Vol. 143, No. 12 — June 10, 2009

Registration

SOR/2009-156 May 28, 2009

FISHERIES ACT

Regulations Amending the Metal Mining Effluent Regulations

P.C. 2009-848 May 28, 2009

Her Excellency the Governor General in Council, on the recommendation of the Minister of Fisheries and Oceans, pursuant to subsection 36(5) of the Fisheries Act (see footnote a), hereby makes the annexed Regulations Amending the Metal Mining Effluent Regulations.

REGULATIONS AMENDING THE METAL MINING EFFLUENT REGULATIONS

AMENDMENTS

1. (1) The definitions “effluent”, “mine” and the portion of the definition “operations area” before paragraph (a) in subsection 1(1) of the Metal Mining Effluent Regulations (see footnote 1) are replaced by the following:

“effluent” means an effluent — hydrometallurgical facility effluent, milling facility effluent, mine water effluent, tailings impoundment area effluent, treatment pond effluent, seepage and surface drainage, treatment facility effluent other than effluent from a sewage treatment facility — that contains a deleterious substance. (effluent)

“mine” means hydrometallurgical, milling, or mining facilities that are designed or used to produce a metal, a metal concentrate or an ore from which a metal or metal concentrate may be produced or any facilities, including smelters, pelletizing plants, sintering plants, refineries and acid plants, where any effluent from the facility is combined with the effluent from hydrometallurgy, milling or mining. (mine)

“operations area” means all the land and works that are used or have been used in conjunction with a hydrometallurgical, milling or mining activity, including

(2) Subsection 1(1) of the Regulations is amended by adding the following in alphabetical order:

“hydrometallurgical facility effluent” means effluent from the acidic leaching, solution concentration and recovery of metals by means of aqueous chemical methods, tailings slurries, and all other effluents deposited from a hydrometallurgical facility. (effluent d’installations d’hydrométallurgie)

“hydrometallurgy” means the production of a metal by means of aqueous chemical methods for acidic leaching, solution concentration and recovery of metals from metal-bearing minerals other than metal-bearing minerals that have been thermally pre-treated or blended with metal-bearing minerals that have been thermally pre-treated. (hydrométallurgie)

2. Schedule 2 to the Regulations is amended by adding the following after item 14:

Item	Column 1 Water or Place	Column 2 Description
15.	Sandy Pond, Newfoundland and Labrador	Sandy Pond, located at 47°25′33″ north latitude and 53°46′52″ west longitude, on the Avalon Peninsula, approximately 3 km east southeast of the town of Long Harbour-Mount Arlington Heights, Newfoundland and Labrador. More precisely, the area bounded by (a) the contour of elevation around Sandy Pond at the 137 m level, and (b) the dams built at the north end of Sandy Pond.

COMING INTO FORCE

3. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue: Vale Inco Newfoundland and Labrador Ltd. (hereinafter referred to as Vale Inco NL) will construct, operate, and eventually decommission a nickel-processing facility in Long Harbour-Mount Arlington Heights, Newfoundland and Labrador. This facility will use hydrometallurgy as defined by the amendments to the Metal Mining Effluent Regulations (MMER). Currently, the MMER do not apply to facilities using these hydrometallurgical processes, even though the solid wastes and effluents are similar to those produced by metal mining and milling processes. This type of hydrometallurgy is an emerging technology which generates significantly fewer air emissions compared to conventional technology. The solid waste generated by the Vale Inco NL hydrometallurgical facility will produce acid if exposed to air. To prevent acid generation and related pollution, disposal of this solid waste under water in Sandy Pond was assessed by Vale Inco NL as the best available option.

A federal environmental assessment of the Vale Inco NL hydrometallurgical facility was completed in July 2008 and included a detailed assessment of alternatives for the disposal of solid waste from the hydrometallurgical facility. The assessment concluded that the use of Sandy Pond as a tailing impoundment area (TIA) is the best alternative on an environmental, technical and socio-economic basis. The environmental assessment also concluded: “with consideration to the mitigations that will be implemented during construction and operation, the project is not likely to cause significant adverse environmental effects.”

Since hydrometallurgical processing is an emerging technology, Fisheries and Oceans Canada recommended that the MMER be amended to ensure that fish, fish habitat and the use of fisheries resources are protected from the effluents generated by these facilities.

Description: The Regulations Amending the Metal Mining Effluent Regulations (hereinafter referred to as the Amendments)

• expand the scope of application of the MMER to include certain hydrometallurgical facilities by amending the definitions of “mine,” “operations area” and “effluent”; and
• designate Sandy Pond as a TIA by adding it to Schedule 2 of the MMER.

Currently, there are no facilities in Canada that use hydrometallurgy as defined in the Amendments to the MMER. However, the Amendments will apply to the Vale Inco NL facility and to any other facilities developed in the future that will use hydrometallurgy as defined in the Amendments. It should be noted that any future proposal to use a natural water body as a TIA for a hydrometallurgical facility will require a separate regulatory process, including a thorough environmental assessment, a rigorous evaluation of alternatives for waste disposal and amendments to the MMER.

