First Nations guardians caribou calf pen

Public money ‘helped fund extinction’ of B.C. caribou through mining subsidies: report

The destructive impacts of three coal mines on critical caribou habitat were justified by promised economic benefits that a new analysis finds were ‘grossly exaggerated’

Endangered caribou in northeast B.C. have been “sacrificed” for the economic benefits of coal mining — benefits that turned out to be “grossly exaggerated,” according to a new report from the Canadian Centre for Policy Alternatives.

“Habitat-destroying coal mining projects are approved because decision-makers believe financial and economic benefits outweigh the cost of caribou loss,” states the Who Benefits from Caribou Decline? report, written as part of the Corporate Mapping Project, an academic and community-based research partnership.

The report’s authors examined the promised economic benefits of three mines owned by Conuma Coal Resources in the Peace River region, where scientists have connected habitat-destroying coal mining to the disappearance of caribou.

Report co-author Robyn Allan, an independent economist, said project proposals promise economic benefits — such as tax revenue, job creation and coal production — which are weighed against potential effects on caribou and efforts to mitigate damage to the environment. 

However, Allan said those purported economic benefits aren’t tracked and there is no mechanism for regulators, such as the B.C. Environmental Assessment Office, to ensure promised benefits are delivered. And when people go looking for those benefits — as Allan and her co-authors did — they come up short.

“When it comes to actually critiquing the cases presented by the proponent and making sure the promises are delivered on, that doesn’t happen,” Allan said in an interview with The Narwhal.

“We need good information upon which we can make good decisions, and we don’t have that.”

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Promises to minimize harm to the environment are also often misleading, Allan added.

“Caribou in the northeastern region of B.C. are under serious stress and will likely go extinct,” Allan said. “We need to stop kidding ourselves that the environment is being protected.”

Fewer than 240 caribou remain in the Peace River region.

A spokesperson from the Ministry of Energy, Mines and Low Carbon Innovation (recently renamed by the returning NDP government) told The Narwhal “we can’t speak to the report at this time but look forward to reviewing it and take the protection of our environment and building a sustainable economy that works for people very seriously.”

The spokesperson added the province has committed $47 million in public funds over five years to aid caribou recovery, “using a comprehensive, science-based approach.”

Coal mines only paid 34 per cent of promised taxes over two-decade study period

To determine the true economic benefits of the three mines — Willow Creek, Brule and Wolverine — the report authors conducted an analysis of publicly accessible data for the past and present owners of the mines from 1999 to 2019, including quarterly and annual reports, bankruptcy proceedings and credit rating reports.

Conuma Coal acquired the mines in 2016 after the previous owner, Walter Energy, went bankrupt. 

The analysis found the mines delivered 34 per cent of the promised corporate tax revenue, 59 per cent of the promised jobs and 37 per cent of the promised coal.

During the study period, the owners of the mines promised $250 million in corporate taxes, but only $86 million was paid. Up until 2016, zero corporate taxes accumulated because the previous owners were able to get their taxes refunded due to business losses. In the Canadian tax system, corporations that experience losses can reclaim taxes paid in the preceding three years.

Conuma Coal acquired the mines in 2016 and paid the $86 million in tax from 2017 to 2019, but those taxes aren’t secure either, according to Allan, because if the company has an unprofitable year, some or all of those taxes could be refunded.

Conuma coal mines corporate taxes

Corporate taxes promised (orange line) and paid (green line) from the Willow Creek, Brule and Wolverine coal mines. Graph: Canadian Centre for Policy Alternatives

Over the same time period, the proponents also promised to employ 583 people but provided just 346 jobs.

In regard to jobs, the Ministry of Energy’s spokesperson told The Narwhal the mining sector provides more than 30,000 jobs in the province, with each job at a mine supporting at least two more jobs in supply or services.

“We are dedicated to making sure this industry creates good jobs for people now, and into the future,” the spokesperson said.

Mines cost companies and taxpayers millions in businesses losses, subsidies

To the question of who benefits from caribou decline, the researchers found a specific answer: a “small and select group of international investors.”

People in that club saw significant returns because they sold their shares at the right time. But between 1999 and 2016, the companies that owned the three mines lost more than $1 billion, leading to losses for many investors, too.

Taxpayers helped foot the bill for these mines through subsidies of at least $1.4 million between 1999 and 2006. The report states this is a low estimate since it does not include government expenses in servicing the mines, nor the reclamation liabilities that often fall on the taxpayer when mining companies go bankrupt.

British Columbians are on the hook for more than $1 billion in cleanup costs from all the province’s mines. The chief inspector of mines estimated in its 2018 annual report (which is the most recent data) that reclamation of B.C. mines will cost $2.8 billion total, while the province has secured only $1.6 billion in reclamation bonds from mining companies.

