Updates with corrected figure 156 acres from Rio Tinto Alcan and District of Kitimat
Rio Tinto Alcan has donated 156 acres (63 hectares) of waterfront land on Minette Bay to the District of Kitimat, Gaby Poirier, RTA General manager BC Operations, said Wednesday, November 12, 2014. It’s a major step in getting people in Kitimat access to the waterfront which is being closed off by industrial development.
In a news release, Poirier said.
It is with great pleasure that Rio Tinto Alcan confirms today a gift to the people of Kitimat of approximately 56 acres of water front land that make up District Lot 471, located in Minette Bay.
For more than half a century Rio Tinto Alcan has participated with pride in the development of Kitimat and Northwest British Columbia. In the 1950’s Rio Tinto Alcan developed a company town from mostly undeveloped land. Today it is a mature, vibrant, and highly liveable northern community. We are very proud of our involvement in making this happen.
Now, 60 years later, a new era of industrial development is on our doorsteps. Rio Tinto Alcan’s BC Operations is looking forward to having new neighbours beside us near the smelter site and port terminals. It is important now, more than ever, to ensure the people of Kitimat continue to have direct ocean access.
To that end, Rio Tinto Alcan is pleased and committed, in this our 60th Anniversary year, to transfer ownership of the water front lot DL 471 to the District of Kitimat in trust for its citizens use for all time.
Ron Poole, District of Kitimat Chief Administrative Officer, tells Northwest Coast Energy News, “As part of the gifting of Lot 471, RTA has agreed to guaranteeing road access across their property to access this lot.”
“It has roughly one kilometre of waterfront on Minette Bay,” Poole says. “We do not have preliminary plans for the site, however, council for years has been negotiating with RTA to provide water access and this is one lot they owned that meets the public need.”
If the Shell-led LNG Canada project goes ahead, with LNG Canada taking over the old Eurocan dock (it already owns the old Methanex dock), that means Rio Tinto Alcan would have to expand its port facilities at “Terminal A” (the original port) and that would cut off access to Hospital Beach which has been the only beachfront available to residents since the 1950s.
You might not be seeing it at the gas pumps at the moment, but you soon will, the price of gas has gone down by 30 per cent since June.
Prices of key commodities, oil, coal and iron ore are dropping. And the weakness in the market for two of those commodities oil and iron ore should be setting off the alarm bells in Kitimat and the northwest.
The declining price of oil will soon affect all those energy-related projects that are supposed to bring an economic renaissance to northwest British Columbia.
As for iron ore, people might ask, what does iron ore have to do with us, there are no iron mines or steel mills around here.? However, in the highly integrated world economy, Rio Tinto is one of the world’s largest producers of iron ore, the decline in iron ore prices is affecting Rio Tinto’s bottom line and that is why, analysts say, the company may be vulnerable to a take over by the little known commodities giant Glencore.
The oil industry has always experienced very long, slow and deep cycles in supply, demand and prices: the current downturn is no exception.
Kemp says the current up cycle began around 2002, with rising oil prices. The financial collapse in 2007 and 2008 briefly interrupted the cycle but now according to Kemp and other analysts there is a glut of oil on the market and prices are falling world wide.
High prices meant not only new plays, especially in the Alberta bitumen sands, but also stronger efforts to save money by increasing energy efficiency and, yes, turning to cheap natural gas.
There are also new factors at play. In the past when there was a downturn in oil prices, OPEC led by Saudi Arabia, would limit supply to keep the price at a profitable level. However, the flood of oil on to the market from shale oil plays, mainly in the United States but also in Canada, has meant that OPEC can’t do that anymore. Too much competition. So the analysts say, the Saudis and other OPEC members are actually starting a price war to retain market share.
When Kemp was writing last week, he said the key marker, North Sea Brent crude:
if prices are adjusted for inflation (using average U.S. hourly earnings), Brent prices are at the lowest level in real terms since October 2007, exactly seven years ago.
There has always been a lot of skepticism among long term residents of Kitimat who have seen boom and bust cycles before and so they, rightly as it turns out, have been wary of industrial promises. Then there’s the current housing debate which may soon see the out of region speculators and developers caught with their pants down in the midst of a Kitimat January blizzard.
The commodity downturn also shows the foolishness of the politicians, business people and commentators who kept saying that BC is a “natural resource economy” and restrictions on corporations and strong environmental requlations will only hurt that economy. Who needs diversification? Who needs a fishing guide anway? It is fairly clear already that Christy Clark’s promises of a debt free province have as much credibility as speculating in Dutch tulip bulbs.
As for the idea among some here that if Kitimat had only voted in favour of Enbridge Northern Gateway, the gates to ecomonic paradise would open, that is foolishness. You can be certain when the Saudi princes decided on a price war to keep themselves in the luxorious lifestyle which they believe they are entitled, they didn’t consider whether Kitimat voted for or against Northern Gateway.
Part of the impetus behind constructing new pipelines to carry bitumen from northern Alberta to the U.S. Gulf Coast, Kitimat on the Pacific, or even all the way across the country to Saint John, N.B., was to help close the substantial discount between Canadian oil and world prices. Well, crude’s recent drop into the $85‑a‑barrel range has basically collapsed the once wide‑open spread that had existed between West Texas Intermediate and Brent crude with hardly any new lengths of pipe being laid into the ground at all.
Rubin went on to note that the decision by the Saudis to launch the price war has changed everything.
For pipeline companies with major proposals on the table, such as TransCanada and Enbridge, falling oil prices are a game‑changer of the same magnitude that rising prices were a decade ago. Back then, soaring prices created an urgent need to build new pipelines to connect North America’s burgeoning supply to coastal refineries and world markets.
We’re now in a different world. At the root of today’s problem is global demand that is no longer growing quickly enough to support the prices necessary to keep expanding expensive unconventional sources of supply such as the oil sands. Lower prices will effectively strand those reserves regardless of the transportation options that may become available. Even if President Obama approved Keystone XL or the National Energy Board gave the green light to Energy East, falling commodity prices mean that soon there might not be enough oil flowing out of northern Alberta to fill those new pipelines.
This week’s near disaster with the Russian container ship Simushir, where the coast of Haida Gwaii was saved by a change in the wind direction, hasn’t helped either.
Will the refinery fade to black?
Economists have always been skeptical about David Black’s plan for the Kitimat Clean refinery and Black has admitted that he also had not much support for the refinery idea either from the hydrocarbon indusry or from government.
But now comes the flaw in Black’s business plan. According to the website, the Kitimat Clean project is based on North Sea Brent Crude priced at $110 US a barrel. The refinery would take advantage of the “discount” on deliveries of Alberta bitumen crude which the site estimated at $35 a barrel. Black’s site says the refinery would be profitable if it could purchase bitumen at a $23 discount, making $12 a barrel over the world price.
Unfortunately, as of this writing, 11 am on October 20, the price of Brent Crude is now $85.79 and dropping slightly. West Texas Intermediate Crude, the other bench mark is even lower at $82.79 a barrel.
It looks like the drop in oil prices wipes out Black’s plan for profitability, since Brent Crude is already $25 a barrel cheaper than Black had projected.
What’s that got to do with the price of gas?
The falling price of crude oil is also going to have a major impact on the liquified natural gas projects in the northwest. The current economic situation will soon see the short term players and speculators cut and run, leaving, it is hoped, a couple of long term players in the west coast LNG terminal market. However the volatility in the dropping oil market may mean that the all important Final Investment Decisions are delayed yet again.
