STANDING COMMITTEE ON RESOURCES
Mr. James DeWolfe
MRS. MURIEL BAILLIE (Chairman): Ladies and gentlemen, maybe we should get this meeting on the road. We will start with introducing the members. I will start off just to tell you that I am Muriel Baillie, MLA for Pictou West and I am sitting in for Jim DeWolfe this morning so you will have to be patient and bear with me, please.
[The committee members introduced themselves.]
MADAM CHAIRMAN: Before I continue, I do want to say that we have a new member on the committee this morning, Brooke Taylor, of course the member for that beautiful Colchester-Musquodoboit Valley. Welcome, Brooke. We will be having another member, a new member, too, Graham Steele, a new MLA.
So we will turn the meeting over to Mr. Terry Daniels. He is the Executive Director, Chamber of Mineral Resources.
MR. TERRY DANIELS: Thank you very much, Madam Chairman. Before I start I would like to introduce the gentlemen with me, starting with the gentleman on my right here.
MR. KIM CONRAD: Kim Conrad, Conrad Brothers Limited.
MR. DAN KAHN: Dan Kahn with LaFarge Canada in Brookfield, the beautiful Colchester County.
MADAM CHAIRMAN: Excuse me, sir. Would you speak a little louder into the mike.
MR. BROOKE TAYLOR: I would like to hear that again. (Laughter)
MR. KAHN: Dan Kahn, LeFarge Canada Incorporated, Pleasant Valley, Colchester County, the beautiful Colchester County.
MR. GORDON DICKIE: Gordon Dickie, Shaw Resources, halfway between Milford and Nine Mile River.
MR. JOHN O'SULLIVAN: John O'Sullivan, Rainbow Resources, Dartmouth.
MR. BYRON MACMILLAN: Byron MacMillan, Fundy Gypsum, Windsor.
MR. DANIELS: Ladies and gentlemen, we certainly appreciate this opportunity to be here today and you taking the time for us to talk to you about this very important industry in Nova Scotia, mining. Much of what I am going to say some of you know very well but I believe it is so important that it needs to be reiterated over and over again because miners tend to take a very low profile in our economic society and I think it is important that we take this opportunity to talk about the significance of the industry to Nova Scotia.
The value of production over the past decade continues to exceed $300 million, that is in constant U.S. dollars. If you convert that to current dollars, of course, it is much higher. During the past decade, employment in the industry has been up and down but has stayed between 3,800 and 5,600 people, that is directly employed in the industry. The average weekly wage for the mining sector continues to be the highest for any provincial economic sector. A recent report by Statistics Canada noted that the average salary was $792 for the mining sector compared with $627 for transportation and communications and $641 for manufacturing and those are weekly wages. Those, again, are expressed in constant 1992 dollars. So if you were to think of the current wage, it would be higher. It is furthermore significant to note that the majority of these high-paying jobs are located in rural areas of the province where they are much needed.
Nova Scotia has had a rich mining history that goes back over 300 years. The first gypsum mine in North America was near Windsor. Salt was mined near Malagash and French engineers first mined coal near Sydney in 1685. Sandstone from the quarries at Wallace was used to build the Parliament buildings in Ottawa. Barite was mined as early as 1865 and from 1904 to 1920 the majority of the barite produced in Canada came from this province. The mine in Walton was recognized as world-class during its years of operation. Between 1860 and 1939, gold production was 1.8 million ounces. At today's prices, that would be a value in excess of U.S. $468 million.
In 1998, Nova Scotia produced 7 million tons of gypsum, that is 80 per cent of product produced in Canada and 7 per cent of the world production, and 1 million tons of salt which is equal to 7 per cent of Canadian production. The province can boast of several large
aggregate producers. Martin Marietta located in Auld's Cove is the seventh largest in Canada with an annual production of 2 million tons. We also produce significant quantities of coal, limestone, dolomite, barite, dimension stone and peat. Equally important is the amount of value-added processing of minerals that takes place. These include cement manufacturing; clay products, bricks; pharmaceutical barite; wallboard; salt products; sand; crushed stone; and dimension stone.
Investment in exploration for new mineral deposits continues to fluctuate between $4 million and $5 million annually. The primary focus is industrial minerals. The production of natural gas from the offshore has sparked increased interest in salt and potash, which is an essential first step to find underground storage for natural gas. The areas staked for salt and potash exploration is up from 5,600 acres. It peaked at 30,000 acres. Currently there are about 20,000 acres under active exploration. This represents an expenditure of $2 million, approximately 40 per cent of the total exploration expenditures. These expenditures pale when compared to those of 1987 when $50 million was spent looking for minerals in this province.
A number of projects are at various stages of development. Lynx Minerals began mining their barite deposit near Scotsville in 1999. The mud grade product is used by the offshore petroleum industry. This company also plans to develop a large barite-fluoride deposit near Lake Ainslie.
Georgia-Pacific is proceeding to production with a gypsum mine at Melford, Inverness County. Tusket Mining Limited continues to work on their Murchyville gypsum deposit in the Musquodoboit Valley. Kaoclay Resources Incorporated continues to evaluate the economic viability of large kaolin and silica sand deposits in the Musquodoboit Valley. Black Bull Resources has completed an initial exploration and bulk sampling program for their Flintstone Rock, kaolin project in western Nova Scotia. C2C Mining Corporation is now planning to build a processing plant in the Annapolis Valley to process zeolites from their North Mountain deposits. Nar Resources and their partner, Titanium Corporation of Canada Limited, continue to explore for titanium-bearing sands in the Shubenacadie River. Newfoundland Goldbar Resources conducted a diamond-drilling program in 1999 and continues to evaluate the Dufferin gold deposit.
Later on in this presentation, in the questions and answers, I think we should hear from John O'Sullivan who is just back from the PDAC and he has a bit of encouraging news with respect to exploration in this province.
Society needs the mineral and metal products that we produce and recycle. Minerals and metals are and will continue to make an important contribution to our economy. They are fundamental components of our modern lifestyle. There is an old saying - this is as true today as it ever was - if you can't grow it, you have to mine it. A healthy mining industry in
Nova Scotia is an important cornerstone for economic prosperity. Early on in, we made reference to the direct positive impact of the industry in this province.
There are large, associated economic benefits that are a direct result of the mineral production. For example, figures released by the Mining Association of Canada suggested every coal mining job creates 3.7 additional jobs, while every dollar of Gross Domestic Product created by coal mining generates a total value of $7.17 throughout the economy. So you get a $7.17 multiplier for every dollar.
Furthermore, for every $1 billion in output created by the mining, smelting and refining sectors, direct demand for goods and services increases by $615 million. In effect, a strong mining industry is an engine for growth from small and medium-sized enterprises in the areas of mining services, consulting engineers and equipment sales.
Canada, in general, has experienced a period of sustained economic growth starting in 1993. This is due in large measure to the ability of the national government to eliminate the deficit and get the economic fundamentals right. Unfortunately, not all regions of the country have shared equally in the successes of this exercise. Some provincial governments are still struggling to get their houses in order.
We are encouraged by current efforts of this Legislature to curtail expenditures in your determination to eliminate deficit spending. It is our sincere hope that you may stay the course and finish what we realize is a most difficult assignment. We appreciate that sometimes doing the right thing does not contribute to the popularity of the government of the day with all segments of society.
The world economy has not been kind to mineral producers over the past few years. Despite the advances in the American economy of the past few years, Canadian mineral producers have faced low prices and heavy competition from international suppliers. The slow pace of the economy in Japan and Southeast Asia has been a major factor in the equation. Commodity prices are expected to continue to suffer as the U.S. economy continues to be sluggish. Prices cannot improve until the U.S. market bottoms out and commences a recovery. Hopefully, other economies that are struggling will follow an upward trend that begins south of the border.
Increased competition and rapid technological change have put pressure on our industry to adapt but opportunities have also been created for efficiencies and economic growth. We are investing in the right ideas. We are becoming industrial leaders in adaptation to new and innovative ways of doing business.
The gentlemen you see in this room today, the very fact that they are here and managing successful, competing mining companies in this province, in my view, attests to their ability to adapt and change in what is one heck of an environment with tremendous
pressures on the bottom line. If any of you have businesses that are struggling and you are looking for someone to give advice on how to pull it out, I would suggest you consult one of them because they have been there and done it, the fact that they are able to carry on.
One result of this is that Canadian mine expertise is now highly sought around the world. Foreign exploration, investment and development has grown significantly. This has been at the expense of domestic investment to a considerable extent. This shift has been driven by a number of things, including changes to government policy and mineral laws related to privatization of state-owned mineral properties, access to land, uncertain environmental processes and attractive geology in foreign lands.
The mineral industry has reached a plateau in Nova Scotia and stayed there over the past two years. Profit margins for existing producers are tight, exploration activity is a shadow of what it once was, yet there is bountiful scientific evidence that clearly indicates that there is a strong potential for an expanded industry. The challenge is to find ways to stimulate interests in exploring for and the development of new mineral deposits in Nova Scotia.
