Wednesday 13 February 2013

Mining’s Dirty Little Secret.

Imagine your lovely house and home with its wonderful yard where you have gardens or your kids and pets play.  One day a person approaches you to buy the dirt from your front yard.  He will pay you a very good price for your dirt - guaranteed, cash up front, and more than you ever imagined dirt could be worth.  He promises to replace the dirt, returning your yard to its original state, and most importantly, he guarantees it will be restored on time and exactly as it was found.  He guarantees it with a post-dated cheque amounting to the original cost of the dirt and the estimated restoration costs: this is supposed to be your insurance policy.  You check out his company and find it is legitimate.  Your lawyer approves the contract for the dirt and reimbursements.  Confident you are protected, you sign the contract.

On the day he arrives to collect your dirt, you meet the company team.  They are most professional, they pay you cash, and you confidently head off to work.  When you return you find that all the dirt has been removed as planned and the team is gone.  To your surprise they don’t show-up the next day.  Exploring the hole more closely you notice that in addition to the dirt, they also broke through the main sewer line and the hole is filling with raw waste water, including some nasty industrial runoff that also collects in the pipe that is broken.  You are obviously unhappy so you call the company.  No answer?!  You go to the office address provided and read the sign on the door, “This Company has declared bankruptcy”.  What now?!  You go to the bank to cash the post-dated cheque which you discover is worthless.  You call your lawyer.  She informs you that your only recourse is trying to take the company to court, which will result in legal battles and fees extending for years and if you are really lucky you might get some of your money back.  An assessment of your front yard indicates the cost to fix the problem is 100x the amount you were paid for your dirt.  Now you have a gaping hole in your property filled with contaminated waste that you can’t use and you are left to wonder “where did I go wrong?”.    

That is mining in Canada: a litany of abandoned mine sites across this country, holes in the ground you may or may not see, piles of contaminated waste rock usually covered by water to keep them chemically “stabilized”, i.e., from killing living things directly, and most probably, toxic water leaching from the site.  The owner is long-gone and environmental bonds intended to fix problems inaccessible because of legal battles for company assets.  If there is an owner, then there are the legal battles to access bonds.  If a bond is accessed, rarely are there adequate funds to cover the current costs to restore the place to its original state.  And while the site sits constantly leaching toxins to the environment via water or wind, there is the cost of monitoring this pollution.  If there is no company, then ‘we’ (the government) pay.  Sometimes and mostly ‘we’ choose not to monitor at all because it is expensive.  Without a mine owner it is our responsibility to restore, i.e., ‘we’ pay (see the 351 mines of ‘our’ >22,000 known contaminated sites across Canada waiting to be restored at  ‘We’ might get lucky and a company restores a site.  It has happened, but rarely do ‘we’ protect ourselves from any future failure of that restored site.

This is the legacy of mining in Canada and their dirty little secret – not my expression, but one used by some retired mining professionals.  In New Brunswick where I live, we have at least 48 known and possibly >250 abandoned mine sites.  Industry correctly claims that it is doing a significantly better job protecting the environment today by meeting and most times exceeding all government requirements (this is the environmental impact assessment process).  However, going from an “F” to a “D” on your grade school report card probably wouldn’t have impressed your parents much.  Interestingly, Canada just decided that companies can build small mines without a federal environmental impact assessment, i.e., Canadian politicians think the mining industry has been doing an acceptable job of protecting the environment on its own. 

Canadians and others have supported this Wall Street model for the mining industry that demands earning wealth for a company and its shareholders.  That is not necessarily a bad thing, but citizens and governments around the world have yet to charge companies for the environmental costs of their business, i.e., taxpayers have given them significant subsidies by not charging for the cost to the environment during operations or the restoration of their mine sites.  The mining industry is not going to change itself if that means reduced profits (don’t get mad at them; we as a society, i.e., company shareholders, are demanding more profits).  Only governments can demand the real cost of mining be incorporated into a mine’s business plan, and importantly including an upfront  guarantee of unfettered access to the money required to address environmental problems when they arise and eventually pay the restoration costs. 

Current governments across Canada are pushing hard for new mining ventures, including openly relaxing environmental regulations.  These ventures are repeatedly supported by the business community, newspaper editors, and journalists.  All of these parties argue that our economies need these mining ventures and moreover, regulations protecting the environment are enough on their own to change the mining industry.  While improving regulations may better protect the people most likely to be affected by mining activities, i.e., those living close to the mine, these regulations don’t address the actual issue which is the real cost of building and operating an environmentally-sound mine and then restoring the environment to a safe condition.  It is disingenuous for our community leaders to argue from an economic podium the case for mining development while continuing to suppress the true costs of mining. 

Canada has a wealth of natural resources.  Canadians from First peoples to today know the value of these resources.  We also have a wealth of science and engineering knowledge and experience capable of extracting and processing minerals including oil and gas while achieving a minimum impact on the environment.  This mining industry, in fairness, has invested millions of dollars on the issues of dealing with its waste and site restoration, but only after they have created negative impacts on the environment which they knew would occur (they report it in their environmental impact statements).  Extracting and processing natural resources, i.e., mining, is acceptable to most Canadians, but we should be investing in the research and development of environmentally-sound processes before we start. 

People might not like these real costs of getting the minerals into the products they consume, delaying consumption until we learn how to extract minerals innocuously, or earning less on investments, but we can’t sustain these secret costs any longer.  The current yet unspoken financial debt for the impact to the environment of all Canada’s past industrial activities is >$85B and growing.  ‘We’ have already spent about $1.3B of our tax dollars “paying down” this environmental debt, i.e., trying to fix the problems (  Ironically, everyone agrees that we need to reduce our current levels of indebtedness, so why continue to knowingly grow our debt by not charging the true cost of extracting and processing natural resources?  Is it ethical to grow these already nasty financial and environmental debts we are leaving to our children and grandchildren?

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