Widespread criticism of B.C.’s mining rules is undeserved according to Energy and Mines Minister Bill Bennett, who has turned down a recommendation from the University of Victoria’s Environmental Law Centre for a judicial inquiry into mining regulation.

“Given the significant changes this government has made to how mining is undertaken and overseen in British Columbia, including changes to law and policy, additional resources to improve permitting processes and significantly strengthened compliance and enforcement, Government categorically disagrees that a Commission of Public Enquiry (sic) into the Province’s mining industry serves the taxpayers of B.C. Such a process would be demonstrably redundant,” Bennett wrote in a letter to the ELC.

The response has exasperated Calvin Sandborn, ELC legal director, who said the rejection is likely to cost B.C. taxpayers dearly because of immense costs of mine reclamation where environmental damage has been caused by poor government oversight and minimal enforcement of the polluter-pay principle.

“You can pay for an awful lot of public inquiries if you avoid just one disaster,” said Sandborn, who points to how previous public inquiries have improved regulatory systems and helped restore public confidence.

An ELC report, commissioned by the Fair Mining Collaborative, said the regulatory system governing B.C.’s mining industry is profoundly dysfunctional and the public has lost confidence in the province’s ability to protect the environment and communities from poor mining practices.

A Commission of Public Inquiry is needed because mining is an industry that can create “catastrophic and long-lasting threats to entire watersheds and to critical public assets such as fish, clean water, wildlife and public health,” says the report.

In the aftermath of the Mount Polley tailings dam collapse, the spotlight has been on B.C.’s mining regulations and enforcement, drawing highly critical analyses from Auditor General Carol Bellringer, Alaskan politicians and environmental groups, First Nations, Canadian not-for-profit groups such as Mining Watch Canada and communities worried about the safety of tailings ponds in their region.

In addition to the Mount Polley disaster, that saw 25-million cubic metres of sludge and toxic waste water surge into nearby lakes and rivers, public confidence has been shaken by the toxic legacy of old mines, such as Tulsequah Chief, which has leached acid mine waste into Alaska watersheds for six decades and the Sunro Mine at Jordan River where reclamation and cleanup efforts were not enforced.

Simultaneously, there is increasing public discomfort with proof that taxpayers are likely to be on the hook for more than a billion dollars in mine clean-ups because of historical problems and B.C.’s lack of financial enforcement, including the practice of allowing the Chief Inspector of Mines to unilaterally set the amount of reclamation bonds and then not demanding the full amount be paid up-front.

Unlike neighbouring Alaska, B.C. will also accept guarantees, rather than demanding cash or bonds.

B.C. Rejects Request for Inquiry into Mining Practices https://t.co/J3MaLhT2Sw #bcpoli #cdnpoli #Alaska #bcelxn17 @LavoieJudith @MiningWatch pic.twitter.com/sry5MUqZ1J

— DeSmog Canada (@DeSmogCanada) April 11, 2017

Independent economist Robyn Allan, in a brief presented to an Alaska State Legislature committee, underlined the difference in bonds paid by mining giant Teck Resources Ltd. in B.C. and Alaska.

Teck has posted a bond of $558-million with Alaska to fully cover reclamation costs at the Red Dog Mine, which is expected to require water treatment in perpetuity.

In contrast, just across the B.C. border, Teck is responsible for 13 mines — six operating and seven closed — and the province has estimated reclamation liability at $1.4-billion, but has required only $510-million in bonding, Allan wrote in her brief.

Teck is the largest donor to the B.C. Liberals contributing $1,502,444 to the party since 2008.

However, Bennett, in his letter to the ELC, said that, following the release of the Auditor General’s report last May, government commissioned Ernst and Young to undertake an in-depth examination of reclamation securities practice.

“Ernst and Young found that (the Ministry of Energy and Mines) has established a carefully-considered and systematic financial security approach for mine reclamation that includes elements of a risk-based approach,” he wrote.

The review suggests ways of moving forward and an amended “reclamation securities approach” will be completed in 2018, according to Bennett, who is not running for re-election in May.

Bennett wrote in the letter that government has accepted all recommendations of the Expert Panel that looked into the Mount Polley disaster and recommendations made by the Auditor General.

