Tailings Management

Management Approach

Sherritt produces two broad types of waste: mining waste and solid waste. Mining waste generally includes waste rock and tailings, produced as processing by-products. Solid waste consists of hazardous waste and non-hazardous waste. Hazardous wastes are identified by their chemical and physical properties, and their classification, handling, disposal and storage requirements are prescribed in regulations. Non-hazardous solid waste consists of materials that we use and produce that can be disposed of in municipal landfills, and is not considered material for the purposes of this report.

We design and operate our tailings management facilities (TMF) in Cuba and Madagascar to meet or exceed all applicable regulatory requirements in those jurisdictions. Ambatovy’s tailings management facility was also designed to meet the requirements of the Canadian Dam Association, the International Commission on Large Dams, and the Mining Association of Canada’s Towards Sustainable Mining (TSM) Tailings Management protocol.

Following the recent tailings dam failures in Brazil and Canada – including our own pond failure at the Obed Mountain mine in Alberta in October 2013 – we are developing an enterprise-wide Tailings Management Standard. This standard will provide additional rigour in supporting our operating sites in fulfilling our commitment to designing, constructing, operating, decommissioning and closing all tailings facilities in such a manner that all structures are stable, all solids and water are managed within designated areas, and all management practices conform with regulatory requirements, sound engineering principles and good practice. This standard will also take into account lessons learned from a post-mortem review of the Mount Polley tailings pond failure conducted by the Mining Association of Canada and the latest guidance from the International Council on Mining & Metals.

Performance

(2016) Ambatovy Fort Saskatchewan Moa Oil & Gas and Power
Total amount of overburden, rock, tailings and sludge (tonnes) 25,676,000 Not applicable 12,931,000 Not applicable
Note: There was a data-collection error in last year’s reporting process, and, as a result, we did not report the tonnage of all forms of tailings waste in 2015. A clarification was made in the 2016 data-collection template to address that error. That is why there is a noticeable discrepancy between the 2015 and 2016 data for this indicator.

At our mining operation in Moa, we continued to work with our Cuban partners and industry experts to improve tailings and water management to better align with international best practice. Recent efforts include issuing the Operations Maintenance and Surveillance Manual and the Emergency Preparedness Plan with sections for management of tailings facilities. Training has been provided to all tailings facility personnel.

The tailings management facility at Moa is regularly reviewed internally and by third parties for structural integrity and effectiveness of management systems. Based on 2016 assessments, the facility is currently operating to design specifications. We continue to work with our joint venture partners to ensure employees have the required skills to manage the facility effectively. As it is nearing capacity, we have retained an internationally respected engineering firm to design an extension that will ensure we can continue to store tailings there until 2021. Permitting and detailed design work for the first stage of the extension was approved in 2016 and construction will take place in 2017.

We also began investigating options for tailings management so that we can continue to support mining operations in Moa in 2022 and beyond. Throughout this process, we will strive to minimize environmental impacts and meet international good-practice standards in tailings management.

At Ambatovy, the tailings management facility is a long-term construction project that involves the continuous raising of the perimeter dams to meet capacity needs. The first two phases of Ambatovy’s TMF are currently operational. The detailed engineering of the third phase was completed in 2016. A significant amount of construction was also completed during the year to ensure the TMF is being developed in accordance with the engineering plan. There was one independent review and four audits of the project in 2016. Once construction is complete, the TMF will provide sufficient storage capacity for the remaining mine life, which is approximately 30 years.

There are no tailings produced at the Fort Saskatchewan or Oil & Gas and Power sites.

Update on Remediation of Obed Containment Pond Breach

As we reported in previous sustainability reports, on October 31, 2013, a breach occurred due to a geotechnical slump, in an on-site water containment pond at the Obed Mountain mine, then owned by Sherritt, that resulted in a significant release of mud, clay, coal particles and approximately 670,000 m3 of water into nearby creeks and the Athabasca River. We quickly mobilized our response team, working with regulatory bodies, and began engaging extensively with First Nations and local stakeholders to keep them informed and to address their concerns. After the sale of our coal operations to Westmoreland Coal Company in April 2014, we retained the environmental remediation and financial obligations associated with the breach, and have continued to work co-operatively with the Alberta regulator to address the impacts of the incident. Read more about it here.

