Another massive Chinese-owned resource project is before Prime Minister Stephen Harper's cabinet.
Some time in the new year, four federal ministers are to decide how to conduct an environmental review for the Izok Corridor proposal. It could bring many billions of dollars into the Arctic but would also see development of open-pit mines, roads, ports and other facilities in the centre of calving grounds for the fragile Bathurst caribou herd.
"This is going to be the biggest issue," said Sally Fox, a spokeswoman for proponent MMG Minerals, a subsidiary of the Chinese state-owned Minmetals Resources Ltd.
It would be hard to exaggerate the proposal's scope. Centred at Izok Lake, about 260 kilometres southeast of Kugluktuk, the project would stretch throughout a vast swath of western Nunavut.
Izok Lake would have five separate underground and open-pit mines producing lead, zinc and copper. Another site at High Lake, 300 kilometres to the northeast, would have another three mines.
MMG also wants a processing plant that could handle 6,000 tonnes of ore a day, tank farms for 35 million litres of diesel, two permanent camps totalling 1,000 beds, airstrips and a 350-kilometre all-weather road with 70 bridges that would stretch from Izok Lake to Grays Bay on the central Arctic coast.
MMG plans a port there that could accommodate ships of up to 50,000 tonnes that would make 16 round trips a year — both east and west — through the Northwest Passage.
Izok Lake would be drained, the water dammed and diverted to a nearby lake. Three smaller lakes at High Lake would also be drained. Grays Bay would be substantially filled in.
The result would be a project producing 180,000 tonnes of zinc and another 50,000 tonnes of copper a year.
"That's not insignificant," Fox deadpanned.
The deposits are an old story. Izok was discovered in the late 1970s and High Lake dates back to the 1950s. They'd been owned by a half-dozen different companies before they were acquired by Minmetals in 2009.
Their time has come, said Fox.
"They're very much about our future confidence in zinc," she said from Melbourne, Australia, where MMG is headquartered. "We see in the next few years a number of major zinc mines will be coming off-line."
One of those is MMG's own Century mine, which produces 500,000 tonnes of zinc annually.
"Between the Izok Corridor project in Canada and our other project in Australia, we would be hoping that they would replace the zinc production of our Century mine," Fox said.
MMG estimates the Izok project would create about 1,100 jobs during construction and 710 permanent jobs. The mine life is estimated at 12 years, but Fox said exploration is likely to expand that.
But more than 400 individuals, organizations, aboriginal groups and governments registered concerns about the project with the Nunavut Impact Review Board.
"Both the Izok Lake mine site and the High Lake mine site, as well as the route of the Izok corridor all-weather road, occur either near to or on the Bathurst calving ground," wrote the government of the Northwest Territories.
"The proposed project may cause significant adverse effects on the ecosystem and wildlife habitat," wrote Environment Canada.
"We are concerned that our hunting and harvesting rights will be in jeopardy if the project is allowed to proceed as is," added the Lutsel K'e Dene.
Many pointed out that the Bathurst herd has only recently stabilized after a 90 per cent drop in the 1980s to today's 32,000 animals. That drop was steep and sustained enough for aboriginal groups to stop hunting the herd and many are leery of anything that could impede its recovery.
"The project may also cause some adverse socio-economic effects such as possible reductions and disruptions in harvesting opportunities," wrote the Kitikmeot Inuit Association, despite acknowledging its members are most likely to benefit from mining jobs.
The board also expressed concern about the growing industrial footprint in western Nunavut. There are now nine mines either operating or under review in the Kitikmeot region.
On Dec. 14, the board recommended Northern Development Minister John Duncan call full public hearings on the project.
Duncan and the three other ministries involved — Transport, Natural Resources and Fisheries and Oceans — have three choices. They can send the project back to MMG and ask for changes, they can choose to let the board run hearings itself or they can decide the project's effects would be broad enough to require the involvement of other governments in hearings.
There's no difference in length, who is able to appear or in intervener funding between the two types of hearings, said board chairman Ryan Barry.
Fox said MMG is aware of the centrality of caribou to residents in the area.
"They're absolutely essential to the local Inuit."
MMG has designed the road to make it as easy as possible for caribou to cross, she said, and the company is conducting field studies on how to further reduce the project's potential impact.
Fox said MMG is also aware of other potential stumbling blocks, such as Canadian sensitivity to major resource projects being owned by foreign governments. She said Minmet has left its Australian subsidiary alone to operate as it sees fit, despite the fact half of MMG's board is from Minmet.
