Canada: Government of Canada Denies Authorization of Taseko Mines Ltd.’s Proposed Prosperity Gold-Copper Mine Project, but Authorizes Mount Milligan Mine Project

On November 2, 2010, the Government of Canada announced that Taseko Mines Ltd.'s (Taseko) Prosperity Gold-Copper Mine Project (the Prosperity Project), near Williams Lake in British Columbia, would not be granted federal authorization to proceed due to concerns about the significant adverse environmental effects of the project. At the same time, the Government of Canada announced that Thomson Creek Metals Company's Mount Milligan Mine Project (the Milligan Project), near Prince George in British Columbia, was granted federal authorization to proceed.

The Prosperity Project underwent a thorough review process, including an environmental assessment by the Province of British Columbia and a Federal Review Panel under the Canadian Environmental Assessment Act. In making its decision, the Government of Canada took into consideration, and agreed with, the Federal Review Panel's conclusions about the environmental impacts of the project. Of note, the Government of Canada did not refer to either the potential economic benefits or potential adverse effects on First Nations Communities of the Prosperity Project, nor did it refer to a review conducted by the British Columbia Environmental Assessment Office as a basis for reaching its decision.

Prosperity Project Background

The proposed Prosperity Project was to include an open pit mine, 125 kilometers of new transmission lines, an onsite mill, a new site access road and fish compensation works – a man-made lake to be called Prosperity Lake. The works were intended to be located 125 kilometers southwest of Williams Lake, British Columbia, within the undeveloped Teztan Yeqox (Fish Creek) watershed.

The Prosperity Project was referred by Fisheries and Oceans Canada to the Minister of Environment under the Canadian Environmental Assessment Act for a panel review, which commenced in early 2009. A key issue for Fisheries and Oceans Canada was the Prosperity Project's proposed use of lakes within the Teztan Yeqox watershed as storage areas for tailings and waste rock. The Federal Review Panel conducted 30 days of public hearings in 10 communities impacted by the Prosperity Project, including the Tsilhqot'in and Secwepemc First Nations, who both expressed opposition to the Prosperity Project. The Federal Review Panel concluded that the Project would result in significant adverse environmental effects, and did not reach a conclusion on the potential economic benefits of the Prosperity Project.

The British Columbia Environmental Assessment Office undertook a separate but coordinated review, finding that the significant adverse environmental effect of the Prosperity Project on fish and fish habitat was justified in the circumstances due to the potential economic benefits. These economic benefits included 275 jobs per year during construction and operation phases, as well as 600 indirect jobs during the Prosperity Project's 20 year operating life. Taseko also indicated that the Prosperity Project would include $200 million in spending in the local economy over the course of the Prosperity Project and estimated that government revenues generated from the Prosperity Project would be $30 million per year.

By not authorizing the development of the Prosperity Project, the Government of Canada in effect overruled the prior approval for the Prosperity Project by the Government of British Columbia.

Milligan Project Background

The Milligan Project is a proposed large-tonnage gold/copper mine located in north-western British Columbia, 155 kilometers north of Prince George between the communities of Mackenzie and Fort St. James. The Milligan Project will consist of an open pit mine, processing plant and associated infrastructure, a tailings impoundment area, explosives factory, a 29 kilometer access road and a 92 kilometer transmission line.

The Milligan Project also underwent environmental assessments at both the provincial and federal levels. However, both environmental assessments determined that, with the implementation of appropriate mitigation measures, the Milligan Project is not likely to cause significant adverse environmental effects.

Implications of the Decisions

As a result of the decision by the Government of Canada, the Prosperity Project will not be permitted to proceed in its current proposed form. Taseko responded in a press release on November 2, 2010, that it would be evaluating and working to understand the process whereby the Government of Canada came to its conclusion. Taseko announced its next steps would be to conduct discussions with both the Governments of Canada and of British Columbia to determine whether the Prosperity Project can move forward and meet criteria that the Government of Canada may deem to be appropriate. The Government of Canada did leave open the possibility that the Prosperity Project could be developed in another form.

The decision regarding the Prosperity Project highlights a major issue in Canadian environmental assessments: multiple review processes between different levels of government with different criteria that produce different results. The provincial review process in British Columbia includes consideration of the economic impact of a project. The federal review process does not. The inconsistent terms of reference for the two levels of environmental assessment create uncertainty and increased costs for project proponents. Moving to one review process could assist with future investments, but critics fear a less rigourous approach that would weaken environmental protection.

The Government of Canada's decision to not authorize the Prosperity Project, regardless of the potential economic benefits resulting from its development, is leaving some, including the Mining Association of British Columbia, with doubts as to the potential for the future of mining investments in British Columbia. However, the contemporaneous authorization granted for the Milligan Project demonstrates that, while the bar for environmental assessment of mining projects in British Columbia may be high, there is not an effective federal moratorium on such projects. The Milligan Project presents a roadmap of sorts for seeking federal approval of mining projects and does leave hope for the advancement of other mining projects in British Columbia.

Both decisions emphasize the extreme care and attention that must be paid to environmental concerns in the mine development and permitting process and the importance of Aboriginal consultation in advancing mining projects in British Columbia and elsewhere in Canada.

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