Minerals and Metals in Canada: A Strong Commitment to Sustainable Development Dr. Stephen Lucas Assistant Deputy Minister, Minerals and Metals Sector Natural.

Minerals and Metals in Canada: A Strong Commitment to Sustainable Development

Dr. Stephen LucasAssistant Deputy Minister, Minerals and Metals Sector

Natural Resources Canada

April 14, 2008

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Outline

• Mining in Canada

• Challenges for Governments and Industry

• Canada’s Approach

• Sustainable Development

• Positive Investment Climate

• Environmental Performance

• Community Benefits

• Transparency

• Corporate Social Responsibility

• Conclusion - Working Together

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Mining in Canada

• Significant contributor to Canada’s economy and the quality of life of Canadians

• Mining as an value-added cluster– Over 1200 junior exploration and mining

companies – Over 2200 suppliers of equipment and

services– Downstream materials and

manufacturing industries– World-leading financial centre

• Foundation for many rural and remote communities

• Largest employer of Aboriginal people

Metals22%

Non-metals 14%

Coal4%

Oil Sands(mining)

23%

Smelting and Refining

34%

$60 Billion Value of Production

Diamonds4%

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Global demand is growing, driven by China …

0

10

20

30

40

50

60

1990 1998 2006

Percent

Aluminum Copper

Nickel Iron ore

Source: AME Minerals Economics

China now consumes 25% of the world’s base metals versus 5% in the 1980s.

China imports $100 billion in metals annually.

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… leading to sustained high commodity prices …

0100200300400500600700800900

10001100

Gold Zinc

Copper

Nickel

Index 2000 = 100

Source: Uranium – Cameco long term industry average prices Other – LME;TradeTech

Uranium

Metal Price Index

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… a global exploration boom …

United States9.8%

Africa14.7%

Canada12.1%

Australia19.3%

Latin America28.1%

Pacific/SE Asia7.7%

Rest of the World8.3%

2007 Worldwide Exploration

Total = $14B

Source: Metals Economics Group

1999 Worldwide Exploration

Total = Canada

21.2%

Australia

12.4%

Africa

16.1%

Rest of

World

16.6%

United

States

7.9%

Pacifi c and

SE Asia

4.0%

Latin

America

21.8%

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… and growth in Canadian mining investments around the world

Latin America

30%

Australia11%

USA35%

Africa11%

Europe 2%

Rest of the world11%

2001US$25.8 billion

2006US$64.4 billion

Australia13%

USA17%

Africa13%

Europe 7%

Rest of the world

6%

Latin America

44%

Source: Natural Resources Canada

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Complexity is increasing for industry and governments

Technical Complexity

CommercialComplexity

Social

Time

Ov

era

ll C

om

ple

xity

Technical Complexity

CommercialComplexity

SocialComplexity

Technical Complexity

CommercialComplexity

SocialComplexity

Shallow mines/pitsSimple processingMinor environ controls

Private companiesMarkets

Remote locationsLow expectationsGov’t control

Deeper minesHigher tech processingIncreased Environment controlsCosts increasing

LME developsEquity marketsCapex growing

Remote locationsNGO’s emergeEnvironmental

Laterite HPALHigher tech processingIncreased Environment controlsMining lower grades

Competition for capitalConsolidation of industryCost escalating

Local Partnerships Stronger NGOVisible across the globePolitically challenging locations

Capex = Capital Expenditure

LME = London Metals Exchange

NGO = Non-Government Organization

HPAL = High Pressure Acid LeachSource: VALE INCO

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Sustainable development: Canada’s approach to realizing the benefits of our natural resources

• Sustainable development of minerals and metals domestically and internationally

• Safe use of minerals and metals

• Inter-governmental exchange of best practices, collectively addressing challenges of mineral resources development

• Principle of multi-stakeholder engagement and cooperation

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Canada’s Investment Climate• Objective is an internationally competitive investment

climate, anchored in sustainable development– Based on principles of transparency, accountability, certainty,

democracy, institutional capacity and security

– Clear federal, provincial and territorial responsibilities

– Well-defined environmental review process and standards

– Clear land access and security of title

– Internationally competitive tax regime

– Minimum investment restrictions for foreign direct investment

– Reliable and accessible geoscientific knowledge

– Investment in research, innovation and people

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Pressure will continue to reduce the environmental footprint of mining …