That’s because, at the moment, in Asia, the price of natural gas is calculated as a per centage of the price of crude oil, what is called the Japan Cleared Customs price. And as the LNG Journal has reported the price of LNG in Japan has dropped to the 2009 level.
East Asian Delivered LNG Indicator Price hit its lowest level since 2009 at $12.30 million British thermal units with European Brent crude oil prices collapsing to $82.85 per barrel. The East Asia LNG price is based on the Japanese Crude Cocktail method of assessing long-term contract cargo prices for Japan, based on oil which last hit current levels and then slipped below $80.00 per barrel during 2009.
The idea of LNG exports, especially since the Japanese earthquake in 2011, is that the companies can make a big profit by buying natural gas at low North American prices, exporting and then selling at the higher Asia price. In a free market world, however, the Asian countries and companies have, for the past few years been balking at buying at the higher JCC price and attempting to buy at the much lower North American Henry Hub price which at this writing was $3.72 MMBTu. Today’s JCC LNG price was $12.75, still higher than the North American price, but as LNG Journal notes, at a five year low.
Weaker oil prices may put proposed LNG projects “to sleep for a number of years,” Fereidun Fesharaki, chairman of Facts Global Energy, an industry consultant, said in a phone interview. “For the projects that are already under construction, it hits their pocketbooks seriously.”
Prices below $80 a barrel may be a “disaster” for some projects, said Fesharaki, who forecasts Brent may decline to $60 a barrel before the end of the year, then rebound to about $80 by the end of 2015.
“There’s no doubt if we were to see the type of crude oil prices we’re seeing now continue they would be looking at lower LNG prices,” Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group Ltd., said by phone. “On face value, it would put pressure on margins.”
Long term LNG prospects
On the other hand, long term prospects for LNG exports are good. Demand in the Asian markets is still growing.
According to the Nikkei Asian Review, the Japanese Ministry of Economy, Trade and Industry projects that by 2020, 70 per cent of Japan’s LNG will come from Australia and North America. That doesn’t mean that Canada won’t have rivals, the projections say that the United States, which is just starting many of its LNG export projects could be Japan’s third largest customer with Canada in fourth place.
There are big benefits to getting LNG from North America and Australia. The unlikeliness of pirate attacks is one. There is also less political uncertainty. And then there is the price. U.S. shale gas, for example, costs about 20% less than what Japan currently pays for LNG.
With the Rio Tinto Alcan Kitimat Modernization Project construction phase winding down, with some uncertainty about the future of Rio Tinto itself and with more possible delays in the Final Investment Decisions for LNG Canada and Kitimat LNG, Kitimat needs a Plan B (and a Plan C or D or E).
The idea of a retirement community is no longer viable, costs of housing, even if they drop, are just too great.
Kitimat’s second strength has always been tourism and fishing. In 2015, there must be stronger efforts of support both fishing and tourism, which, in the long term will support that regions economy through good times and bad.
That means the new council must be firm in demanding (yes demanding) full access to the Kitimat waterfront and that includes a well-managed marina or marinas that have the capacity for recreational, adventure and fishing guiding and industrial use.
The District of Kitimat must come up with a plan that will promote the advantages of the region as a tourist and fishing destination. While the Chamber of Commerce has being doing a good job, up to now as the main promoter of tourism, Kitimat’s public image across Canada and the world is soley industrial and the District should assume more responsiblity for changing that image. The economic development staff at the district have been working largely on large scale industry. It should devote more time and money to the natural wonders of the area.
The plan B should also mean balance. Balance between industry and environment. The sneering contempt for those who want to protect the environment of the northwest is short sighted thinking, because a large proportion of the economy will depend for decades to come on attracting visitors to the wild beauty of of this part of British Columbia. That means, as much as it can within municipal powers, the new council must strengthen environmental protection in Kitimat.
Back in the 50s, Kitimat was planned for a future, a future that didn’t exactly work out when the price of aluminum slumped in the early 60s. Now we’re facing a slump in energy prices, so those plans will change. The plan B must include, as much as possible, creating a mainstay base that will smooth out the boom and bust of the commodities cycle.
The motto on the Kitimat snowflake logo is “A marvel of nature and industry.” The new council should make sure that motto is applied during the coming years.
The world’s business media are paying rapt attention to Glencore’s now stalled attempt to take over Rio Tinto.
Late Tuesday, the company issued a news release which says
Glencore announces that in July 2014 it made an informal enquiry by telephone call to Rio Tinto, seeking to gauge whether there might be any interest at Rio Tinto in investigating some form of merger between the two companies. Rio Tinto responded that it was not interested in pursuing these discussions.
Glencore confirms that it is no longer actively considering any possible merger transaction with, or offer for the shares of, Rio Tinto.
As a consequence of this announcement, the Panel Executive has determined that Glencore is for a period of 6 months from the date of this announcement subject to Rule 2.8 of the City Code on Takeovers and Mergers in relation to Rio Tinto. Glencore however reserves its rights to make an offer in the future with the consent of the Takeover Panel, either with the recommendation of the Board of Rio Tinto, in the event of a third party offer for Rio Tinto, or in the event of a material change in circumstances.
The board of Rio Tinto notes the recent press speculation regarding a possible combination of Rio Tinto and Glencore.
The Rio Tinto board confirms that no discussions are taking place with Glencore.
In July 2014, Glencore contacted Rio Tinto regarding a potential merger of Rio Tinto and Glencore.
The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto’s shareholders.
The board’s rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter.
According to Bloomberg, Glencore’s secretive CEO Ivan Glasenberg made a verbal stock offer to Rio Chairman Jan Du Plessis in July. The Rio Tinto board rejected the offer in August, which means under that UK law, Glencore must wait six months before making another bid.
Glasenberg’s informal July bid carried no significant premium, said the person, who asked not to be identified as the information is private.
Bloomberg’s television arm reports that the Glasenberg’s offer was in stock, an attempt, apparently, to get Rio Tinto “on the cheap.” Earlier Forbes reported that there were rumours of an offer from Glencore to Rio Tinto of a “share-swap merger”
Bloomberg goes on to report that.
After being rebuffed by the board, Glencore has reached out to Rio’s biggest investor, Aluminum Corp. of China, to gauge its interest in a potential deal in the next year, according to people familiar with the matter.
After the initial report on the takeover Monday, business writers used epic analogies.
Meanwhile, behind its premium paywall Lex, the Financial Times is comparing the Glencore bid for Rio Tinto to the Game of Thrones.
The analysts are saying there are two main factors, Rio Tinto’s balance sheet has been weakened by a downturn in the iron ore market while at the same time Glencore aims to overtake Rio Tinto rival BHP Billiton. If it acquires RT, then Glencore will become the world’s largest mining and resource company.
The business media all say Glencore is already the world’s biggest trader in commodities.
China is a major force behind this corporate Game of Thrones. China wants more access to world resources for its increasingly hungry industry and population,while at the same time it has apparently all the iron ore it needs and iron ore is Rio Tinto’s biggest asset. The key player is a giant Chinese aluminum company now under investigation as part of the country’s corruption crack down.
Glencore is already huge, listed as Number 10 on the Fortune Global 500 list . Rio Tinto is far down at number 201. (Walmart is number one. Companies involved with Kitimat are Shell in second place, Sinopec in third and the China National Petroleum Corporation in fourth. Chevron is in 12th spot.)
Glencore is a major player in the aluminum business with assets around the world, some in partnership with the Russian giant aluminum group Rusal . According to Wikipedia, Glencore owns 8.8 per cent of a joint venture with Rusal, and the Sual Group (Siberian-Urals Aluminium Company) . That joint venture, Wikipedia says, has created the “World’s largest aluminium and alumina producer with 110,000 employees in 17 countries.”