In 2016, we continued environmental monitoring of water quality, soil and sediment quality, fish habitat, wildlife, and vegetation and wetland resources. Past reports indicate that the breach and the resulting release of polluted water and sediments had measurable but minor effects on fish and fish habitat in the nearby creek, and that there are no residual effects on water and sediment quality in any of the nearby creeks or in the Athabasca River.

In 2016, we also submitted a reclamation plan to the Alberta Energy Regulator and Department of Fisheries and Oceans, with anticipated approval of final design expected in mid-2017.

We continue to engage with First Nations, communities and government on our progress, and we received an award from the Canadian Public Relations Society for our communications response to the crisis. A more detailed account of our response and remediation activities can be found on www.obed.ca.

Biodiversity and Land

Management Approach

Sherritt’s operations are found in diverse locations, ranging from primary forests to island environments to industrial zones. Our approach to managing biodiversity is tailored to the context of each operating site. At assets found in highly sensitive ecosystems, such as our Ambatovy mine in Madagascar, we follow a strict mitigation hierarchy: avoid impacts where possible, minimize any unavoidable impacts, repair any damage, and provide offsets (e.g., positive management interventions such as restoration of degraded habitat for residual impacts) wherever necessary.

This mitigation hierarchy, which forms the foundation of Ambatovy’s biodiversity-related work, was designed by the Business and Biodiversity Offsets Programme (BBOP), a multi-stakeholder initiative that seeks to develop best practice in biodiversity protection for developers of large greenfield projects. Ambatovy has been an active supporter of BBOP since its inception in 2006.

Ambatovy’s approach to conservation also conforms to the requirements of Madagascar’s regulator, the National Environment Office, and with the International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability (2012 version), which includes a discrete standard on biodiversity conservation and sustainable natural resources management.

In 2009, Ambatovy established a Scientific Consultative Committee on biodiversity as part of its commitment to transparency and to apply international conservation expertise to its biodiversity management activities. The Committee includes 14 national and international independent scientists renowned for their expertise in biodiversity, conservation, and environmental management. The Committee convenes every two years – most recently at the end of 2016 – to facilitate an external evaluation of Ambatovy’s implementation of the biodiversity management program and to make recommendations for the conservation of Madagascar’s unique biodiversity to management.

In Canada and Cuba, environmental baseline studies and impact assessments are conducted and biodiversity management plans are implemented, as required by regulation. However, the breadth and depth of our work at Ambatovy has demonstrated to us the value of developing a standard approach for addressing biodiversity considerations across the rest of the company. We have been evaluating the requirements of the Mining Association of Canada’s Towards Sustainable Mining Biodiversity Conservation Management protocol and how these could add value to our business. We intend to develop a minimum standard for biodiversity and land management within the next few years. It will be practical and risk based, and will provide us with a consistent set of requirements for identifying and managing biodiversity impacts.

Land Management

We recognize that the land entrusted to us is a valuable resource. We work with authorities and other organizations to manage and reclaim the land during active mining and once operations have ceased. This is demonstrated by our longstanding record of reclamation and remediation activities, which have been covered in previous sustainability reports. Our active mining properties in Cuba and Madagascar progressively rehabilitate land and regularly monitor progress against rehabilitation plans with the regulatory authorities in both jurisdictions.

The Fort Saskatchewan site manages land issues within its government-approved operating permit, which includes discrete requirements for soil management. Our Oil & Gas operating sites in Cuba routinely mitigate any impacts of oil exploration and recovery activities when operations have ended. Drill sites are cleaned, topsoil is replaced and the land is returned to conditions similar to those that existed before drilling commenced. In accordance with the requirements of our operating permits, the land will be returned to the Cuban state after the expiry of the term of the contract.

Performance

Ambatovy’s Biodiversity Management System

In 2016, the Ambatovy Biodiversity Management System (ABMS) – which operationalizes many of the principles mentioned in the preceding description of our biodiversity management approach – was fully implemented. Twelve status reports on 12 impact management plans were written and validated by Quality Controllers. Five of the plans have finished an entire cycle of ABMS (flora, birds, lemurs, mantella and micromammals). Coaching on the implementation of the management system was provided to stakeholders, including universities, non-governmental organizations, and offset site managers. Discussions were held to improve standard operating procedures, and database management.

