A prominent conservation group in southeastern British Columbia says it will push the federal and provincial governments to pressure Swiss-based coal giant Glencore PLC into addressing serious environmental problems with the B.C. steelmaking coal mines it wants to acquire from Teck Resources Ltd.
“Allowing Glencore to take control of Teck’s coal mines could be disastrous,” said Randal Macnair, a conservation coordinator for the B.C. environmental group Wildsight, in a post on the group’s website.
Wildsight pointed to Glencore’s history as the former owner of the Anaconda Aluminum Company in Montana, now costing the U.S. government tens of millions of dollars in cleanup costs. “Money for cleanup must be a top priority before any transfer of ownership takes place,” Macnair said. “Adequate funds must be held to cover the costs of reclamation as well as water quality environmental remediation so Canadian taxpayers aren’t left holding the bill.”
Wildsight said the deal should not be approved until there is a review by the International Joint Commission (IJC), the binational agency established by the Canadian and U.S. governments to resolve trans-border water issues.
The group was commenting on last week’s announcement of a US$8.9-billion takeover offer from Glencore – along with partners Nippon Steel of Japan and POSCO steel of South Korea – for the coal operations of Canada’s largest diversified mining company. If approved by the federal government, the deal would give Glencore control of Teck subsidiary Elk Valley Resources, which operates four sprawling open-pit coal mines in the Elk Valley of southeastern B.C. The remaining assets – primarily copper and zinc – will remain with Teck.
A Glencore spokesperson declined to comment on Wildsight’s suggestion that the takeover should be delayed until the IJC reviews water quality issues. They pointed to a list of commitments made by the company at last week’s announcement, in particular that it will increase research and development activities in Canada by 50% to $150 million, “including on innovation in relation to water quality treatment technologies.”
The company also says it will maintain a Canadian head office in Vancouver, provide no net reduction in jobs, boost capital expenditures by $2 billion over three years, and increase sponsorship, community and charitable programs. The spokesperson said that Glencore is working cooperatively with the U.S. Environmental Protection Agency, the state of Montana and the local community to restore the Anaconda site, which has operated since the 1950s and was acquired by Glencore in 1999. “Glencore will continue to ensure that [the site] has the resources it needs to meet its obligations.”
Finance Minister Chrystia Freeland said the government will “follow our regulatory processes carefully” in an upcoming review of the Teck takeover under the Investment Canada Act, adding that key factors will be jobs, a Canadian headquarters, environmental concerns and the rights of Indigenous people. Freeland also pledged to consult with the B.C. government on the review.
Teck a global coal supplier
Teck’s Elk Valley coal mines are the second-largest suppliers of steelmaking coal (also called metallurgical coal) in the seaborne market (coal exported by ships from the producing to the consuming country). In 2022, the company sold 22 million tonnes of coal to steelmakers in China, India and other Asian countries.
The mines are a major economic driver in southeastern B.C., with 4,000 people employed directly by Teck and an estimated 30,000 jobs indirectly supported by the company.
The federal government is reviewing the takeover because the Investment Canada Act mandates Ottawa to review significant foreign acquisitions of Canadian companies, and to reject them if they don’t provide “net benefit” to Canada or if they pose national security concerns. Governments have used this power sparingly in the past. The courts have recently challenged Ottawa’s authority to regulate in environmental areas that are also in provincial jurisdiction. This is one of the reasons Freeland signalled that Ottawa will consult with B.C.
Nevertheless, environmental issues are expected to dominate the year-long review, partly because of the extensive environmental damage that has already occurred in the region, but also because of an agreement reached by President Joe Biden and Prime Minister Justin Trudeau earlier this year to address cross-border water pollution from the mines.
Significant water-pollution problems have plagued Teck since it acquired its first coal mine in the region more than 30 years ago. The key issue is with selenium, a naturally occurring substance, which runs off the massive rock formations dug out by the company to access the coal beneath. High levels of selenium cause fish to have reproductive problems and physical deformations, leading to a drop in numbers.
Calcite, which also occurs naturally, is also a problem since it can cement rocks together in stream beds, harming fish and other habitats. “Fish populations have collapsed, municipal and other drinking water wells have been contaminated, and streambeds have been cemented with calcite with no end in sight,” Macnair said.
Cleanup could be in the billions
He said Teck has already spent more than $1 billion on water treatment that handles only a small portion of the company’s water pollution. The cost to clean up and treat the water flowing into the Elk River “could easily be more than the $8.9 billion purchase price and will certainly be many multiples of the $150 million commitment to water quality Glencore has announced as part of the deal,” he said.
In Biden’s visit to Ottawa in March, he and Trudeau agreed in principle to address pollution in the Elk-Kootenay watershed by summer 2023, which has come and gone with no agreement. Subsequently, the Ktunaxa Nation in B.C. and the Confederated Salish and Kootenai Tribes of Montana proposed that the U.S. and Canadian governments refer the issue to the IJC, a request that has the backing of the U.S. State Department but is opposed by Canada.
In May, the IJC wrote to Trudeau and Biden saying the matter is becoming urgent. The standard for safe amounts of selenium approved by the U.S. Environmental Protection Agency is 0.8 micrograms per litre of water, compared with measurements of 9.46 micrograms per litre in the Elk River in Canada, 4.99 in the trans-border Lake Koocanusa and 1.4 in the Kootenai River in Montana.
The IJC also said the U.S. government is considering a unilateral request to refer the matter to the commission, which it would act on, but “it is in the best interests of all concerned” if both the Canadian and U.S. governments jointly refer the matter to it.
Last month, the Confederated Salish and Kootenai Tribes in Montana set a deadline of November – this month – for a meeting of the U.S. and Canadian governments and the Ktunaxa Nation in Canada to discuss the selenium pollution issue.
Another potential environmental issue for the federal review is the overall carbon emissions from the coal produced at the mines. According to Teck’s most recent sustainability report, the company emitted 2.7 million tonnes of carbon dioxide equivalent in Scope 1 (direct operating) emissions in 2022. The report also states that in 2021, 29% of these emissions were from methane (a more powerful greenhouse gas than carbon dioxide that is responsible for roughly 30% of global warming since pre-industrial times). Coal mines are heavy emitters of fugitive methane as coal seams are exposed to the atmosphere.
In addition to Scope 1 emissions, Scope 3 (end-use) emissions by the company’s steelmaker customers were far higher, at 65 million tonnes. In information released about the deal, the company didn’t cite any plans to deal with the Scope 3 releases, saying only that it will pledge to become net-zero in all three scopes by 2050. Given that it doesn’t control how its coal is consumed by its customers, there’s no clear net-zero path to Scope 3 emissions.
So while Teck may benefit by ridding itself of coal assets that have fallen out of favour with wary investors so that it can focus on the climate-friendly critical minerals business, the hidden cost of its operations may continue through heavy carbon emissions and polluted waterways under its new owner. That is, unless governments, environmentalists and Indigenous Peoples intervene.
Eugene Ellmen is a former executive director of the Canadian Social Investment Organization (now Responsible Investment Association). He writes on sustainable business and finance.
