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 began drafting an enterprise-wide Tailings Management Standard in 2017, which will be finalized in 2018. The standard aligns with TSM’s Tailings Management Protocol. 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

2017 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power
Total amount of overburden, rock, tailings and sludge
(tonnes)
27,200,453 Not applicable 14,380,826 Not applicable

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. As a new member of the Mining Association of Canada, we will be applying MAC’s Tailings Management Protocol at Moa and at Ambatovy.

The tailings management facility at Moa is regularly reviewed internally and by third parties for structural integrity and effectiveness of management systems. Based on 2017 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 2022. Permitting and detailed design work for the first stage of the extension was approved in 2016. Construction began in 2017 and will continue into 2018. The extension will also be subject to the Tailings Management Protocol.

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. Construction in 2017 focused on installing seepage recovery systems. In 2018, engineering will be completed on the pumping capacity increase. 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 2017, 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.

Over the course of the year, final remediation designs were prepared, and these were submitted to the regulator in early 2018. Once approved, planned remediation work will occur over the course of the year with the intent to conclude by year-end.

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 at least every two years – most recently at the end of 2017 – 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. As members of the Mining Association of Canada, we will be implementing the Towards Sustainable Mining Biodiversity Conservation Management Protocol at all operations where it is applicable. In addition, we are developing a minimum standard for biodiversity and land management as part of our sustainability framework that aligns with TSM and provides additional guidance to Sherritt’s divisions. 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 2017, the Ambatovy Environmental Management System (AEMS), including the Biodiversity Management System (ABMS) – which operationalizes many of the principles mentioned in the preceding description of our biodiversity management approach – was externally audited to assess whether the plans were being implemented according to their original design criteria. Data collection and validation were found to be acceptable; and additional focus will now be on data integration and dissemination for the AEMS. Coaching on the implementation of the management system was provided to stakeholders, including universities, non-governmental organizations, and offset site managers.

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.

In 2017, 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.

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 monitor and control invasive species at the Ambatovy mine, plant and port sites. The following occurred in 2017:

  • Norway rats: Extensive capture activities took place in 2016; however, the program was put on hold in 2017 due to the planned program and the outbreak of the pneumonic plague coinciding in timing and location. For safety reasons, the program has been scheduled for 2018.
  • Crayfish: Crayfish control occurred at two sites during the year. 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.
  • Invasive and exotic plants: An exotic species removal program took place over 11 hectares at the mine site, and three hectares of that were planted with native tree species.
  • Asian toads: There was a continued effort to remove Asian toads within the site footprint and the surrounding area. 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 2017, eradication efforts were focused on the mine and plant sites, as well as the surrounding area. Ambatovy’s staff also supported communication efforts and education regarding toad eradication to nearby communities.

In 2018, on the recommendation of Ambatovy’s Scientific Consultative Committee, the company plans to contract an invasive species specialist to better advise how Ambatovy can support broader eradication efforts of the Asian Toad population.

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. Ambatovy also has 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 2017, Ambatovy continued to support 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.

Refer to this case study for more information about Ambatovy’s partnership with Mitsinjo Association regarding a breeding program for a threatened, endemic frog species.

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 2017, the reforestation program in the park concluded. In 2018, Moa will support the government by undertaking monitoring activities of the reforested area. In addition, Moa received recognition from the environmental regulator, CITMA, for their achievements.

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 2017, 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 2017, both Ambatovy and the Moa site practiced progressive reclamation in accordance with their operating permits and commitments. The total amount of disturbed land in 2017 was higher than 2016 and rehabilitated land during the year was about 50% less. This was mainly due to increased clearing activity for mining at Ambatovy, and rehabilitation work related to Hurricane Matthew that occurred at Moa in 2016. There were no changes to the operational footprint of the Fort Saskatchewan refinery. In Cuba, our energy business was awarded a new production sharing contract (Block 6A); however, no drilling activity took place there, pending an anaylsis of available geological and geophysical information. The Corporation’s PSC for Block 2 (Varadero West), which expired in November 2017, has reverted to the Cuban government as per our operating agreement, and as such, there was also no meaningful change in land disturbed and rehabilitated for OGP.

In 2016, the Fort Saskatchewan site submitted an updated soil management plan to meet the regulatory requirements of Alberta. Throughout 2017, the Fort Site engaged with a technical expert to refine the plan, and recommendations are expected in 2018.

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

2017 Ambatovy Fort Saskatchewan Moa2 Oil & Gas and Power Total
Total amount of land newly disturbed within 2017 (ha) 168.5 0 51 2 221.5
Total amount of land newly rehabilitated within 2017 to the agreed end use (ha) 5 0 15 Not applicable 19

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

2017 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power Total
Total water withdrawal (m3) 26,751,644.5 2,800,000 14,040,000 5,299,603 48,891,247.5
Note: There was a reporting error in 2016, which was corrected with the inclusion of “Saltwater” as an indicator component in 2017.

Ambatovy reported 26.7 million m3 of water consumption in 2017, which is comparable to 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 unrelated to Ambatovy’s mining activities, from which Ambatovy draws water for mining operations, is a risk we take seriously. It is in our interest to ensure the long-term viability of the river, and so, in 2017, Ambatovy continued collaborating with PRODAIRE, a development project that promotes an integrated approach to rural development and environmental protection. This two-year collaboration, which began in 2016, involves local villages, and will bring greater focus to reforestation and the prevention of riverbank erosion in the impacted areas. It is expected that this work will continue in 2018.

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 2017 was slightly higher than previous years: 2.8 million m3, including 2.7 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 approximately 14 million m3 of water for its processes in 2017. This is in line with water withdrawal for the previous two years. Water is collected in our adjacent reservoir and treated before use.