We enjoy some considerable strengths in this province and when I say our strengths I am comparing them internationally with foreign lands and so on because mining - if I could reiterate what I said before - is a global industry. Political boundaries are not of great consequence to them anymore, they chase opportunities wherever they find them, so my comments in this area are prefixed in the context of the world picture. In that context, Nova Scotia is well positioned to attract investment, the geology is favourable with excellent potential for certain minerals, especially zinc and gold, industrial minerals, structural materials and fuels.
We enjoy a stable, consistent legislative framework, complete with an up-to-date Mineral Resources Act and associated regulations. The geography and climate, supplemented by a good transportation network of rail and road service, with connections to superb, all-weather ports, make for relatively inexpensive access to markets.
The Department of Natural Resources maintains one of the best geological databases in Canada. The province has world-class deposits of industrial minerals with proven production records. The workforce here is highly skilled and there is a reputable service industry present in the form of consultants, contractors and suppliers. Costs associated with staking, recording fees, land acquisition, operating and mining is very attractive. There is an equity tax credit available to small business. The availability of natural gas in the offshore has interesting possibilities for added value.
The present Mining Matters annual conference is an excellent forum for promoting the industry. It is an opportunity to showcase the sophisticated science required to develop a mineral deposit. Having said that, we need to do some things if we want to make this industry show a return to the gross provincial product that it is capable of.
A significant new mineral find would energize the mineral industry in Nova Scotia. Investors prefer to put their dollars into projects where there is the most promise of success; therefore, we need to examine ways and means whereby we can encourage exploration in the province. There are areas of strong geological interest and we need to enhance interest in these areas within the exploration industry.
The mining industry can play a key role in creating a strong and robust economy. Increased levels of mining and mineral activity will create well-paid jobs and stimulate the service, supply and consulting sectors of the economy. Government revenues will be enhanced through an expansion of the tax base.
The recommendations outlined herein are designed to make Nova Scotia a province where the mining industry will want to come in search of new minerals. First, we need to send a strong signal from the government of this province that mineral exploration and development are welcome in Nova Scotia. It would go a long way to restoring confidence with investors. Manitoba, New Brunswick and Newfoundland are good examples of jurisdictions where this has been done with great results.
The process of approving permits and licences needs to be made to work in a timely manner. The concept of the one-window approach, designed to give industry one entry point to all agencies and departments, is a good one, however, it requires some review to ensure that it is working properly. There is always an inherent danger that it can become an excuse for one agency to simply play off against another agency for action not taken.
Natural Resources should be encouraged to take a more proactive stance and utilize their exceptional geoscience database to encourage mining and mineral exploration. A direct link should be made to the existing mineral policy. The promotional plan should emphasize opportunities to attract small and medium-scale mining companies to this province. Dedicated promotional events could be targetted at specific players.
Attendance of departmental staff at the Prospectors and Developers Association's annual general meeting and conference in Toronto, and what is known as the Cordilleran Round-Up in Vancouver, are absolutely essential if we want to attract investors. These are two events in Canada where the people who are making the decisions on where exploration dollars are spent, give priority to and they generally attend them. They are looking to see what is going on and where. That has a big impact on what jurisdiction they go to to spend those exploration dollars annually.
In mining, there is a tendency to think large; we need large deposits, so on and so forth, to cover the cost of investment and to ensure an adequate return on investment. In Nova Scotia, we are a small province; therefore, it is important that we think small in terms of what we want to do. To minimize conflicts with other land-use activities, emphasis should be placed on developing small and medium-sized mining operations. The geology and geography of the province lend themselves well to this concept. Experience in the European communities has proven that this approach can work well. Ireland, Sweden and Switzerland have had positive experiences with this approach. The regulatory regime must develop a process that can be managed both technically and financially by smaller-scale projects with lower rates of return for investors.
Access to land for exploration is essential if mineral exploration is to flourish. We need to develop a multiple purpose use concept with respect to land use. Before any lands are set aside for any special purpose, the mineral potential of the area under consideration should be thoroughly examined to determine its economic potential. Final decisions with respect to the creation of a restricted area should not preclude the possibility of mineral exploration. Rather, the emphasis should be on how to achieve conservation objectives and still permit other activities such as mineral exploration to take place.
We have made tremendous advances in technology and operating know-how that enable us to conduct mining-related activities with minimal impacts on the environment. In fact, the opportunity exists to actually enhance habitat for certain species, if producers are given an opportunity to design these features into their development plans. The Department of Natural Resources is to be commended for the fair, well-informed and objective manner in which they approached the land-use planning process over the past two years.
There is a requirement for an investment tax credit for persons who invest in mineral exploration. In November of last year, the federal government announced tax incentives for investors who put money into mineral exploration ventures. The plan is designed to encourage provincial governments to announce a parallel package. We urge you to implement an exploration tax credit plan similar to that being implemented in other provinces.
Underground mining regulations in Nova Scotia have been subject to extensive review and consultation. It is time to proceed to enact the changes that have been discussed without creating a discriminatory legislative process targetted at a single industry. A key element of this legislation has to be a recognition that coal mining requires a set of regulations that are separate and apart from other types of underground mining.
Provincial employees need to have the cloud of regulatory liability cleared so that they can effectively administer the law that you, the legislators, have put into effect to protect the interests of citizens. The government's response to the Westray Inquiry report needs to be reviewed to ensure that the recommendations and findings are practical, enforceable and
meet the test of actually affording additional protection to workers' health and safety. Concern over liability has forced Civil Service employees to take a very conservative, narrow approach to interpreting legislation as a result of the Westray Inquiry report that was prepared by Justice Richard.
There is a requirement for us to work together to better educate the general public and decision makers with respect to the essential role the mineral industry plays in our modern society. Public policy needs to pursue strategies that reflect the positive aspects that the presence of a healthy industry can make to the economic future of the province.
Finally, the provincial Core Library in Stellarton is a valuable mineral exploration asset. A plan to reassign the staff who operate it is a major concern to us. It is important that ways and means be found to operate this facility in a manner compatible with the objectives of those individuals, corporations and institutions who depend on the resources housed there to conduct their activities.
Madam Chairman, that is kind of an overall summary of things. We would be pleased to take any questions or discuss any matters that might be of interest to you.
MADAM CHAIRMAN: So it is open for questions. Mr. MacKinnon.
MR. RUSSELL MACKINNON: First of all, I would like to thank you for coming. I agree, I think mining is very important. The constituency I represent has a number of mining-related activities. In fact, the very first coal mine in North America was actually in my constituency, in the community of Port Morien. I believe that is the one you were referring to. As well, we have the Donkin coal mine; I think it is the largest in North America but has never produced a ton of coal yet. The potential is there anyway, whenever supply and demand take action. As well, in the Loch Lomond area, I think you are perhaps familiar with, I think it is dolomite. There is a lot of dolomite, there is the silver mine, and I could go on and on.
I noticed through your dissertation you raised concern about the impact on your industry of foreign activities, in particular the American market. What do you foresee in the short term and in the long term, in terms of the cause-and-effect relationship there, on your industry?
MR. MACMILLAN: Basically what we are into here right now is competition with not only synthetic gypsum from the flue gas desulphurization process and the coal-fired power generating stations in the U.S., but also we have large competition from the Spanish and now Mexico, as far as the gypsum industry is concerned. Gypsum being a low-cost commodity, every penny is critical to our operations.
MR. MACKINNON: Given the fact that 80 per cent of the product that is produced in Canada is from Nova Scotia, do you foresee that that percentage will decline because of these foreign pressures?
MR. MACMILLAN: Yes, quite likely.
MR. MACKINNON: To what extent?
MR. MACMILLAN: Right now, technology-wise, we are head and shoulders above Mexico, which is maintaining our competitive advantage right now. Once there is a little more investment in the Mexican market - you have cheap labour as compared to our labour, as we referred to, the highest wages in the industry - it is going to be critical.
MR. MACKINNON: Two other questions on that. One is in terms of the regulatory process. You seem to indicate that the regulatory process in Nova Scotia is a hindrance to mining activity.
MR. DANIELS: What we are saying, John O'Sullivan will expand on it. We are not saying it is a liability, I think what we are saying is it could stand some improvement. The regulatory process, in a sense it is well defined, but I think there are areas where it needs vast improvements to make it work.
MR. O'SULLIVAN: I am mostly associated with the exploration side of things rather than the mining, and I know in the past there has been a lot of trouble in terms of flip-flops on land access and things like that, things that were unclear. They are improving. I think the integrated resource management situation that went on the last couple of years has made vast improvement in land access. There is a lot of clarification now in terms of where you can go and where you can't go, and that has pleased the industry. It is making things a lot more attractive here.
[9:30 a.m.]