Cost-benefit statement: The total estimated incremental cost to industry for the Vale Inco NL hydrometallurgical facility associated with the Amendments is $65.6 million (over the 25 year period discounted at 8%). This estimate includes incremental capital and operating costs of $58.1 million for the TIA, monitoring and reporting as prescribed in the MMER and the implementation of a fish habitat compensation plan. An additional $7.5 million will be incurred for the closure and post-closure monitoring of the hydrometallurgical facility.

The incremental cost to the Government of Canada associated with compliance and enforcement for the Amendments is estimated to be $56,200 over the 25-year period.

The total incremental costs to industry and government are estimated to be $65.6 million (discounted at 8%) over the 25-year period.

There will be a loss of fish habitat in Sandy Pond equivalent to 18.1 hectares (ha) as a result of the Amendments. However, Vale Inco NL is required, under section 27.1 of the MMER, to implement a fish habitat compensation plan to offset this loss. It is expected that there will be a net gain equivalent to approximately two ha of fish habitat as a result of the implementation of the fish habitat compensation plan.

Business and consumer impacts: The designation of Sandy Pond as a TIA will allow Vale Inco NL to build and operate the hydrometallurgical facility. The Amendments are not expected to place any additional administrative burden on Vale Inco NL or affect its competitiveness in the domestic and international markets.

Domestic and international coordination and cooperation: Consultations with the Government of Newfoundland and Labrador, the local communities, national Aboriginal organizations, industry, other government departments and environmental groups were conducted. The provincial and local governments strongly support the project and the use of Sandy Pond as a TIA. The project is also supported by the majority of local residents. However, some environmental and Aboriginal groups have expressed opposition to the use of natural fish-bearing water bodies as TIAs and this view is shared by two local residents.

Issue

Vale Inco NL will construct and operate a nickel-processing facility in Long Harbour-Mount Arlington Heights, Newfoundland and Labrador. The company will use a hydrometallurgical process at this facility, estimated to have an operational life of at least 15 years. Hydrometallurgical processes are used to recover metals from ore concentrates or other sources using water-based solutions at low temperature. Hydrometallurgy is an alternative to conventional pyrometallurgical smelting, which uses very high temperatures to recover metals and generates significantly more air pollution than hydrometallurgy. Although the solid wastes and effluents generated by certain hydrometallurgical facilities can be similar to those from metal mining and milling operations, these types of facilities are currently not regulated under the MMER.

The acid-generating solid waste from the Vale Inco NL hydrometallurgical facility will be disposed under water in Sandy Pond, located about 2 km from the facility. This disposal method has been demonstrated to be an effective method of preventing acid formation and minimizing the potential for significant environmental impacts. In order to do so, amendments to the MMER are required to expand the scope for the MMER to apply to certain hydrometallurgical facilities and add Sandy Pond to Schedule 2 of the MMER, designating it as a TIA.

The risks associated with the disposal of solid waste in Sandy Pond were evaluated as part of the screening level environmental assessment (see footnote 2) (EA) of the proposed Vale Inco NL hydrometallurgical facility under the 1992 Canadian Environmental Assessment Act (CEAA). Fisheries and Oceans Canada and Transport Canada were the responsible authorities for the environmental assessment and Environment Canada provided technical advice. A detailed assessment of alternatives for the disposal of solid waste from the hydrometallurgical facility was also conducted. The environmental assessment concluded that, “with consideration to the mitigations that will be implemented during construction and operation, the project is not likely to cause significant adverse environmental effects.” The environmental assessment screening report, prepared by Fisheries and Oceans Canada, states that the potential environmental impacts of the TIA can be avoided through the implementation of the fish habitat compensation plan and other mitigation measures.

The project was also subject to an environmental assessment conducted under provincial legislation, and this environmental assessment, completed in August 2008, reached similar conclusions. (see footnote 3)

Objectives

The objective of the Amendments is to ensure that fish, fish habitat and the use of fish resources are protected in water bodies that receive effluent from facilities which use hydrometallurgy as defined by the Amendments to the MMER.

No fundamental changes to the policy objectives or requirements of the MMER will be undertaken as part of these Amendments.

Description

The Amendments

The Amendments expand the scope of the MMER to apply to certain hydrometallurgical facilities by

• amending the definition of “mine” to include hydrometallurgical facilities;
• defining “hydrometallurgy” as the production of a metal by means of aqueous chemical methods for the acidic leaching, solution concentration and recovery of metals from metal-bearing minerals other than metal-bearing minerals that have been thermally pre-treated or blended with metal-bearing minerals that have been thermally pre-treated;
• amending the definition of “effluent” to include hydrometallurgical facility effluent;
• defining “hydrometallurgical facility effluent” as effluent from the acidic leaching, solution concentration and recovery of metals using aqueous chemical methods, tailings slurries, and all other effluents deposited from a hydrometallurgical facility; and
• amending the definition of “operations area” to include hydrometallurgical activity.

In addition, the Amendments add Sandy Pond, a natural fish-bearing water body, to Schedule 2 of the MMER, designating it as a TIA. This will enable waste from the Vale Inco NL hydrometallurgical facility to be disposed of in Sandy Pond while ensuring that the effluent from the TIA is strictly controlled and monitored.

The Amendments will come into force on the day on which they are registered.

