Tailings Pond Regulations Draw a Wave of Protest

Vale plans to use Sandy Pond, near Long Harbour, Newfoundland, as a tailings impoundment area for waste from its adjacent nickel-processing facility.

Environmentalists, mining giant Vale (NYSE:VALE) and Canada’s federal government are awaiting a verdict from a Newfoundland judge that could affect mining operations across the country.

Lawyers for the three groups squared off in court in late February over the multinational mining giant’s plan to use Sandy Pond, near Long Harbour, Newfoundland, as a tailings impoundment area (TIA) for waste from its adjacent nickel-processing facility. Vale has been building the $2.8-billion Long Harbour plant, which will process ore from the huge Voisey’s Bay deposit, since April 2009 and plans to commence operations later this year. The facility will employ roughly 475 people, according to Vale’s website.

A group called the Sandy Pond Alliance to Protect Canadian Waters launched the court challenge in 2010, but it has faced delays related to questions regarding whether Vale, as well as the Mining Association of Canada and the Mining Association of BC, should be granted intervener status in the case. They have now been granted that status, albeit on a limited basis.

Ken Kavanagh, former chair of the Alliance, feels a decision is likely still months away. “It took five to six months for the decision over intervener status to be made because there were reams of material from Vale, the government and the Mining Association,” he said in a March 18 phone interview. “I think we could be in for another four to six months again, but that’s just my personal opinion.”

“I want to make it clear that we are not against development and we’re not against jobs in Long Harbour,” he added. “We are simply against this aspect of dumping mining waste into a pristine pond.”

Environmental group aims to close “loophole”

At issue is Schedule 2, which was added to the country’s Metal Mining Effluent Regulations (MMER) by Prime Minister Jean Chretien’s Liberal government in 2002. The regulations were made under the country’s Fisheries Act.

On the surface, Schedule 2, which is posted on the government’s website, is simply a list of water bodies that have been used as TIAs. That is how the Council of Canadians, a social justice advocacy group, claims the government defines the schedule.

“Schedule 2 was first introduced by the Liberal government in 2002,” states the council’s website. “At the time, environmental groups were told it was merely an administrative detail aimed at accounting for the lakes and rivers that had historically been used for mining waste. The Liberal government gave assurances that Schedule 2 would not be used for healthy bodies of water.”

However, the council claims that the Conservative government of Stephen Harper, which came to power in 2006, is now using Schedule 2 as a loophole to allow mining companies to circumvent the Fisheries Act.

“Then in 2006, under the Harper government, two lakes in Newfoundland and Labrador were approved for destruction using the MMER loophole and a precedent was set that would put the future of all lakes and rivers throughout the country in jeopardy,” the council’s website states. Sandy Pond was added to Schedule 2 by an amendment published by the government in the June 10, 2009 Canada Gazette. Once bodies of water are added to Schedule 2, they lose all environmental protection, the council’s website explains.

The federal government has now reclassified 14 water bodies across the country as TIAs, and another 12 have been proposed, according to a March 13 HazMat Management article.

From Fish Lake to Sandy Pond

The case has similarities to an earlier controversy surrounding Taseko Mines’ (TSX:TKO) plan to drain Fish Lake in British Columbia as part of a plan to store waste rock from its New Prosperity copper–gold project. The province initially approved Taseko’s plan, but it was rejected after a federal environmental review in 2010. Taseko has since redesigned the project to preserve Fish Lake. A federal review panel is currently examining the revised proposal. Fish Lake was never added to Schedule 2.

Sandy Pond differs from Fish Lake in that Vale’s project has passed the provincial and federal environmental assessment processes. However, both proposals have faced significant resistance from environmental and citizens’ groups and, in the case of Fish Lake, nearby First Nations.

The Long Harbour plant will produce 375,000 metric tons per year of “combined leach and iron/gypsum residue, requiring a total storage capacity of 5.8 million m³ with a design for more than that amount,” according to Vale’s 2006 project description and registration document. The preferred storage site is Sandy Pond, “where two containment dams would be required at the northeast end of the pond.”

The company has finished constructing the dams and has also removed 1,400 fish from Sandy Pond, relocating them to two other nearby ponds, according to The Telegram. “Vale has already done a lot of damage,” said Kavanagh. “They’ve already dammed up the pond, removed the fish and I believe they’ve already started dumping treated sewage into it. Sandy Pond is likely damaged beyond repair.”

Case has far-reaching implications

The Alliance charges that Schedule 2 is incompatible with the spirit of the Fisheries Act and should be removed. “This gives [Ottawa] authority not to just regulate fisheries, but wipe them out. That’s a big departure from the theme of the Act, which is conservation,” Alliance lawyer Owen Myers told Hazmat Management. Myers also contends that the federal government cannot authorize the destruction of fish habitats without parliamentary approval.

Ottawa’s position is that because the MMER forces mining companies to create new fish habitats when they destroy old ones, the Cabinet’s actions, including adding water bodies to Schedule 2, are compliant with the Fisheries Act.

The amendment published in the Canada Gazette highlights this point. “There will be a loss of fish habitat in Sandy Pond equivalent to 18.1 hectares (ha) as a result of the Amendments,” the executive summary reads. “However, Vale Inco NL is required, under section 27.1 of the MMER, to implement a fish habitat compensation plan to offset this loss. It is expected that there will be a net gain equivalent to approximately two ha of fish habitat as a result of the implementation of the fish habitat compensation plan.”

Kavanagh’s desired outcome is a decision that Schedule 2 is ultra vires (or outside the scope) of the act, with retroactive effect. That likely wouldn’t change the situation at Sandy Pond, but it would make it more difficult to designate water bodies in the future. But even that ruling likely wouldn’t settle the matter, in his view. “I suspect that industry and government would appeal, and if we won again, industry would lobby government to change the act and put in what they can’t do under an illegal resolution,” he said.

In the end, Kavanagh would like to see a more collaborative approach between the mining industry and citizens’ groups on environmental matters like the storage of mining waste. “That way, we can make sure we’re approaching these big mining projects in a more sustainable way,” he said.

Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.

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