There have been some hold-ups in terms of permitting access to land and so on, through the department that are happening mainly, I think, because a lot of the decision making has been farmed out to other departments and you have an overlap. In fact, I would like to see a department of mines formed because in the old days you had mining inspectors who were familiar with their jobs; whereas now it has been passed on to the Department of Labour, they get consultants in and by the time you go through all of that there are delays. Quite often, the people who are dealing with the on-the-spot decision making are not people who are totally familiar with mining. So I think from that point of view, the power has to really be handed back more to the Department of Natural Resources.
MR. KAHN: Can I add to that a little bit? On the regulatory process, I guess some of the issues are maybe from the lack of regulations in place. In 1997, the government of the day said that they would implement new underground mining regulations. It is now 2001 and we are still not there, so anybody coming in from outside gets frustrated with the lack of knowledge of how to proceed. They don't know what the regulatory regime is going to be. We are working with an old Act, and also a new Act is being written. The regulators are trying to apply parts of both Acts to try to get through their process, so there are things like that.
The Mineral Resources Act has not been revised to take safety out due to this delay in the labour regulations. So there is a lot of uncertainty and frustration for companies that are used to clarity. They are used to coming in here and finding a way to work within the rules and regulations. Right now things keep changing, the objectives seem to keep changing a little bit.
MR. MACKINNON: On that, it is my understanding that there are still some issues that haven't been resolved with the federal government. I guess a lot of the mining, particularly coal mining, was a federal responsibility and I think the Westray Inquiry report, a lot of the responsibility for mining was transferred from the Department of Natural Resources over to the regulatory, the inspection process in particular, to the Department of Labour because of the potential conflicts within. As far as the Department of Mines, we know who eliminated the Department of Mines in a previous life, but that's yesterday.
One final question, and it speaks to the issue of mining safety as well, is the Occupational Health and Safety Act. How do you find this new Act working? Have the incidents of injury and death been reduced because of the new Act?
MR. DICKIE: Gordon Dickie from Shaw Resources. Within our company we have found that the dialogue that has gone on roughly over the last three years pertaining to Occupational Health and Safety has actually been quite effective. We find that the new regulations are achievable, we feel we are able to have our employees much more involved during Occupational Health and Safety committees, it works extremely well. Knock on wood, from our own company's perspective, we found that preventable accidents, injuries, et cetera, have all been reduced. There has been a significant, I suppose, increase in the level - on the part of our company - to ensure the health and safety of our workforce. I know I can speak for others in the industry as well. So we have seen a significant decrease in work-related injuries.
One of the most significant factors probably is the identification of near-miss type accidents. Using the pyramid scheme, for every thousand near-misses you will have three incidents and one serious injury resulting so, the idea being, if you can minimize the number of near-misses or at least analyse them to put the necessary measures in place, then that
seems to be the cornerstone on which this thing has been developed and we find it very effective.
MR. MACKINNON: As the former Minister of Labour, I am glad to see we did something right. (Laughter)
MADAM CHAIRMAN: Mr. Dooks.
MR. WILLIAM DOOKS: I represent the area of Eastern Shore. The Eastern Shore has had a bit of a history with gold deposits. I would like to ask the question, is the private sector doing any exploration on the Eastern Shore?
MR. O'SULLIVAN: Yes, as a matter of fact, just within the last week, Dufferin Mine has poured their first gold bar. There is renewed activity at the gold mine in Tangier. It will basically be surface exploration for the moment. There are a number of small-scale exploration programs in various areas around Isaacs Harbour, Country Harbour and . . .
MR. DOOKS: Would that be gold ones, once again?
MR. O'SULLIVAN: For gold exploration, yes.
MR. DOOKS: What about other minerals?
MR. O'SULLIVAN: There is not too much in the way of other minerals on the Eastern Shore right now.
MR. DOOKS: Do we have other minerals?
MR. O'SULLIVAN: Not in abundance, not on the Eastern Shore, it is predominantly gold there. I just returned from the Prospectors and Developers Association convention in Toronto. After a number of years of people pulling out of Canada and going overseas, there seems to be a renewed look at Canada again. I have seen more interest in Nova Scotia this year than I have for the last four years. It wouldn't surprise me if we saw renewed activity there again, especially with the mine at Dufferin pouring gold. That is certainly going to attract some new small operators in.
MR. DOOKS: I have been to that mine and it is very interesting, indeed. I haven't been in it but I have been out to the surface for sure. Thank you.
MADAM CHAIRMAN: Is that all Mr. Dooks?
MR. DOOKS: Yes.
MADAM CHAIRMAN: You might be a rich area yet.
MR. DOOKS: I hope so.
MADAM CHAIRMAN: Mr. Taylor.
MR. BROOKE TAYLOR: Madam Chairman, I would like to thank the Chamber of Mineral Resources for coming in this morning. Like the member for Cape Breton West, we are very appreciative of the mining industry, especially in Colchester-Musquodoboit Valley. We have a number of employers, there are literally aggregate quarries all over the place, some are owned by Basin and some are, of course, owned by Dillman Enterprises, National Gypsum - we share that with the neighbouring constituency of Hants East, Milford and Dutch Settlement - of course, we have a limestone quarry in Upper Musquodoboit and Tusket Mining out in Murchyville. Tusket Mining was mentioned during your presentation. I know they went from the exploratory stage to the development stage and then it seemed as if that project had stopped.
My colleague, the member for the Eastern Shore, is always concerned about employment opportunities, as well he should be and I understand there is a large minable reserve there. I don't know if any of the gentlemen are able to speak to that but we had heard initially, through the public hearings and the public consultation process at least, that there were going to be wonderful opportunities for that to come into fruition. It has gone so far and it seems like for the last two years at least, just from my point of view, that it has pretty much ceased. I wonder if anybody could comment on that? I should also mention we are very graced to have Lafarge in Brookfield, a long-time employer with very little employee disruptions for the last several decades.
MR. MACMILLAN: That is basically in private hands, I don't know where they stand with that right now but yes, there is a very large minable deposit of gypsum there. As it has gone through the public process there is no big secret. Initial plans were to ship it out of Sheet Harbour, I don't know what stage they are at there now. There is a German firm involved in that with a local contractor. I really don't know where it stands.
MR. TAYLOR: Madam Chairman, maybe I could direct my question to the gentleman who is on his feet. Kaoclay Resources Limited, they carried out a lot of exploration and the initial reports were very favourable. With all respect, we heard a lot of boasting that the job opportunities are unlimited if, in fact, it is deemed to be viable. I understand that assessments are being carried out relative to the economic viability of that project but again, I know you have to consider the deposit and the viability and all that stuff but the unemployment rate in eastern Halifax County, especially, is quite phenomenal when compared to different parts of HRM and we are lumped in that great big conglomerate. I am just wondering again, does anybody have any information on that particular initiative?
MR. DICKIE: Specifically on that particular initiative I suppose comments similar to what Byron said before, it is basically a publicly-traded company and the reports of their activity are part of the public record. One of the interesting things about the industrial mineral business that I am involved in is mines are where you find them, not where you want them. When you find a deposit, one of the differences between industrial minerals and other mineral commodities such as gold, silver, copper, lean or zinc is that in order to produce an industrial mineral commodity you need a few things. The first thing you need is a deposit. The second thing you need is that the quality of that deposit be equivalent or better than your competitor. A third thing you need is a market within transportation striking distance. All of those things come into play, particularly in the case of Kaoclay and ourselves and the gypsum business. You can have the largest deposit in the world, if it either doesn't meet quality requirements, or is in the wrong place, or costs too much to produce, or costs too much to upgrade, then there is nothing really that you can do. Basically, you have a deposit but you don't have a mine.
The other thing is that over time, just because you happen to have the best clay deposit, or the best silica deposit today, there is no guarantee that somebody is going to come along tomorrow and develop a better one. You have a choice, either you can change the way you do business, or you can try to find a better customer, or a different customer with different specifications. On the other hand if you have a gold mine and assuming that your cost for production is less than what you can get for an ounce of gold, you get a set amount for an ounce of gold, it is set on the London Metal Exchange. There is no such price setting for clay, for barite, for the other industrial minerals of which we have an abundance.
So I guess in a long answer to a short question, there isn't any activity on the past of Kaoclay currently, in terms of developing that deposit. They are expending some exploration dollars on properties they have acquired in the United States in the clay belt, in Georgia, particularly. I believe it has been stated by the company that they are hopeful that they might use the Musquodoboit clay as a blending stock with better quality clay they may find in that location. At this point that is all I know that has been in the public record.
MR. TAYLOR: That is appreciated, Madam Chairman. It just seems that we, being the residents in the communities of Musquodoboit Valley and down along the Eastern Shore had been led to believe, and maybe it was a misperception, in fact, that that find was extremely significant and the quality was quite excellent. During the presentation, Mr. Daniels talked about a significant new mineral find was needed to sort of energize the sector. He indicated that there are some promising areas of geological interest. I just wonder if you would be prepared to enlighten the committee as to where, in fact, you would like to see - you are the experts in the field? That is an open-ended question but as far as exploration goes, I understand there is a significant amount of capital spent during the exploration stages of any potential development. I am just wondering is there one particular project that interests you or you think could be potentially developed? We want to know where the jobs are.
