B.C. projects run into government roadblocks

A war of words has broken out between the British Columbia government and two major mining companies, Fording Coal and Cominco (TSE). The disputes affect existing jobs and new economic development in several regions of the province.

Tension is running particularly high in the province’s East Kootenay district where Alberta-based Fording had planned to build a $200-million coal-fired electricity generation plant. The company recently shelved the project, saying it was forced to do so because the government was continually throwing up new roadblocks and because environmental goal posts remained “elusive.”

Fording had proposed to meet federal emission limits but the province was seeking a more stringent limit for sulphur dioxide emissions — a limit Fording said is not consistent with lower standards set in most other industrialized nations.

“In fact, the technologies Fording would build into its power plant would reduce sulphur emissions to one-thirtieth the amount of sulphur that we use annually to fertilize land reclaimed at our mine,” Fording said in a letter to Anne Edwards, British Columbia’s minister of energy, mines and petroleum resources.

“Insisting that Fording spend an additional $100 million over the life of the project to reduce sulphur emissions to one-ninetieth the sulphur content that agronomists recommend for proper fertilization does not seem sensible. There is no supportable evidence that such requirements would achieve anything other than permanently shelving a project that would provide a much-needed boost to the people and economy of the East Kootenay region.” The project would have created 65 permanent jobs, 150 permanent spinoff jobs, and an annual revenue of about $50 million (above the initial capital investment) in a region where over 2,000 jobs are already threatened because of the bankruptcy of Westar Mining and by various labor disputes. Edwards, who represents the East Kootenay riding, said she cannot understand the actions of Fording in shelving its proposal. She said the company did not respond to repeated requests for information that would justify why the project should not or could not meet provincial emission standards if the best available control technology is used.

“Rather than showing that the proposal is economically or environmentally viable, the company has dangled the project in front of the public as an economic opportunity and a chance to bring new jobs and benefits to the Elk Valley,” Edwards said.

“In light of their announcement yesterday and the present state of the Valley economy, their actions come across as misleading and a cruel joke.” But Fording said the British Columbia government did not provide it with a clearly stated definition of its Best Available Control Technology policy, only definitions described as “under consideration” by the ministry. The mayor of Sparwood, Toto Miller, also doesn’t accept the government’s explanation, and points out that 90% of power in neighboring Alberta comes from modern coal-fired plants that operate under national environmental guidelines.

“Excuses come easy,” Miller told The Northern Miner. “The government did an injustice to the people of the Elk Valley because they were scared to lose votes from the environmental lobby.”

Miller described Edwards’ performance as mines minister as “disappointing,” and said the vast majority of people in his area “support the coal industry and the wisdom of adding value to the product.”

Job uncertainty is also brewing in Trail, B.C., where Cominco owns and operates a lead and zinc smelting complex that has been losing money for almost three years.

Late last year, the provincial government’s Job Protection Commission appointed a special commissioner to analyze the operation and bring together affected parties to develop an economic plan to ensure Cominco can continue operations while completing its modernization program.

An interim report indicated the operation was in jeopardy unless operating costs were reduced by $50 million annually. Cominco then launched a series of initiatives to reduce operating costs which involved the loss of 500 jobs, as well as successful efforts to reduce energy, transportation and other purchasing costs. But the remaining part of the package — efforts to reduce the water licence tax and property taxes imposed by provincial and municipal governments — was not realized.

The commissioner’s final report, completed in April of this year, indicated that a fair tax regime was a fundamental condition for continued operations at Trail, and was endorsed by the company, unions and suppliers. The report noted that Cominco had traditionally relied on the advantage of access to low-cost electric power from company-owned dams to bolster its competitive position, but also pointed out that increased costs from provincial water rental fees negated some of that cost advantage.

Cominco President Robert Hallbauer said the government originally agreed with the commissioner’s recommendations, but reversed this position “out of the blue” in late September.

The provincial government now says the concessions recommended from the province by the commissioner are not workable “because they attract harmful trade actions and set costly precedents.” In particular, the government said water rental relief could result in countervailing duties being imposed on Trail smelter products by the U.S.

Hallbauer, who doesn’t agree, says this won’t happen, “if it’s handled properly.”

The government insists that any further participation in the smelter program will be on a commercial basis, and will likely involve “over time, the acquisition of rights to power held by Cominco as consideration for funds provided to Cominco for the Trail smelter capital program.”

Economic Development Minister David Zirnhelt said the government will first need assurances that Cominco is vigorously pursuing the recovery of expenditures for the failed lead smelter from engineering and construction companies involved, an independent audit of value received for public funds already invested, and an independent assessment of the lead smelting technology Cominco chooses to employ in completing its new smelter. But Hallbauer said Cominco isn’t looking for a capital contribution from the government to complete its modernization program which began in 1977. The company has already spent $650 million on this program, and needs to spend a further $325 million. The company said it is committed to making this investment, “once a fair tax regime has been established.”