Taseko Skewers Review Panel's Errors
Hell may have no fury like a woman scorned, but don't publicly scold a miner by claiming a mine would wreak severe damage on the environment when that assessment is based upon a flawed analysis. You'd also do well not to try to hide your mistake, because you'll be publicly outed anyway.
Copper and gold miner Taseko Mines assumed its New Prosperity mine in British Columbia was on the fast track to approval, and was caught off guard when the agency tasked with reviewing its application ruled the project would cause "several significant adverse environmental effects," including the degradation of water quality at Fish Lake, blockage of cultural and religious use of the land by aboriginal tribes, and endangerment of both aquatic life and the grizzly bear population.
Having hired some of the preeminent experts and engineers in the industry to detail its plans, Taseko never anticipated there would be a flaw. Of course, you can't foresee a government agency making a decision based not just on faulty data, but completely wrong data. Rather than use the mitigation plans submitted by the miner, the Canadian Environmental Assessment Agency instead substituted one offered up by Natural Resource Canada (NRCan), a mineral and resource agency of the Canadian government, whose plan would indeed cause those catastrophic results.
When Taseko's engineer pointed out the divergence from reality, the agency publicly asked the miner for documentation, specifically pointing out where it erred, but then said it wouldn't publish the results on its website. That set Taseko off.
"Our position is very clear; we expect to be treated fairly and objectively in this process. Publicly requesting information, and then choosing not to release the results of the request in a similar manner creates an inaccurate portrayal of Taseko and an impression in the minds of the public that our critique of the panel's findings are somehow flawed. We have therefore posted the specific documents related to this matter on Taseko's website to ensure our shareholders, community stakeholders and the general public are fully aware of the facts."
In a statement on the company's website, Taseko calls the agency's error "so outrageous as to be nearly unfathomable."
At issue is the construction of a tailings storage facility, a large pond where a mix of water and finely ground rock left over from the mining operation is stored until the two components separate. In Taseko's plan, the facility floor is covered with a continuous, low-permeability compacted soil liner that minimizes seepage into the surrounding waterways. It's a design currently used by Thompson Creek Metals at its Mount Milligan gold and copper mine (designed by the same firm that Taseko used) and elsewhere around the world. NRCan's design, on the other hand, inexplicably eliminated the liner, which allows the tailings to more readily leak out.
As I've noted before, however, while the tailings storage facility was one reason behind the denial, perhaps even the main one, it's not the only one, and investors can't ignore the complaints by the local Indian tribes that the project will trample on their cultural and religious heritage, or the risks to the local bear population.
The public shaming of the agency may get Taseko Mines over the one hurdle, but an embarrassed bureaucrat can be just as ornery and dangerous as a cornered grizzly, all sharp teeth and claws, so don't expect this episode to go away without a fight.
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The article Taseko Skewers Review Panel's Errors originally appeared on Fool.com.Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.