Background

The MMER came into force on December 6, 2002 under the Fisheries Act, and by 2007 applied to 93 metal mines across Canada. The MMER specify limits for releases of arsenic, copper, cyanide, lead, nickel, zinc, radium-226 and total suspended solids, and prohibit the discharge of effluent that is acutely lethal to fish. The MMER do not currently apply to hydrometallurgical facilities.

The MMER include provisions to designate natural fish-bearing water bodies as TIAs, as at some sites the disposal of solid waste in such water bodies may be the preferred disposal option for better pollution prevention and reduction of environmental risks. Approval for the use of a water body as a TIA requires a thorough environmental assessment and a rigorous evaluation of alternatives for waste disposal. The assessment of alternatives for solid waste disposal must clearly demonstrate that the use of a water body for waste disposal is the option that makes the most environmental, technical and socio-economic sense. The use of a water body as a TIA can only be authorized through an amendment to the MMER approved by the Governor in Council.

In the case where a fish-bearing water body has been designated as a TIA, section 27.1 of the MMER requires the development and implementation of fish habitat compensation plans which have to be approved by the Minister of Fisheries and Oceans Canada. This requirement is based on “The Policy for the Management of Fish Habitat” (see footnote 4) (1986) developed by Fisheries and Oceans Canada. The fish habitat compensation plans are designed to offset the loss of fish habitat as a result of designating fish-bearing water bodies as TIAs. The MMER also requires a mining company to submit to Fisheries and Oceans Canada an irrevocable letter of credit to ensure that adequate funding is available to implement the fish habitat compensation plan in the event that the company is unable or unwilling to complete implementation of the plan.

All effluent discharged from facilities subject to the MMER, including effluents from TIAs, must meet the effluent discharge limits specified therein to help ensure the protection of downstream ecosystems. In addition, the MMER require that environmental effects monitoring be conducted downstream from effluent discharge points to determine if there are any effects on fish, fish habitat, or the use of fisheries resources (see Schedule 5 of the MMER).

The Vale Inco NL hydrometallurgical facility

The Vale Inco NL facility will consist of a port on Long Harbour, the hydrometallurgical facility and associated infrastructure. The hydrometallurgical facility will be located about three kilometres (km) southeast of Long Harbour-Mount Arlington Heights, Newfoundland and Labrador (see Figure 1). The Long Harbour facility is expected to provide 450 full-time jobs for at least 15 years.

The facility will use an acidic leaching hydrometallurgical process to recover metals. The solid waste from this process will generate acid if exposed to air. Vale Inco NL will dispose of this solid waste underwater to prevent acid generation and the associated risk of water pollution. Disposing of acid generating wastes such as this underwater has been demonstrated to be an effective means of preventing acidic drainage. (see footnote 5)

Vale Inco NL will construct a TIA in Sandy Pond in order to maintain a secure and permanent water cover over the solid waste. Sandy Pond has a total surface area of almost 38 ha and a maximum depth of 16.5 metres. Dams will be constructed at the outlet of the pond and in two other low lying areas. These dams will facilitate the management and treatment of effluent from the TIA to protect the downstream aquatic ecosystems and also ensure that the TIA has sufficient capacity to contain the solid waste from the facility under an appropriate depth of water. The dams will be designed such that they could be raised to increase the future capacity of the TIA, if necessary.

Figure 1: Location of the Vale Inco NL hydrometallurgical facility / Emplacement de l’installation d’hydrométallurgie de Vale Inco NL

Vale Inco NL will pump water from the TIA back to the hydrometallurgical facility for reuse. Effluent from the hydrometallurgical facility will be treated and discharged into Long Harbour via a 6 km underwater pipeline. The effluent must meet the limits specified in the MMER, helping to ensure that there are no impacts to fisheries. The location of the final effluent discharge point should help to further ensure that there are no impacts on the in-shore fishery in Long Harbour.

Fish habitat compensation plan

Vale Inco NL has developed a fish habitat compensation plan (see footnote 6) to meet the MMER requirement to fully offset the loss of fish habitat resulting from the designation of Sandy Pond as a TIA. The plan quantifies expected fish habitat loss and details compensation measures.

The expected harmful alteration, disruption or destruction of fish habitat resulting from the designation and use of Sandy Pond as a TIA was assessed to determine the required degree and nature of fish habitat compensation. The assessment included sampling to determine fish species that are present in the pond, habitat mapping, and hydrological data collection. The information was used to quantify the predicted habitat loss in accordance with methodologies established by Fisheries and Oceans Canada. The assessment concluded that the equivalent of 18.1 ha of fish habitat will be lost as a result of using Sandy Pond as a TIA.

The fish habitat compensation plan was developed with the objective of offsetting the expected habitat loss with new or rehabilitated fish habitat of a similar type. The compensation measures will be implemented in a watershed adjacent to the Sandy Pond watershed, and consist of

• the creation of a pond in a small valley near Sandy Pond; and
• the expansion and rehabilitation of existing ponds.

The new pond will be created in a small valley which is drained by an intermittent stream and contains two small, very shallow ponds. The valley bottom will first be prepared by removing vegetation and creating natural habitat features, and then a low dam will be constructed to allow the water level to increase within the valley. A weir on the dam will facilitate fish movement in and out of the new pond. Once conditions in the new pond have stabilized and a population of aquatic plants has been established, fish will be relocated there under the supervision of Fisheries and Oceans Canada. It is expected that the new pond will be ready for relocation of fish from Sandy Pond prior to its use as a TIA. (see footnote 7) An equivalent of 15 ha of fish habitat are expected to be created in the new pond, offsetting about 80% of the fish habitat that will be lost as a result of designating Sandy Pond as a TIA.