Sandborn disagrees.

“As our submission demonstrated, government has clearly failed to implement the prime recommendations of both the panel and the Auditor General — to move towards elimination of water impoundments and to get the Ministry of Energy and Mines out of the enforcement business,” he said.

Sandborn also dismissed Bennett’s claims that B.C.’s mining regulations are equal to, or more stringent than Montana or Alaska.

“This is demonstrably inaccurate,” he said.

“Alaska requires mine securities of 100 per cent of reclamation costs, while B.C. allows companies to fall far short of that figure. Teck Resources alone has been allowed to fall more than $700-million short in B.C.”

Bennett’s response is similar to his denials after the Mount Polley breach that there had been significant cuts in regulatory staff, Sandborn said,

“The Auditor General’s report showed that we were right and the minister was wrong about that,” he said.

Image: Energy and Mines Minister Bill Bennett. Photo: Province of B.C. via Flickr

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By Dermod Travis, executive director of IntegrityBC.

One of the last things anyone would ever imagine the B.C. government doing is adopting an old NDP program, but that's exactly what Energy and Mines Minister Bill Bennett did this month when he announced a five-year, $300 million hydro bill deferment plan for 13 B.C. mines owned by six companies.

Never mind that BC Hydro is grappling with its own deferral problems to the tune of $5 billion.

Make no mistake, there's a price to pay when BC Hydro becomes a political arm of government. The intertwining of self-interests gets complicated, and the interests of ratepayers can take a backseat to political interests.

Three of the six companies in Bennett's deal were highlighted in a December Financial Post article, “Debt risks mount as Canada’s base metal miners sink deep in the hole.”

One could argue that the headline alone justifies Bennett's move, except there's no guarantee — other than a hope and a prayer — that BC Hydro will be repaid.

The issue of what happens if metal prices don't rebound wasn't addressed in Bennett's news release.

Consider the “dire financial position” of one of the companies: Colorado-based Thompson Creek Metals.

Last year, Deutsche Bank analyst Jorge Beristain said the company is “quickly approaching an end-game” with debts of $832 million U.S.

According to the Financial Post, Teck Resources “has more than US$3.5 billion of debt coming due between 2017 and 2023 and lost its investment-grade credit rating last year.”

Taseko Mines, “has more than $260 million of senior notes coming due in 2019, while a US$30 million secured loan matures this May.”

It seems like only yesterday that the company sent Bennett off to lobby Ottawa on its behalf.

In January 2014, Bennett spent a day on Parliament Hill meeting with Natural Resources minister Joe Oliver and Industry minister James Moore to make Taseko's case for its controversial New Prosperity copper and gold project.

By then copper prices had already fallen 27.5 per cent off their 2011 high.

Taseko is also in the midst of a messy proxy fight with Chicago-based Raging River Capital over $26 million in management fees Taseko has paid Hunter Dickinson Inc. Taseko and Hunter Dickinson share three directors in common.

Imperial Metals owns three of the 13 mines in Bennett's deal, including Mount Polley, Red Chris and Huckleberry. In 2004, the government quietly forgave $3 million in liabilities owed it by Huckleberry Mine.

Imperial Metals's controlling shareholder — Murray Edwards — has a net worth of $2.69 billion.

The BC Liberal party has done well from them.

From 2005 to 2014, the six companies donated $2.8 million to the party. Key executives kicked-in another $380,000.

Three of the six companies donated $97,010 to the NDP, $75,300 of it in 2013.

BC Hydro's contractual obligations with private power producers have ballooned from $22.25 billion in 2009 for “2010 and beyond” to $56.2 billion for “2016 and beyond.”

It's the gift that keeps on giving for everyone involved, except ratepayers.

In a 2008 call for independent power projects, 75 proponents registered with BC Hydro.

Forty-three submitted proposals and, in 2010, BC Hydro signed purchase agreements with 18 of the proponents.

From July 1, 2008 to September 30, 2010 — when B.C. Hydro was making its decisions — 14 proponents donated $268,461 to the Liberals. One donated $1,000 to the NDP.

