Commentary: Eight reasons why Taseko’s New Prosperity will fail

Investors hoping to cash in on Taseko Mines’ second bid to develop the Prosperity copper-gold mine (“New Prosperity”) should think back a year. At that time, despite assurances from the company and its president that the original Prosperity mine proposal would be accepted, it was soundly rejected by the federal government and the company’s share price plunged.

With New Prosperity, once again there is a proposal before the federal government’s Canadian Environmental Assessment Agency (CEAA) and the company’s president is saying he is confident it will be approved. And once again the federal government will have no choice but to reject it.

Here are eight reasons why the New Prosperity bid will fail:

1. The CEAA Review Panel report last year on the original Prosperity proposal was not almost the same as the B.C. Environmental Assessment Office’s rubber-stamp approval of the project – not even close.

The CEAA report found immitigable, devastating impacts to the local fish stocks and endangered grizzly populations, and to the existing and future rights of the Tsilhqot’in and its youth. The problems were so serious that then Environment Minister Jim Prentice described the report’s findings as “scathing” and “probably the most condemning I have ever read.”

2. The company knows its new option is as bad as, or worse than, the one that was rejected.

Brian Battison, Taseko’s vice-president of corporate affairs, made it clear in his opening presentation at the CEAA Review Panel hearings on March 22, 2010, when he stated: “Developing Prosperity means draining Fish Lake. We wish it were otherwise. We searched hard for a different way, a way to retain the lake and have the mine. But there is no viable alternative. The lake and the deposit sit side by side. It is not possible to have one without the loss of the other.”

And the point was emphasized by Taseko’s vice-president of engineering, Scott Jones, who stated: “What happens to the water quality in Fish Lake, if you try to preserve that body of water with the tailings facility right up against it, is that over time the water quality in Fish Lake will become equivalent to the water quality in the pore water of the tailings facility, particularly when it’s close.”

3. “New” Prosperity is, in fact, not a new proposal and does not address the issues that led to last year’s rejection. New Prosperity is simply “Mine Development Plan 2” in the original proposal. Taseko confirms this on page 20 of its new project submission, where it states: “Option 2 is the basis for the New Prosperity design… The concepts that lead to the configuration of MDP Option 2 have been utilized to develop the project description currently being proposed.”

This second option was already looked at and rejected last year by the company, Environment Canada and the CEAA Review Panel. For example, on page 65 of the CEAA report, it states: “The panel “agrees with the observations made by Taseko and Environment Canada that Mine Development Plans 1 and 2 would result in greater long-term environmental risk than the preferred alternative.”

4. The additional $300 million in proposed spending for New Prosperity is not for previously unheard-of mitigation to make this alternative acceptable.

Taseko writes in its economic statement: “The new development design, predicated on higher long term prices for both copper and gold, would result in a direct increase in capital costs of $200 million to purchase additional mining equipment to relocate the tailings dam and to move the mine waste around Fish Lake to new locations. This redesign also adds $100 million in direct extra operating costs over the 20-year mine life to accomplish that task.”

This new spending, by the way, is $37 million less than the company last year said it would have to spend just to go with the option that it and the review panel agreed would be worse for the environment.

5. The federal government is required under Canada’s Constitution to protect First Nations, which have been found to be under serious threat in this case, and is internationally committed to do so under the United Nations Declaration on the Rights of Indigenous Peoples. These duties are every bit as clear regarding this resubmitted proposal.

6. Approving this mine would show that the environmental-approval process is meaningless, and would demonstrate that governments are ignoring their obligations. The Assembly of First Nations’ national chiefs-in-assembly made this crystal clear this summer in their resolution of support for the Tsilhqot’in.

7. The Fisheries and Oceans Canada (DFO) ministry has opposed this project since it was first proposed in 1995. It soundly rejected it again last year. It has no reason to support it now, and nor does the Environment Canada ministry, which, as the CEAA report notes, found last year that option 2 would be worse than the original bid.

8. There are many other, more-worthy mining projects to be considered – the vast majority of which, if not all, will require working with aboriginal communities. Natural Resources Canada estimates there is $350-billion to $500-billion worth of such potential projects in Canada.

Bad project 

We’ve shown here why New Prosperity cannot get federal approval. The question is, will it be rejected on Nov. 7 when the CEAA announces the next steps, or will it first have to go through a pointless, costly and divisive new review?

This is simply a bad project that should never have gotten this far. Why would governments, industry and investors want to go backwards by pushing through this confrontational proposal and, in doing so, rebuff efforts by First Nations to find a way to create a better mining system that would benefit everyone in the long run?

– The author is the elected chief of the Xeni Gwet’in band of the Tsilhqot’in First Nation, whose territory largely lies to the west of the Fraser River and Williams Lake, B.C., where Taseko Mines’ New Prosperity copper-gold project is located. See www.xeni.ca for more.

Editor’s note: Read the response from Taseko Mines’ president and CEO Russell Hallbauer here.