Participant Funding Program – Aboriginal Funding Envelope
Funding Review Committee's Report

Allocation of Federal Funds for the Environmental Assessment of the Kitsault Mine Project

The Participant Funding Program (PFP) is established pursuant to subsection 58(1.1) of the Canadian Environmental Assessment Act (the Act), which states: For the purposes of this Act, the Minister shall establish a participant funding program to facilitate the participation of the public in comprehensive studies, mediations and assessments by review panels.

A funding review committee (FRC) was established independent of the environmental assessment (EA) of the Kitsault Mine Project (the Project), which is being conducted by means of a major-resource comprehensive study (CS). Its purpose was to assess funding applications received under the PFP–Aboriginal Funding Envelope (AFE) to support Aboriginal participation in the EA process for the proposed Project, and to recommend whether funding should be provided, and if so, in what amount.

Under the AFE for this Project, a total of $220,900 was made available to support Aboriginal participation and related consultation activities in the EA including:

• Review and comment on the Environmental Impact Statement (EIS) Guidelines;
• Review and comment on the EIS submitted by the Project proponent;
• Prepare for and participate in community meetings/open houses to consider the proposed Project;
• Prepare for and participate in the conduct of the EA prior to the preparation of the Comprehensive Study Report (CSR);
• Input and comment on the draft CSR; and
• Final input into the CSR.

In addition to the PFP-AFE funding being made available to assist Treaty Nations and Aboriginal groups to participate in the EA process, funding for this purpose is also being provided by the Province of British Columbia.

The deadline to submit an application was April 8, 2011. Nine applications were received requesting a total of $1,094,850.68.

On April 15, 2011, the FRC met to review the applications. The FRC members were Paul Scott, retired Regional Director of the Agency's Pacific and Yukon offices, acting as Committee Chairperson, Ray Crook, EA Consultant and Patrick Duffy, EA Consultant.

Background

The Project proposed by Avanti Kitsault Mine Ltd. (the Proponent) would entail re-opening an existing molybdenum mine that previously operated from 1968-1972 and 1981-1982. The Project would be located in north western British Colombia (BC), approximately 140 km north of Prince Rupert. Reclamation of the old mine site commenced in 1996 and was completed in 2006. No mine infrastructure remains on site, and the open pit has been substantially re-vegetated, so that, with respect to the applicability of the Act, the re-opening is considered to be a new project (rather than a modification of an existing project).

The Project is located in the Nass Area and Nass Wildlife Area, which are subject to the provisions of the Nisga'a Final Agreement (NFA). As a result, the EA of the proposed Project must comply with the requirements of the NFA in addition to the requirements of the Act.

Key Project components would include expansion of the historic open pit and construction and operation of a processing plant and tailings management facility. The average ore production rate will be 40,000-50,000 tonnes per day over an estimated mine life of 15 years. Ancillary infrastructure will consist of a processing plant; water management facilities; reagent handling and storage; assay and metallurgical laboratory; air supply; power supply and distribution; staff accommodations; explosives manufacturing facility and explosives magazines; and solid and wastewater management facility. The proposed Project will utilize existing access roads and power line. Approximately 80 tonnes of concentrate per day will be produced and transported from the mine site to the Port of Vancouver.

During the construction phase of the proposed Project, the Proponent is considering the use of trucks to transport equipment and aggregate to the mine site on existing roads. Equipment will be sourced from a variety of locations. Neither the highway routes from these locations to the mine site nor the frequency of construction phase truck transport have been determined. When the proposed Project is operating, molybdenum concentrate will be transported by trucks on existing roads from the mine site to the Port of Vancouver. The frequency of transport trucks from the mine site is expected to remain at 2-4 trucks per day.

There are two highway route options that are being considered by the Proponent:

1. From the mine site following the Alice Arm Road south to the Nass Forest Service Road to New Aiyansh, continuing south to Terrace along Highway 113. This route then turns north along Highways 16/37 to Kitwanga, and then eastward via Highway 16 to Smithers, continuing along Highways 16, 97 and 1 towards Vancouver.
2. This alternate route travels from Alice Arm Road and continues along the Nass Forest Service Road to the Cranberry Connector, leading to Cranberry Junction, and then south on Highway 37 to Kitwanga. The route then turns east at Kitwanga along Highway 16 through Smithers, and continues on Highways 97 and 1 to Vancouver.

Both highway route options will be included in the Proponent's Environmental Impact Statement (EIS)/Application for consideration and review by the Provincial and Federal governments, the Nisga'a Nation, Aboriginal groups, and the general public.

An earlier component of the proposed Project was an option that involved the use of barges between Prince Rupert and the Kitsault townsite. This barge route could have been used during the construction phase as well as being an option for the transportation of processed ore to Prince Rupert for ongoing shipment to markets. The barge options have been dropped from consideration, but not before some of the applications under consideration were received.

