significant adverse environmental effects on fish and fish habitat, navigation, on the current use of lands and resources for traditional purposes by First Nations.” Aboriginal rights and a grizzly population might be at risk. 
The Harper government considered the review, decided the damage was too great and said no.
Gordon Campbell was unhappy. So were many people in the region. The mine would mean about 375 jobs and $20 million a year in revenue for the provincial government. The north faces several decades of tough times while the forests recover from the pine beetle disaster; it hurts to give up opportunities.
The two governments took different approaches. The federal government focused on the damage done; the province on balancing the costs against the benefits.
They’re both legitimate. Any major resource project — or new road or trail — brings some environmental damage. But the provincial government’s approach calls for competence in reaching the best balance and making sure the company is doing all it can to address concerns.
The government, as it turns out, didn’t do that.
Because this week, Taseko announced a new plan. Copper prices are high, the company said. We can afford to build a tailings pond to hold the mine waste. We don’t need to destroy the lake after all.
But companies rarely make major investment decisions based on fluctuations in commodity prices over the course of a year.
It seems more likely Taseko thought governments would accept the cheaper, more environmentally destructive option of using the lake as a waste dump. That would save it $300 million — good news for shareholders.
The provincial government did accept the lake’s destruction; the federal government didn’t.
And as a result Taseko came up with a better plan.
That’s not too surprising. Taseko forecasts it can take $3 billion worth of gold and copper out of the mine over 20 years and produce a 40 per cent pre-tax return. It can afford a significant capital investment. (The public, which owns the minerals, will get about $400 million.) 
It’s reasonable to trade off the benefits and costs of development in assessing projects. But you need a competent government able to get the best deal for the public.
And in this case, at least, the B.C. government failed to ensure environmental protection which, it turns out, the company was able and willing to provide if pressed.
Enter Christy Clark. She made the mine an issue in her leadership campaign before Taseko unveiled its new approach. She called the federal decision “dumb” and promised to go to Ottawa and fight for a reversal. She backed the plan that would have — needlessly — destroyed the lake. The environmental damage was acceptable given the benefits, Clark said. (Stephen Harper said the project’s rejection was based on the facts and wouldn’t be reversed based on political lobbying. The government will review the new proposal.)
The Prosperity Mine case shows the provincial government — not the federal government — was a poor bargainer, too quick to buy the line that the lake had to go to make the mine viable. Taseko has now acknowledged that’s not true.
Which, of course, raises questions about the government’s skill in handling other projects and industry demands for subsidies and tax and royalty breaks.


Grant G said...

Exactly...And the same thing will happen if fish farmers are told to get land based or self contained or get lost.

olive ridley said...

Really good points here, however, I don't think this is incompetence, it's regulatory capture of the government by the mining industry. This government has no interest in environmental protection, they love to use things like the carbon tax (good policy for publicity, but very poorly implemented and wholly inadequate for the purpose) to burnish their credentials, but have never met a mining proposal, however destructive, that they did not like.

You're falling for all the numbers provided by Taseko in their environmental assessment. Companies routinely overstate compliance costs and understate damage, this is the nature of the environmental risk assessment game. past research on environmental compliance costs in the US (we don't monitor as well in Canada) has shown that compliance costs for major legislation like the clean air act, the clean water act, smoking bans, seatbelt laws, etc were all overstated by groups opposing the regulation, and turned out to be quite modest in the end.

So, when Taseko says 300 million, divide that by 2 or 3 to get the real amount :)