Species of Concern

Ambatovy has commitments to protect and conserve species of concern (SOC) within the lands under its direct control. Our mining operation is located within the Ambatovy-Analamay forest, and our mine lease is subdivided into the mine footprint, which contains our active operations, and the surrounding conservation zone.

The Ambatovy-Analamay forest area is within the Torotorofotsy Ramsar Convention site, which is an internationally significant wetland. The forest area forming our lease comprises 21.5 km2 of high biodiversity value, featuring 1,700 species of vascular plants and 336 species of vertebrates. Within this area, we have identified nine priority species, of which four are considered to be endangered, according to criteria established by the International Union for the Conservation of Nature (IUCN), and six are SOC. We are responsible for the inventory and monitoring of a total of 109 SOC and the four endangered species, as well as retrieving all orchid species. Refer to this case study to learn more about our orchid conservation work.

In 2016, we continued to introduce SOCs into the mine zone, and salvaged SOCs from the clearing zone directly in the mine footprint. Thanks in large part to this type of work, we were awarded the Syncrude Award for Excellence in Sustainable Development at the Canadian Institute of Mining, Metallurgy and Petroleum’s annual convention in 2015. Read this case study to learn more.

Last year, Ambatovy was proud to take part in the World Lemur Festival in Madagascar’s capital. The theme was: “Lemurs, national heritage, friends to protect”. The Festival represented an important opportunity for Ambatovy to share with a Malagasy and international audience both scientific and anecdotal information on its efforts to ensure the long-term viability of the 13 species of lemurs it has identified and their habitat in the conservation areas around the mine.

Invasive Species

One of the most significant potential threats to areas of high biodiversity is the introduction of non-native, exotic and invasive species, which can rapidly adjust to new conditions and have an adverse effect on native biodiversity.

We have processes in place to control three invasive species at the Ambatovy mine, plant and port sites:

  • Norway rats: We have implemented a 6 km2 capture zone around five villages near the mine to prevent Norway rats from affecting the forest; and, in 2016, undertook six eradication campaigns, during which capture activities occurred.
  • Crayfish: Crayfish control is implemented twice a year at six sites. Apart from capturing the crayfish in collaboration with local villagers, who are trained as capturers, we also organize campaigns to raise awareness about the crayfish and its impacts on agriculture, habitat and biodiversity. There was an increase in the number of crayfish captured in 2016 from the previous year.
  • Asian toads: Throughout 2016, a vigorous effort to remove Asian toads within the mine footprint continued; Ambatovy also supported broader eradication efforts (see details below). The toads are believed to have been introduced via an unidentified container from Southeast Asia at the Port of Toamasina, which is located near our plant site.
Response to Concerns over the Introduction of the Asian Toad

In 2015, two international non-governmental organizations approached Sherritt about the introduction of invasive Asian toads to Madagascar. They suggested that Ambatovy’s shipping activities through the port may have inadvertently introduced the species and requested that we take a leading role in the overall response. We have examined this issue critically, and while our assessment does not support their conclusion, we have responded to their queries formally and have had several constructive discussions on this topic with representatives from these and other concerned organizations and institutions.

During the timeframe that the toad is speculated to have arrived in Madagascar, Ambatovy accounted for less than 5% of the Port of Toamasina’s total traffic – and that percentage is even lower for shipments coming from the toad’s zone of origin, according to our records and those we obtained from Madagascar’s customs office.

Nevertheless, as a responsible actor that cares deeply about biodiversity management, we are committed to supporting the Government of Madagascar’s leadership in addressing this significant threat. We have joined the government’s national committee, which is comprised of several stakeholders, to mitigate the impacts of the Asian toad. We also entered into a memorandum of understanding with Madagascar’s National Environment Office to carry out a joint eradication program that goes well beyond the scope of our own efforts to date. We appreciate the growing urgency to take broader measures and are hopeful that our contributions will lead to lasting results.

In 2016, Ambatovy signed a collaboration agreement with the Regional Directorate of Environment, Water and Forest (DREEF) Atsinanana to continue the program against invasive toads. During the year, seven eradication campaigns took place with support from the Department of Animal Biology at the University of Antananarivo. Ambatovy also provided financing for a third party to manage the eradication efforts in nearby communities and areas outside of Ambatovy’s footprint. These efforts are scheduled to begin in early 2017.

