Proponents of iron-ore plant for Belledune may try for carbon-tax waiver

The company that wants to build an iron-ore processing plant in northern New Brunswick is exploring whether it can get a break from the federal carbon tax if the project goes ahead.

Maritime Iron is proposing to build the plant next to NB Power's Belledune generating station, a potential shot in the arm for a region hit by the recently announced shutdown of a nearby lead smelter.

The $1.5 billion iron plant would increase greenhouse gas emissions in New Brunswick, and would be subject to the federal government's carbon price on industrial emissions.

But Maritime Iron says, because its operations would lead to lower emissions globally, it's looking at whether Ottawa's rules allow it to get an exemption or waiver from the levy.

"That is a discussion that we've been exploring, and we've been working with a number of experts in the space to understand the federal environment," said Elena Mantagaris, the company's vice-president of public affairs.

"We think we have a real value proposition to bring forward."

Maritime Iron says its location in Belledune would reduce global emissions by displacing other higher-emitting iron processing and slashing shipping distances for both the raw and processed iron.

"We've been pretty clear in our materials that there is a net increase within the province of [greenhouse gases] but we cannot look at this matter just locally," she said. "You must look at it globally. GHGs don't reside in one location. They're part of the atmosphere."

Mantagaris said the company hopes the argument could persuade federal officials to waive the levy. It's also possible the New Brunswick government will get Ottawa's approval to adopt its own less-stringent tax on industrial emitters.

In either scenario, "obviously the business case changes depending on the dollars associated with some of this," she said. "We understand what the implications are to our project."

But she added the project will still be viable without an exemption.

"I don't see it as a deal-breaker," she said.

Beacon of hope?

The Maritime Iron proposal has emerged as a beacon of hope for the Chaleur region, now facing the loss of 420 jobs with the looming shutdown of the Glencore lead smelter in Belledune.

If the project goes ahead, the company says it will create 1,300 direct jobs during construction and 200 permanent jobs during the plant's operations.

Maritime Iron has signed agreements with nearby First Nations and has been presenting its proposal to municipalities and business groups. It held a reception in Fredericton last Tuesday, attended by many provincial politicians.

The next day in the legislature, Liberal MLA Guy Arseneault called on the province to treat the project with "urgency," while People's Alliance Leader Kris Austin called it "a glimmer of hope" for the area that should be advanced "as quickly as possible."

But Premier Blaine Higgs was cautious, agreeing it "could be a game changer for the region"but repeating several times that officials are still assessing how credible it is.

"We will make sure we understand whether that project is real or not," he said in question period. "How real is this project? Does it have traction?"

Former Liberal premier Brian Gallant first announced the proposal in June 2018, just months before the provincial election. By then, Gallant's government had already given the company $625,000 for what it called "pre-feasibility" studies.

Construction could start next summer

Maritime Iron's plant would process iron ore into pig iron, and would pipe a byproduct gas to the adjacent NB Power generating station to generate electricity. That gas would allow the utility to cut the station's coal consumption in half, Mantagaris said.

The company submitted its environmental impact assessment documents in June, but the province asked officials "to add additional elements to complete the package," she said. She added the finalized version will be resubmitted "in the very near future."

Assuming the normal six-month timeline for approval, construction could start next summer, she said.

The plant will use a technology licensed from Posco, a Korean steel company. It would produce 90 per cent less nitrogen oxide, sulphur oxide and dust than conventional iron ore processing, Mantagaris said.

Iron ore from Quebec and Labrador is now shipped mainly to China for processing, so the Belledune location would reduce greenhouse gas emissions from shipping on ocean-going freighters by 98 per cent, she explained.

"This is one of the benefits of the Belledune site," she said.

The finished pig iron would be sold primarily in U.S. markets, displacing pig iron from suppliers in places like Russia and Ukraine and cutting those shipping emissions by 60 percent, she added.

Environment and Climate Change Canada was not able to say by the end of the day Monday whether federal carbon tax laws and regulations allow for exemptions based on a project's purported emissions reductions beyond Canada's borders.

Climate change researcher Louise Comeau of the University of New Brunswick said the Paris climate agreement and Canada's rules don't allow the international trading of carbon reductions. But the Paris deal allows for countries to negotiate that in the future.

Higgs said in the legislature last week that he discussed Maritime Iron with federal cabinet minister Dominic LeBlanc last year .

He said LeBlanc told him Ottawa could treat the project "as a global initiative and, as such, the environmental impact is reduced globally," despite higher emissions provincially.

Those higher New Brunswick emissions could also derail the province's goal of getting emissions to 30 per cent below 2005 levels by 2030. The province is close to that number now.

Mantagaris would not provide a precise emissions figure for the plant, but Higgs said last week it might be negated by Glencore's closure.

"With the smelter down now, it maybe balances out as our overall picture," he said.