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Minister of Natural Resources
Ottawa, Canada K1A OE4
SEP 2 0 2007

I am writing in response to Environmental Petition no. 202 concerning mine sites currently or formerly owned by the Cape Breton Development Corporation (Devco). The petition was received by my department on May 23, 2007.

The enclosed document provides federal responses to all of your questions with the exception of Question no. 8. That question falls within the mandates of the Ministers of the Environment and Fisheries and Oceans who will respond under separate cover.

It is important to understand that coal located within the boundaries of the province of Nova Scotia is owned by the province and that, through its Mineral Resources Act, Nova Scotia provides a system of legal tenure and administration for coal development.

With respect to the remediation of Devco-owned properties, the Corporation expects to complete the major portion of its site remediation within the next five years. Thank you for providing us the opportunity to respond to your questions on this matter.

Yours sincerely,
The Honourable Gary Lunn, P.C., M.P. Enclosure: (1)
c.c.: Distribution

Responses to Questions Posed in Petition Number 202 Related to Environmental Damage and Remediation at Former Cape Breton Development Corporation (Devco) Mine Sites

1) Why is Devco's Prince Mine property at Point Aconi being strip mined even though there's no market for the high sulphur coal?

Response: You would have to address this question to Pioneer Coal Ltd. or to the Province of Nova Scotia.

2) Why wasn't a federal Environmental Assessment Triggered?

Response: There were no triggers for a federal environmental assessment as specified in the Canadian Environmental Assessment Act. The sale of the Cape Breton Development Corporation's (Devco) land at the Prince mine site to Pioneer Coal did not trigger a federal environmental assessment because Devco was not subject to the Canadian Environmental Assessment Act at the time of the conveyance.

3) What is the federal government's responsibility for environmental conditions and liabilities at Devco's Prince Mine and other properties?

Response: Devco is responsible to address residual liabilities associated with former coal related activities, including environmental obligations associated with its properties. The former Prince mine site is no longer owned by Devco. However, mining will result in the site being remediated during the mining/reclamation operation.

4) Given that the Prince Mine is a federal site that toxic materials were left on, what has the government done to remediate the site?

Response: The Prince Mine site is no longer owned by Devco. Devco conveyed the site to a private contractor in June 2006. Full disclosure of environmental issues was provided. Prior to the sale Devco removed most of its buildings and any toxic materials from the site.

5) What is the budget for cleaning up Devco's properties and how has that figure been determined? What is the breakdown on what is spent at each site? What is the timeline for remediation? Response: Devco has recorded $119 million of anticipated future costs for environmental issues in its 2006 Annual Report. To arrive at this estimate, Devco has assessed each individual property owned by the corporation and recorded all environmental disturbances. Devco management's best estimate of the liability is based on property assessment work, studies and reports from independent consultants, and a review and verification of the data by corporation management. Information on the breakdown at each site is confidential as it could have a negative effect on the cost of site remediation. The Corporation's projections indicate that the major portion of site remediation will be completed by 2011-2012.

During 2006-07 significant progress was made on the remediation of the former Victoria Junction Coal Preparation Plant site. This is a major project that was spread over two years and will be completed in 2007/08. This site is approximately 300 acres in size and was considered one of the properties with the largest environmental liability.

In 2007/08, the Corporation began the remediation of two of its former mine sites, Princess Colliery in Sydney Mines and Lingan Colliery in New Waterford. In 2007/08, the Corporation plans to spend up to $22.0 million on site remediation. Remediation expenditures from 2007-08 to 2011-12 are projected to be $90.8 million based on current knowledge of the issues.

6) How much was allocated to clean up the Prince Mine? Why is the funding not available?

Response: In 2005, clean up of the Prince site was estimated by Devco to cost $6.6M. The site has been transferred to the private sector for a planned mining operation. Mining will result in the site being remediated during the mining/reclamation operation. As a result, no moneys were allocated to the clean-up of the site.

7) What if any conditions were attached to Devco's sale of the Prince Mine property? Was there any consultation between the federal and provincial governments during the sale and approval of the Prince Mine project?

There were communications between the Province of Nova Scotia and the Corporation as part of the Memorandum of Understanding between the Province and Devco developed at the time of the coal lease surrender. Conditions attached to the purchase and sales agreement for the Prince property are confidential.

8) What is the difference between what NSDEL says is "orange precipitate" and what everyone else says is typical "Acid Mine Drainage? What is Environment Canada and DFO doing about the "orange precipitate" being discharged into a brook that flows into ocean fishing grounds at the mouth of the Bras d'Or Lakes?

Response: This question does not fall within the responsibility areas of the Minister of Natural Resources.

9) Did the 2004 "Prince Mine Baseline Environmental Site Assessment" done for PWGSC find any environmental issues, current and potential? What did the federal government do about it? Can we get a copy of the report?

Response: Devco indicates that Pioneer Coal, the company that purchased the property was made aware of the Environmental Site Assessment and was informed of all environmental issues identified in the study prior to its purchase of the property. Devco has indicated that the document is a lengthy technical assessment and it is prepared to meet and review the document with any interested party.

10) How much did Devco receive for the sale of the Prince and Donkin Mine properties? Where is the footprint of the Prince Mine property sold to Pioneer Coal Ltd and what is its total size? Response: Devco has indicated that the price paid for the properties is commercial information. The total size of the Prince mine property sold to Pioneer Coal was 224 acres.

11) What's there to stop the province of Nova Scotia from strip mining other federal Devco properties?

Response: The Province of Nova Scotia is the owner of the coal under Devco lands and has the ability to solicit tenders to explore and develop the coal properties. Strip mining of coal under Devco lands would require access to Devco lands either through a sale or a lease process. Devco would ensure that any requirements under the Canadian Environmental Assessment Act relating to these activities are met.

Mr. Ronald C. Thompson Interim Commissioner of the Environment and Sustainable Development
The Honourable John Baird, P.C., M.P. Minister of the Environment
The Honourable Loyola Hearn, P.C., M.P. Minister of Fisheries and Oceans
The Honourable Michael Fortier, P.C., M.P. Minister of Public Works and Government Services

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