"We're a bit of a different model for Chinese investment," said Fox. "We really run day-to-day quite separately."
MMG doesn't expect the Harper government's recent policy changes on investment by state-owned enterprises to affect Izok. The prime minister announced those changes at the same time Ottawa approved the takeovers of Nexen (TSX:NXY) by China National Offshore Oil Co. and Progress Energy Resources Corp. (TSX:PRQ) by Malaysia's Petronas.
"We're not acquiring and operating assets that are producing," she said. "We're in there as a long-term investor in a project that has been seen as quite marginal by others.
"The Harper government has noted the importance of mineral investment in this region and the importance of that to unlock benefits for the local communities. We certainly see that we're very aligned in our strategy with that."
However Ottawa decides to tackle the questions over Izok, mine production is a long way off.
MMG plans to ask for permission to start preliminary work on-site before the regulatory process is over, but even that wouldn't be until late 2014. The earliest the mines could be producing would be 2018.
Duncan has no deadline to respond to the board's request for a review. But, as the board notes in its letter to him, the ball is now in his court.
"The (board) looks forward to receiving your decision and will respond in a timely and efficient manner to your direction once received."
Earlier on HuffPost:
Here are five things to know about Canada's investment treaty with China which is expected to be ratified next week:<br> <strong><em>With files from CBC</em></strong>
5. Growing Investment From China
This FIPA is different from other FIPAs due to the sheer amount of investment China already has in Canada, said Gus Van Harten, an international investment law expert and associate professor at the Osgoode Hall Law School at York University, in an interview with CBC Radio's The House. Van Harten explained, the FIPAs Canada has in force are typically with countries who don't own major assets in Canada. However, under this treaty, Van Harten said Canadian taxpayers will assume "more of the risks and more of the constraints" than their Chinese counterparts to the degree that Chinese investments in Canada outpace Canadian investments the other way.
According to Van Harten, the deal doesn't deliver on market access and investor protection. "We come out on the losing side on both," said Van Harten. "We should insist on reciprocity. The treaty does not allow for market access except under the exisiting legal framework of each country." The problem with that, Van Harten said, is Canada's legal framework is "more open and less opaque" than China's existing legal framework which will benefit China more than it will benefit Canada.
3. Impact On The Provinces
Under this treaty, the investor-state mechanism is such that China could sue for decisions made by any level of government in Canada, if Chinese companies thought they were not being treated the same as Canadian ones. In other words, this deal could undermine the provinces "bargaining power," said Van Harten because "this very powerful arbitration process operates outside of the Canadian legal system and Canadian courts." Arbitration would happen behind closed doors, said Van Harten and if the arbitrators found Canada at fault, Canadian taxpayers could be left footing the bill. Several countries have already faced stiff punishment under such treaties. This, according to Van Harten, also calls into question whether the treaty is unconstitutional or not.
2. Opposition Parties
The Opposition New Democrats, Liberals and Greens are all calling on the federal government to study and debate the agreement instead of ratifying it and locking it in for the next 31 years without public consultation – as they can do. In an interview with CBC Radio's The House on Saturday, NDP MP Don Davies, who serves as the international trade critic, told host Evan Solomon that if the federal government ratifies the agreement as it is now, it will have "frozen in time a very lopsided deal." Davies said they have "received 60,000 emails in the last two weeks from Canadians who are concerned about this deal."
The federal government insists "this agreement includes reciprocal obligations" and is good for Canada, said the Conservative MP who tabled the FIPA with China. Also in an interview airing on CBC Radio's The House, Deepak Obhrai, the Parliamentary Secretary to the Minister of Foreign Affairs, said this FIPA with China "levels the playing field" between the two countries. Obhrai told Solomon, this agreement "give assurances to Canadian businesses that their investment in China is protected and they can do business in China because this is a deal that is open and treats our companies in each other's country on equal terms." The question we should all be asking ourselves Van Harten said, is "has Canada conceded something now that we were not prepared to concede under previous governments?" And according to Van Harten, the answer is "it's quite possible."