Along with the eradication program, the national committee developed a communication strategy with financial support from Ambatovy. Communication with local community members occurs via print and electronic media, and educates communities on the invasive species, eradication techniques, and other suggested actions.

Ambatovy will continue to provide technical and financial support to these efforts in 2017.

In addition to addressing invasive toads and other fauna, we are also controlling three exotic plant species at the mine site, including the removal of the Lantana camara species over an area of 42 hectares (ha) and the removal of exotic pine and eucalyptus trees over approximately 1,600 ha.

Conservation Partnerships and Collaboration

Ambatovy is involved in two important partnerships with civil society organizations to assist in managing the offsets we have created to compensate for our disturbances. We engaged Conservation International to manage the Ankerana forest – our 5,715 ha offset that is located some 70 km northeast of the mine site. We also reached an agreement with Asity Madagascar, which is associated with BirdLife International, to manage the Torotorofotsy wetlands. We feel that these respected civil society organizations bring both credibility and additional expertise in managing biodiversity. Both the Ankerana and Torotorofotsy offsets are important demonstrations of our commitment to evolving international best practice and to protecting and enhancing the rich biodiversity that surrounds the mine area and beyond. In 2016, Ambatovy supported both managing parties financially and technically for conducting site patrols, developing income-generating activities, and carrying out awareness campaigns – all of which are necessary to maintain the habitat quality of the sites.

Biodiversity Management at Moa

Our open pit nickel mine near Moa, Cuba, is located approximately 15 km north of Alejandro de Humboldt National Park, a UNESCO World Heritage site particularly known for its extensive suite of endemic species of flora. Moa Joint Venture has long partnered with the Cuban authorities for the restoration and protection of these lands. For more information, refer to this case study.

In 2016, more than eight hectares of land were reforested, reconstructed and protected from degradation. In 2017, prioritization will be given to areas affected by Hurricane Matthew.

Biodiversity Management Elsewhere

In Canada, our refinery’s impacts on biodiversity are minimal, given that it is located in an industrial zone within the city limits of Fort Saskatchewan. Our energy operations in Cuba also have minimal impacts on biodiversity, given the small footprint and nature of our activities. In 2016, no significant conservation activities were required or undertaken at these sites.

It is worth mentioning that our Block 10 oil drilling program, which began in 2016, is taking place adjacent to a protected mangrove site. To minimize our impacts, we are conducting the program from a previously disturbed footprint, while working in close consultation with Cuba’s environmental regulator.

Land Management

In 2016, both Ambatovy and the Moa site practiced progressive reclamation in accordance with their operating permits and commitments. The total amount of disturbed and rehabilitated land during the year was similar to that of 2015. There were no changes to the operational footprint of the Fort Saskatchewan refinery or our Cuban energy business, in part because these areas are still active.

During the year, however, the Fort Saskatchewan site did submit an updated soil management plan to meet the regulatory requirements of Alberta. Discussions on this plan will continue in 2017.

The table below shows the amount of land (owned or leased, and managed for production activities or extractive use) disturbed or rehabilitated.

2016 Ambatovy1 Fort Saskatchewan Moa2 Oil & Gas and Power Total
Total amount of land disturbed and not yet rehabilitated (ha) 2,088 100 166 6 2,360
Total amount of land newly disturbed within 2016 (ha) 82 0 51 2 135
Total amount of land newly rehabilitated within 2016 to the agreed end use (ha) 10 0 30 Not applicable 40
Total land rehabilitated since the start of the project (ha) – estimate 105 Not applicable 640 Not applicable 745
  1. Please note the data reported for Ambatovy in 2015 accounted for all planned land disturbance over the entire life of mine, rather than what had been disturbed up to the reporting year; this error has been corrected in 2016 reporting, which accounts for all current land disturbance at the mine, plant and auxiliary facilities.
  2. Data reported for Moa represents land disturbance that occurred from 1994 onwards – or the years that the Moa Joint Venture between Sherritt and the Cuban state has been in place. The data do not reflect any mining activity at the site that pre-dates the joint venture.

Water

Management Approach

As the global population swells, the demand for fresh water continues to grow and societal concerns about water quality and availability increase. We understand and share these emerging concerns, which are common across the company.