A pond close to the hydrometallurgical facility served as a water source for an industrial facility which formerly operated at the location of the port on Long Harbour. Associated with the past industrial use of the pond, a small dam had been constructed at the outlet of the pond, resulting in reduced flows to the downstream ponds. As a result, there is less overwintering of fish downstream from this dam and the ponds are gradually filling up with organic material and vegetation. In addition, the ponds are smaller and shallower than they were before the dam was constructed. The compensation measures, by expanding the shorelines and removing vegetation from these ponds to help restore them to their original size and depth, will augment and reestablish fish spawning and rearing habitats. These compensation measures are expected to create an equivalent of 5 ha of fish habitat.

The fish habitat compensation plan also includes monitoring to determine the extent to which the objectives of the plan have been achieved. This consists of monitoring the structural stability of physical habitats that have been created or rehabilitated, fish utilization and other biological features. In addition, water quality monitoring will also be conducted in the new pond. Mercury concentrations in fish from the new pond will be compared with Health Canada guidelines for mercury in fish tissue, the only metal for which Health Canada has such guidelines. Monitoring will take place in the first ten years following the implementation of the fish habitat compensation measures as it is expected that the objectives would be achieved within this period. The results will be reported to Fisheries and Oceans Canada and will also be publicly available. If the objectives of the plan are not achieved, the industry would be subject to enforcement action under section 27.1 of the MMER.

Overall, the designation of Sandy Pond as a TIA is expected to result in a loss of fish habitat equivalent to 18.1 ha. The implementation of the fish habitat compensation plan is expected to result in the establishment of fish habitat equivalent to 15 ha in the new pond and 5 ha from the restoration of ponds affected by past industrial activity. Thus, fish habitat equivalent to a total of 20 ha is expected to be created, resulting in a net gain of approximately 2 ha of fish habitat. While there will be some loss of terrestrial habitat associated with the establishment of the new pond, the overall environmental effects are deemed, according to the environmental assessment, to be insignificant.

Regulatory and non-regulatory options considered

Regulatory options

The only regulatory option available to achieve the objective described above is to amend the MMER. The Amendments will expand the scope of the MMER to include certain hydrometallurgical facilities and add Sandy Pond to Schedule 2 of the MMER, designating it as a TIA.

The definition of “hydrometallurgy” was carefully considered to ensure that the Amendments apply only to those facilities for which they are intended and not to other facilities.

With respect to the addition of Sandy Pond to Schedule 2 of the MMER, Vale Inco NL completed a detailed assessment of alternatives for the disposal of solid waste from the hydrometallurgical facility. (see footnote 8) A total of 12 possible locations for the storage of the solid waste were assessed. These included 11 options which would directly impact water bodies and one option which would involve the excavation of a pit on land with no direct impact on water bodies. These 12 options were quantitatively evaluated against 24 criteria within four categories: environmental, technical/operational and socio-economic. (see footnote 9) The assessment of waste disposal alternatives (discussed below) concluded that using Sandy Pond as a TIA is the best option.

Designating Sandy Pond as a TIA

The final report on the assessment of alternatives for the disposal of solid waste from the Vale Inco NL hydrometallurgical facility was submitted to Fisheries and Oceans Canada and Environment Canada by Vale Inco NL in April 2008. This assessment examined the composition of the solid waste and evaluated potential solid waste disposal methods and the possible disposal sites against criteria established by Vale Inco NL with input from Environment Canada and Fisheries and Oceans Canada.

The Vale Inco NL hydrometallurgical facility will produce a solid waste with high sulphur concentration and a very high potential to generate acid if exposed to air. The evaluation of alternative solid waste disposal methods determined that the potential for this solid waste to generate acid and release metals (particularly nickel and copper) underwater would be significantly lower as compared to disposal in an on-land facility with a dry cover. It was concluded by Vale Inco NL that the best option for the disposal of the solid waste would be underwater disposal.

The analysis further concluded that the use of Sandy Pond as a TIA had the highest overall score among the 11 alternatives evaluated for underwater disposal, ranking first in the environmental and technical categories and second in the economic and socio-economic categories. The advantages of using Sandy Pond as a TIA, as identified by Vale Inco NL, include

• smallest watershed area impacted and smallest ecological footprint over the total life of the project;
• minimal anticipated negative social impact;
• most favourable closure conditions; and
• limited recreational use due to its isolated location and difficulty in accessing it from existing roads.

The dams that will be built to contain the solid waste in the TIA may present some risks of potential failure of the structures over their lifetime. However, the probability of failure is very low. In the event of such a failure, impacts should be limited as there are no communities located directly downstream of the TIA. Any release of tailings or effluent as a result of the failure of dams would be subject to enforcement under the Fisheries Act.

The environmental assessment of the project found that the use of Sandy Pond as a TIA was not expected to have significant adverse environmental effects. On this basis, Environment Canada and Fisheries and Oceans Canada recommended that Sandy Pond be added to Schedule 2 of the MMER.