Ten of the 14 signed purchase agreements with BC Hydro. One of the 14 who didn't, never donated again.

Their before and after donations are interesting too.

For the 10 successful proponents, their donations more than doubled from $112,801 (January 2005 to June 2008) to $229,471.

After the deals were done, they settled back again. Seven donated $112,345 to the Liberals and five gave $16,225 to the NDP (2010 to 2014).

In 2008, the Mining Association of B.C. received a $295,188 grant from the Northern Development Initiative Trust (NDIT) to make the business case for the Northwest Transmission Line.

In turn, the association hired Australia-based Macquarie Bank to “determine the threshold of economic activity that would be required to make the construction of the (line) an economically viable infrastructure project.”

NDIT's Highway 37 Power Line Coalition has 22 private sector partners.

Excluding the six companies in Bennett's deferral program, independent power producers and those identified by BC Hydro as “potential future mines” for the transmission line, three trade associations and ten of the companies donated $962,220 to the Liberals and $10,320 to the NDP.

Macquarie has donated $17,050 to the Liberals.

The $404 million transmission line overshot its budget by more than $300 million, with a final price tag of $716 million. But who counts bills among friends?

There are the nine “potential future mines” that BC Hydro hopes will one day connect to the line.

With the downturn in metal prices, BC Hydro shouldn't hold its breath in anticipation.

Excluding donations from Imperial Metals and Teck, who have interests in three of the mines, the most generous companies were Goldcorp at $795,700, the Lundin Group of Companies ($112,145) and Copper Fox Metals ($93,130).

One of the founding directors of Copper Fox Metals is Hector Mackay-Dunn, who co-chaired the BC Liberal's 2009 election preparation efforts.

MacKay-Dunn is affectionately known in some party circles as Hector the Collector for his prowess at political fundraising.

The nine companies behind the potential mines have donated $1 million to the Liberals and $18,050 to the NDP ($10,000 of it from Copper Fox in 2013).

And at the same time the government was imposing hydro rate increases on schools and hospitals in 2014, Bennett announced a $100 million BC Hydro initiative for pulp and paper producers to “support investments in more energy efficient equipment.”

The forest industry has donated more than $4.2 million to the Liberals and $294,905 to the NDP.

Tidy haul.

Add it all up: more than $9.8 million in donations from interested parties to the Liberals and $417,185 to the NDP, not including their 2015 donations.

Guess who gets saddled with the bill?

Including operating and capital development agreements that have tripled to $3.3 billion since 2010, BC Hydro's contractual obligations now stand at $59.7 billion, not including their debt which has grown from $6.8 billion in 2004 to $16.7 billion last year.

They've had to borrow $3.2 billion just to turn around and give it to the B.C. government as so-called dividends.

Meanwhile, Hydro-Quebec cut a dividend cheque of $2.5 billion for the Quebec government in 2014.

They didn't have to borrow money to cover the cheque and still had $700 million in profits left over.

In 2014, it's rates were nearly two cents per kWh lower than B.C. From 2007 to 2015, its cumulative rate increase was 17.1. In B.C., it was 63.2 per cent.

Total donations from all of Hydro-Quebec's suppliers and contractors to the Parti Quebecois and the Quebec Liberal party in the last 30-years? Zero.

Quebec bans corporate and union donations. The maximum any Quebec resident can give to a political party is $100 annually.

Image: Crusher at the Red Chris mine via Imperial Metals

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No charges will be laid against the Mount Polley Mine Corporation, owned by Imperial Metals, for the collapse of a tailings impoundment on August 4, 2014, that sent an estimated 24 million cubic metres of mining waste into the pristine waters of Quesnel Lake.

The incident, considered one of the worst mining disasters in Canadian history, was simply the result of “poor practices,” according to B.C. chief inspector of mines, Al Hoffman, and not due to “non-compliances.”

Hoffman released the results of a yearlong investigation into the tailing pond’s failure Thursday and did not recommend charges be brought against the mine or its parent company.