Water is central to our metallurgical process for producing nickel, and we manage it carefully. Where feasible, process water is recycled or reused within the process itself. Runoff is controlled through diversions and catchments to minimize any release to the environment. For each operating site, we conduct baseline studies, assess risks and engage stakeholders to inform them of our water management planning.

Pumping water for use in our processes takes a considerable amount of energy, and we are continually taking steps to identify how we can optimize our practices and minimize the amount of water and energy we use.

We also conduct monitoring to help ensure that we are not unduly contaminating surface water or groundwater resources with our process discharges. There are stringent regulatory water quality limits that apply to our discharges to protect the receiving environment, and our monitoring programs are designed to comply with the emission limit values in each jurisdiction, and to help us detect any unanticipated problems and manage risk beyond regulatory obligations.

Our approach to water management varies across our operations, depending on technical requirements, local climate, water bodies and stakeholder interests. Building on the range of water management practices and initiatives in place, we are working towards the development of a corporate Water Standard that will apply across the company.

Performance

Water Use

2016 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power Total
Total water withdrawal (m3) 27,800,000 2,500,000 14,150,000 234,000 44,684,000
Note: There was a reporting error in 2015 water use data for Moa that has been corrected. Water use at Moa in 2015 was 14,300,000 m3.

Ambatovy reported 27.8 million m3 of water consumption in 2016, which is consistent with prior years. Water for our processes is withdrawn from a variety of sources at the mine, plant and port facilities, including the Ivondro River, the Mangoro River, Antsahalava Creek and groundwater wells. Potable water for the plant site originates from wells at the facility. Our water withdrawal is monitored quarterly by the regulator.

Erosion and silting of the Mangoro River, from which Ambatovy draws water for mining operations, is troubling. It is in our interest to ensure the long-term viability of the river, and so, in 2016, Ambatovy began collaborating with PRODAIRE, a development project that promotes an integrated approach to rural development and environmental protection. This two-year collaboration, which also involves local villages, will bring greater focus to reforestation and the prevention of riverbank erosion in the impacted areas.

Our Fort Saskatchewan site withdraws water from the North Saskatchewan River under provincial licenses for use in our processes. We purchase potable water from the local municipality. The total water withdrawal for the Fort Saskatchewan site in 2016 was the same as previous years: 2.5 million m3, including 2.4 million m3 taken from the river and 0.1 million m3 of purchased potable water. We report our water withdrawal monitoring results to the provincial regulator on a monthly basis. Process effluent and stormwater (snowmelt/rainwater) that we collect on our site are treated to meet the regulated water quality guidelines. This water is then transferred to the municipal wastewater collection system, where it is treated further and then discharged into the surrounding environment along with wastewater from the wider municipality.

Our Moa site in Cuba withdrew 14.15 million m3 of water for its processes in 2016. (The 2015 data was misreported; the correct withdrawal amount for that year was 14.3 million m3, which is in line with 2016.) Water is collected in our adjacent reservoir and treated before use.

Oil & Gas and Power reported a total water withdrawal in 2016 of 0.23 million m3, a slight decrease from 2015. Water is drawn primarily from municipal sources, as well as groundwater sources at Power facilities. Oil & Gas service rigs use recycled water only, resulting in a net effect of zero on the water supply.

Water Quality

In 2016 at Ambatovy, there continued to be elevated concentrations of manganese in water that we discharge from our tailings management facility that sometimes exceeded the regulated limit established by Madagascar’s environmental agency. Manganese at low concentrations poses only aesthetic concerns; that is, it imparts a discolouration to drinking water. At higher concentrations, it can have adverse health effects. To safeguard public health, we offered an alternative source of potable water to residents located close to the discharge point and who may use nearby water sources for drinking water in 2015, and this program is scheduled to conclude in 2017, when a permanent potable water supply system will be installed for the local community. We also provided regular water-quality updates to residents and the regulator. Based on the findings of a root cause analysis of the issue, we began implementing corrective actions – as per the Manganese Action Plan, which was finalized in 2016 – including building up tailings beaches to reduce the manganese before discharge and installing a permanent pumping house in order to regain compliance with our permit requirements. The Plan has been reviewed externally. In 2017, we will continue to install interceptor wells and drainage systems to capture water before it enters into the surrounding environment, and recirculate it for treatment. We will also continue to look at other options for treatment.