Non-regulatory options

The only non-regulatory option to amending the MMER would be to maintain the status quo. Retaining this option prevents expanding the scope of the MMER and designating Sandy Pond or any other natural water body as a TIA. In this case, Vale Inco NL will have to dispose of the solid waste in an on-land facility. Disposal on-land requires the excavation of a pit for solid waste disposal. This excavation would displace a considerable amount of rock through blasting which will also need to be disposed of elsewhere. The total surface area of terrestrial habitat projected to be lost due to the excavation of a pit for solid waste disposal is 76.6 ha plus an additional 100 ha due to on-land disposal of excavated materials. The excavation of the pit would also disturb existing groundwater and run-off flow patterns causing a permanent change to the hydrogeology of the Rattling Brook watershed, likely causing a reduction in flow and impacting downstream habitats. It was also determined that on-land disposal would result in substantially higher costs to the industry. Based on the quantitative and qualitative evaluation, the assessment of alternatives concluded that on-land disposal is not the best available option from an environmental, technical and socio-economic perspective, and on this basis, the status quo is not considered a viable option.

Benefits and costs

Cost-benefit analysis framework

The cost-benefit analysis identifies, quantifies and monetizes to the extent practicable the costs and benefits associated with the Amendments. The key cost-benefit analysis framework assumptions include the following:

• incremental compliance costs associated with the construction, operation and closure of the TIA, monitoring and reporting, and implementation of the fish habitat compensation plan have been estimated;
• all costs are expressed as present values in 2007 dollars over a 25-year timeframe as the bulk of the costs would be incurred during this period; and
• a social discount rate of 8% has been used for this analysis.

Costs to industry

The present value of total incremental costs associated with the Amendments is estimated to be $65.6 million. This includes an estimated cost of $52.7 million associated with the TIA and $12.9 million for the implementation of the fish habitat compensation plan, the details of which are given in Table 1.

Table 1: Present Value of Total Incremental Costs to Industry

Incremental Costs	Present Value (2007 million $)
Tailing impoundment area costs
Construction costs	43.1
Operation and maintenance costs	1.4
Monitoring and reporting costs	0.7
Closure costs	7.3
Post-closure monitoring costs	0.2
Sub-total	52.7
Habitat compensation plan
Capital costs	12.6
Monitoring and reporting costs	0.3
Sub-total	12.9
Total	65.6

The incremental capital cost for the construction of the dams and associated works in the TIA will be incurred in the first year. For the purpose of this analysis, the operation and maintenance costs are assumed to be incurred over a period of 25 years. Vale Inco NL will also incur incremental costs related to the final closure and post-closure monitoring of the TIA after the processing plant operations cease in year 16. TIA Monitoring costs were estimated by Vale Inco NL for a period of 100 years after closure of the processing plant, however, as the timeframe for this analysis has been determined to be 25 years, only 10 years of these post-closure monitoring costs have been included. Financial assurances to cover post closure costs will be posted with the province as a condition of allowing the project to proceed.

It is estimated that fish habitat equivalent to approximately 18.1 ha will be lost as a result of designating Sandy Pond as a TIA. However, as previously described, Vale Inco NL is required to implement a fish habitat compensation plan to offset this loss of fish habitat.

The incremental costs for the fish habitat compensation measures for the creation of a pond near Sandy Pond and the rehabilitation of existing ponds will be incurred in the first year. However, the incremental costs for monitoring and reporting on the implementation of the fish habitat compensation plan are assumed to be incurred over the 25-year period. In addition, as required under section 27.1 of the MMER, the company will submit an irrevocable letter of credit to ensure that adequate funding is available to DFO to cover these costs throughout the life of the fish habitat compensation plan in case the company becomes unable or unwilling to complete it.

Costs to Government

The undiscounted incremental cost to government associated with compliance and enforcement for the Vale Inco NL hydrometallurgical facility is estimated to be $6,000 per year over 18 years. This period includes compliance and enforcement activities over the 15-year operational life of the facility plus an additional three years to achieve closed mine status, as required under the MMER. The incremental costs are associated with administrative compliance verifications, site inspections and other routine enforcement activities. The present value of the incremental cost to government is estimated to be $56,200.

Total costs

The present value of total incremental costs to industry and government are estimated to be in the order of $65.6 million.

Benefits

The Amendments will help ensure the protection of downstream ecosystems from the impacts of effluent from the Vale Inco NL hydrometallurgical facility and other facilities using this process in the future. The Amendments will also ensure that potentially acid generating solid waste from the Vale Inco NL hydrometallurgical facility is disposed of in the most environmentally, technically and socio-economically sound manner available. Furthermore the habitat compensation plan will ensure that appropriate mitigation measures are taken to protect the fish, fish habitat and the use of fish resources.

The loss of fish habitat equivalent to 18.1 ha due to designating Sandy Pond as a TIA will be more than offset by the creation of new and rehabilitation of existing fish habitat equivalent to 20 ha. Thus, it is expected that there will be a net gain in fish habitat equivalent to two ha as a result of the implementation of the fish habitat compensation plan. It is also expected that the creation of new fish habitat and the restoration of existing fish habitat will have a positive effect on fish populations in those water bodies. The fish habitat compensation measures are required under the MMER and are based on Fisheries and Oceans Canada’s policy of ensuring no net loss of the productive capacity of fish habitat. The MMER also place regulatory requirements for monitoring and reporting of the implementation of the fish habitat compensation plans to ensure that the measures are achieving the established objectives.