• Regulatory standards tightening for GHGs, air pollutants, and water effluents

• Concerns about water supplies

• Concerns about mine waste management

• Need for improved mine site rehabilitation

• Concern about acid drainage

• Need to consider the impact of climate change on mining

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• Canadian Environmental Assessment Act provides the legal framework for federal environmental assessments

– Coordination by the Canadian Environmental Assessment Agency

• Bilateral harmonization agreements with provinces and project-specific arrangements

• Government commitment to improve regulatory performance and process certainty

– Major Projects Management Office

– Investment of $150M in regulatory capacity

• Engagement with communities

– Consultation with Aboriginal communities

… and for thorough and transparent environmental impact assessments

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Technology can offer solutions Green Mines – Green Energy: Biosolids to Bioenergy

Biosolids + Mine Tailings + Energy Crops = Green Fuel

Tomorrow?Today

Government-industry consortium in Canada is examining the use of “waste” organic materials (municipal compost, pulp and paper waste) to rehabilitate mine sites and establish energy crops (canola, corn, soy) for the production of biofuels

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Aboriginal communities are taking advantage of opportunities in the mining sector…

• Mining can help build self-reliant and sustainable communities through:Employment, training and transferable skillsDirect and indirect economic and business

opportunitiesImprovements in community infrastructure

and social fabric

Achieving community benefits – Aboriginal Participation in Mining

…and are securing benefits through agreements with industry

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• Ekati Diamond Mine, BHP Billiton Diamond Inc. (Northwest Territories)Spending target for Aboriginal and local

businesses. Workplace Learning Program

• Teaches essential skills in reading, writing

math, oral communication

• Voluntary and confidential

participation

• Work release time for attendance

– Aboriginal Underground Miners Training Program

– Community Partnership Program

Aboriginal Participation in Mining – Impacts & Benefits Agreements

(http://ekati.bhpbilliton.com)

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Building community awareness and capacity to benefit from mining

• “Mining Information Kit for Aboriginal Communities”Four modules: Mineral Exploration,

Mine Development, Mine Operation, Mine Closure

Content:• Description of activities

• Opportunities to get involved

• Acts and regulations

• Environmental and social impacts

• Employment and business opportunities

• Community experiences(www.nrcan.gc.ca/mms/abor-auto/mine-kit_e.htm)

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Multi-stakeholder Engagement

• Multi-stakeholder consultation and dialogue provide greater certainty for mining investment

• Grounded in transparency, access to information, democratic process

• Encourages corporate social responsibility and environmental stewardship

• Provides communities and Aboriginal Peoples increased understanding of the mining cycle, and opportunity to achieve social and economic benefits

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Transparency

• Transparency and strong accountability systems are essential components of good governance

The Extractive Industry Transparency Initiative as a tool to improve governance Canada became a member of EITI in Feb 2007 There is a need to adopt an approach specific to

mining - distribution of benefits is a key issue Kimberly Process is a good model

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Corporate Social Responsibility• Attention is turning to social and human rights issues

– Local communities have their own needs and expectations– Industry can find itself delivering services normally provided by

governments

• Government of Canada has been called upon to regulate industry abroad– Lead to CSR Roundtable process in Canada– In-depth discussion with stakeholders and experts on:

• Standards

• Incentives

• Reporting and conflict resolution

• Tools for implementation

• Governance

• Multi-stakeholder consensus report submitted to Government

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Conclusions• Canada’s approach based on an internationally competitive

investment climate, sustainable development and principles of transparency, accountability and certainty

– Generates social and economic benefits and protects the environment – contributing to the quality of life of Canadians

• Mining is a global industry. Collaboration, sharing knowledge, expertise and leading practices improves natural resource governance in a global context.. ….we still have lessons to learn.

• There is a need for global dialogue and cooperation to address global issues facing governments and industry

– Opportunity through UN CSD review of mining in 2010/11

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www.NRCan.gc.ca