At Fort Saskatchewan, we monitor water quality at several locations within the site’s treatment system, and review the results to ensure compliance before the release of water into the municipal collection system. We reported our water quality results to the municipality monthly and to the Alberta regulator on an annual basis. There were no non-compliance events sourced to Sherritt during the year.

Historic activities at Fort Saskatchewan have had an impact on groundwater quality. We have installed a series of wells to monitor groundwater quality and we remove and treat affected water as required. We report regularly to the Alberta regulator about our activities and effects.

Sherritt also continued its participation on the Capital Region Water Management Framework Advisory Committee in 2016. The goal of the Framework is to improve the quality of water in the North Saskatchewan River, manage impact on water quantity, and implement a water management framework that is science-based and world-class.

When we invested in Moa more than 20 years ago, we inherited a legacy water management issue, which has affected water quality in a nearby river. Over the years, we have been working with our Cuban partners and the regulatory agency to address this issue. In 2016, we continued our investigation into long-term treatment options for water management. We expect to come to a decision with our Cuban partners on the preferred solution in 2017, and to begin implementation soon thereafter.

There were no significant spills recorded at Oil & Gas and Power in 2016.

Energy and Climate Change

Management Approach

We operate an energy-intensive business. Energy consumption is a major input to our processes across the company, and energy-related costs are the second-largest component of unit operating costs after labour. These realities mean that we are motivated to reduce energy consumption and maximize efficiencies at every stage of our production cycle, from mining and oil recovery through to processing, refining and shipping finished products, and generating electricity. Concerns about the possible impacts of climate change on the planet and on our business increase the urgency of this issue for us, and affirm our role in contributing to global efforts to reduce greenhouse gas (GHG) emissions.

We have evaluated our management approach to energy and climate change against the requirements of the Mining Association of Canada’s Towards Sustainable Mining Energy and Greenhouse Gas Emissions Management protocol and intend to develop and implement a corporate standard across the company in the coming years.

Air Quality

Broadly speaking, managing air quality around our operations is an important element of our environmental programs company wide. We are conscious of the potential impacts of our operations and take great care to ensure that all applicable air quality regulations are properly followed.

Air emissions generally comprise two types of sources. The first type includes specific discharges of gases from our process stacks and vents – such as sulphur oxides (SOX), hydrogen sulphide (H2S) and nitrogen oxides (NOX). When emitted into the air, these compounds can pose risks to human health and lead to environmental degradation. The second type of air emission includes small airborne particles generated from activities in the open environment, called particulate matter (PM). PM is predominantly produced as a result of traffic on unpaved roads at our facilities, excavation activities at our mines, and fertilizer production at our refineries. We have strict safeguards in place at all sites to minimize the risk of air releases and regularly review and revise processes to minimize the release of PM through our activities.

Performance

GHG Emissions and Energy Consumption

2016 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power Total
Scope 1 GHG emissions(kt CO2e) 1,884 355 622 1,583 4,444
Scope 2 GHG emissions(kt CO2e) 0 130 50 0 180

GHG emissions at Ambatovy, for the mine, plant and port facilities, were estimated at a combined total of 1,884 kilotonnes (kt) of CO2 equivalent during 2016, representing a 7% decrease over 2015 emissions. The decrease is mainly the result of several maintenance shutdowns. As there is a lack of large-scale power available in Madagascar, the use of coal for power generation at Ambatovy accounts for the majority of the GHGs produced. Ambatovy consumed 3,551,782 gigajoules (GJ) of energy in 2016 from a mix of coal-fired power plant and fossil fuel burned. In 2016, Ambatovy continued to take steps to reduce the use of light vehicles on site and optimize the use of electric vehicles as a means of reducing emissions. Refer to this case study to learn more.

Fort Saskatchewan reported GHG emissions of 355 kt of CO2 equivalent in 2016. Sherritt has purchased 44 kt of carbon credits to help offset these emissions and comply with provincial regulations. Fort Saskatchewan recorded total energy consumption (including purchased electricity) of 5,071,000 GJ in 2016, which is comparable to the year previous. During the year, the site reduced overall GHG emissions by using waste fuel for the powerhouse boilers.