According to that report, the Willow Creek, Brule and Wolverine mines have reclamation liabilities totalling $73.8 million combined, while $26.9 million in bonds has been secured by the province thus far.

In order to build a mine, “you should have cash, you should have bonds, you should have insurance,” Allen Edzerza, member of the B.C. First Nations Energy and Mining Council, previously told The Narwhal.

“It should be a hard commitment.”

Conuma Coal also recently received $120 million from the Canada Development Investment Corporation, a federal Crown corporation, through a fund for employers experiencing difficulty due to the pandemic.

Central Mountain caribou habitat coal mines CCPA

A map from the report showing existing and approved coal mines in central mountain caribou habitat. Herd boundaries identified by the B.C. government are in dark green and habitat identified by the West Moberly First Nations is in light green. Map: Canadian Centre for Policy Alternatives

‘Poor accounting and flawed economic models’ justify industrial projects: expert

In what the report’s authors call “a perverse and disturbing outcome,” public money “helped to fund extinction of caribou by subsidizing exploration and development.”

As for employment, Allan said the high number of promised jobs was based on the owners’ forecasts that the mines would be operating steadily. In reality, jobs fluctuated with the “boom and bust” of the market, as mining jobs often do.

“ … we are making trade-offs that we can never reverse.”

“We were shocked regulators would accept these scenarios of full production without any interruption,” she said. “You really ask the question about whether or not the regulator is just rubber-stamping approvals without any detailed digging.”

On average, the three mines have been shuttered for almost a third of their lifetime. It’s unclear how many jobs went to people from local communities and how many went to workers flown in, according to Allan.

Tara Martin, a professor at the University of British Columbia’s department of forest and conservation sciences, said detailed analyses like this report are “crucial” to “reveal the poor accounting and flawed economic models that lie beneath these large industrial projects.”

“Whether its mining, Site C dam or the Trans Mountain pipeline, the number of promised jobs and revenue relative to the cost of these projects don’t add up,” she told The Narwhal.

“But even more devastating is that we are making trade-offs that we can never reverse.”

Call for moratorium on mining in caribou habitat where populations are plummeting

Allan and her co-authors recommend placing a moratorium on new mine approvals in central mountain caribou habitat.

Across the province, caribou populations have plummeted, largely due to loss of habitat and migration disruption caused by mining and other industrial activities like logging. The Quintette herd of the Peace Region dropped from about 173 to 74 animals between 2008 and 2018. As well, five herds in the Kootenays have become locally extinct since 2006. 

Only three of the 48 caribou herds in B.C. have stable populations, according to 2020 data from the B.C. Ministry of Forests, Lands and Natural Resource Operations and Rural Development.

The NDP government also backpedalled on its promise to enact an endangered species law. 

The Saulteau First Nations and West Moberly First Nations have taken matters into their own hands, building a pen for pregnant cows and providing 24-hour armed security to ensure calves are born and not eaten by wolves. They brought a herd from 36 caribou in 2014 to 95 caribou this year.

Julian Napoleon caribou calf pen

Saulteau First Nations guardian Julian Napoleon prepares to catch a two-day-old calf. Caribou are known as “followers,” according to wildlife biologist Scott McNay. “Pretty much, caribou calves will get up and follow their mums right away.” Deer, on the other hand, are known as “hiders.” They will stash their fawns and leave to feed. Photo: Ryan Dickie / The Narwhal

“One hundred animals is still not anywhere out of the woods in terms of stabilizing that herd, but it’s definitely going in the right direction,” Roland Willson, Chief of West Moberly First Nations, told The Narwhal in July. The first nations signed a partnership agreement with the province in February to guide caribou recovery.

Read more: Up close with B.C.’s endangered baby caribou — and the First Nations trying to save them

The authors also recommend a public inquiry into the economic impact of B.C. mines, policy reforms to ensure accountable tracking of economic impact and a full accounting of all subsidies paid to any industry in the province that can be linked to habitat loss and species extinction.

Martin agrees more investigation is needed.

“We need teams of forensic accountants to work alongside conservation scientists to track the true costs and benefits of these major developments, including the cost of lost species and lost opportunities to future generations as a result of species extinction,” she said.

Allan believes other industrial projects would show similarly lacklustre economic returns if financial information was available. A report published in October found that although BC Hydro has already spent $5 billion on the Peace River Site C dam project so far, the public utility would still save money if the project was halted.

“There are so many areas where we are seeing negative impacts,” Allan said.

“They may not be priced yet, but we know the cost is huge.”

Updated Dec. 3, 2020, at 1:45 p.m. PST: A previous version of this story misstated the number of jobs that were promised and created by the owners of the mines. 

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