Rationale

The assessment of alternatives for the disposal of solid waste from the Vale Inco NL hydrometallurgical facility concluded that the use of Sandy Pond as a TIA is the best option from an environmental, technical and socio-economic perspective. As concluded in the federal environmental assessment, the project, including the use of Sandy Pond as a TIA, is not likely to cause significant adverse environmental effects. Moreover, the fish habitat compensation plan associated with the TIA is expected to result in a net gain equivalent to two ha of fish habitat in the area.

The Amendments provide regulatory certainty that Vale Inco NL will be able to use Sandy Pond as a TIA and proceed with the construction and operation of the hydrometallurgical facility.

During consultations with stakeholders, general support was expressed for the expansion of the scope and TIA designation. Some local residents and environmental groups have expressed concerns about the Amendments. Environment Canada and Fisheries and Oceans Canada are of the view that these Amendments would enhance the management of effluents from certain hydrometallurgical facilities that are similar to conventional mining operations. The requirements in place in the Fisheries Act, CEAA and MMER would ensure that the selected option for disposal of the solid waste is technically and environmentally sound and that appropriate fish habitat compensation measures are in place to ensure no net loss of fish and fish habitat.

Consultation

In June 2008, Environment Canada, Fisheries and Oceans Canada and Transport Canada held two consultation sessions, one in Long Harbour, Newfoundland and Labrador, and the other in Gatineau, Quebec. Transport Canada was involved in both sessions as the proposed use of Sandy Pond as a TIA would also require an Order in Council under section 23 of the Navigable Waters Protection Act, for which Transport Canada is responsible. Prior to these sessions, extensive consultations associated with the provincial environmental assessment of the project also took place in the local community.

The Long Harbour and Gatineau consultation sessions took place during the public review period of Fisheries and Oceans Canada’s draft screening report for the federal environmental assessment. The draft screening report was also made available on the Canadian Environmental Assessment Registry Web site as per subsection 18(3) of CEAA. The objective of these consultation sessions was to provide participants with the necessary information to enable them to provide comments. This included information on the environmental assessment of the hydrometallurgical facility, the proposed Amendments to the MMER and the Order in Council required under the Navigable Waters Protection Act.

Participants in the sessions included local residents and elected officials, representatives of national Aboriginal organizations, environmental groups, industry (including Vale Inco NL), and the Province of Newfoundland and Labrador. Following the two consultation sessions, fifteen written submissions were received — two from national Aboriginal organizations, one from a regional Aboriginal organization, four from environmental groups, three from industry, four from local residents, and one from a local area chamber of commerce.

In general, the proposed designation of Sandy Pond as a TIA was supported by the provincial and local governments as well as other federal departments. It was strongly supported by the local business community, including the Chamber of Commerce and by the town of Long Harbour and Mount Arlington Heights and many local residents.

Comments raised at the two consultation sessions and submitted in writing, as well as Fisheries and Oceans Canada and Environment Canada’s responses to these comments and submissions are summarized below.

Proposed change in scope of application of the MMER

The proposed expansion of scope as initially presented at the consultation session was opposed by industry and some environmental groups. Industry argued that this proposed scope would apply to all hydrometallurgical facilities regardless of whether metal-bearing minerals were thermally pre-treated or whether leaching was carried out under acidic conditions. As a result, three existing hydrometallurgical facilities in Quebec, Alberta and British Columbia, whose design is different from that of the hydrometallurgical facility proposed to be constructed by Vale Inco NL, would become subject to the amended MMER. Industry representatives argued that the application of the MMER to other existing facilities of different design is not appropriate, and that there had not been sufficient consultation on this matter. Environmental groups argued against this expansion on the basis that these other existing facilities would have the legal ability to seek authority to use natural water bodies as TIAs.

Fisheries and Oceans Canada and Environment Canada officials carefully considered the basis and rationale for the objections to the proposed expansion in scope. It was determined that, while these existing facilities use hydrometallurgical processes, the composition of solid wastes and effluent produced by them is substantially different from those of the Vale Inco NL process. As a result, the definition of hydrometallurgy was revised in the proposed Amendments to apply only to certain facilities which use hydrometallurgy, such as the facility proposed to be constructed by Vale Inco NL and any future facilities using the same type of process. However, the existing facilities which use different hydrometallurgical processes would not be affected by the proposed Amendments.

Proposed designation of Sandy Pond as a TIA

• The proposed designation of Sandy Pond as a TIA was opposed by some local residents, environmental groups, and Aboriginal groups. They were of the view that the use of a natural, fish-bearing water body is inappropriate, regardless of the conclusions of the environmental assessment.

While understanding these concerns, Environment Canada and Fisheries and Oceans Canada officials are of the view that in some instances the use of water bodies is an appropriate waste disposal option when compared to the alternatives. A range of alternatives must be quantitatively and qualitatively evaluated in order to identify the option that would have the least short-term and long-term adverse effects on the environment, be technically sound with minimal potential for containment failure, and be economically feasible. Each case is considered individually and the decision to use a water body for waste disposal takes into account site-specific factors. Based on the evaluation that was undertaken, Environment Canada and Fisheries and Oceans Canada are satisfied that the use of a water body for the disposal of wastes from the Vale Inco NL hydrometallurgical facility is preferable to the other options available at this site.