In 2016, a significant amount of stakeholder consultation occurred in Alberta for the development of new provincial GHG regulations, which could impact operations at the Fort Saskatchewan site. Sherritt continued to be active in the regulator-led process, advocating for a science-based approach that gives fair consideration to energy intensive trade-exposed businesses, like ours. Until regulations change, the Fort Saskatchewan site will continue to operate under the current regulatory regime; as such, we track and report all emissions and are required to make reductions in, or to purchase equivalent credits for, emissions arising from both the combustion of fossil fuels and the venting of certain streams within our ammonia plant.

At Moa, we produced 622 kt of CO2 equivalent during 2016; this amount is comparable to previous years. We consumed a total of 7,582,473 GJ of energy in 2016, including generated and purchased electricity. Most notably in 2016, we completed construction of a 2,000 tonnes/day sulphuric acid plant, which allows us to produce more of our own acid as an input to our process and reduce the amount of acid we need to import. Furthermore, it produces by-product steam, which in turn reduces fuel oil combustion. All told, the acid plant is expected to reduce CO2 emissions at Moa by approximately 100 kt per year.

Oil & Gas and Power (OGP) reported the production of 1,583 kt of CO2 equivalent during 2016 from its Boca de Jaruco, Puerto Escondido and Varadero facilities. Our Oil & Gas operations reported energy usage of 40,804,195 GJ. OGP also flared 19,705 e3m3 of hydrocarbons associated with its oil production processes during the year. The increase in energy usage over 2015 is attributed to the fact that there was no drilling program in 2015, whereas drilling activities occurred at Block 10 from August onward in 2016. OGP’s preventative maintenance program ensures optimal operation of our equipment, and we conduct quarterly monitoring of any emissions from our key sources to verify proper combustion.

Since 2007, Energas has generated well over one million Clean Development Mechanism (CDM) credits at the Varadero combined cycle power generation facility in recognition of its low GHG emissions relative to other sources of electricity in Cuba. While there are many benefits to the program, the relative administrative costs are significant and, due to Sherritt’s financial constraints, our participation has diminished in recent years. Read this case study for more information on our efforts to obtain CDM credits over the last few years.

2016 was the first year that Sherritt has reported Scope 2 emissions across the entire company. Scope 2 emissions refer to indirect emissions generated from the purchase of electricity. The majority of power consumed by Sherritt is generated on site, due to the remote nature of our operations and/or the limited availability of grid power in host jurisdictions. Therefore, Scope 2 emissions will always be of a lower order than those of Scope 1.

Air Quality

In 2016, Sherritt experienced eight reportable air quality–related incidents: five at Ambatovy and three at Fort Saskatchewan. The majority related to short-term exceedances in normal operating conditions or equipment failures with no identified off-site air quality impact. No employees or community members were harmed while these incidents occurred or while they were addressed.

2016 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power
Air emissions – NOX 7.1 μg/m3 1,678 tonnes 1,564 tonnes 6,687 tonnes
Air emissions – SOX 18.3 μg/m3 57 tonnes 13,073 tonnes 11,601 tonnes
Air emissions – TPM 28.2 μg/m3 PM10 77 tonnes Not calculated Not applicable
Note: In Madagascar, our current monitoring system records air emissions as a concentration rather than a total mass (which is what we monitor at our other operating sites), and we base our ambient air quality observations at ground level, so we are unable to normalize these data across Sherritt at this time.

Our sources of emissions to the atmosphere are regulated under requirements in the various jurisdictions where we operate. In Madagascar, our current monitoring system records air emissions as concentration rather than as a total mass (which is what we monitor at our other operating sites) and we base our ambient air quality observations at ground level, so we are unable to normalize these data across Sherritt. Ambatovy emissions include: SO2 from the acid plant, ammonia from refinery scrubbers and vents, H2S from the mixed-sulphide and hydrogen sulphide plants, NOx from fossil fuel use (from gensets, the coal-fired power plant and mobile equipment), and PM with a diameter of less than 10 microns from stockpiles, the power stacks and roads.

Our 2016 emissions at Fort Saskatchewan are consistent with historical levels. Most of the NOX and SOX emissions come from our utility generation (natural gas combustion) and fertilizer production (ammonia and sulphuric acid production) activities. Ammonia is released primarily from ammonia scrubbers in the metals refinery, which uses an ammonia-based leaching process. The PM is generated primarily from the production of ammonium sulphate fertilizer and from traffic on unpaved roads. Additional information on air quality in Fort Saskatchewan can be found on the Fort Air Partnership website.

