Noront Initiates Co-ordinated Environmental Assessment Review Process in the Ring of Fire

Noront Resources Ltd. submitted a draft environmental assessment report (the “Report”) for its project located in Northern Ontario’s Ring of Fire (the “Eagles Nest Project”).  The Report responds to a federal-provincial co-ordinated environmental assessment process, governed by the Ontario Environmental Assessment Act (EAA) and former Canadian Environmental Assessment Act (CEAA).  The assessment process is intended to identify, mitigate, and possibly prevent negative effects that designated projects may have on the surrounding environment.  For the Eagles Nest Project to proceed, federal and provincial governments must approve it.  If the project is approved, Noront expects commercial production at Eagles Nest by 2017/2018.

About Eagles Nest Project

In 2007, Noront discovered a high-grade nickel-copperplatinum group element deposit in the area now known as the Eagles Nest. The Eagles Nest is located approximately 540 kilometres north of the City of Thunder Bay and 240 kilometres west of James Bay, in an area called the Ring of Fire. Noront is proposing to construct an underground mine, an on-site mine mill, and a facility for groundwater extraction. Initial capital investment to build the mine and accessory infrastructure is estimated to be $734 million. The anticipated life of the mine is approximately 11 years, with the potential for more than 9 additional years. Noront expects to create 700 jobs during construction. It is expected that the mine will employ approximately 300 people and create an additional 1,200 spinoff jobs once it is fully operational.

Federal-Provincial Co-ordination Process

Proposed mining projects in the Ring of Fire require different approvals under federal and provincial legislation. The federal government and the Province of Ontario have entered into a co-operation agreement to increase efficiency in obtaining environmental approvals. Because of the co-operation agreement:

• consultation opportunities will be co-ordinated as much as possible;
• there will generally be only one set of technical studies required; and
• where possible, Aboriginal groups and other stakeholders will only need to submit one set of comments on similar documents.

Although components of a mining project may trigger provincial environmental assessment obligations, the EAA does not usually apply to an entire mining project.  Nevertheless, Noront has entered into a voluntary agreement with the Ontario Ministry of the Environment (MOE) to subject the entire Eagles Nest Project to EAA requirements. Noront believes that this will result in a more efficient co-ordination with parallel federal requirements.

Approval Process Moving Forward

While Noront has taken a significant step forward by submitting the Report, a number of obstacles lie ahead.  Critical next steps to gain approval are:

• MOE Review - The MOE will review the Report over seven weeks with Aboriginal communities, the public, and government technical staff having an opportunity to comment.
• Comprehensive Study Report (CSR) - During the seven-week comment period, the Canadian Environmental Assessment Agency (the “Agency”) will prepare a draft CSR, which will provide Aboriginal groups and government technical reviewers an opportunity to comment. The CSR is the report which the Federal Minister of the Environment will ultimately rely on to make a final determination on whether or not to approve the Eagles Nest Project.
• Ministry Review - At the end of the seven week comment period, the MOE will publish a Ministry Review indicating whether (1) Noront met the EAA requirements; (2) the environmental assessment was prepared in accordance with the approved Terms of Reference (being a work plan for preparing the environmental assessment and satisfying public consultation requirements); and (3) the proposal is in the public interest.
• Comment Period - After the Ministry Review is published, a five-week period will commence where Aboriginal groups, the public, and government technical reviewers may provide comments.
• Submitting CSR - The Agency will submit the CSR to the federal Minister of the Environment where the public and Aboriginal groups will have a further opportunity to review and comment.
• Provincial Determination - The MOE will make a recommendation to the provincial Minister of the Environment which, with the approval of the Ontario Cabinet, may approve the project with or without conditions or refuse the project outright.
• Federal Determination - The federal Minister of the Environment will either determine that the project (1) will not likely cause significant adverse environmental effects, in which case federal permits and authorizations may be issued; or (2) is likely to cause significant adverse environmental effects, in which case no required permits or authorizations may be issued.

In a time where mining activity in Canada has slowed down, it will be interesting to see how the co-ordinated review process will work with the various stakeholders.  Just recently, federal cabinet approved the expansion of Jackpine Mine in Northern Alberta even though the project was found to cause significant adverse environmental effects.  Arguably, federal cabinet approved the Jackpine Mine expansion in part because of the economic benefits it would bring to the region, Alberta, and Canada. How federal and provincial levels of government will balance environmental concerns against economic benefits for the Eagles Nest Project is unclear, but will likely be an important factor in the decision-making process.