• It was also suggested by stakeholders that the loss of Sandy Pond would be significant in light of the loss of local recreational fishing grounds and potential impacts on local freshwater resources.

It was noted by Fisheries and Oceans Canada and Environment Canada officials that the designation of a water body as a TIA requires Vale Inco NL to implement an approved fish habitat compensation plan to offset the loss of fish habitat. In addition, the environmental assessment of the project evaluated the impacts on all aspects of the local environment, including any impacts on freshwater resources due to the loss of Sandy Pond. The remediation measures to be undertaken by Vale Inco NL were reviewed and Fisheries and Oceans Canada and Environment Canada officials are satisfied that there would be no adverse impact on freshwater resources.

• Some local residents expressed concern about the potential impacts of the effluent discharged into Long Harbour/Placentia Bay on existing commercial fishing activities.

In response, Fisheries and Oceans Canada and Environment Canada officials noted that if the MMER was amended to include facilities such as the proposed Vale Inco NL hydrometallurgical facility, the effluent discharged into Long Harbour/Placentia Bay would be subject to the requirements of the MMER. Effluent from the hydrometallurgical facility would be required to meet all the effluent quality standards specified in the MMER to prevent the discharge of deleterious substances into fish-bearing waters and the operator of the hydrometallurgical facility would have to monitor and report on the quality of effluent discharged. As a result of these requirements, any effluent discharged from the hydrometallurgical facility would have to be non-lethal to fish. Therefore, there would be no impact on commercial fishing activities in the area.

Proposed habitat compensation plan

Some stakeholders expressed concern that the measures identified in the proposed fish habitat compensation plan would be inadequate to offset the loss of fish habitat that would result from designating Sandy Pond as a TIA.

In response, it was noted that Fisheries and Oceans Canada used region-specific policies to determine the quantities and types of fish habitat that would be required to be compensated. Fisheries and Oceans Canada also made recommendations regarding the implementation of the plan to ensure no net loss of fish and fish habitat. Therefore, the measures identified in the proposed fish habitat compensation plan are considered adequate to offset the loss of fish habitat as a result of the proposed TIA.

Stakeholder consultations process

Stakeholders expressed concern that the consultation process was undertaken too late in the decision-making process, was not sufficiently inclusive of local participants, environmental groups and Aboriginals, and the amount of time was insufficient to provide meaningful comments.

Fisheries and Oceans Canada and Environment Canada clarified that extensive consultations were held during the environmental assessment process for the proposed Vale Inco NL project. Following the 2008 consultation session, stakeholders were given the opportunity to submit written comments. In addition, following the pre-publication of the proposed Amendments in the Canada Gazette, Part I, stakeholders were able to provide additional comments during the public consultation period.

It was also clarified that there are no Aboriginal communities with land rights that extend into the area of development of the hydrometallurgical facility and there are no unresolved or outstanding land claims on the island of Newfoundland.

Assessment of alternatives

Concern was expressed by some stakeholders that the assessment of alternatives for the disposal of solid waste from the proposed Vale Inco NL hydrometallurgical facility was inadequate. Questions were raised about the validity of the quantitative analysis of alternatives and the value assigned to the criteria used in that analysis.

It was noted by Fisheries and Oceans Canada and Environment Canada officials that due to the nature of local topography and drainage, options for on-land disposal of the solid waste would have significant environmental impacts. It was also noted that the process employed by Vale Inco NL to undertake the quantitative assessment of alternatives was based on industry best practice. The assessment of alternatives was thoroughly reviewed and Fisheries and Oceans Canada and Environment Canada officials support the conclusion that the use of Sandy Pond as a TIA is the best available alternative on an environmental, technical and socio-economic basis.

Consultations on the proposed Amendments following publication in the Canada Gazette, Part I

On February 21, 2009, the proposed Amendments were published in the Canada Gazette, Part I, for a 30-day comment period. During this period, 35 submissions were received from industry, 15 from local residents, one from the town of Long Harbour and Mount Arlington Heights, and one from the local chamber of commerce. The majority of the stakeholders were supportive of the Amendments. An overview of the comments that were submitted along with Fisheries and Oceans Canada and Environment Canada’s responses to these comments is presented below.

All submissions received from industry indicated that they support the Government of Canada’s decision to proceed with the proposed Amendments. The submissions indicated that industry is sensitive to the public’s concern about the use of natural water bodies for tailings disposal and is committed to protecting endangered species, aquatic and terrestrial integrity, the fisheries resources and fish habitat. Furthermore, the industry indicated that it will invest significant resources in reclamation activities to support healthy ecosystems. In addition, the local chamber of commerce, town council and the vast majority of the submissions from local residents were supportive of the proposed Amendments.

Designation of Sandy Pond as a TIA

Two submissions from local residents expressed concerns similar to those raised during the June 2008 consultations. Both submissions expressed the view that the project will have an adverse effect on the environment that would be unacceptable despite the resulting economic gains to the community. The submissions were primarily concerned with the adequacy of the assessment of alternatives to the use of Sandy Pond as a TIA; the potential success of the fish habitat compensation plan; the inadequacy of assessment of air, groundwater, and recreational impacts; and the consultations process deemed not inclusive of all stakeholders.