In Cuba, Moa’s NOx and SOx emissions are generated from the sulphuric acid plant and the powerhouse. The 2016 volumes decreased slightly from 2015. OGP’s NOx and SOx emissions continued to show a decrease from the previous year, due to the optimal operation of the equipment at our OGP facilities.

Environmental Liabilities, Closure and Reclamation

Management Approach

The reputation of the mining sector has been affected by the historical mismanagement of mine properties that closed before regulations were in place to address closure and associated costs. We take seriously our responsibility to provide adequate financial resources to address the closure of our properties once reserves have been depleted.

Regulations have been strengthened around the world. As part of the permitting process, mining and energy companies are now required to prepare closure plans with associated cost estimates, and to provide host governments with financial assurance to cover the costs of environmental remediation in case the company is no longer able to complete the work. In addition to these regulatory requirements, international accounting and securities exchange rules require public companies to account for the reasonably expected liabilities associated with the closure of mining and energy properties. These estimates, like those provided to host governments, are based on the closure plans and assumptions contained therein.

We comply with regulatory requirements regarding closure planning and related environmental rehabilitation obligations, cost estimates, and financial assurance in each of the jurisdictions where we operate. We also meet the requirements of the Ontario Securities Commission, which obliges publicly listed companies in Ontario to estimate and disclose their environmental rehabilitation provisions. We review these provisions on a quarterly basis. Whenever possible, we engage in the progressive reclamation of our properties over the life of the operation, rather than initiate such activities at the time of closure.

Performance

The current estimate of Sherritt’s share of total anticipated future closure and reclamation costs to be incurred over the life of the company’s various assets and investments is approximately $103.2 million (excluding operating expenses).

In 2016, we continued to carry out our environmental liability obligations related to the containment pond breach at the Obed mine, a non-operational coal mine in Alberta that we owned at the time of the incident in 2013. Our remediation work is described under Tailings Management.

Closed Properties

As part of our acquisition of Dynatec Corporation in 2007, we inherited three now-closed assets from Highwood Resources Ltd.:

  • Mineral King, a former lead-zinc and barite mine and processing facility near Invermere, British Columbia. In 2014, Sherritt completed the reclamation work plan as required by the provincial regulator. Portals for accessing the mine were covered and secured, coverage of the tailings pond with topsoil was completed, access roads were pulled back, and designated areas were seeded and fertilized. A 2015 inspection by British Columbia’s regulator required additional work on the portals and surface depression. This work is planned for 2017. Once reclamation is complete and approved by the government, we intend to transfer future liability to the new property owner.
  • Parsons, a former barite mine and processing facility near Parson, British Columbia. In 2014, we completed the regulator’s reclamation work plan, which involved: a general clean-up, monitoring, seeding, and the removal of an invasive species. Once vegetation is re-established and land certification requirements are met, we will take steps to release the property to the provincial government. We expect the release of the bond and the return of the property to the government to occur in 2018.
  • Canada Talc, a former talc mine in Madoc, Ontario, and processing facility near Marmora, Ontario, and associated claims areas. In 2012, remediation of the mine was completed and the processing facility was sold. The Ontario regulator retained a security deposit for further surface and groundwater sampling and geotechnical monitoring, which will continue until 2017, at which time Sherritt expects to be in a position to release the security and begin the sale of the property.

Current Operations

All of our mining assets that are currently operational have more than 20 years of resources and production capacity in their lifecycles. Each has up-to-date closure plans that meet host jurisdiction regulations and cost estimates that we believe reasonably and appropriately address the liabilities at each site.

In 2016, Ambatovy continued its work on a mine restoration strategy, including developing comprehensive cost estimates. The operation also engages in planning discussions on a quarterly basis with our finance department about projected environmental rehabilitation obligation costs.

At Fort Saskatchewan, our closure plan incorporates a set of robust considerations which account for both likely and unlikely obligations that we may need to address, and our current cost estimates cover the reasonable obligations.

For our OGP operating sites, all assets will revert back to the Cuban state for closure, as outlined in our permits and related agreements.

For information on our reclamation activities in 2016, please refer to Performance in Biodiversity and Land.