Glencore along with Rusal has an undisclosed interest in Rusal’s Windalco alumina operation in Jamaica. Glencore also has an undisclosed interest in the Alumina Partners of Jamaica. It owns 44 per cent of Century Aluminum in Monterey California. Glencore has also undisclosed interests in idle aluminum smelters in Washington State and Montana. It has an undisclosed interest in Kubikenborg Aluminium AB in Sweden, Aughinish Alumina in Ireland and Eurallumina in Sardinia.
In the northwest, Glencore, through its agricultural subsidiary Vittera, is a partner, along with Cargill Ltd. and Richardson International in the Prince Rupert Grain Terminal. In Vancouver, Glencore owns Vittera’s Cascadia grain terminal in Vancouver.
located on the south shore of Burrard Inlet. Vittera Inc. owns and operates Canada’s largest grain handling network. The terminal handles wheat, durum, feed barley, malting barley, canola seed and specialty products, with storage capacity of 282,830 tonnes of product, handling loading from its 244 metre berth with a depth of 14.6 metres. –
Glencore is also developing a metallurgical coal mine near Chetwynd.
Glencore, through the earlier 2013 take over the mining company Xstrata owns the famous Kidd copper and zinc mine near Timmins, Ontario. The operation has 1300 employees. (Xstrata earlier took over the well-known Canadian mining company Falconbridge). It also operates the Horne copper Smelter in Rouyn-Noranda, Québec, which employees 700 and the CCR copper Refinery in Montreal, Québec which employees 650.
In Sudbury, Glencore is reviving the Errington-Vermillion Project, two deposits were that were previously mined in the 1920s and 1950s. It says the project has potential for approximately nine million tonnes, polymetallic- zinc, lead,copper, silver, gold or a rate of 2,900 tonnes per day.
The other factor for Kitimat with Glencore is that, unlike Rio Tinto, which is mostly a mining and smelting company, Glencore has interests in natural gas, oil and shipping and it is reported that the company wants to expand its hydrocarbon business from extraction to shipping.
According to Forbes, many Rio Tinto shareholders are not happy about the costs of the takeover of Alcan
The chairman of Rio Tinto, Jan du Plessis said the board was happy with the leadership of managing director, Sam Walsh, and finance director, Chris Lynch.
Interestingly, that might not be a view shared by all Rio Tinto shareholders who are still smarting from the $40 billion written off after the ill-timed acquisition of the Alcan aluminium business, followed by a $3 billion write-off after an equally poorly executed coal asset deal in Africa.
(It should be noted that Walsh was not the CEO at the time of both acquisitions, but was brought in to put Rio Tinto back on track after those huge losses)
The Rio Tinto news release says it’s business as usual:
Rio Tinto remains focused on the successful execution of its strategy, which the board of Rio Tinto is confident will continue to deliver significant and sustainable value for shareholders….
The board believes that the continued successful execution of Rio Tinto’s strategy will allow Rio Tinto to increase free cash flow significantly in the near term and materially increase returns to shareholders. Rio Tinto’s shareholders stand to benefit from the very considerable value that this will generate.
RBC Capital Markets analyst Timothy Huff said: “A potential merger with Rio would enable Glencore to get hold of the lowest-cost iron ore business in Australia. This is likely just a shot across the bow from Glencore and we expect Glencore to play the long game with any highly desired acquisition target. While asset divestments may have to play a larger part in a Glencore/Rio tie-up, we think the broader strategy for an enlarged group makes sense.”
The Globe and Mail Report on Business says
It is an open secret that Mr. Glasenberg, a multibillionaire South African, has every intention of using mergers and takeovers to greatly extend Glencore’s reach along the commodities value chain. Glencore’s strategy is to control the mines, the warehouses, the ports, the ships and the trading networks that produce and distribute commodities.
The question is whether Rio’s management and shareholders would endorse a deal that could come with no takeover premium. Some analysts think not.
One problem with Glencore’s approach to Chinalco is that the company is part of the wider probe by the Chinese government of corruption. As Reuters reported
Aluminum Corp of China general manager Sun Zhaoxue is suspected of “serious violations” of the law, a euphemism for corruption, according to a notice published by China’s Central Commission for Discipline Inspection.
Sun is also the vice chairman of Chinalco’s listed subsidiary, Aluminum Corp Of China Ltd. He is the former president of China National Gold Group Corp, the country’s biggest gold producer.
Some business analysts say even if Rio Tinto shareholders are not happy with current management they may not want their holdings affected by a possibly corrupt Chinese company.
On the other hand, as the Telegraph points out, it is really the Chinese government that will make the decision, not the company itself.
China’s government holds the key to a deal despite Rio Tinto’s public rejection of Glencore’s interest. State-owned Aluminum Corporation of China is the largest shareholder with around 10 per cent and Glencore reportedly started talking to the Chinese in the summer to sound out their interest in an exit. Although China is the world’s largest consumer of iron ore and owning such a significant stake in one of the world’s biggest mining groups is strategic now could be a good time to exit. The world is flooded with iron ore and securing supplies for steel mills is no longer an issue for the Chinese government. Now is a good time to cash in.
The man behind the so-far failed deal, who is likely “patiently stalking” Rio Tinto is the highly secretive and private Ivan Glasenberg.
Pounce, leak and wait.
It is a classic strategy in the shadowy world of mergers and acquisitions and Ivan Glasenberg, the chief executive of Glencore, is a master of this dark art.
Although a potential $160 billion mega takeover of the world’s largest shipper of seaborne iron ore, Rio Tinto, was flatly rejected in August, don’t bet on Glasenberg walking away for good
Glasenberg was born in South Africa in 1957, and apparently now holds four passports, South Africa, Australia, Israel and as of 2011, Switzerland.
When Glencore went public on the London Exchange in 2011, which the Guardian called “the biggest stock exchange float in British history,” the British media received a letter from a London law firm warning the normally aggressive media not to probe into the private lives of the company executives.
Glencore executives, the letter said, “are extremely private individuals”, who expected scrutiny of their business activities, but not their personal lives. A warning followed about the “security risk” that could be posed by any reports about their homes or private lives.
It appears that for the British media the royal family and missing school girls are fair game but not Glencore’s executives.
Although he was referring mainly to the company’s main business, commodity trading, the interview is enlightening.
Asked in an interview with The Wall Street Journal if the company has a work-life balance, the 57-year-old billionaire, a former coal trader, says: “No. We work. You don’t come here to take life easy. And we all got rich from it, so, you know, there’s a benefit from it.”
This competitiveness, he says, is smart business. “If I’m not pulling my weight and setting an example” and “traveling 80% of the time”, his charges would complain to the board and try to get him fired….
Mr. Glasenberg says the phenomenon is still at play. “I see it happening. Some guy suddenly decides: ‘I want to take it easier, I want to spend more time with the family’… an attack will come.”
Mr. Glasenberg, who had been CEO of Glencore since 2002, says he is insistent on instilling this culture at Xstrata, a mining company. Glencore had amassed a portfolio of mines over the past decade. “I thought if we could put our hard-working culture as traders into the asset management it will be a great combination and we did do that,” he says.
One area where Glasenberg does get soft however is on worker mobility, noting that blue collar miners can work their way up to earning the eight-figure salaries enjoyed by his squadron of commodities traders. Just try him.
