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Sherritt's brush with nature Add to ...

gyork@globeandmail.com

When bulldozers began clearing the forest for the biggest industrial project in the history of Madagascar, they left the felled trees on the ground for 48 hours to allow hundreds of traumatized lemurs to escape.

It didn't quite work. Eleven of the rare primates died from stress and lack of food, according to environmental experts working on the Canadian-led project.

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It's just one example of the environmental challenges facing Sherritt International Corp. as it tackles one of the biggest and most sensitive mining projects in the world: a massive $4.5-billion nickel mine in the middle of a pristine rain forest in a biodiversity hot spot.

The Ambatovy nickel project is already dogged by financial and political crises. Nickel prices have plummeted, and the project's capital costs have soared.

Sherritt announced in February that its estimated costs have ballooned to $4.52-billion (U.S.) from $3.4-billion, and it admitted that it lacked the capacity to finance its share of the project. The Toronto-based company suffered a $456-million (Canadian) writedown on the project in the fourth quarter.

Sherritt owns 40 per cent of the project, while Japanese and South Korean companies have smaller shares and SNC-Lavalin Group Inc. SNC-T of Montreal owns a 5-per-cent stake.

Madagascar, meanwhile, has been consumed by political violence, with a new president taking power in a coup and deadly clashes continuing between protesters and security forces.

The new regime has made noises about a review of mining contracts and it ordered police to raid foreign miners to hunt for alleged mercenaries, although Sherritt has been unaffected so far.

Even as Sherritt searches for financial help and political stability, the company must solve a series of daunting environmental problems, knowing that its actions are already under criticism from ecological activists in Madagascar and elsewhere.

Madagascar, the world's fourth-biggest island, is one of the most distinctive biological sites on Earth. About 70 per cent of its animals and 90 per cent of its plants are endemic, found nowhere else in the world.

Sherritt's nickel mine - adjacent to several national parks and reserves - occupies a 1,340-hectare footprint in the middle of a crucial biodiversity site, home to five endangered lemur species and many other rare plants and animals.

The damage from the mine is already visible in the rain forests of Andasibe, just a few kilometres from one of Madagascar's most famous national parks, where Sherritt has torn a 50-metre-wide gash in a pristine forest to make room for its 220-kilometre slurry pipeline.

Sherritt's official goal is to produce "no net harm" and "no species loss" to Madagascar's forests and animal habitat. The company acknowledges that the biodiversity around the mine site is "highly sensitive." So the mining project is spending millions of dollars on a series of extraordinary environmental measures, ranging from "lemur bridges" (wooden structures above the roads and pipelines to allow the lemurs to cross safely) to the creation of "replacement forests" to offset the forests destroyed by the mine.

Sherritt and its partners have also agreed to preserve two tracts of original forest above the ore body, sacrificing substantial revenue to preserve samples of the unique habitat.

In one of its most innovative initiatives, the mine is trying to reduce illegal poaching by local villagers who often hunt lemurs as "bush meat." Sherritt plans to help the villagers to develop their own resource industries that will leave the wildlife intact.

A few kilometres from the main mining camp, Sherritt has set up a "Bio Camp" to monitor the project's impact on flora and fauna. The company uses a radio-monitoring system to keep track of hundreds of lemurs, ensuring that they are continuing to cross the pipeline and move safely around the region.

From their tents at the Bio Camp, researchers roam through the forests with tranquilizer-dart guns. When they spot a lemur in the treetops, they shoot it with the dart gun, then wait below with a net until the lemur falls into it. Then they bring the animal back to the camp for a battery of health tests, blood and tissue samples, measurements and monitoring devices, including microchips and radio collars.

At least 220 lemurs have been fitted with radio collars and microchips so far. The monitoring suggests they are able to cross the 50-metre pipeline corridor without any problems, according to project officials. Almost 40 of the lemurs have been moved to a national park to ensure their survival.

Local environmentalists, however, are skeptical. "I'm very sad about this project," said Nirina Rabarison, president of an association of park guides in Andasibe, near the pipeline.

"It creates jobs, but it has destroyed a lot of forest. I don't want to think about it."

Rainer Dolch, co-ordinator of an environmental group called Mitsinjo that manages a nature reserve at Andasibe, said the mining project has not received enough scrutiny from independent scientists. Instead, the government is relying on data from Sherritt itself, he said.

There is already evidence of heavy silting in a local river as a result of erosion caused by the new pipeline, Mr. Dolch said.

"One has to ask why the government issued the environmental permits, if you look at it closely. There are so many things that can be negatively affected by the mine, and it's unclear how they can offset it," he said.

SHERRITT INTERNATIONAL (S)

Close: $4.95, up 2¢

Sherritt

Q1

2009

2008

Profit

($42.9-million)

$89-million

EPS

(15¢)

38¢

Revenue

$349-million

$314.2-million

Source: Company reports

Report on Business Company Snapshot is available for: SHERRITT INTERNATIONAL CORPORATION

 
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