MR. O'SULLIVAN: On the exploration scene right now, most of the effort is on industrial minerals. You have the Kaoclay situation, which is a good deposit but I think they are having a little trouble getting their grades and so on to meet specifications. They are still in it for the long term and I think that probably can be sorted out. On the other hand, there is another kaolin and quartz clay down in Yarmouth County, that is the Black Bull deposit, which is very high-grade silica and high-grade kaolin. It doesn't have the size potential that the Kaoclay deposit has but it looks like it is going to be a goer. They have some pretty high-grade stuff there.
Another development that has sort of come in in the last few years is the zeolites in the North Mountains. Zeolites are peculiar, funny little minerals that can absorb toxic minerals, they are good for kitty litter and things like that. They can also act as water purifiers and are used in a number of situations in water purification and general clean-ups. They were always known - as a matter of fact the provincial mineral is stilbite which is a zeolite - but never looked at too terribly commercially. Now C2C Resources has looked at them seriously and it looks like they may be coming into commercial production. There is a little bit of barite work going on in Cape Breton at Lake Ainslie and also the mine dumps at Walton are being looked at again, in terms of producing and it looks fairly favourable for that going ahead.
The metal mining exploration is very low at the moment but it looks like it is coming back, certainly, with the Dufferin Mine coming back onstream, there is going to be a renewed look at Nova Scotia gold mines. To get my own plug in, I have been doing a little bit of work in Cape Breton in Gabarus Bay way and we have come up with some very good numbers for molybdenum copper and gold in that area. It is a grass-roots prospect and whether it ever gets going to any great extent is another thing. If it develops into anything, if that goes, it will certainly attract a lot more exploration in there.
There is a certain amount of work being done in the Boisdale Hills for platinum and palladium. Platinum and palladium these days - other than diamonds - are the magic metals at the moment and everybody is looking for them.
I wouldn't say we have a very healthy metallic mineral exploration program here at the moment, but it certainly looks like it is improving from what it was. I don't think it will ever get up to the stage of the boom days in the late 1980's for gold, but certainly I think within the next three or four years we are going to see quite an increase in mineral exploration at the grass-roots level.
MR. TAYLOR: In the number of job opportunities that you talk about in the sector, do you consider the service and supply companies as being indirect jobs? Some of them exclusively serve the mining companies and, in fact, are not in business for any other purpose. Would those be considered indirect jobs?
MR. O'SULLIVAN: Yes.
MR. TAYLOR: Thank you.
MADAM CHAIRMAN: Mr. Epstein.
MR. HOWARD EPSTEIN: I have a few stray points that I wonder if you could help me with. The first has to do with underground storage for natural gas. There was some mention in your submission about salt caverns having this potential. I have been aware of this for some time but yet I am not aware that any contracts have been signed with anyone, either here or in New Brunswick, which is the other part of the line for the SOEP project, extracting natural gas for the offshore. Am I wrong on this? Have contracts been signed for underground storage at all?
MR. DANIELS: Not that I am aware of.
MR. EPSTEIN: Is there a reason that they haven't?
MR. DANIELS: I'm not sure that the evaluation process that has been going on for some time of these caverns - where we are short, we don't have expertise right here that can tell you or us precisely what the requirements are for storage. You would need somebody from the petroleum sector to do that for us. What we are aware of is a number of companies are out there looking at these deposits with a view to developing them, mining them out and then utilizing them for storage. As to what the specifications might be, in order to have a cavern that would meet their requirements, I don't know.
MR. KAHN: I believe there were regulations being developed for the last few years in anticipation of that requirement. Right now our gas goes through the pipeline to its markets. The requirement for storage would usually be at a processing plant that would require this temporary storage for its products. I think that until you see the market developed for the products that have been refined natural gases, the storage probably doesn't make sense to make it here. There is probably lots of capacity downstream, where the markets are, to do that storage right now.
The regulations are a challenging thing to write, to actually write the legislation for monitoring these storage caverns. What do you do with the salt that you actually brine out? Do you just throw it away or is that a product that you can actually use in the market? I think there are a number of things that because we are in the early stages of that industry you haven't seen the applications. There are some people who have made application to use caverns that are pre-existing in the Port Hawkesbury area, or at least they would like to make them available for people to use. They are caverns that were developed decades ago really. There is something going on but I don't think anyone is wanting to put it in the ground tomorrow.
MR. CONRAD: I was at a Kiwanis club meeting and a fellow named Steve Pillon from Sempra Gas gave a presentation. It was somewhat like what we were saying here. They figure that in about 10 years, they discussed having reserves in case there is an interruption in the supply of natural gas for Nova Scotia or Maine or wherever it will be shipped. He figured it would probably be 10 years before they would get to that point and get all the distribution or a lot of the distribution done. He said that mostly they would want that for reserve if they had a plant shut down for renovation or upgrade, but they figured at this rate it would be in about 10 years.
MR. EPSTEIN: I had another question about the zeolites on the North Mountain. My geology is pretty rusty, but aren't diamonds sometimes associated with zeolites?
MR. O'SULLIVAN: No, they occur in totally different geological settings.
MR. EPSTEIN: My apologies.
MR. O'SULLIVAN: Diamonds are usually intruded along high temperature, high velocity and discrete intrusions, whereas the zeolites are actually minerals that fill the gas bubbles, if you like, in lava flows.
MR. EPSTEIN: Mr. O'Sullivan, maybe you could help me on this, is there any potential for diamond mining in Nova Scotia?
MR. O'SULLIVAN: I would say very low. You typically need specific, I don't want to get into geological terms here, mafic rock types, ultramafic rock types. These, in Canada, are usually associated with the older Archaean rocks, the very old rocks. As a matter of fact, I can foresee Canada in the next 10 years becoming the biggest producer of diamonds in the world, but in Nova Scotia there is very little potential.
MR. EPSTEIN: But in the Northwest Territories. Thank you for your help on that. The other thing I wondered about had to do with the opportunities for displaced coalminers. It seems fairly clear that there is not a robust future for coal mining, underground coal mining in Nova Scotia. I guess what I am wondering is whether there are opportunities for the skills that any displaced coal miners have to move into other kinds of mining in Nova Scotia, without having to leave the province. I wonder if the skills are transferrable, and I wonder if you have seen any migration of displaced coal miners into other aspects of other kinds of mining?
MR. DANIELS: I guess there is a yes-no answer. Yes, their skills are transferrable, but I would suggest that no perhaps there hasn't been, that I am aware of, much movement of those displaced people into other mines. Are you fellows aware of it? I am unaware of it.
MR. MACMILLAN: Generally, I know speaking for our company, I am not so sure about the other companies, but we are running at a plus 90 per cent retention rate with our employees. They are all senior employees. We don't have hardly any turnover, so the amount of opportunity for displaced coal miners would be limited in the industry as it exists today unless there is an expansion or new mineral finds.
MR. EPSTEIN: So the problem is lack of opportunity, not that the skills are not transferrable, they are.
[10:00 a.m.]
MR. MACMILLAN: That is correct, the skills are absolutely transferrable, especially if you are an industrial-type mechanic, a diesel mechanic, an equipment operator, whatever it may have been.
MR. JOHN MACDONELL: Gentlemen, thank you for your presentation. In particular with Shaw Resources, I am aware of the impact of the industry in my constituency. We even try to claim the mastodon, if we can, too. (Laughter)
I am curious, I find the whole industry around minerals and the business of geology quite interesting. I don't have much of a background in that. I am assuming, like everything, not all gypsum is created equally. Something I have been curious about for a number of years, even before I ever got into this business, was watching the carloads of gypsum leave Nova Scotia, or I am assuming they are. I am wondering why we don't make gyproc or some other value-added product from the gypsum. I think I am probably directing this more to Mr. O'Sullivan or Mr. MacMillan. I just wonder if it is just not practical for a variety of reasons to do that, and if you can tell me if at one point they used to make gyproc or other products from the gypsum in Newfoundland? I heard that they used to and they don't anymore. I wonder if you could shed some light.
MR. MACMILLAN: Actually we do make wallboard in Nova Scotia. We make it at a plant in Point Tupper, owned by USG, the same company that owns both Fundy Gypsum and Little Narrows Gypsum. It was purchased from Louisiana Pacific a few years ago. As it stands right now basically that is all the market will demand, one board plant here. Yes, there is a board plant in Newfoundland, in Cornerbrook. It was recently purchased by Lafarge. Lafarge has become a big player in the wallboard industry. The other wallboard plant, there is one in Macadam, New Brunswick. It is a converted plywood plant that Georgia Pacific, I believe, had at one time. That is owned by West Rock, which is a subsidy of British Plaster. Generally, other than that the markets just don't dictate it. Plain and simple.
MR. MACDONELL: Point Tupper could produce all the wallboard for the Nova Scotia market.
