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Taseko Mine's proposed Prosperity Project would require draining Fish Lake, located 125 kilometres southwest of Williams Lake in the traditional territories of the Xeni Gwet'in First Nation.

Xeni Gwet'in First Nation

The federal government's decision on a controversial $800-million copper-gold mine in British Columbia will be a precedent for industrial development in Canada, from the use of fresh-water lakes as dump sites for toxic waste to relations with first nations.

In a rare move, a federal review panel concluded late Friday that the proposed mine by Taseko Mines Ltd. will have "significant adverse environmental effects," specifically on fish, lakes and first nations use of the land. A final decision will be made by Prime Minister Stephen Harper's cabinet.

Stock of Taseko was slammed on Monday, knocked down more than 20 per cent.

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However, in a statement late Monday, the company said it remains confident the project will be approved. The federal panel weighed environmental and first nations' questions but not predicted economic benefits for a region of the province badly hurt by forestry's decline and the mountain pine beetle.

"It must be remembered that the report is advisory only," company chief executive officer Russ Hallbauer said in a statement. "It will help to inform Cabinet but it does not commit Cabinet to a particular course of action."


The B.C. government has already approved the project, after a review that looked at environmental and economic impacts.

However, first nations insist that if the federal government approves the Taseko mine, it will bode badly for all future development. Stewart Phillip, president of the Union of B.C. Indian Chiefs, said an approval is "unfathomable."

The building of the mine would destroy Fish Lake, about 250 kilometers north of Vancouver, to use the small body of water to store the toxic waste tailings from copper and gold mining and processing.

The lake and the region, the federal review report said, is "one of the few remaining areas of spiritual and cultural importance" for the Tsilhqot'in first nations that hasn't been affected by other industrial activity such as logging.

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"If the federal cabinet just sweeps away this decision, it'd really be a black day for relations between industry and first nations," said Mr. Phillip, adding that it would taint the legitimacy of the review for the proposed multibillion-dollar Enbridge Inc. Northern Gateway oil sands pipeline through B.C.

"The Tsilhqot'in are absolutely opposed to this mine and are prepared to defend their territory by whatever means it takes," said Mr. Phillip.

Analyst Craig Miller of TD Securities Inc. cut his rating on Taseko stock to "hold" from "buy" and halved his one-year stock price estimate to $3.50 from $7. Because of the uncertainty, he removed the potential of the Taseko mine from his calculus of the company's value.

"We see a potentially messy decision process pitting provincial interests against federal interests, economic interests against environmental interests, and first nations interests against those of the unemployed in the Williams Lake region," Mr. Miller said in a report to clients on Monday. "It is not going to be an easy decision."

Federal government departments have 10 weeks to prepare a recommendation for the federal cabinet.

Entwined in the first nations question is the fate of Fish Lake, which Taseko wants to use to store the mine tailings. This is a much cheaper option than building a separate tailings storage area and Taseko is seeking what's called a "schedule 2" under metal mining effluent regulations in the Fisheries Act.

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Such an exemption was granted to Vale Inco in June, 2009, to dump its toxic tailings from a nickel processing plant into Sandy Pond in Newfoundland. (In the Vale case, the cost to use Sandy Pond for tailings was $62-million compared with $490-million to build and operate a separate pit.) This May, Terrane Metals Corp.'s application for a schedule 2 exemption for its $915-million copper-gold mine in northern B.C. was put up for comment and consultations by the government.

A similar push by Northgate Minerals Corp. was rejected in 2008 by the federal and provincial governments, after a joint provincial-federal review panel ruled that a mine expansion wasn't in the public interest. Northgate's plan involved using a lake for tailings storage, and the lake was valued for its spiritual value by local first nations, who opposed the project.

Findings of "significant adverse environmental effects" are rare. The Taseko case is only the third such example in the nearly two-decade history of the Canadian Environmental Assessment Act. The second was the Northgate case and the first was for a basalt quarry in Nova Scotia, which was turned down by government in 2007.

In the book Unnatural Law, David Boyd's review of the big and small decisions of the Canadian Environmental Assessment Agency between 1995 and 2000, 99.9 per cent of were approved, according to law firm Woodward & Co., counsel for the Tsilhqot'in.

"It's clear approving the project is unjustified infringement" of first nations' rights, said Jay Nelson, a Woodward lawyer. "It really calls into question Canada's relationship to our first nations in 2010. It's a defining moment."

Correction: Terrane Metals Corp.'s application for an amendment to the Metal Mining Effluent Regulations, for a copper-gold mine in B.C., remains subject to a public comment period and to consultations with aboriginal and environmental groups. Incorrect information appeared on Tuesday.

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About the Author
National correspondent, Vancouver bureau

David Ebner is a national correspondent based in Vancouver. He joined The Globe and Mail in 2000 and worked in Toronto and Calgary before moving to Vancouver in 2008. He has reported on a wide range of stories – business, politics, arts, crime – and has covered sports since 2012. More

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