“You want to be a trader, come be a trader,” he told Wall Street Journal. “You want to travel six days a week, you want to travel the world, the door’s open. I earn more than you. Come be a trader. Please, the door’s open.”
If the Glencore news release is correct, that means in six months, on April 7, 2015, the next move in the future of Rio Tinto will come, unless, as the Glencore news release states “if there is a material change in circumstances”
One thing is clear, Kitimat can now add Rio Tinto and Rio Tinto Alcan to the mix of uncertainty along with Shell, Chevron, Enbridge, Apache and the rest of the corporate movers. In other words, we are all extras in the corporate Game of Thrones.
The cost of the Kitimat Modernization Project has jumped to $4.8 billion US, Sam Walsh CEO of Rio Tinto, the parent company of Rio Tinto Alcan said Thursday as the company released its results for the first six months of 2014.
In its report. Rio Tinto said.
In February 2014, the Group announced that a review of major capital projects had identified a project overrun in relation to the Kitimat Modernisation Project. The overrun evaluation is now complete and has identified the requirement for additional capital of $1.5 billion to complete the project. This was approved by the Board in August 2014, taking the total approved capital cost of the project to $4.8 billion. First production from the Kitimat Modernisation Project is expected during the first half of 2015.
The weakening Canadian dollar appears to have improved the overall bottom line for the RT aluminum division, with underlying earnings of $373 million 74 per cent higher than in the first half of 2013:
The main drivers were growing momentum from the cost reduction initiatives, a weaker Australian and Canadian dollar and a further rise in market and product premiums, with 61 per cent of the Group’s primary metal sales sold as value added product generating a superior price. This was achieved despite a nine per cent decline in LME prices over the period which lowered earnings by $265 million.
The report also contains details of the deal between Rio Tinto Alcan and LNG Canada for the old Eurocan dock, indicating that LNG Canada will not likely commit to a deal until the Final Investment Decision is made:
On 12 February 2014, Rio Tinto entered into an option agreement with LNG Canada, a joint venture comprising Shell Canada Energy, Phoenix Energy Holdings Limited (an affiliate of Petro-China Investment (Hong Kong) Limited), Kogas Canada LNG Ltd. (an affiliate of Korea Gas Corporation) and Diamond LNG Canada Ltd. (an affiliate of Mitsubishi Corporation) to acquire or lease a wharf and associated land at its port facility at Kitimat, British Columbia, Canada. LNG Canada is proposing to construct and operate a natural gas liquefaction plant and marine terminal export facility at Kitimat. The agreement provides LNG Canada with a staged series options payable against project milestones. The financial arrangements are commercially confidential.
According to The Australian other aluminum operations aren’t doing so well, and the newspaper says that RT is starving under performing units in favour of the “good bits.”
The qualifier is that there is still much work to do on the aluminium front, Rio having splurged $US38bn on the acquiring Alcan in 2007.
Aluminium’s contribution to underlying earnings increased from the $US214m in the previous corresponding period to $US373m. But returns remain miserable, and that is from the good bits.
The underlying loss was $US182m, an increase from the $US158m loss previously. At least the bad bits of aluminium are being starved of capital expenditure, with Walsh putting them on the private equity-type approach to running a business.
But is has to be wondered how much longer the pain will be endured. And there is increasing chatter that closures are on the cards, with the long-term future of Rio’s Australian smelters the real concern.
Overall Rio Tinto is making money with earnings up 21 per cent, according to the report:
Sam Walsh said “Our outstanding half year performance reflects the quality of our world-class assets, our programme of operational excellence and our ability to drive performance during a period of weaker prices. These results show that our current strategic and management focus is making a meaningful contribution to cash flow generation.
“During the first half we have increased underlying earnings by 21 per cent to $5.1 billion and enhanced operating cash flow by eight per cent. We delivered what we said we would, exceeding our $3 billion operating cash cost reduction target six months ahead of schedule while producing record volumes and driving productivity improvements across all our businesses.
“We have decreased net debt by $6.0 billion compared with this time last year, through our stronger operating cash flows, sharply reduced capital spend and proceeds from divestments. We are confident Rio Tinto’s low cost, diversified portfolio will continue to generate strong and sustainable cash flows over the coming years. This solid foundation for growth will result in materially increased cash returns to shareholders, underscoring our commitment to deliver greater value.”
Net income increased 156 per cent to $4.4-billion while revenues were $24.3-billion. Rio Tinto said it reduced operating costs by $3.2-billion, exceeding its $3-billion target six months ahead of schedule.
Despite the good news, the financial press is already speculating that Sam Walsh who is 64, may not last long as boss of Rio Tinto. His contract expires at the end of 2015. The Financial Times is quoting analysts as saying despite Walsh’s desire to stay on, the company is already looking for a successor.
According to the FT these include
Andrew Harding, head of iron ore, holds the job that was previously Mr Walsh’s, running Rio’s most important division, and for that reason is probably a front runner. Aged 47, he is a 21-year Rio veteran and previously ran its copper business. Chris Lynch, finance director since 2013, is the only executive on Rio’s board other than Mr Walsh and is another industry veteran, but at 60 is only a few years younger than Mr Walsh.
Alan Davies, head of diamonds and minerals, and Harry Kenyon-Slaney, head of energy, also have important operational experience across commodities and lengthy Rio careers but like Mr Harding are relatively new to their current roles. The heads of the other mining businesses are also relatively new to Rio. Jean-Sébastien Jacques, head of copper, joined Rio in 2011 from Tata Steel while Alfredo Barrios came to the group from BP only in June and is running aluminium.
1. Why was the study suddenly released after the province said it was “privileged?”
2. Did the apparently rushed release mean that the study, as far as the public is concerned, is incomplete?
3. While most people in Kitimat believed that the study would be a wide ranging look at all parameters of industrial development in the valley, it was limited to just two factors, sulphur dioxide and nitrogen dioxide.
4. It appears that everyone involved were consulted prior to the release with one key execption, the District of Kitimat. Why?
5. The study appears to have changed in its criterion from the time of the request for proposal and the final release one issue—an oil export terminal, which went from “crude” in the request for proposal to refined in the final report.
While the study is spun has a showing that industrial development in the Kitimat Valley can proceed as long as the environment is properly managed, the gaps and the spin will likely bring doubt to the results. That means that a wider ranging and truly independent study of the air shed is needed so that both residents and industry can then make the proper decisions.
In October 2013, the Ministry of the Environment issues a “request for proposal” to “study potential cumulative effects to environment and human health from existing and proposed industrial facilities in the Kitimat airshed.” to be filed by March 31, 2014.
The Province will fund a $650,000 scientific study to help inform regulatory and policy development for future industrial activity in the Kitimat area. The goal is to ensure the potential impacts from industrial air emissions are clearly understood prior to new projects being approved and in operation.
The Kitimat Airshed Impact Assessment Project will look at the cumulative effects of existing and proposed industrial air emissions in the airshed. These include emissions from: an existing aluminium smelter, three proposed LNG terminals, a proposed oil refinery, a crude-oil export facility, and gas-turbine-powered electrical generation facilities. The study will focus on sulphur dioxide and nitrogen dioxide emissions from these facilities.
The study will assess the impact of emissions through a number of scenarios, including their potential effects on water and soil, as well as on vegetation and human health from direct exposure.
With that news release, it appears that many people assumed that “cumulative effects of existing and proposed industrial air emissions in the air shed,” would include all possible scenarios and contaminants.
The report, when it was released on Friday, covered just the “focus” sulphur dioxide and nitrogen dioxide and no other factors in air quality.
Crude or refined oil export?