Environment Canada and Fisheries and Oceans Canada maintain that all options were adequately evaluated during the federal and provincial environmental assessment process. The ensuing consultation included all major stakeholders. In addition, adequate time was allocated for stakeholders to submit written comments during the June 2008 consultations as well as during the pre-publication of the Amendments in the Canada Gazette, Part I. Furthermore, Environment Canada and Fisheries and Oceans Canada reiterate that the approved fish habitat compensation plan will offset the loss of fish habitat, and all other impacts due to the loss of Sandy Pond were appropriately assessed and the mitigation measures are considered to be sufficient.

Definition of hydrometallurgy

An owner/operator of an existing hydrometallurgical facility was supportive of the Amendments but questioned whether the proposed definition of hydrometallurgy in the Regulations would result in their facility being subject to the MMER.

Environment Canada considered this comment and clarified that the current definition does not apply to the type of hydrometallurgical process used at this facility or other existing facilities in Quebec, Alberta and British Columbia. The processes being used at these facilities are significantly different from the process to be used at the Vale Inco NL facility.

Implementation, enforcement and service standards

The Amendments will come into force on the day they are registered.

Vale Inco NL will be informed of the Amendments and of their obligations under the MMER. Final discharge points for the effluent will be established and effluent from these final discharge points will be required to be in compliance with limits of the MMER. Environmental effects monitoring will be required and implemented.

Vale Inco NL will be required to conduct weekly and monthly monitoring of effluent flow and quality at all final discharge points and report the results to Environment Canada on a quarterly and annual basis. The results of environmental effects monitoring will also be reported to Environment Canada. The results of the annual compliance reporting will be included in the annual status reports on MMER compliance that are prepared by Environment Canada and released to the public. The results of environmental effects monitoring will be made available upon request through regional offices of Environment Canada.

Vale Inco NL will be required to monitor the implementation of the fish habitat compensation plan and the effectiveness of compensation measures that have been implemented in achieving the objectives of the plan. The results will be reported to Fisheries and Oceans Canada and will be available upon request from Fisheries and Oceans officials.

The Amendments will not impact the manner in which the MMER are enforced. Compliance with all provisions of the MMER will be enforced by Environment Canada, except section 27.1 (fish habitat compensations plans) which will be enforced by Fisheries and Oceans Canada. Compliance and enforcement activities are carried out in accordance with the “Compliance and Enforcement Policy for the Habitat Protection and Pollution Prevention Provisions of the Fisheries Act”. (see footnote 10)

There are no service standards associated with designating the water bodies as TIAs in Schedule 2 of the MMER.

Contacts

Mr. Chris Doiron
Chief
Mining Section
Mining and Processing Division
Public and Resources Sectors Directorate
Environment Canada
351 St. Joseph Boulevard
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-1105
Fax: 819-994-7762
Email: Chris.Doiron@ec.gc.ca

Mr. Markes Cormier
Senior Economist
Regulatory Analysis and Instrument Choice Division
Environment Canada
10 Wellington Street, 24th Floor
Gatineau, Quebec
K1A 0H3
Telephone: 819-953-5236
Fax: 819-997-2769
Email: Markes.Cormier@ec.gc.ca

Footnote a
R.S., c. F-14

Footnote 1
SOR/2002-222

Footnote 2
Fisheries and Oceans Canada (June 2008), Canadian Environmental Assessment Act (CEAA) Screening Report — Commercial Nickel Processing Plant, Long Harbour, Placentia Bay (the screening report can be accessed from the CEAA Web site at www.ceaa.gc.ca/050/documents/27933/27933E.pdf).

Footnote 3
Information on the provincial environmental assessment of the project is available at www.env.gov.nl.ca/env/Env/EA%202001/Project%20Info/1243.htm.

Footnote 4
The policy is available from the Fisheries and Oceans Canada web site at: www.dfo-mpo.gc.ca/oceans-habitat/habitat/policies-politique/operating-operation/fhm-policy/pdf/policy_e.pdf.

Footnote 5
This has been demonstrated through numerous Canadian and international research and development initiatives, notably in field and laboratory studies conducted as part of the multi-stakeholder Mine Environment Neutral Drainage Program (MEND) coordinated by Natural Resources Canada.

Footnote 6
AMEC Earth and Environmental (2008), Commercial Nickel Processing Plant Freshwater Fish Habitat Compensation Strategy — Sandy Pond, Long Harbour, NL. The document is available upon request from Environment Canada.

Footnote 7
In the event that the new pond is not ready for fish re-location in advance of the use of Sandy Pond as a TIA, then, as noted in the fish habitat compensation plan, fish from Sandy Pond would be re-located to another suitable location selected in consultation with Fisheries and Oceans Canada officials.

Footnote 8
Vale Inco (2008), Hydromet Plant Residue Storage Options for the Commercial Nickel Processing Plant at Long Harbour, Newfoundland and Labrador. The document is available upon request from Environment Canada.

Footnote 9
Ibid

Footnote 10
The policy is available from the CEPA Registry Web site at: www.ec.gc.ca/ele-ale/default.asp?lang=En&n=D6765D33-1.

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