After the public shaming Taseko Mines (NYSEMKT:TGB) delivered to Canada's environmental authorities last November, it's not surprising the regulators did a copy-paste job in once again rejecting the miner's New Prosperity gold and copper project in British Columbia.
As I said at the time, an embarrassed bureaucrat is still a dangerous animal, and from the looks of its press release it seems the environmental agency didn't even bother to reconsider the problems with their reasoning Taseko brought to light, but rather chose to circle the wagons around their previous erroneous report and declare once more that New Prosperity would "cause significant adverse environmental effects that cannot be mitigated."
The Canadian Environmental Assessment Agency infamously made the bonehead move to reject the mine not on Taseko's proven mitigation plans, but rather from those submitted by a separate agency that were known to be unworkable. Instead of the tailings pond liner Takeso suggested be installed to prevent seepage, a design that is effectively being used by Thompson Creek Metals (NYSE:TC) at its Mount Milligan copper and gold project, the agency ignored that and agreed with Natural Resources Canada that damage would occur from a tailings pond that had no liner. Well, duh. That's why Taseko proposed including one.
The miner highlighted the discrepancy and turned over to the CEAA documentation of its error but was then enraged when the environmental agency said it wouldn't make public its review of the missteps. So Taseko published them itself on its own site.
Again, it's a cathartic move, but hardly one conducive to endearing itself to those with veto power over the project. So yesterday, when the CEAA handed down its ruling, essentially ignoring everything Taseko pointed out and simply reiterating its support for the previous rejection, I don't think anyone was really surprised.
Yet as I've also noted in the past, while the tailings pond problems were one of the reasons the agency rejected the miner's application it wasn't the only one. There were also significant concerns about the obliteration of Little Fish Lake by the creation of the storage site, the impact on the cultural and religious practices of local First Nations who use the area, and the effects the project would have on grizzly bears. The storage facility was but one hurdle to overcome.
First Nations and indigenous tribes globally have been able to gain for themselves supremacy in many of the deliberations miners are facing as they seek to construct new mines or expand existing ones. Cliffs Natural Resources (NYSE:CLF) is facing a similar circumstance in Ontario over its Ring of Fire chromite project, as the First Nation tribes there were not enamored of the miner's plan to build a road across their ancestral lands. Projects that Barrick Gold (NYSE:ABX) and Codelco were developing in Chile have run aground over local opposition, as have those proposed by Goldcorp in Mexico, and Rio Tinto in Arizona.
Certainly Taseko Mines won't be letting this matter rest, but after reporting earnings recently that showed a substantial widening of losses from $9 million to $34.8 million as production costs increased while still facing a weak market for copper, it's a setback nonetheless and suggests the miner will be the poorer because of it.
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