Teck CEO Don Lindsay’s letter to federal Environment Minister Jonathan Wilkinson, released on Sunday night, neglects to mention some fundamental economic reasons behind the company’s abrupt decision to abandon its Frontier oil sands mine.
Low global oil prices, which weighed heavily on the project, have nothing to do with the colour of the government in Ottawa, or Edmonton. But in his 745-word communiqué, Mr. Lindsay did not reference oil prices. Not even once.
That’s in spite of the reality that low prices are why it was widely assumed that, even if it received government go-ahead, Teck would not have put shovels in the ground any time soon, if ever. For Teck, regulatory approval would have been the first step in a long and expensive journey that low oil prices argued strongly against undertaking.
But despite its omissions, Mr. Lindsay’s letter is worth reading, and heeding. It needs to be read by politicians and voters on both sides of the aisle.
It may not reveal everything about what killed Frontier, but it has rather a lot to say about the bigger challenge facing Canada. That challenge is being exacerbated by extreme voices on both ends of the political spectrum.
On Monday, Alberta’s United Conservative Party government won a victory at the Alberta Court of Appeal, which ruled the federal carbon tax is unconstitutional. The issue goes to the Supreme Court next month. In the meantime, the country will be treated to another dose of uncertainty. Even if the Jason Kenney government eventually triumphs in court, the victory will be Pyrrhic.
Anyone who thinks the way to get oil sands projects built is to do away with a national carbon-reduction plan will find no support in Mr. Lindsay’s letter. On the contrary, the Teck chief executive wrote that “global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products.”
He described his company as “strong supporters of Canada’s action on carbon pricing and other climate policies, such as legislated caps for oil sands emissions.” The oil industry is not the opponent of serious carbon-reduction plans.
There are those on the left who think the only environmentally correct answer is to shut the oil patch down yesterday; there are those on the right who think the only economically sound policy is to pay the environment no more than lip service. Neither of those approaches will work for Canada.
Earlier this month, this page argued that Ottawa should approve Frontier, with stringent environmental conditions. One of Frontier’s problems was that, as proposed, it would have been dirtier than rival mines, with higher emissions per barrel of oil. During the regulatory review, Environment Canada concluded that Teck’s proposal did “not demonstrate that the project will be ‘best in class.’"
Where the project was best in class, however, was in terms of Indigenous partnerships. Frontier had the support of all 14 nearby First Nations and Métis communities.
Just hours before Teck pulled the plug, Alberta had reached environmental agreements with the final two. The leader of one, Chief Allan Adam of the Athabasca Chipewyan First Nation, expressed disappointment at the news. “It’s a shame,” Mr. Adam said, “because we worked so hard with the province and did everything we can to make sure the project was going to get the green light.”
It’s a reminder that Indigenous peoples are not opposed to developments that consult them, partner with them and properly compensate them. That message of reconciliation, and that story of co-operation, is getting lost.
For Teck and Mr. Lindsay, this is the end of a long road. In 2005, when he became CEO, he turned the sights of the miner of copper, coal and zinc to the oil sands. Teck bought into the Fort Hills oil sands mine as a junior partner. It also made moves for its own mine, which became Frontier.
Lower oil prices, however, have hurt the company. Last Friday, Teck announced a $900-million writedown on Fort Hills. Before Friday’s news, Teck’s stock had already lost more than half its value since mid-2018. Mr. Lindsay bet on oil, and he lost. To explain why, he found helpful cover in invoking conflicts around climate change and politics. That didn’t tell the whole story, but in laying out the problem facing the industry, and Canada, he hit the mark.