British Columbians would pay millions a year to subsidize proposed Prosperity Mine – Study

Hydro subsidy alone to cost British Columbians $35 million a year

July 14, 2010 -Taseko Mines Ltd’s proposed Prosperity Mine would cost British Columbians at least $20 million a year, with hydro subsidies and other costs dwarfing any benefits the mine might create for the government, according to a detailed analysis of the company’s Environmental Impact Statement.

The analysis by Dr. Marvin Shaffer, a professor at Simon Fraser University and respected BC resource economist, states: “Contrary to statements in the EIS (the company’s Environmental Impact Statement) suggesting this project would generate billions of dollars of net benefits, the project would appear, based on the available information, to generate significant net costs for British Columbians and Canadians as a whole.” 

Responding to the report, Tl’etinqox-t’in Chief Joe Alphonse said: “This report shows British Columbians are being asked to endorse the destruction of Fish Lake and our First Nations culture, way of life and rights – and to pay Taseko millions to do it. This study demonstrates the claims of massive revenues and jobs for all are a myth, designed to make people believe the permanent damage that will be wreaked is justified.”

Mines use a tremendous amount of power and BC Hydro would need to create an expensive new power supply to meet this project’s demands. Currently Taseko would pay BC Hydro less than half the true power costs to construct and operate the mine. Dr. Shaffer found that this huge subsidy to the mining industry and loss of revenue to BC Hydro would cost BC Hydro, and ultimately all of its customers at least $35 million a year, and likely considerably more.

The cost of offsetting greenhouse gas emissions would add another $3 million a year to the tab, said Dr. Shaffer, who presented his findings to the federal environmental assessment panel that recently reported on the significant negative environmental and first nations impacts the proposed mine would create. Dr. Shaffer’s report states these combined costs alone would be more than double the benefits the government could expect – and leave British Columbians with a net cost of some $20 million a year.

The company’s Environmental Impact Statement and the BC Environmental Assessment Office review have both cited claims of huge benefits to counter environmental objections. They argue that the revenues and jobs alone justify destroying Teztan Biny (Fish Lake) and ignoring First Nations and environmental concerns.

Commenting on the BCEAO’s statement that ‘there is no expected cost to future generations except for the loss of Fish Lake and Little Fish Lake,’ Dr. Shaffer said: “That is factually incorrect. This is not a minor oversight in the BCEAO report; it is a major failing. It ignores the multi-million dollar cost the mine would impose on BC Hydro and its customers.”

Dr. Shaffer also detailed how both the company and the BCEAO failed to incorporate standard economic analysis into their estimates of increased employment benefits by failing to recognize the amount of income that would otherwise have been earned by the people employed. Using these standard practices, the employment benefit would be $7.6 million, and not the $30.6 million that is claimed.

Dr. Shaffer also noted most of the jobs created by the mine would go to local people already employed or to outsiders brought in because of their skills. The mine would have little impact on the local unemployed, while creating infrastructure and social costs to support increased populations.

Dr. Shaffer estimated the corporate tax revenues to governments might reach $7.5 million, as opposed to the $23 million a year claimed by the company, and that the figure could be even lower. His comments were backed up at the hearings by Joan Kuyek, testifying for MiningWatch Canada, who noted that for its Gibraltar mine, Taseko Mines Ltd. estimated its 2009 tax at statutory rates of $3.38 million, but paid only $669,000, slightly over one per cent of its operating profit.

As for the company’s EIS claim that mineral taxes would generate $6.5 million a year, Dr. Shaffer noted the project’s feasibility study put the figure at $3.2 million and that even this might be high. Ms. Kuyek told the panel hearings Taseko paid $606,000 in mineral taxes on an operating profit of $28.1 million in 2008, and $981,000 on an operating profit of $48.3 million in 2009 for an average rate of two per cent.

Dr. Shaffer’s report concludes: “The estimated costs to BC Hydro and its customers, plus the GHG offset costs imposed by this project total almost $38 million per year. That significantly exceeds the estimated employment and government net benefits from the project. The quantified consequences suggest net costs averaging $20 million per year over the life of the mine. There would as well be the non-quantified environmental, cultural and social costs, of great concern to the affected First Nations and others.

“The only trade-off this project offers is the positive community impacts arising from the increase in regional economic and related opportunities. However, there is no evidence to suggest these are of a magnitude that would offset the very significant costs this project would impose. As stated at the outset, there is no evidence to suggest the project would generate positive net benefits overall.”

David Williams, President of Friends of the Nemaiah Valley (FONV), which commissioned the report, said: 
“We believe that if the provincial government had bothered to do a similarly correct analysis it would never have allowed the presumed economic benefits (of Prosperity Mine) over-ride what we now know are overwhelming environmental and human costs.”

Xeni Gwet’in Chief, Marilyn Baptiste added: “The only defence that has been put forward for destroying Fish Lake to build this mine is the claims of huge benefits – it cannot be justified on an environmental basis. This report demonstrates this mine will end up actually costing British Columbians at least $20 million a year.

“That leaves only one reason for building this mine; to make money for the company and its investors. This cannot be justifiable grounds for approving such an environmentally and culturally destructive project.”

View Dr. Shaffer’s Report at: http://www.ceaa.gc.ca/050/documents/41844/41844E.pdf

Media inquiries: Chief Joe Alphonse, Tribal Chairman, TNG – 250.305.8282 (c)/394.7212
Susan Smitten – 250.383.2356 / cell 604.209.1535