Federal Clean Fuel Standard ‘a second carbon tax’: Sask Minister of Energy and Resources

For a province of just over a million people, Saskatchewan punches above its weight in the Canadian mining industry. While potash and uranium continue to be mainstays in the province, there has been increasing diversification within the sector to include base metals, lithium, diamonds and rare earth elements.

Like the rest of the country, Saskatchewan went into a lockdown in March as Covid-19 spread across Canada. Yet the shutdowns of production and exploration operations, coupled with the way people in the province dealt with the situation, helped to mitigate the effects of the coronavirus and allow the Saskatchewan mining sector to resume its role as an economic driver earlier than some anticipated.

To get a closer look at how the mining industry is doing in Saskatchewan, The Northern Miner spoke to the province’s Minister of Energy and Resources, Bronwyn Eyre. Minister Eyre was elected to the Saskatchewan Legislative Assembly in 2016 and assumed the Energy and Resources portfolio in February 2018.

The Northern Miner: How has Covid-19 impacted the mining sector in Saskatchewan?

Bronwyn Eyre: Obviously Covid was challenging, but potash mines in Saskatchewan continued to run through the Covid period with enhanced protocols in place.

But production and exploration at other mines were largely suspended in northern Saskatchewan, including at Cigar Lake and the McClean Lake mill, and that affected over 700 workers. Production was also suspended at the Seabee gold mine, with 350 workers laid off. And, of course, there was an impact on junior exploration companies, and just their access to sites to do the exploration work they wanted to do.

That’s why one of our relief measures through that period for the sector was to wave those expenditure requirements that had already been paid by companies on mineral claims and leases for one year, and then to apply them to future expenditure requirements.

TNM: What has happened since lockdown restrictions began easing?

BE: Operations have resumed at Seabee, at McClean Lake and at Cigar Lake. Workers returned to Seabee in June and at Cigar Lake and McClean Lake operations earlier this month.

But I do have to say that Saskatchewan mining companies had an exemplary safety record. They were quick to implement comprehensive safety protocols. And they were also extremely generous to their local communities. They donated what amounted to millions of dollars to community outreach, charitable donations, to food banks, First Nations communities, breakfast clubs, you name it. They really did us very proud.

TNM: What do you see as the biggest challenges facing the mining sector in Saskatchewan?

BE: I have to say the biggest ongoing challenges are emanating from the federal government. Most recently we have been addressing the impacts of the Clean Fuel Standard, and the anticipated serious impacts of it. As well as oil and gas, this will impact mining.

The Clean Fuel Standard focuses very much on switching to electricity for transportation and heating. But that doesn’t take into account the more carbon-intensive nature of power generation in Saskatchewan, compared to the hydro- and nuclear-powered grids that you see in other provinces. We also have to transport products over much greater distances and that already adds costs.

But mining companies are saying that the economic, bottom-line cost of this is not going to be minor. We’re talking millions and millions of dollars. And make no mistake, the Clean Fuel Standard is a second carbon tax. It will be applied on top of the Carbon Tax on the same emissions. And we feel in Saskatchewan that the Carbon Tax is already uneconomic.

TNM: What about the clean-up of the Gunnar uranium mine north of Lake Athabasca?

BE: Well, you might be aware of our attempts to get the federal government to honour the memorandum of agreement that it entered into with Saskatchewan back in 2006, to equally share in the costs of remediation of the Gunnar mine. Finally, we had no choice but to undertake legal action.

The federal Liberals announced very clearly during the election campaign last fall that remediation of northern mines was a top priority. But clearly, that does not apply to northern Saskatchewan. We’re ordered to remediate the mine and we’ve done it to the tune of $280 million. Whereas the federal government has provided $1 million. But we’ve done it because it’s the right thing to do.

TNM: At the end of August your government announced plans to build a rare earth elements processing plant in Saskatoon. What was behind this decision?

BE: We announced $31 million in funding for this processing facility that will be operated by the Saskatchewan Research Council, knowing global demand for rare earths is set to increase significantly over the next few decades.

Northern Saskatchewan has a number of high-grade, rare earth deposits, and significant potential for more discoveries. And the facility we have announced will form a model for commercial resource expansion. And it will create immediate and long-term jobs. It’s expected to be fully operational in late 2022 [and] construction is to begin this fall. It is going to be the first processing plant of its kind in Canada, and we hope it will stimulate the resource sector here in the province, and across the country.

TNM: How important is the mining sector to Saskatchewan’s economic future?

BE: It’s very important to the province. Exploration spending last year was over $200 million, and the mining sector generated $7.4 billion in sales. That’s potash sales, uranium, gold, coal, sodium chloride, sodium sulphate.

Last year, the mining sector accounted for 10% of provincial GDP. It directly employed about 10,000 people. And every job in the mining sector generates at least two jobs in supply and services. It’s very important for the north [of Saskatchewan], and for First Nations communities. Companies such as Cameco have traditionally been the largest employer of First Nations in the country. About 21% of Saskatchewan mine employees are Indigenous.

The mining sector is a very key driver of the economy here in Saskatchewan and one of the reasons that the impact of the pandemic has been perhaps less severe here than other places in the country. We have the strongest economic recovery in Canada. Our unemployment rate fell to just 7.9% in August, the lowest of all the provinces. Employment is now at 95.7% of what it was pre-pandemic.

Many of these companies are innovating, with new technologies. Such as selective potash solution mining, and in situ uranium extraction. Our growth plan targets are increasing the annual value of uranium sales to $2 billion by 2030, and the value of potash sales to $9 billion. So mining is a big component of our growth.

— This interview has been edited and condensed.