The Mount Polley mine was operating within existing regulation, Hoffman found, but failed to use best available practices. Hoffman made 19 recommendations to the B.C. government and the mining industry to prevent a similar event from occurring in the future. The recommendations include introducing a “designated mine dam safety manager” to monitor tailings facilities as well as improving records management and transparency around design, construction and operation of mining facilities.

B.C.’s Ministry of Mines currently has no rule in place for levying administrative penalties against mining operators. Upon release of the report, B.C. Minister of Energy and Mines Bill Bennett said he hopes to introduce new legislation this spring that will give his ministry the power to impose fines to encourage compliance.

Despite the promises for stronger mine management and future legislation, the current lack of consequences for the Mount Polley Mine Corporation and Imperial Metals has critics outraged.

“How can so many things be done so poorly, sloppily or haphazardly and result in massive damage without someone being ‘at fault?’” Ugo Lapoint, Canadian program manager with MiningWatch Canada, stated in a press release.

The catastrophic failure of the tailings impoundment, which sent contaminated waste into a major source of drinking water and spawning grounds for, at high times, up to 60 per cent of the province’s sockeye salmon stocks, was “not an ‘Act of God,’” Lapointe said.

“It was poor design, poor practices, poor oversight and misconducts on the part of Mount Polley Mine Corporation.” 

“It makes no sense. Either there were political reasons for the chief inspector to not lay charges against [Mount Polley], or the regulatory system is even more broken then we all thought. Either way, it’s not reassuring for any of the mines currently operating in B.C.,” Lapointe added.

MiningWatch Canada found that although the chief inspector did not lay charges, he made numerous incriminating statements in his recent report.

“It does not add up,” Lapointe said.

Richard Holmes, environmental biologist and resident of Likely, B.C., where the spill took place, said the report is a damning indictment of the province’s regulatory system.

“I think this reflects the weak regulations we have in B.C.,” he said

He added the lack of charges against the company does not come as a surprise.

“I didn’t think the chief inspector of mines would condemn his own ministers too much,” he said.

Holmes said the disaster is the outcome of “a bad combination of weak regulations, no oversight and a company that was hell bent on walking a very fine line in doing what was right and making a profit.”

The province’s push for more mines is troubling given the Mount Polley incident reflects poorly on the government’s ability to manage resources and watersheds, Holmes said.

There are currently 10 new mines planned for northwestern B.C., threatening transboundary watersheds flowing into Alaska. The proposed mines include the Red Chris Mine, owned by Imperial Metals, the same operator of Mount Polley.

“The Alaskans and others have every right to be concerned about transboundary rivers,” Holmes said. “Alaska has its own mining concerns that don’t need to be compounded by a weak B.C. regulatory system.”

Calvin Sandborn, legal director of the Environmental Law Centre at the University of Victoria, said a previous B.C. report put together by a panel of experts found management failures contributed to the collapse of the tailings impoundment.

“We sure would like to see someone held to account for this incident,” Sandborn said.

“B.C. government officials have been telling us for years they have world-class laws, world–class standards when it comes to mining,” Sandborn said. In 2012, Premier Christy Clark told a Calgary audience B.C. has the “highest standard of sustainable mining in the world.”

“So do those laws really provide a remedy when you have one of the biggest mining disasters in the world?” Sandborn said. “The jury is still out on that.”

Sandborn said there are still two Mount Polley investigations pending — one conducted by the B.C. Conservation Office Service and another by the federal Department of Fisheries and Oceans.

Sandborn said in January a panel of independent experts brought together by B.C. recommended the province eliminate the use of wet tailings impoundments altogether and opt for safer dry stacked tailings — a tailings management technique used in many other mining jurisdictions.

“Most importantly we need to look to the future and accept the recommendations of the government’s own experts and stop ignoring that advice,” he said.

After the Mount Polley incident it was revealed Murray Edwards, owner of Imperial Metals, raised $1 million at a private fundraiser for Clarks’ re-election. The Mount Polley Mining Corporation has donated $46,720 to the B.C. Liberals and mining giant Teck Resources has donated $1.7 million over the last nine years.

“You have to wonder if the B.C. government is constrained because they get so many political contributions from the mining industry, if that is a factor in their policy,” Sandborn said.

Image: Global News 

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