MR. MACMILLAN: Exactly. Right now, I think they are running it about three days a week, producing wallboard. They are developing niche markets where they are going after the manufactured housing markets with what they call monster panels. Instead of 4' x 8' or 4' x 12' sheets, they might be 16' x 8' wide. It is a lot easier to manufacture. Other than that, all your wallboard plants are located in major cities, Boston, New York, Baltimore, Norfolk, Jacksonville, Montreal, that type of thing.
MR. MACDONELL: The quality of the gypsum, say Windsor's compared to Dutch Settlement, are we basically talking about the same product?
MR. MACMILLAN: No. In the gypsum industry we not only supply rock for the manufacture of wallboard, we also supply rock for the manufacture of your joint treatment, your mud, plasters. Plus we also supply gypsum and a hydrate or a combination thereof to the Portland cement industry. For instance, our plant in Little Narrows, only about half of their product actually goes to manufacture wallboard, the other half goes to manufacture Portland cement. They supply basically the whole Portland cement market from Hamilton east on the St. Lawrence.
Our company, we supply rock that goes into specialty, white plasters, white Portland cements. We have two sites, for lack of a better term, one site is producing gypsum at plus 90 per cent purity, 90 per cent gypsum; whereas, typically, your wallboard grade is somewhere around mid 80's to high 80's. It is generally a different colour, darker. It has some impurities in it.
MR. MACDONELL: I was thinking there was something else, before I make you sit down. (Laughter) Anyway, thank you. I appreciate that.
Madam Chairman, if I may, you had mentioned, Mr. Daniels, I think, the spin-offs from the coal industry. I read recently that the federal government was going to put $30 million into Devco. This may not be a question you or anybody here can answer, but I am curious as to your analysis, if you have ever had one, of why those Devco mines don't seem to make money.
MR. DANIELS: Let me respond this way. In a previous incarnation I spent 30 years as an economic policy advisor in the Government of Canada. One of my last assignments was to evaluate that project with a view as to why it didn't make money and what could be done to assist it in making money. Then I was retired. (Laughter)
MR. MACDONELL: We would like to know what you came up with before you were retired, if that was the reason. (Laughter)
MR. DANIELS: I would have to refer you to the Minister of Natural Resources, Canada, for that. Apart from my disengagement, I can't tell you any more on that.
MR. MACDONELL: But you think they can make money?
MR. DANIELS: There was a course of action that could be taken at one time that I believe would have made it a profitable mine. I don't know that those conditions exist today.
MR. KAHN: Well, some of the more recent issues there are just difficult mining conditions, very difficult underground conditions that have led to the closures.
MR. MACDONELL: You mean the roof falls, those types of things? (Interruption) But that doesn't necessarily mean that they have to be in that area. I mean, isn't there enough resource there that they don't need to be mining in areas where there are roof falls?
MR. KAHN: Yes, I think you would have to look closely at each of those mines. Some of the mines are extended distances from the surface and they are in areas that are the reserves. Those were the reserves that were defined and that is where they expected to mine. A lot of the rock is gone but there are other coal seams, for sure, in that area that could be looked at and should be looked at.
It affects us as an operation in Brookfield. We used to buy all our coal from Cape Breton Development Corporation. Now we are importing coal from places as far away as Venezuela and the cost of doing that is very high and it affects our operations, as well, when we don't have good solid operations there.
MR. MACDONELL: Is the quality that you are getting from Venezuela better than what there would be at Devco?
MR. KAHN: It is similar. We have very tight specifications of what we want for chemistry. We spec it very closely to what was coming from Cape Breton which was very successful for our operation.
MR. MACDONELL: Do you have a figure for what that would cost you, what the increased costs would be?
MR. KAHN: I don't, but it is substantially more by bringing it in those long distances. We would go, probably, from $50 or $60 a ton to $70 or $80.
MR. MACDONELL: Yes. That is quite a bit. One more?
MADAM CHAIRMAN: All right.
MR. MACDONELL: Mr. Kahn, I wonder if you could clarify a little bit, you were talking about companies looking at Nova Scotia and thinking of coming here to work. You mentioned the mining regulations, or regulations to come, and I wasn't clear about whether
it is the existing regulations that are a problem or the fact that there is a vacuum, that there is not really . . .
MR. KAHN: Well, one of the recommendations made in the Westray Inquiry report was to update all the underground mining regulations. They were quite old. We had separate Acts, though. We had a Coal Mining Act and underground mining regulations, as well. Both of them had been brought together and it makes it difficult for operators that are used to non-coal environments to actually meet some of the requirements. The terminologies are much different so you are bringing two things together. It gets confusing to interpret the Acts.
Then, at the same time, the Department of Labour has an Act that it is legally bound to use, but it also has these revised revisions that it has beside it saying, well, this is what the Act says but we would like you to do this, at the same time. So it doesn't make it very easy for people to know which way you are going and then the revised Act is constantly being revised as industry makes its . . .
MR. MACDONELL: Arguments about the lack of clarity.
MR. KAHN: Clarity. We have been asked to tell people that we think that the two regulations should be separate because there is such a distinct difference in the two industries.
MADAM CHAIRMAN: Mr. Boudreau.
MR. BRIAN BOUDREAU: Thank you, Madam Chairman. First of all, I want to thank you for coming in. I think this is the second time, if I am correct, you were in.
MR. DANIELS: Yes.
MR. BOUDREAU: Your presentation is very educational. I want to congratulate for that and, of course, your successes throughout the province in your industry.
You talk about restoring confidence with investors, similar to Manitoba, Newfoundland and New Brunswick. Can you just explain a little bit what initiative this particular government could take?
MR. DANIELS: Sure. Do you want to take that on, John, or what?
MR. O'SULLIVAN: Just a quick bit on the exploration side. On the exploration side, a lot in the mining industry depends on the attitude that comes from the province, in terms of attracting people in.
I have been in Nova Scotia, I guess, 21 years now, and over the last five or six years there have certainly been a number of items through politics and land access and so on which has scared a lot of mining companies away. Now, on top of that, there has been a lot of attraction overseas, in terms of mineral exploration in new areas such as Chile and Indonesia for a while, South Africa or general Africa, and Russia.
Now, a lot of people went overseas and got burned there, and they are starting to re-look at the Canadian potential again. Canada has actually gone down significantly in terms of mineral exploration expenditures overall, but people are taking a new look at Canada, especially in the light of platinum, diamonds and so on. For the first time in a long time, I can see a renewed optimism within the mining industry of Canada to Canadian potential. With that, they seem to be taking a renewed interest in Nova Scotia.
I think, certainly, the integrated resource management, the land management package over the last couple of years has done a lot to clarify the situation for mining companies. It makes the field a lot better to work in, where we know where we stand. I think you are going to see a lot of renewed interest in Nova Scotia in mineral exploration.
MR. DANIELS: A specific example of a plan that was carried out, for example, in New Brunswick a few years back. The previous Premier there set up a direct phone line. He went to Toronto - well, not just in mining but in all businesses - and said, New Brunswick is open for business. If you want to talk about locating in my province, here is a phone number you can phone and I, personally, will talk to you. He didn't answer the phone but you could phone and he would phone you back.
As a component of that program for mining, for example, he went to the Prospectors and Developers Association conference, which is the international forum for mineral exploration. He put on a rock fest. We have what they call an Atlantic Canada Rock Room, where all the Atlantic Provinces co-operated. The prospecting community go there, they show their wares, promote their products. This is what John would have been doing when he got the investors interested in his project, recently, for example.
The Premier walked in with a rock hammer in his hand and a prospector's vest on. He sat down and personally talked to the people. As I referred to earlier, this is where the managers of exploration, the guys who were charged with making the corporation expenditures on exploration go. We can't underestimate the impact of a Premier walking up to this guy and shaking his hand and saying, why don't you come to New Brunswick? There is a direct correlation between that walk through the Royal York Hotel and expenditures the next season in New Brunswick on mineral exploration.
Manitoba did a different spin on the same thing. They had a minister - their Minister of Mines, he personally - they drew up a program where - again, at the PDA and the Cordilleran Round-Up. They picked some other key events where the Minister of Mines took
his key staff in mines, he walked in and he says, okay, boys - to the same people - the people are going to write the cheque, they are going to tell the field crews where to go and the money gets spent.
He said, boys, why don't you come to Manitoba? Here is what we've got. I've got my people from the mines branch here and I am here to tell you that they are at their desk to serve you if you want to come to Manitoba to explore. You know, they are there to assist you, advise you, to tell you where the things are, and here is other information. Furthermore, if you have any major concerns, you want to talk to me, here is my card.
There is a lot of showmanship in it but there is a lot of that in attracting the dollar, and it works. (Laughter) I mean, it is incredible it might seem, but it works. You just can't underestimate the influence that you people in elected offices, ministers, have on those investment decisions. They are tremendous.
MR. DICKIE: Could I add a point to that, Madam Speaker?
MADAM CHAIRMAN: Yes, go ahead.
MR. DICKIE: Just one further point to that and Terry referred to it. I believe it is the last item in our brief, that in addition to the personal touch, also, the province provides various facilities that can assist in evaluating mineral properties. From a geological point of view, if you are looking at a property, you want to know if previous work had been done, if there had been previous drilling on the property so you can get a fresh look at the rock.