As Northwest Coast Energy News noted that the report, as released, doesn’t include any references to the Enbridge Northern Gateway project, even though Northern Gateway is a source of “proposed industrial air emissions in the air shed.” The request for proposal also mentions “a crude-oil export facility” but the report as issued concerns a marine terminal for Black’s refinery
The products will be exported via a marine terminal on the Douglas Channel. Projected volumes include 320,000 barrels per day of diesel fuel, 110,000 barrels per day of gasoline and 60,000 barrels per day of jet fuel.
The map in the main report clearly shows that the study concerned the “Kitimat Clean Refinery Port” not a crude oil export facility—in other words likely Enbridge Northern Gateway.
On October 21, 2013, District of Kitimat Council endorsed a motion by former Councillor Corinne Scott:
“The BC Government has recently announced a budget of $650,000 to study the cumulative effects on the air quality due to the proposed industrial development in the District of Kitimat. It would be beneficial to have a representative from the District of Kitimat as an active participant on the committee to provide input and feedback as the study progresses.”
At the time Chief Adminstrative Officer Ron Poole told council that the minister’s office had called and promised to “involve the District.”
At that meeting, Councillor Mary Murphy reported that member were “vocal” at the Union of BC Municpalities that it was essential that Kitimat be involved. Councillors suggested that the study be wide ranging and include emissions already in the area and residual emissions left over from the closed Eurocan and Methaex operations.
The provincial final air shed report makes no mention at all of the District of Kitimat, Eurocan or Methanex.
In April, 2014, after the March 31, reporting deadine, the District and Council had heard nothing from the province. So in April, District Council passed a motion asking for a report on the status of the study.
In June, the province refused to release the report to lawyers involved in a suit against the Environmental Assessment Board which is challenging Rio Tinto Alcans’ permit to increase sulphur dixoide emission in the valley. According to the Globe and Mail, Dennis Doyle, a lawyer with the Ministry of the Attorney General, in the RTA suit, wrote to the Environmental Law Centre in Victoria
In a follow-up letter dated June 12, Mr. Doyle said, “On the matter of the Kitimat Airshed Study I am instructed that this report was prepared to guide development of government policy on industrial development in the Kitimat area and to assist the executive council in its ongoing deliberations. It is not a report that was prepared for the Respondent and played no part of the decision-making process for the permit amendment which is now under appeal.”
The EAB told the province to respond to that question by July 18. Instead there was a hastily called news conference and the report was released. However, a close look at the report shows that it was likely rushed to meet the EAB deadine and was incomplete—rather surprising for a report that was supposed to be complete by March 31.
What evidence is there that the report was rushed out by the Ministry of the Environment? The most compelling indication is that instead of a public-friendly Summary Report with an executive summary and clear conclusions, there was nothing more than a short Power Point presentation.
Most people in Kitimat who follow the energy debate are familiar with the approach of combining a readable summary with technical data. It is most evident in the report of the Enbridge Northern Gateway Joint Review, which issued a relative short summary, Connections along with the long technical report, Considerations.
Let’s take as a prime example, the original report on the Kitimat airshed commissioned by Rio Tinto Alcan. In that case, ESSA Technologies Ltd of Vancouver, the company hired by the RTA Kitimat Modernization Project to study the effects of increased sulphur dioxide emissions in the Kitimat Valley, issued three documents, an easy to understand 37-page summary report, a much longer 456 page Technical Assessment Report and a third 332 page volume of appendices, technical data and tables.
It was the same company, ESSA Technologies, that was retained by the province to do the much larger study of the airshed. However, the only public-friendly information was the 16 page highly simplified Power Point presentation.
The ESSA summary report for RTA shows in plain language, the reasons for its conclusions that the increased sulphur dioxide from KMP on human health “is characterized as moderate, an acceptable impact, but in need of closer scrutiny with moderate monitoring.” That report also outlines the limitations and uncertainties of the study.
There was no similar plain language summary released for the overall provincial air shed study, even though it was produced by the same company and came to similar conclusions. To find any limitations or uncertainties in the provincial air shed study you have to do a computer search for those key words.
So it is apparent that intended audience for the report is not really those who live in Kitimat, where over the past five years there is wide knowledge that a summary release along with a technical report is considered a standard procedure.
Kitimat not consulted
At the Friday news conference, reporters asked Environment Minister Mary Polak several times about the delay in releasing the report, and then why it was suddenly released.
In answer to the initial question, Polak said, “We had always intended to release it.” She refused to comment on the claim of cabinet privilege, saying that was the responsibility of government lawyers at the Ministry of the Attorney General. She said that the government had received the March 31 report “by the end of April and “it went through quite a rigorous and thorough review by different agencies… we are satisfied now that the findings have been given the kind of rigorous overview and we’re pleased with what has resulted from that.”
Polak said the Haisla Nation were consulted before the commissioning of the report.
Asked again about who the BC government consulted during the review period, she replied, “There were a number of other groups involved in technical review, so not just Ministry of Environment, you’ll be aware of Northern Health authority, but Ministry of Natural Gas Development, Health Canada, Environment Canada and also specialist reviewers from the Province of Quebec, the University of Helsinki, UBC, also private consultants. Then we spent some time going over and having a technical review with Gitga’at and Coastal Coastal First Nations. So it was a matter of ensuring that we had done the very best review of the work before the occasion on which we released it.”
Which leaves one big question, why was the Province of Quebec and the University of Helsinki consulted and Kitimat, despite requests, was not?
Not in the report, not my department
The provincial government called for a report on the “cumulative effects of existing and proposed industrial air emissions” and noted it would focus “ focus on sulphur dioxide and nitrogen dioxide emissions from these facilities.” It is clear that the report did not go beyond the narrow focus on those two substances.
At the Vancouver news conference, a reporter asked Polak why green house gases were not included.
She replied, “That’s not what this study was intended to look at. This department deals with pollutants and pollution and protecting our environment from it, whereas GHG [green house gas] emissions are dealt with in our department around climate change and climate action. These particular substances have an immediate impact on human health and vegetative health and the receiving environment generally unlike GHGs which are a more global impacted and of course have an impact on climate change. This study only looked at those pollutants sulphur doixide and nitrogen dioxide
Then a second reporter asked here about particulate matter, to which Polak replied, “Coming from the Fraser Valley I am very aware of the impact of particulate matter. Any industrial development that we permit in British Columbia or receives an environmental assessment certificate, particulate matter and the release of particulate matter is one of the things that gets evaluated as we determine whether or not to grant those permits. Or to put stipulations on those permits in order to ensure a reduction or management of particulate matter. That’s where that’s dealt with and we have some pretty good understanding of how that operates. We also have some modelling from this study.
“The reason this study didn’t report on that because we hadn’t asked them to. We specifically wanted to get at the issue of sulphur disoxide and nitrogen dioxide but please do not take frm that because it’s not in the study, it doesn’t get looked at. It simply gets looked at in a different process. In this case it was the understanding of the Kitimat air shed with respect to sulphur dixoide and nitrogen dioxide that we needed to have a better answers and better information.”
In other words, despite what the original proposal said: “The goal is to ensure the potential impacts from industrial air emissions are clearly understood prior to new projects being approved and in operation,” the provincial government is content to wait until the permit phase to consider particulate matter, rather than include particulate matter in the long term planning for the air shed.
And for green house gases, the same attitude seems to apply, either it’s not her department or it will be dealt with sometime in the future.
What’s going on in the air shed?
Although the provincial government has been able to spin that the air shed report clears the way for more industrial development in the region, the report isn’t much help for long term planning for those both for and against industrial development in the valley.