Capital costs are estimated at $641M USD, with potentially 500 jobs during the construction phase, and 360 jobs during the operation of the mine. The Project will be reviewed by means of a CS under the Act. The Project is also subject to review under the BC Environmental Assessment Act, and a cooperative EA is being coordinated between the Canadian Environmental Assessment Agency (the Agency) and the BC Environmental Assessment Office.

This is the first CS in BC to be wholly subject to the new requirements and procedures of the recently amended Act. The Proponent's Project description was accepted into the federal EA process on August 18, 2010.

Eligibility

Under the PFP-AFE, funding may be provided to Aboriginal groups to support their input to an EA and/or to support their engagement in consultation activities with the federal government. These activities must be linked to the EA of a proposed Project through a comprehensive study, mediation or review panel.

Eligible recipients must plan to engage in Aboriginal consultation activities with the federal government that are linked to the EA of the proposed Project, and must be able to demonstrate that they meet at least one of the following eligibility criteria:

• have a direct, local interest in the proposed Project, such as a residence in the area or historical or cultural ties to the area likely to be affected by the proposed Project;
• have community knowledge or Aboriginal traditional knowledge relevant to the EA; or
• have expert information relevant to the anticipated environmental effects of the proposed Project.

All of the applicants were deemed to have met the eligibility criteria.

Funding from other sources that is known to have been made available to or received by Treaty Nations and Aboriginal groups related to the review of a project is considered by the FRC, as are any partnerships between PFP-AFE applicants and other participants in a project assessment.

Under the PFP-AFE, applicants can request funding for costs related to:

• professional fees;
• staff salaries and benefits;
• travel expenses;
• honoraria for Elders and Chiefs to attend meetings and functions;
• ceremonial offerings related to receiving traditional knowledge in relation on the EA;
• administration and reporting;
• other expenses related to local collection and distribution of information;
• office supplies and telephone charges;
• rental of office space and meeting rooms;
• legal fees;
• general media, and advertising and promotion;
• purchase of information material; and
• other detailed expenses.

Rationale for Allocation

In reviewing the applications received and in reaching its conclusions and recommendations, the FRC took into consideration a number of factors including the following:

• Engagement in consultation activities with the federal government that are linked to the environmental assessment (EA) of a proposed project through a comprehensive study (CS), mediation or review panel;
• Aboriginal groups who could demonstrate that they had met at least one of the following criteria were eligible for participant funding under the program:
  • have a direct, local interest in the proposed Project, such as living or owning property in the Project area;
  • community knowledge or Aboriginal traditional knowledge relevant to the EA; or
  • expert information relevant to the anticipated environmental effects of the Project.
• The quality, clarity and content of the application, particularly with respect to the relationship between specific Project components and the applicant's traditional lands and resources, and the applicant's proposed EA participation work plan;
• Potential Project impacts on traditional lands and resources, and on the related interests and asserted rights and title of the First Nations represented by the applicant;
• The Project description including the revised Project information submitted to the Agency late March 2011;
• The limitation on funds available under the PFP-AFE;
• Presence/absence of specific Project components within each applicant's traditional lands, and, linked to this, a general sense of the scope of potential Project impacts on traditional land and resources, and on the related interests and asserted rights and title of the applicants; and
• Recognition that the Nisga'a Nation is likely to be most directly and immediately impacted by the proposed Project, since the mine site component is located within lands subject to the Nisga'a Final Agreement (NFA).

Recommendation

The FRC recommends allocating all of the $220,900 of the available AFE funding to support seven of the nine applicants as follows:

• $136,400 to the Nisga'a Nation;
• $12,000 to the Kitselas Nation;
• $12,000 to the Kitsumkalum Nation;
• $22,000 to the Gitanyow Hereditary Chiefs;
• $12,500 to the Gitxsan Hereditary Chiefs;
• $12,500 to the Métis Nation of BC; and
• $13,500 to the Wilp Luuxhon.

Given that the barging options had been abandoned the FRC did not recommend allocating funding to either the Lax Kw'alaams Indian Band or the Gitxaala Nation.

The FRC further recommends that a condition of any funding award be that the funding recipient must provide input to the EA through comments on any or all of the following documents: the EIS Guidelines; the EIS and the CSR.

The Participant Funding Review Committee
Kitsault Mine Project
Aboriginal Funding Envelope

_____________________________________
Paul Scott, Committee Chairperson, Retired Regional Director of the Agency's Pacific and Yukon Office

_____________________________________
Patrick Duffy, Environmental Assessment Consultant

_____________________________________
Ray Crook, Environmental Assessment Consultant

Recommended Participant Funding Allocations
Kitsault Mine Project
Aboriginal Funding Envelope

Applicant	Total award amount recommended
Nisga'a Nation	$136,400
Kitselas	$12,000
Wilp Luuxhon	$13,500
Kitsumkalum	$12,000
Gitanyow Hereditary Chiefs	$22,000
Gitxsan Hereditary Chiefs	$12,500
Métis Nation of BC	$12,500
Lax Kw'alaams	$0
Gitxaala	$0
TOTAL	$220,900