Energy Subsidies for Northern Industry Include Environmental Offenders

A Preliminary Look at the Revamped Northern Energy Advantage Program

During Premier Doug Ford’s visit to Sault Ste. Marie on April 8, 2022, he announced a revamped Northern Energy Advantage Program (NEAP) that will support “Northern Ontario’s industrial sector by reducing electricity costs.”  

The program will replace the Northern Industrial Electricity Rate (NIER) program and boost the total provincial government contribution from $120 million to $176 million over the next few years. The changes also mean that more companies can apply, and the previous $20 million funding cap will disappear. The NEAP is just one part of the Ontario government’s efforts to spur increased development and growth in northern industry, including the development of mineral deposits in the Ring of Fire region of the James Bay Lowlands.

In March of 2022, the Ontario government released its first official Critical Minerals Strategy, a five-year strategic plan to “secure the province’s position as a reliable global supplier of responsibly sourced critical minerals.” Citing the desire to build what it calls a ‘corridor to prosperity,’ it plans to introduce a range of economic incentives to expand industrial capacity, “including critical minerals development, battery assembly and electric vehicle manufacturing.”

Premier Ford has said that he wants to create an integrated supply chain proprietary to Ontario, one that spans the resource extraction to product manufacturing spectrum. The recently released Ontario Budget includes a focus on developing northern Ontario’s mining sector, including a $1 billion dollar pledge to build road infrastructure that’s required for the Ring of Fire.

A freedom of information request reveals that, as of late May, there are just six facilities that are beneficiaries of the NEAP program, representing five different companies. The list of facilities and companies from the Ministry of Northern Development, Mines, Natural Resources and Forestry (NDMNRF) also reveals that program beneficiaries are exclusively gold mining operations.

The NIER program that predated the NEAP began in 2010 and expired at the end of March of this year. According to NDMNRF, the predecessor program included 28 facilities representing 21 companies, some of which were considered in “good standing” and therefore “continued their participation through NEAP and are not required to re-apply to the new program.”

Current beneficiaries of the NEAP include Alamos Gold, Pan American Silver, Agnico Eagle Mines, Wesdome Gold Mines, and Evolution Mining. Gold is not explicitly listed in Ontario’s ‘critical minerals list.’

According to publicly available data from the Ontario government, every facility or company associated with the current NEAP have violated provincial environmental regulations at least once. Two of the companies – Alamos Gold and Wesdome Gold Mines – have been fined multiple times for environmental offences.

The Young Davidson Mine operated by Alamos Gold has consistently violated applicable environmental regulations. In 2017, the company was fined $26,325 for seepage from its tailings that resulted in copper and cyanide entering Mistinikon Lake. In 2018, it was fined $13,162.50, again for seepage from its tailings that resulted in copper and cyanide entering Mistinikon Lake. In 2019, it was fined $10,000 for failing an ‘acute lethality test,’ in which live animals - like daphnia magna or rainbow trout - are used to gauge the toxicity of wastewater disposal. It was most recently fined $6,499.50, in 2021, for exceeding wastewater disposal concentration limits.

Wesdome Gold Mines faced a raft of fines for environmental offences that occurred in late April and early May of 2018 at its Eagle River Mine. In 2019, it was fined over $40,000 for five separate offences that included failing acute lethality tests and exceeding wastewater disposal concentration limits. It also faced a $1,640 fine for exceeding wastewater disposal concentration limits in 2016.

Kirkland Lake Gold – recently acquired by Agnico Eagle Mines – was fined $10,000 in 2019 for failing an acute lethality test at its Holloway-Holt Mine. In 2017, it also violated applicable regulations for dustfall – a rough test for air pollution in the form of fugitive dust – and wastewater disposal concentration limits at its Macassa Mine Site.

Lake Shore Gold – a subsidiary of Pan American Silver – violated applicable environmental regulations in 2018 and 2020, both related to wastewater disposal concentration limits. Available data does not show that Evolution Mining faced environmental fines, but it violated applicable regulations for wastewater disposal in 2020.

Compliance with environmental regulations is not a condition of participation in the NEAP program. However, beneficiaries are required to submit an Energy Management Plan illustrating “proposed steps and methods for improving electrical efficiency and sustainability.” NDMNRF’s application review process includes an analysis of “efficiency and conservation targets” to assess capabilities to abide by program guidelines, in addition to a financial review “to assess the new applicant’s solvency and operational viability.”

The Ontario Lobbyists Registry shows that at least two of the current program beneficiaries have been lobbying the provincial government. As of last month, Alamos Gold had three active lobbyists with Rubicon Strategy focused on government regulations and electricity supply to the Northern Ontario mining industry. Likewise, Kirkland Lake Gold had two active lobbyists with Sussex Strategy Group focused on government regulations and electricity supply to the Northern Ontario mining industry.