First one has to wonder just how comprehensive was the study, even when it comes to sulphur dioxide and nitrogen dioxide?
The report for Rio Tinto Alcan for just one substance—sulphur dixoide—from one industry—aluminum smelting–led to a 456 page technical report with 332 pages of appendices.
The provincial technical report adds one more substance, nitrogen dioxide, and adds four LNG facilities, an oil refinery, different export terminals for those industries, and two hydro generating stations plus related shipping, including a passing mention of vehicular and train traffic. The new report is 363 pages, including the appendices. (It should be noted that the air shed report does reference some of the information in the RTA report)
The various studies for the Enbridge Northern Gateway, which often contained material on air emissions, included a much longer list of what in industry jargon are called CPOC “chemicals of potential concern,” including chemicals that might be released in trace amounts from the Northern Gateway terminal, but may be of more concern from LNG projects. Who knows unless those substances are studied?
As was required by the Joint Review Panel, Enbridge also studied potential problems from accidental release of air-borne contaminants from the Northern Gateway project. There is no mention of accidental release in the current air shed study.
Although the increase in truck traffic in Kitimat is clearly visible to people who live in the town, the air shed report also speculates that with LNG and a possible refinery, there will also be a significant increase in rail traffic coming into Kitimat, hauled, of course, by diesel locomotives, which the report says is “expected to be conservatively captured within the background concentration adjustment.”
Can the Valley “handle industrial expansion”
Stakeholders in the region from the District of Kitimat to the Gitga’at First Nation to various environmental groups asked for a comprehensive review of what is going to happen in the Kitimat air shed with industrial expansion.
So the answer to the question can the valley “handle industrial expansion” after the flawed and limited report from the provincial government is not “yes,” but “we don’t know yet.”
It appears that the report is part of Christy Clark’s ongoing campaign that LNG will save the provincial economy.
There are two factors the report ignores.
First the energy companies are going to make their final investment decision on cold hard facts, including their own assessment of the potential problems from the air shed, not spin from the provincial government.
Second, until there is a proper air shed study, the First Nations, including the Haisla in Kitimat, the Gitga’at at Hartley Bay, the Kitselas in Terrace will not have solid evidence to make a decision on the details of the LNG or refinery development on their traditional territory and increased ship traffic along the coast and that will come into immediate conflict with the Supreme Court ruling on the Tsilhqot’in decision and the finding that “Whether a particular use is irreconcilable with the ability of succeeding generations to benefit from the land will be a matter to be determined when the issue arises.”
There is a new Orwellian phrase used by both the federal and provincial government. Every report is “independent” and “science-based,” although all they all tend to support the policy of the commissioning agency.
What the Kitimat Valley, Douglas Channel and the Terrace region need is a truly independent and truly science based and truly comprehensive evaluation of the air shed. At the moment, that doesn’t exist. It should whether it comes from industry or if the local governments can find the budget to fund a proper study or some combination of the two.
The long awaited Kitimat air shed study, released by the province Friday, July 17, 2014, says “that with proper management, Kitimat’s ai rshed can safely accommodate new industrial growth” without major affects on either human health or the environment. Link to news release :Study shows Kitimat airshed can handle new industrial development
The Kitimat Airshed Assessment looked at the cumulative effects of industrial air emissions, primarily sulphur and nitrogen oxides, and their potential impacts on both human health and the environment from
Rio Tinto Alcan’s existing aluminium smelter and its planned modernization
David Blacks proposed “Kitimat Clean” oil refinery at Onion flats
Four proposed LNG facilities; Shell-led LNG Canada, Chevron lead Kitimat LNG, the floating Douglas Channel LNG at the old log dump and a second floating LNG project called Triton.
BC Hydro gas turbine powered electrical generation facilities in Kitimat and near Terrace
Predicted increased to marine shipping in Douglas Channel.
The study was divided into two zones.
Health results were first examined for Kitimat townsite, the Kitimat Industrial Service Centre and Kitamaat Village.
The wider study included Gitga’at Old Town, Hartley Bay (Kulkayu), Kitimat-Stikine, Kitselas, Kitsumkaylum, Kshish, and Terrace.
There was one big factor missing from the study, it does not include the Enbridge Northern Gateway project, although the consultants who did the study do cite a couple of the air quality studies that Enbridge filed with the Northern Gateway Joint Review Panel. That despite the fact the Joint Review Panel under Condition 82 required that Enbridge file with the NEB for approval, at least four months prior to commencing construction, “an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.”
The JRP report acknowledged that emissions from the Enbridge terminal would be minimal but would contribute to the cumulative effect of pollutant emissions from other industries and required Enbridge to consult with the District of Kitimat, the environment ministries and other industries in planning for emissions.
The map from the airshed study also shows that the possible marine terminal for David Black’s proposed Kitimat Clean refinery project is at or close to where the proposed Enbridge Northern Gateway terminal would be.
Health and environment
The study looked at proposed emission levels and the effect of emissions elsewhere in the world and then compared those studies with the Kitimat Valley. It found that the risk of sulphur dioxide was “directly related to proximity to industrial area”–largely the Kitimat Service Centre area–and that there would be a minor increase in respiratory incidents of 0.5 per cent to 2 per cent, with a slight increase of nitrogen dioxide but those were within existing guidelines.
As for environmental impact, the study says nitrogen dioxide impacts will be low. There wil be “some increased risk of soil impacts” from sulphur dioxide. The study says there will be “no negative impacts to vegetation across all scenarios” but did find “potential for acidification” of seven small lakes. Lakelese Lake is not one of those affected.
The study also doesn’t include particulate matter and although it does consider climate change, did not take into consideration possible increase of green house gases in the Kitimat Valley.
The consultants, Esssa Technologies of Vancouver, based its findings on an earlier study by Rio Tinto Alcan on emissions from the Kitimat Modernization Project and worked on those findings by adding new industries and a greater area to the models they used.
The province and industry says they will continue to monitor air, water, soil and vegetation “to ensure these values are protected.”
The higher levels of sulphur dioxide emissions from the Rio Tinto Alcan Kitimat Mondernization Project will be allowed to continue under the current permit. Environment Minister Mary Polack told reporters that will only change if the current court challenge to the sulphur dioxide levels are successful.
What Northern Gateway Joint Review said about emissions in the air shed
Among the 209 conditions imposed on the Enbridge Northern Gateway project is No. 82, an Air Quality Emissions Management and Soil Monitoring Plan.
Northern Gateway must file with the NEB for approval, at least 4 months prior to commencing construction, an Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal…
This plan must include:
a) a description of the baseline, pre-construction conditions, informed by relevant modelling results and recent, existing monitor data;
b) locations of both air and soil monitoring sites on a map or diagram, including the rationale for the locations selected and the timing for installation;
c) methods and schedule of ambient monitoring for contaminants of potential concern in air (e.g., NO2, SO2, and H2S) and in soils (e.g., pH; major plant nutrients K, P, N, and S; and trace metals), and emissions source tracking;
d) data recording, assessment, and reporting details;
e) a description of the public communication and complaint response process;
f) additional measures that will be implemented as a result of monitoring data or ongoing concern;
g) the criteria or thresholds that will require implementing additional measures;
h) a description of the plan updating process;
i) a summary of Northern Gateway’s consultation with Environmental Canada and the British Columbia Ministry of Environment regarding the Air Quality Emissions Management and Soil Monitoring Plan. This summary must include any issues or concerns raised regarding the plan and how Northern Gateway has addressed or responded to them; and
j) a summary of discussions with the District of Kitimat and local or regional industrial emitters regarding collaborating on the plan’s design and implementation.