What this province has done, there was a very substantial core library facility in Stellarton that was established 15 years ago, I guess. Just lately, the staff from that facility had been laid off. It is basically up in the air how those facilities are going to be managed.
If we talk about level playing fields or competition for exploration dollars that are out there, the message that Nova Scotia has just sent is, we have this wonderful facility but we are going to close it. So if you want to come here, that's fine, but one key facility that we have provided for 15 years, unfortunately, is no longer available. So you have that backdrop compared to the backdrop that Mr. Daniels just indicated.
MR. O'SULLIVAN: I wonder if I could add to that?
MADAM CHAIRMAN: Yes.
MR. O'SULLIVAN: Just in the last month, I have staked some claims. On those claims are something like 30-odd drill holes. They have significant gold in them. The drill core is stored at Stellarton and those 35 holes, at an average of 100 metres a hole - that is 3.5 kilometres of drill core that is in storage. I need to get access to that and go through the
whole lot, inch by inch, to look at the thing. Now, that will probably require about a week's work in Stellarton and if the facilities are closed, my opportunity to do that is gone. Also, any investors that I have coming in on it won't get the opportunity to evaluate the core either. That is key in terms of evaluating the mineral deposit.
It would be a terrible shame if this core facility was closed because it is an invaluable asset and when you consider that drilled core costs on average about $20 a foot to drill and there must be God knows how many miles and miles of drill core on storage, it is an extremely valuable asset.
Just as a comparison, when the Buchans Mine closed 20 years ago, there was drilled core there from 1929. Every foot of drilled core that was ever drilled at Buchans, was stored and the government took it over and rehabilitated that setting and all the core is on record there. That is our main tool in evaluating old deposits.
MR. BOUDREAU: Madam Chairman, I have two more questions, actually. You indicate throughout the binder, at least I read some material in there where it indicates that you feel that there is poor internal communication between the departments. Now I know you indicated that a new Department of Mines would be the answer. However, given the fiscal restraints of this particular government, I don't think we are going to see a new Department of Mines. What I am asking, I guess, is how do you feel this particular government can improve the lines of communication to better assist your industry?
MR. DICKIE: I will try to start it off. The current, I guess, buzz phrase is one-window approach for the private sector in dealing with government. The snag is the window has a lot panes. So what can happen is, for example, if I wish to develop a sandpit in Nine Mile River, there are a number of regulatory processes that I need to go through. There are a number of different departments that I need to be in compliance with their various Acts and regulations and then when I get my business up and running, there are further groups of departments and Acts and regulations that I would need to follow. There are about eight different Acts altogether that I would need to be involved with.
One of the difficulties that can arise in the early going, in the one-window approach, is, if, for example, my one window, let's say, is the Department of Natural Resources - which it oftentimes is, more often than not in a mineral commodity like silica or something else other than sand and gravel, but if that is the one window - then in the various meetings we would have would be representatives from Labour, Environment and other government departments. Typically in meetings like that, then your project is evaluated and there are a fairly specific set of rules and requirements, time-frames and so on, that are involved.
However, one of the difficulties that we found lately - and I know there is another person here in our group who will probably want to speak to this - is that oftentimes if you have a particular project and let's say there are perhaps very specific environmental concerns
or considerations to take into account or if there is some other department that has specific concerns, one of the difficulties that we have today is with the concerns of the liability of civil servants and so on, the common sense and the specific application of certain requirements as to a specific project. If they are not exactly in compliance with the specified wording of a law or regulation, and there doesn't seem to be very much latitude for the technical civil servant on the ground to be able to make some adjustments to what may need to go in your operating permit permitted to take place, you can be told by these folks, gee, we really don't have latitude. This is what it says in the Act, this is what it says in the regulation and that is the way it is going to be. Sometimes these can be project breakers.
On the other hand, if we get back to a balance somewhere in the middle, between unbridled enthusiasm on the part of the civil servant to get the project going versus where we are on the other side, if you don't conform exactly to the rule of the law and regulation, then it might break your project. Somewhere in the middle, I guess, is what we are saying. We would like to see the balance re-established, and to be able to work with the technical civil servant to arrive at a sensible set of regulations and guidelines, specific to your project. Once you have the rules of the game laid down for your specific project, then all of us can say that we are certainly very pleased, able and willing to comply. The question is the discretion seems to be gone.
MR. BOUDREAU: I just have one other question, if I may. I believe it was last fall that your group came in, was it last fall?
MR. DANIELS: November 1999.
MR. BOUDREAU: I thought we wrote a letter to the minister, I believe it was something like that. Anyway, do you feel anything has been done to assist your industry since you last appeared before the committee?
MR. O'SULLIVAN: I will make a quick comment here. Land access has been clarified, and I think that is a very important point in terms of exploration. We now know where we can't go, and at least we know that to start with, rather than going in there and finding out afterwards we couldn't go there.
MR. DANIELS: I would say that the present government is a very open government and access is not a problem. I think overall they are generally supportive and want to be supportive. I appreciate there is a problem, because a lot of the things we want done cost dollars and we know they are in short supply. We wouldn't want to leave a negative impression. What we are saying is look, things could be better. There are some things that need to be done. That is where we are today. We are taking the high road here, and saying look, we know you are sending positive signals our way but signals aren't enough, we need some other things.
MR. BOUDREAU: Some action.
MR. DANIELS: Here they are. We need some real things. For example, the tax credit. The way the federal tax credit proposal is written and introduced, it also requires a provincial tax credit with it to get the attention of the investor. At the present time, Ontario, for example, and Quebec have gone with provincial tax credits that are in line with the federal tax credit. If you are an investor, that is where you want your money to go, into a project in one of those provinces, because that is where you maximize your tax return. It puts a province like Nova Scotia at a disadvantage.
The people who are drawing up projects may want to go down and invest in Mr. O'Sullivan's project, but the investor may say, sorry pal, we won't give you money to go there, we will give you money to go look at something in Ontario that may not be quite as attractive, simply because it is a better tax deal. It is a question of levelling the playing field. That is the type of thing we would like to see done.
MR. BOUDREAU: Madam Chairman, if I may, I would just like to indicate that my question wasn't intended to embarrass the government. In recognizing the importance of this industry within Nova Scotia, I think it is important to find new ways to ensure that we continue the success that this industry has had in the past. We have to find new ways in the future. Hopefully some of your comments here today will assist the government in providing those avenues.
[10:30 a.m.]
MR. DANIELS: The way we look at it, everything today requires a partnership. We think we have some good ideas that can and should be done. We are here, our message is look, we would like to sit down and work with you to accomplish certain things, and here is how we think it can be done, let's work together.
MADAM CHAIRMAN: Thank you for those remarks and thank you, Mr. Boudreau. We move now to Mr. Chipman.
MR. FRANK CHIPMAN: I just have a couple of statements to make. The zeolite mine is actually in my area, in Annapolis County, on the North Mountain, in case people weren't aware of that. In the past a gentleman had it for a gravel pit, I guess you would say. They used to go in and excavate it out of the ground, and they used to refer to it as rotten rock. I have purchased some of it myself. It comes in fairly large chunks, it is almost a brickish colour with flakes in it, and I am assuming that is the zeolite.
I didn't have that many calls on it actually, but I just wanted to say I think they did a good job of promoting what they were going to do, and letting people be aware of the project and how it was going to affect different individuals. I have a grape grower near that
site, and he was quite concerned there was going to be dust, and others claimed that the water supplies could be contaminated and this sort of thing because of blasting. There is not going to be any blasting at this site, they are going to go in and rip it with an excavator and truck it away. It will be processed somewhere else. That was just a statement I wanted to make.
I had one other question, a simple question I guess. I know that the Mineral Resources Act refers to minerals but it does not include gypsum, peat or limestone, and yet with industrial minerals further on it refers to those. Could somebody explain that?
MR. DICKIE: I can try that one. Typically, from a generic point of view, we would consider a mineral as something that you would dig out of the ground, process and be able to use it for some other purpose. The strict definition of mineral under the Act does not include things like sand and gravel, gypsum, peat, and other common materials that you might have for everyday use that typically wouldn't have, in the past, required as much processing.
A hundred years ago when the definitions were coming into play, those things were excluded; gypsum, I guess, because it was really used as land plaster and plastering material is a general building-type material. Since that time, of course - and Byron can speak to this - there is a gypsum tax or a levy that is applied by the government on gypsum. It is not by definition a mineral, but it is probably considered similar to other things defined as minerals.
MR. CHIPMAN: I just have one other question for Mr. O'Sullivan. The gold samples, the core as you referred to, I am assuming you have done evaluation and testing, what would be the percentage per ounce of gold? I should say tonnage.