Here are a few details of the major investment deal coming soon between Canada and China, as well as a list of what CBC chief political correspondent Terry Milewski calls a "small blizzard of incremental agreements," signed in Beijing. <em>With files from CBC</em>. (Diego Azubel-PoolGetty Images)
The Big One: FIPA
Prime Minister Stephen Harper called the foreign investment promotion and protection agreement (FIPA) between Canada and China the first "comprehensive economic agreement" between the two countries. In fact, what was signed by Harper and Chinese Premier Wen Jaibao in Beijing is not the final deal, but a declaration of intent: Now it must be legally reviewed and ratified by both governments, which for Canada will mean a debate in the House of Commons. Once both countries complete this process, it will need to be formally signed to take effect. This deal will protect Canadians investing in China, as well as Chinese investors in Canada, from "discriminatory and arbitrary practices." Once in place, investors can have more confidence that rules will be enforced and valuable business deals will be subject to predictable legal practices. Harper told reporters in Beijing he "absolutely" expected that it will make a "practical difference." "The agreement does not override existing Canadian law in regard to foreign investment and foreign investment review," Harper said. "Those laws remain in place." Negotiations for this agreement took 18 years, and key players in manufacturing, mining and the financial sectors were consulted to get to this stage. It's not unusual for Canada to have this kind of an agreement with a trading partner. FIPAs are in force with 24 other countries that trade with Canada, and active negotiations are underway with 10 other countries, according to the government's announcement. (Diego Azubel-PoolGetty Images)
The 'Blizzard' (By Sector):
(AP Photo/Valentina Petrova)
- A new protocol, building on a 2010 agreement to restore Canada's market access to the Chinese market for Canadian beef following the 2003 BSE outbreak and resulting border closures, to allow industrial beef tallow (fat) to be imported for the first time in almost a decade. China used to be Canada's top export market for tallow ($31 million in 2002), and now Canada has a shot at a share of the $400 million in tallow China imports from around the world. - A memorandum of understanding (MOU) on canola research, to address a recent fungal disease in canola and rapeseed that threatens Canada's valuable trading relationship with China in canola. - On Tuesday, Chinese aquaculture feed company Tongwei announced it will increase its purchase of Canadian canola by up to $240 million per year by 2015. (DAVID BUSTON/AFP/Getty Images)
- A MOU between Natural Resources Canada and the Chinese Academy of Sciences to collaborate on scientific research on sustainable development of natural resources. The government release touts benefits including new technologies for resource firms, carbon emissions reduction strategies, reduced environmental impacts and natural hazards from resource development, and new opportunities for Canadian suppliers of equipment and services. - A MOU spelling out a "framework" for Parks Canada and China's state forestry administration to collaborate and share scientific expertise in the management of national parks, natural reserves and other protected areas. The agreement includes language around ecological restoration, conservation measures for endangered wildlife, wetlands development, and the preservation of forests and wetlands. (<a href="http://www.flickr.com/photos/47096398@N08/" target="_hplink">Flickr: eleephotography</a>)
- A continuation of the MOU, first signed in 2001 and renewed in 2006, on energy co-operation to "engage China on energy issues" through a Canada-China joint working group on energy co-operation, chaired by Natural Resources Canada and China's national energy administration, which is responsible for Chinese energy policy. The working group oversees joint research projects, exchange of expertise, and co-operation between energy companies in both countries, including the promotion of energy efficiency and renewables. It aims to both attract capital investment and improve market access for Canadian energy resources and technology. (MARK RALSTON/AFP/Getty Images)
Science and Technology
- Approval of seven projects, valued at $10 million, under the Canada-China framework for co-operation on science and technology and innovation, including: a diagnostic kit for acute kidney injuries, a wind energy seawater desalination system, a waste heat-recovery system to help oil refineries consume less fuel, new solar cells for renewable energy panels, a real-time multi-sensor navigational tracking device for hand-held devices, a blue-green algae bloom warning system and "next generation" large-scale geographic information systems. - Two more calls for proposals, valued at $18 million ($9 million from each country) for joint research under the same framework. These proposals are for the development of "innovations with high commercial potential" in the areas of human vaccines and clean automotive transportation. The Canada-China joint committee on science and technology, made up of individuals from industry, academia and government, sets the priorities and oversees these projects. (To date, 21 projects ranging from nuclear power to AIDS drugs, to clean technologies for pulp and paper have received some $28 million in funding.) (TOSHIFUMI KITAMURA/AFP/Getty Images)
- A renewed MOU extending and modifying the Canada-China scholars' exchange program, which has seen 900 students travel between Canada and China since 1973. New eligibility rules and scholarships will be in place for the next round of competitions in 2012, including eight to 12 Canadian scholarships for Chinese professionals and 20 awards for Canadian university students. (<a href="http://www.flickr.com/photos/plutor/" target="_hplink">Flickr: Plutor</a>)