One of the things that the Joint Review Panel noted in requiring Enbridge Northern Gateway to have an updated plan and to collaborate with Kitimat and other industries is that levels of acceptable sulphur doixide in the atmosphere are changing and much of Northern Gateway’s modelling was based on standards that were becoming obsolete.
In the Joint Review Panel report, section 8.7, the JRP said:
Northern Gateway assessed changes in the atmospheric environment, including a modelled assessment of criteria air contaminant, hazardous air pollutant, and greenhouse gas emissions. Criteria air contaminants assessed by modelling included sulphur dioxides, nitrogen oxides, carbon monoxide, hydrogen sulphide, and particulate matter. Hazardous air pollutants were also modelled and included total volatile organic compounds (VOCs), benzene, toluene, ethylbenzene, and xylene (combined, BTEX), as well as hydrogen fluoride.
The provincial air shed report considered only two contaminants, sulphur dioxide and nitrogen dioxide.
Northern Gateway said there would be minimal atmospheric emissions from the construction and operation of the pipeline. The focus was on the Kitimat marine terminal.
The modelled assessment for the Kitimat Terminal included emissions associated with terminal operations, with the largest sources being vehicle traffic and
hydrocarbon storage tanks Northern Gateway used the conservative assumption of continuous ship berthing…emission rate) in order to capture the worst case scenario of concurrent adverse meteorology and maximum potential emissions. From the model results, Northern Gateway predicted that sulphur dioxide associated with operating the Kitimat Terminal would exceed the provincial air quality objectives (Level A) for all time periods. This after mitigation.
Environment Canada said that Northern Gateway took appropriate measures in designing and siting its proposed facilities to minimize adverse effects on air quality. It acknowledged Northern Gateway’s commitments to adopt best practices and to use economically-feasible best-available technologies in designing the Kitimat Terminal to minimize effects on air quality.
Northern Gateway ackknowledged that “due to the project interacting with nearby topographical features, where the largest sulphur dioxide emissions are from the
marine vessels, the highest concentrations were predicted to occur infrequently and immediately adjacent to the terminal fence line.
Northern Gateway, Transport Canada, the Heiltsuk First Nation and other stakeholders did acknowledge that eventually the vessels coming to Kitimat “would be subject to the reduced sulphur fuel requirements associated with the joint United States-Canada North American Emission Control Area.
Based on this, marine fuel sulphur requirements permitted in Canadian coastal waters (200-nautical-mile limit) would be 1.0 per cent in 2012, reducing further to 0.1 per cent by 2015. Northern Gateway predicted that sulphur dioxide emissions from marine vessels should be approximately 96 per cent lower than modelled once these new international fuel standards take effect. Northern Gateway also predicted exceedances of provincial air quality objectives in the area for carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulphur.
Northern Gateway said there “no exceedances of hazardous air pollutant guidelines were predicted as a result of the project itself” but there could be a cumulative effect with other industries in the Kitimat waterfront.
The Joint Review Panel ruled:
By the Kitimat Terminal’s proposed in-service date, there will have been significant changes to the number and magnitude of existing air emission sources since
the provincial emission inventory of 2000 was compiled, and since Northern Gateway completed its modelling assessment.
Regarding the sulphur emissions attributable to the terminal, marine vessel berthing would account for 97 per cent. Given that Northern Gateway used conservative assumptions regarding berthing in the modelling and that regulations coming into force regarding the sulphur content of marine fuels would further decrease predicted missions, the Panel finds that the modelling results presented in the application and subsequent filings are not predictive of the realistic potential effects on local air quality.
Based on the filed information about sulphur dioxide emissions, the Panel is satisfied that new modelling based on the updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not exceed provincial air quality objectives.
The Panel requires that further modelling, reflecting the current level of activity, equipment, and marine sources, must inform Northern Gateway’s design of the Air Quality Emissions Management and Soil Monitoring Plan for the Kitimat Terminal.
Updated modelling would be used to inform the monitoring program’s design, as well as to help ensure that the monitors are placed effectively to monitor both human and environmental health.
Cumulative effects on the atmospheric environment
Northern Gateway said that, during the Kitimat Terminal’s operations, tank maintenance and marine berthing would add a potential measureable contribution to regional cumulative environmental effects from air emissions. Northern Gateway incorporated the existing industrial sources in the Kitimat area in its modelling assessment, using the British Columbia Ministry of Environment’s emissions inventory. At the time the modelling was run, the available emission estimates from 2000 were used to characterize the existing sources in the airshed.
The Joint Review panel noted that over the time of the hearings”it heard of many changes to the industrial make-up of the Kitimat area since the 2000 emissions inventory was developed.”
Combining these with the predicted project emissions, the model results indicated predicted exceedances of regulatory thresholds for sulphur dioxide, carbon monoxide, particulate matter, hydrogen sulphide, and total reduced sulfur, though not at every averaging period.
Northern Gateway said that, due to the existing large emission sources and the region’s complex meteorology and topography, the exceedances are primarily attributable to the other industrial activities around Kitimat and not from the project itself.
Because there would be adverse project effects remaining after mitigation that could combine with the effects of other past, present, and future projects, and because cumulative effects are of primary concern, the Panel’s significance recommendation is given below in its analysis of cumulative effects.
The Panel finds that the emissions associated with the Kitimat Terminal’s operation would be minimal compared to the existing sources presented.
Although the modelled cumulative emissions exceeded many regulatory thresholds, the exceedances were predicted based on an out-of-date emissions inventory, and were predicted to occur prior to adding emissions from the project. Based on the information about sulphur dioxide emissions on the record, in addition to the modelling included in the application, the Panel is satisfied that new modelling based on updated information would indicate that sulphur dioxide associated with the Kitimat Terminal’s operations would not contribute to an increased exceedance of provincial air quality objectives, either through limited emissions or berthing management to limit emissions in particularly adverse conditions.
LNG Canada has chosen CFSW LNG Constructors, a consortium of four engineering companies Constructors as its main contractor for Front End Engineering and Design (FEED) as well as project execution services for the proposed liquified natural gas export facility.
The contractors will begin FEED activities for the LNG Canada project on June 1, 2014.
Final go ahead is still subject to a Final Investment Decision which will come, yay or nay, sometime in the next couple of years.
One of the partners in CFSW familiar to Kitimat residents is WorleyParsons.(company website) Others are Chiyoda, a Japanese company specializing largely in LNG construction (Chiyoda website in Japanese), Foster Wheeler, an international company with expertise in LNG, off shore oil and similar projects and SAIPEM an Italian based engineering company again with energy industry expertise.
The announcement was made at the LNG Canada facility at the old Methanex office building in Kitimat. Company representatives, members of council and representatives of the Haisla Nation, including Chief Sammy Robinson were at the ceremony.
LNG Canada’s Susannah Pierce said, subject to the final investment decision, Shell and its partners “We want to make this the first LNG project out of British Columbia, serving the energy needs of Asia.” (repeating a similar statement she made in November 2013 at the environmental assessment open house .)
Wim Ravesloot, LNG Canada Project Director said one of the reasons for choosing the consortium was “experience in developing modular construction.”
Rio Tinto Alcan’s Kitimat Modernization project is also highly dependent on modular construction, with many components of the new aluminum smelter are produced in China, brought to Kitimat and then used to create the new potlines and related facilities. Publisher David Black also recently told Kitimat audiences that the reason for the possible location of his refinery near Kitimat, rather than Alberta, is due to the need for large scale modular construction.