MR. O'SULLIVAN: You can't put tonnage on things at the moment. Basically what you do is you take your drill core and analyse sections out of that drill core. Plot them up along the section and build up a number of sections, and you build it into a three dimensional model of your length, width and height of your ore body. The gold in Nova Scotia deposits is very variable. It is typically a coarse, nuggetty gold, which means that if you get a nugget of gold in a vein half an inch thick, you may travel several metres before you will even get another speck of gold. In terms of drilling it, you may get no gold in a productive vein or you may cut through a nugget in an unproductive vein.
It is a very difficult type of deposit to evaluate properly. The only thing you can do is once you get a number of these things is to sink a shaft on the vein, go down and actually follow the vein underground. It is very rare that you can predict any major tonnage without very close-based underground sampling.
MR. CHIPMAN: Who would be the beneficiary? Say you discovered gold on someone's property, what benefits would they receive? I know the resources are owned by the federal government or the province.
MR. O'SULLIVAN: Well, the property owner would have the ability to negotiate with the discoverer in terms of fair value for the property. I know of cases where people have actually gone underground and mined under some of these lands without disturbing the land, and the owner has gotten no compensation out of it. That's in Ireland. Generally, the owner of the property on which the mine is set up negotiates with the mining company in terms of a fair and equitable value for his property. Obviously, if you are going to make a lot of money out of the property, it automatically pushes the value of the property up considerably.
MR. CHIPMAN: I know a location where there was exploration done, many, many years ago, actually by a prospector not by a company, and I can show you excavations, not that deep, maybe five or six feet into this rock wall, and there is a seam of quartz there probably that wide and there were traces of - and I am not familiar with all the minerals but I know there was - graphite and there were sections of fool's gold. Is there a good indication that where there is fool's gold there is real gold?
MR. O'SULLIVAN: Not necessarily. You do get pyrite, which is fool's gold, associated with gold but where you get pyrite in itself, it doesn't give you an indication that there is gold there. Generally, in the area from Yarmouth to Canso, along the southern belt, the gold belt, there are a lot of quartz veins. Nova Scotia has had 65 mining districts. There is probably more gold scattered on an intermittent basis through Nova Scotia than many other places. Any of these quartz veins within that have the potential of having gold in them.
MR. CHIPMAN: Of significant quantity?
MR. O'SULLIVAN: Historically, no. There is the potential for small mines in Nova Scotia. You are not going to get any big bonanza mines but there is a chance of having small to medium-size deposits. Several deposits such as in Goldboro and Montague and Tangier, they are producing significant gold, but you are not going to find anything comparable to the stuff they are mining down in Nevada or any of those deposits.
MR. CHIPMAN: I wouldn't need a licence to pan for gold, would I, just to get a pan and go to a stream?
MR. O'SULLIVAN: No, but you could join our prospectors association for $20 and we have meetings every month. (Laughter)
MR. CHIPMAN: And what are the benefits? (Laughter)
MR. DANIELS: They tell you where to go.
MR. O'SULLIVAN: We have regular field trips. We have a prospectors association, which is sort of a semi-professional and semi-amateur organization. We probably have about 80 per cent weekend prospectors who have no interest in actually going into the business. It is a very informal group but we run regular field trips. We now have over 150 members.
MR. CHIPMAN: I shouldn't say this is folklore, but I read an article in a magazine quite a few years ago that apparently there was a native from Bear River and he used to leave - I don't know if you have heard this story or not, there was quite a write-up about it - his community every so often, and he retired very, very wealthy. They would always try to follow him. He died with the secret of where the gold was but apparently he had found gold somewhere and I have no idea . . .
MR. O'SULLIVAN: There is one of those guys in every province.
MR. CHIPMAN: Well, this guy had a name and I can't recall his name at the present, but people would attempt to follow him. He would go away every so often and come back with this gold and he died with the secret of where the gold was. There probably are areas that have significant . . .
MR. O'SULLIVAN: Oh, there are a number of areas where you can pick and high-grade and get a nice little bit of gold. Edgar Horne had the Double Nugget mine out in Renfrew and he picked away at that for years, ran it on a small-scale basis. He didn't do terribly well on it but he certainly had fun with it. Realistically, I think if you are an individual prospector and you are looking for the big bonanza, I don't think you are going to find it but you will certainly have fun at it.
MR. CHIPMAN: Now, if you join the prospectors association, do you get the recipe for sour dough bread?
MR. O'SULLIVAN: Oh, yes. As a matter of fact, we are doing up a cookbook. (Laughter)
MADAM CHAIRMAN: I must add, panning for gold is exciting, Frank. I had a trip to the Yukon and I did pan for gold and I am sorry I didn't belong the association but I did get gold, some little flecks. Mr. Taylor.
MR. TAYLOR: Madam Chairman, I knew my colleague to the right was quite talented, but every day I am learning something new about his skills. I am just curious, we had mentioned earlier in jest about the mastodon but several years ago, decades ago now I guess, over in the Carrolls Corner area, the skeletal remains were found of a mastodon. I am just wondering, obviously most of the findings, the archeology type discoveries, are probably by accident on most occasions. I am just wondering, what protocols are in place to deal with that type of thing?
MR. CONRAD: If it is going to interfere with production, you would put the blinders on I suppose. (Laughter)
MR. TAYLOR: I don't want to get into Aboriginal title and all that, but there are times where we read . . .
MR. MACMILLAN: They had found some mastodon bones in our deposit too and actually one section of the quarry is called Mastodon Ridge. The operators look for it, quite truthfully. Generally, where you are going to find them is in very old sinkholes and that type of thing, when you get into the dark black peaty stuff, that is when they start looking for the stuff. At that point, if there is anything found, everybody is on the radio and you call the Museum of Natural History and the archeologists would come out. Then they evaluate the site and you go from there.
MR. TAYLOR: Okay, that's fine, thank you. Why I suggested earlier on, it seems how this is such a diverse conversation that the honourable member for Hants East could have the back half of the mastodon. When they positioned it up at Mastodon Ridge, the private enterprise there, they put the rear end out next to Highway No. 102 and from time to time, I have an office right near and people come in and complain about that so I was hoping that John might take the back end. (Laughter)
Speaking of gold, several years ago, Moose River Gold Mines and Caribou Gold Mines, two communities in central Nova Scotia and on the Eastern Shore were thriving gold mining communities. Every once in a while you will hear a rumour or something that there has been a new discovery out in that neck of the woods or else there is some interest in an old discovery. Is there anything happening in either of those communities?
MR. O'SULLIVAN: It has been very quiet for the last three or four years, but I think things are starting to pick up now. Dufferin has picked up. I know one person has Moose River staked and he is looking at that again. A company at Mooseland is beginning a renewed activity in it again. Tangier is starting to move again. There is renewed activity, not on a very high level but I can see it picking up within the next couple of years.
We talked earlier on about mine disturbance and so on like that. I brought along a photograph which I will pass around here. It is an air photo of Tangier. Now, one centimetre is 100 metres, so I have an area marked here of the 1989 operation and of the area that was mined from the 1860's on until about 1904. It will show you the extent of the disruption of the area and how it has been rehabilitated, naturally, because in the early days, 1904, nobody made any attempt to clean up. There are a lot of shafts in there which are being reclaimed at the moment by the Department of Natural Resources, but this will give you an idea of how much damage a typical Nova Scotian mine does to the environment.
Under today's regulations, we have some pretty strict environmental rules. I think anybody who comes in here is more than prepared to deal with it.
MR. KAHN: Just a point on the gold mining. Almost all of our gold mining has been from underground and again, with unclear regulations, it is difficult for people to come in here to try to set up something that is generally on a world scale smaller or not the scale that they want to deal with. So you have smaller companies that would want to start it but, again, they need some good regulations that are workable.
MR. TAYLOR: Just a final question, Madam Chairman, a final question from me. The cement plant in Brookfield has been operating for years, I guess well over 30 years now.
MR. KAHN: Thirty-six years.
MR. TAYLOR: Yes. I am just curious, the components, the primary raw products that are needed to make cement, the Portland variety, I guess, is there any concern in the Brookfield operation about the raw product being available in . . .
MR. KAHN: Raw materials? Yes, Portland cement is mostly made of limestone and that is what we are mining in Brookfield is a limestone seam. The mine has been there for 36 years now. We have mined essentially what the original people who designed that plant had thought the life of the mine would be but there are extensions to this deposit. They are deeper underground, they are a little bit more challenging geologically to get at. We have streams that overlay them, things like that. So right now we are in the process of applying for stream diversion permits and we are also doing some studies as to how much of this material we could actually get.
Generally it is limestone and then you add certain things, iron, silica, alumina. Brookfield is a little different than most cement plants in that the limestone that exists in the ground has the right amount of iron, has the right amount of silica, has the right amount of alumina so we can essentially take limestone from the ground, put it through mills to pulverize it and feed it and make normal Portland cement. Now when you would do special cements like the Confederation Bridge, silica-fumed cement, then we start adding some things that aren't native but we would use products from Gordon Dickie's site, silica sands and that sort of thing. The coal actually brings certain properties so right now we are hoping that we have 20-plus years of reserves there. Economics will determine most of it and then environmental issues as well.