Oil & Gas and Power reported a total water withdrawal in 2017 of 5.3 million m3. Water is drawn primarily from saltwater sources and some municipal sources. Oil & Gas service rigs use recycled water only, resulting in a net effect of zero on the water supply.

Water Quality

In 2017 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 commissioned a permanent potable water supply system to be installed. This was completed in 2017 and handed over to 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 continued to implement 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 installed interceptor wells and drainage systems to capture water before it enters the surrounding environment, and recirculate it for treatment. Our efforts will continue in consultation with the regulator.

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.

In 2017, the Capital Region Water Management Framework’s Steering Committee Terms of Reference changed so that companies are now represented by the Northeast Capital Industrial Association (NCIA), as opposed to engaging with the Capital Region Water Management individually. The goals of the framework is to improve the quality of the 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 2017, we agreed to a phased approach to developing long-term treatment options for water management. The first phase, to be implemented in 2018-2019, involves relocation of effluent discharge to support the rehabilitation of the river.

There were no significant water-quality issues recorded at Oil & Gas and Power in 2017.

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 one of our largest unit operating costs. 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 are developing a corporate standard.

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

2017 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power Total
Scope 1 GHG emissions(kt CO2e) 1,808 349 610 1,507 4,274
Scope 2 GHG emissions(kt CO2e) 0 59 49 0 108

GHG emissions at Ambatovy, for the mine, plant and port facilities, were estimated at a combined total of 1,808 kilotonnes (kt) of CO2 equivalent during 2017, representing a 4% decrease over 2016 emissions. 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 14,386,003 gigajoules (GJ) of energy in 2017 from a mix of coal-fired power plant and fossil fuel burned. The large increase over previous years is the result of improved reporting around coal and fossil fuel consumption for plants and mobile equipment. In 2017, 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 349 kt of CO2 equivalent in 2017, which is in line with 2016 emissions, and 64 kt CO2e higher than the legislated limit. Accordingly, the Fort Saskatchewan site will be purchasing 64 kt of credits for its 2017 emissions to comply with provincial regulations. Fort Saskatchewan recorded total energy consumption (including purchased electricity) of 5,033,000 GJ in 2017, which is a slight decrease over previous years.

In 2017, the Fort Site conducted a significant amount of stakeholder consultation, regarding the development of new provincial GHG regulations in Alberta. Sherritt advocated for a science-based approach that gives fair consideration to energy intensive trade-exposed businesses like ours. In December 2017, the Government of Alberta released the Carbon Competiveness Incentive Regulation, which came into effect on January 1, 2018. As such, 2017 GHG emissions reported enclosed are not subject to the new regulation. This new regulation sets the requirements regarding GHG reporting and outlines new compliance obligations for the Fort Site. In 2017, Sherritt purchased emissions credits to achieve regulatory compliance.

At Moa, we produced 610 kt of CO2 equivalent during 2017; this amount represents a 2% reduction over the previous year. We consumed a total of 6,580,145 GJ of energy in 2017, including generated and purchased electricity. This represents a 13% reduction over the previous year. Moa was able to achieve these reductions due to the completion of a 2,000 tonnes/day sulphuric acid plant in 2016, 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. 2017 was the first full year of operation for the acid plant.

Oil & Gas and Power (OGP) reported the production of 1,507 kt of CO2 equivalent during 2017 from its Boca de Jaruco, Puerto Escondido and Varadero facilities. This is historically consistent with what was reported in previous years. Our Oil & Gas and Power operations reported energy usage of 31,744,608 GJ. OGP also flared 104,355 e3m3 of hydrocarbons associated with its oil production processes during the year. 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. As our Oil & Gas operations have additional reporting metrics under the Global Reporting Initiative, please refer to the Performance section for this information.

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.

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. Beginning in 2018, Scope 2 emissions associated with the Fort Site will be subject to a compliance obligation under the new Albertan GHG regulations.

Air Quality

In 2017, Sherritt experienced four reportable air quality–related incidents: three at Ambatovy and one at Fort Saskatchewan. This represents a 50% reduction over 2016, mainly as a result of targeted repair work to the Pressure Acid Leach (PAL) at Ambatovy that resulted in a significant reduction in H2S emissions. All reported emissions were due 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.

2017 Ambatovy Fort Saskatchewan Moa Oil & Gas and Power
Air emissions – NOX Not reported 1,381 tonnes 1,304 tonnes 5,836 tonnes
Air emissions – SOX Not reported 76 tonnes 12,091 tonnes 21,751 tonnes
Air emissions – TPM Not reported 91 tonnes Not calculated Not applicable
Note: In Madagascar, our current monitoring system records air emissions as a concentration rather than a total mass, 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 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 2017 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 2017 volumes represented a further reduction from 2016, due to the operation of the acid plant and operating at lower rates in the powerhouse. OGP’s NOx emissions continued to show a decrease from the previous year, due to the optimal operation of the equipment at our OGP facilities; however, the increase in SOx is attributable to an ongoing service issue with the sulphur plant. This will not be an issue in 2018.

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 $95.3 million (excluding operating expenses). The decrease in anticipated costs over 2016 is mainly a result of changes in estimates rather than the completion of rehabilitation obligations.

In 2017, 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. The work was originally planned for 2017, but was delayed due to weather. It is expected to occur now in 2018. Once reclamation is complete and approved by the government, we intend to transfer future liability to the new property owner in 2019.
  • 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 continued in 2017. Sherritt expects to be in a position to release the security and begin the sale of the property by 2019.

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 2017, 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 2017, please refer to Performance in Biodiversity and Land.