“So we are here today to make a statement that we are here to deliver our project in a safe way without any incidents and with out having any impact on the environment.” Raveslook said. “We also want to make a statement that we want to develop this project responsibly with close cooperation with the local people that live here in this town, in the village, here in Haisla lands where we are a guest and hopefully in the future as a respected neighbor.”
Pierce introduced two documents that outlined what she said is LNG Canada’s commitments to the community.
The first said:
LNG Canada is committed to an approach that the First Nations and local communities in the northwest realize economic benefits from this project. These benefits may come in the form of direct employment opportunities for qualified workers and potential contract opportunities for competitive businesses. Most of the employment and contract opportunities during the construction phase will be through CFSW….as a result CFSW and LNG Canada is committed to work together so that local residents can become qualified to work for LNG including investing in skills training, developing long ter partnerships with local education and training facilities in the region to develop and maintain a skilled workforce to support LNG development….a key component of this contract with the community is for you to develop the skills and training for sustainable employment at this project when it proceeds.
The second concerned Health, safety and the environment.
Health, safety and environment is integral in everything at LNG Canada. Our HSE objectives are Goal Zero, meaning no harm to people, no uncontrolled releases to the environment. We comply with life saving rules we respect and care for people and the environment. We are engaged, committed and lead by example. We set clear expectations for staff and contractors. We communicate openly and honestly, encouraging everyone to speak up. We are learning organization with a focus on continuous improvement. We hold each other accountable, share information and celebrate success.
The US based Natural Resources Defence Counsel environmental group, a major opponent of both the Keystone XL and Northern Gateway pipeline projects, is praising Rio Tinto for divesting its interests in the controversial Alaska Pebble Mine project.
The NRDC is, in fact, so pleased, with Rio Tinto that they took out an expensive full page ad in London’s Financial Times to congratulate the mining and smelting giant which, of course, owns Rio Tinto Alcan and the aluminum smelter in Kitimat. Related Rio Tinto donates $19 million Pebble Mine stake to charity
The National Resources Defence Counsel is often a favourite target for the Harper government and oil-patch conservatives who see it as one of the foreign environmental groups interfering in Canadian affairs.
We’ve gone each year [to corporate shareholder meetings or to meet corporate executives] to fight the Pebble Mine — a 21st Century example of what the mining industry will do if given free reign, based on promises of safety, sustainability, and technological innovation that can’t be kept and must not be believed….
In 2010, I also traveled to Tokyo to meet with leadership of Mitsubishi Corporation, a former significant Pebble shareholder that quietly sold all of its interest in the project eight months later.
This has become an essential aspect of our advocacy with multi-national corporations: meeting privately with company leadership and participating in the once-a-year public gathering of their shareholders, of which – in order to gain access — we are one. Attending the shareholder meetings is no fun, requiring immersion in a world where natural resources are for extraction and exploitation, where representatives from far-flung communities seeking remediation and redress from contamination recount the tragic impacts of mining on their daily lives.
But this year promised to be different for the residents of Bristol Bay – and for those of us supporting their cause.
Reynolds goes on to write that a week after Rio Tinto announced the divestment, they were meeting with RT CEO Sam Walsh and senior executives in the London headquarters:
We were there to thank them for listening to the people of Bristol Bay who, by overwhelming numbers, have consistently voiced their opposition to the mine – a project that embodies the greatest threat ever posed to the economic lifeblood of the region, the Bristol Bay wild salmon fishery.
Each of us in turn – including Bobby Andrew (Yupik elder and spokesperson for Nunamta Aulukestai, an association of Bristol Bay village corporations and tribes; Kim Williams, Executive Director of Nunamta Aulukestai; and Bonnie Gestring, Circuitrider for Earthworks) — delivered a simple message: that Rio Tinto had fulfilled its commitment to Bristol Bay’s communities to act responsibly in a manner consistent with protection of the wild salmon fishery and the wishes of the people who depend on it. Given the scope of the proposed Pebble Mine and the unavoidable risks of contamination associated with its location, there is only one responsible course – divestment – and that is precisely what Rio Tinto had done. The company deserved congratulations, and we conveyed it unequivocally.
Later, meeting with Rio Tinto directors, Reynolds presented the board with a copy of the ad from the Financial Times.
In the blog, Reynolds noted that Vancouver-based Northern Dynasty Minerals is determined to proceed with the project and so the NRDC says “despite major progress against the Pebble project, our work isn’t done, and we remain committed to continuing the fight – along with our Members and activists in support of the people of Bristol Bay.”
In taking out the ad, NRDC’s Taryn Kiekow Heimer, Senior Policy Analyst, Marine Mammal Protection Project, said:
NRDC and its 1.4 million members and activists join the people from Bristol Bay, Alaska Natives, commercial fishermen, sportsmen, jewelers, chefs, restaurant and lodge owners, and conservationists in thanking Rio Tinto for showing environmental and financial leadership by divesting from Pebble Mine.
The Haisla Nation and other groups often quoted NRDC studies on pipelines in their presentations before the Northern Gateway Joint Review Panel.
Royal Dutch Shell has said it will deploy more Chinese equipment at its struggling US shale business – becoming the latest natural resources company to try to reduce costs by switching to cheaper Asian suppliers.
Miners such as Rio Tinto and Antofagasta have already been encouraged by improvements in the reliability of Chinese machinery, which they say can now be integrated into their existing operations without compromising efficiency or safety standards….
Shell’s move comes as oil and mining companies – which ramped up capital expenditure in recent years amid a huge commodities boom – are being pressed by shareholders to curb spending and improve returns….
Rio Tinto, the Anglo-Australian miner, has also been on a spending spree in China. The company, which is slashing its capital spending after disappointing investors with cost overruns, says it made close to $2bn-worth of equipment purchases in China last year, and around $1bn-worth in India.
Rio Tinto Alcan has said that much of the building materials and equipment for the Kitimat Modernization Project has come from China, often in huge modules which are then inserted into the new buildings as part of the aluminum smelter upgrades.
Since LNG Canada, a joint venture of Shell Canada Energy, Phoenix Energy Holdings Limited (an affiliate of Petro-China Investment (Hong Kong) Limited), Kogas Canada LNG Ltd. (an affiliate of Korea Gas Corporation) and Diamond LNG Canada Ltd. (an affiliate of Mitsubishi Corporation) has not yet made a Final Investment Decision on the project, the option will likely be triggered if that decision is made. There is currently uncertainty about Royal Dutch Shell projects worldwide due to management restructuring at the parent company.
The news release quotes Sam Walsh, chief executive, Rio Tinto as saying: “This is an excellent example of how we can generate meaningful value from our existing assets by selling options on port facilities to LNG Canada enabling it to share one of the best deep water ports on the western seaboard of the country. This innovative approach will provide an expanded gateway for Canadian resources to worldwide markets which has the potential to benefit the communities and economy of British Columbia.”
Andy Calitz, vice president, LNG Canada commented in the news release: “We are pleased to confirm the finalization of this agreement. We believe the LNG Canada project represents the best opportunity to bring the liquefied natural gas industry and its benefits to the people and
communities of British Columbia.”
The deal between Rio Tinto, parent company of Rio Tinto Alcan, for the old Eurocan dock, has been in the works for some time. When LNG Canada filed for its environmental assessment with the province of British Columbia a few weeks ago, the map showed the footprint of the project extended from the old Methanex plant site, where LNG Canada will be located through RTA lands on the Kitimat river estuary to the dock, long before Wednesday’s deal was signed.