MADAM CHAIRMAN: Mr. Chisholm.
MR. RONALD CHISHOLM: Madam Chairman, when Mr. O'Sullivan was speaking earlier, I believe he mentioned Isaac's Harbour, Country Harbour areas for some exploration I believe it was. Is that a gold deposit they are looking for there?
MR. O'SULLIVAN: Yes, there are a number of previous producers in that area along the Goldboro area.
MR. RONALD CHISHOLM: Forest Hills.
MR. O'SULLIVAN: There has been very little work done over the last few years but it looks like it is picking up a little bit again. I have just picked up some property on the west side of Country Harbour up around Widow Point, which is an area that has had very little work on it. So I am going to be doing a program on that in the next little while.
MR. RONALD CHISHOLM: I also noticed, too, I guess a year ago there was some activity out around Lochaber, it is in Antigonish County. They were doing some testing there, drilling some holes. Do you have any idea what they were looking for there?
MR. O'SULLIVAN: I don't know. I am not familiar with that property.
MR. RONALD CHISHOLM: The Lochaber and Copper Lake areas.
MR. O'SULLIVAN: Yes, I think they were looking for copper in that area. I think that would have been the Titanium Corporation.
MR. RONALD CHISHOLM: I am not sure who it was. I met one of the guys one day at a . . .
MR. O'SULLIVAN: I don't know the results of their work.
MADAM CHAIRMAN: We will go back to Mr. Epstein.
MR. EPSTEIN: Mr. Daniels, when you came to us last in November 1999, one of the points made in your brief was, at that time, that you were hoping that the negotiations over land claims with the First Nations people might move along more quickly. I notice that item is not in this year's brief, so I am wondering if this was an oversight or whether you see progress or whether you have just thrown up you hands and given up. Can you tell us how you see the situation?
MR. DANIELS: Does anyone want to tackle that one? We had a great debate on that and the conclusion we came to was that we could serve no useful purpose in resolution of the debate and the settlement of land claims by entering into it here today. If we look at it, we see so many forces and factors, we believe it is an issue and we believe it is imperative that it be addressed and settled, the whole issue of aboriginal rights. Everybody seems to have an opinion on it and we thought that perhaps maybe you could do with a few less opinions, if I am expressing myself correctly, in terms of getting on with the job. It is a
horrendous task to take on; the courts put a new angle into it almost weekly, so I guess we thought we would step aside on that one.
MR. EPSTEIN: That is fine. Could we say this? Is it still your position that it would generally make your lives easier if this matter were settled?
MR. DANIELS: Absolutely.
MR. EPSTEIN: Okay, that is fine. I actually have a question for Mr. Dickie. What I am wondering about is the prospect for your core enterprise at Shaw, if I am defining it correctly, as being brickmaking. Could you tell us a little bit about how you see the future of the brick enterprise here? I am not even sure, for example, to what extent brick represents a proportion of the home construction market or how it is going in terms of commercial or industrial uses. Can you give us a bit of a perspective on that?
MR. DANIELS: I will try. The brick division of the Shaw Group is not a division that I work for but I have some familiarity with what goes on there. Shaw has been producing brick for 136 years or something like that. Over the course of that history, the business has had its ups and downs. The brick kiln at Lantz is a type of kiln that can produce more brick now than it currently is. The domestic market for brick has fallen somewhat in the last, probably, 15 years, as other less expensive materials are used, things like vinyl siding and other substitute materials that are less per square foot to install.
That being said, our company has however improved its markets for the brick that it makes. We sell brick overseas, we sell brick to the United States, albeit in fairly lesser amounts than are sold domestically. Brick tends to be a commodity that has a limited distance for which you can economically ship it, it is heavy and you fairly quickly reach the limits of where it is economic to enter other markets.
On the positive side, the brick that is made here is a hard-fired brick, it is extremely durable in this climate. There have been other brick types used in this marketplace, produced in Upper Canada and in other areas that have had significant problems with structural failures, freeze-thaw failures. I guess it is probably a commodity that is a core business for us. We would probably like it at this point if the domestic market was larger, because then our capacity would start to approach what the demand is, so the economics would come into play.
In terms of reserves in Lantz, we mine a clay there that's laid down about the same time that the mastodons fell in the sinkhole, to place the scene in age somewhere from between 10,000 and 20,000 years. Sizeable deposits and substantial reserves are certainly sufficient there to keep that operation going for decades.
MR. EPSTEIN: Thank you, that is a big help. Before you leave can I ask what is the general range of Shaw activities now?
MR. DICKIE: In terms of the Shaw Group itself?
MR. EPSTEIN: Yes.
MR. DICKIE: We are a fairly broad-based, privately-owned company that has a number of divisions. The core division is Shaw Brick and Pipe at Lantz. Shaw Resources produces mostly things like silica, concrete, sand, fly ash, pre-mixed products, wood pellets, cat litter. Shaw Wood produces pine furniture for Ikea in Cornwallis; Prestige Homes in Sussex, New Brunswick builds homes; Clayton Developments has a number of housing developments you are probably familiar with, starting in Clayton Park and Cole Harbour area and so on. Let's see if I have forgotten any, we have a transportation group that hauls our products, other people's products and we produce concrete pipe and concrete block.
MR. EPSTEIN: Good, thanks very much. One other . . .
MADAM CHAIRMAN: Excuse me, we are running out of time, Mr. Epstein, and we have two people after yourself.
MR. EPSTEIN: Fine with me, go ahead, I will pass.
MADAM CHAIRMAN: A short snapper from Mr. MacDonell.
MR. MACDONELL: I'll direct this to Mr. O'Sullivan. I am curious as to what his knowledge is of barite in Walton and he mentioned the mine dumps. I am curious as to what that . . .
MR. O'SULLIVAN: The Walton deposit was a very unique deposit. It was one of the largest individual barite mines in the world. It was around 4.8 million tons and associated with it were small pots of high-grade lead-zinc and silver. The silver grade within that section of the deposit was remarkable, it was around 13 ounces per ton, on average, mine grade. I was involved with a company in Ireland when the barite mine in Walton was going and associated with our lead-zinc deposit, we also had another barite deposit, which incidentally was of a very similar geological type and of very similar size. That company that was operating here came over and opened the barite mine in Ireland. They were probably two of the best barite mines in the world.
They mined down to about 1,600 feet and they had to give up in the end because they had this sand cover and they had gypsum and hydrate cover rock. There had been cavities with masses of sand in there and the sand did float into the mine and made the mine inoperable and they closed in 1978. On surface there they had some large dumps which were
there from the early days of mining. Some of the stuff on the dumps had quite large blocks of high-grade barite and they are being re-evaluated right now, in terms of operating. They just finished up a business plan in terms of going back into operation. It won't be on a large scale but certainly, it could be productive.
MADAM CHAIRMAN: Mr. Boudreau.
MR. BOUDREAU: Madam Chairman, just a quick question because we are almost out of time but reclaiming of abandoned sites, it is my opinion at least, your industry has experienced a level of success in that regard. Cape Breton has the tar ponds so I am wondering, does the chamber feel it can have an input into the clean-up of that particular site?
MR. DANIELS: I don't know that any of us are familiar with the specifics of what is required there but I can say that the mining industry as a whole is where you will find the very best of expertise, knowledge and experience in this area. Now having said that, I don't know what the application of that would be without some knowledge of the magnitude of the problem there. I am just familiar with what I read in the press so maybe some of the rest of you may want to comment. It would seem to me that if you are looking for a source of expertise, in terms of rehabilitation, the mining industry is where you should look. How you would apply that to your problem, I am not sure, without more knowledge.
MADAM CHAIRMAN: I want to add my thanks to you for coming in this morning. I was very happy to see your strengths, so many of them. Hopefully, we will be able to work with you to get done what needs to be done to make you stronger and it sounds very good for Nova Scotia and I do thank you very much.
MR. DANIELS: Well, we certainly appreciate the opportunity to be here and we would be pleased at any time to answer any questions. Furthermore, I would like to extend an open invitation on behalf of all our members that if any of you should ever want to visit one of our operations, we would be more than pleased to assist you in setting it up.
MADAM CHAIRMAN: Thank you and thanks to the members for making my job so easy this morning.
MR. BOUDREAU: Madam Chairman, if I may, I am prepared to move a motion, I guess, to send a letter to the Minister of Natural Resources and to the Minister of Finance, with a copy of these minutes today, in regard to the input that the industry has had and the suggestions that they have made.
MADAM CHAIRMAN: You have heard the motion. Would all those in favour of the motion please say Aye. Contrary minded, Nay.
The motion is carried.
Our next meeting date is April 24th.
MR. CHIPMAN: Time?
MRS. DARLENE HENRY (Legislative Committee Clerk): From 9:00 a.m. until 11:00 a.m. It is forestry issues, Dr. Eldon Gunn.
MADAM CHAIRMAN: The meeting is adjourned.
[The committee adjourned at 11:02 a.m.]
