In May this year, Environment and Climate Change Canada published a technical paper on the federal carbon pricing backstop which seeks to inform Canadians and stakeholders about the federal carbon levy and the output-based pricing system that are going to take effect in 2018 and 2019, respectively. All elements of the backstop will apply in jurisdictions that do not have a carbon pricing system in place by 2018. The backstop will also supplement systems that do not fully meet the benchmark. In effect, a carbon pollution pricing system will take form in all provinces and territories in Canada as early as next year.
Coverage and rates of the carbon levy
Fossil fuels that will be subject to the levy include liquid fuels (e.g., gasoline, diesel fuel, and aviation fuel), gaseous fuels (e.g., natural gas) and solid fuels (e.g., coal and coke). Carbon levy rates will initially be set for the period from 2018 to 2022. Rates for each fuel subject to the levy will be set such that they are equivalent to $10 per tonne of CO2 e in 2018 and increase by $10 per tonne annually to $50 per tonne in 2022. These rates of levy correspond to increases in gasoline and diesel prices of ¢11.63 and 13.69, respectively.
Impact on the mining industry
Mining companies, such as Agnico Eagle, have estimated the impact of the federal carbon tax in the range of tens of millions of dollars over the next six years for their remote operations locations in Nunavut. With energy representing about 25% of production costs, mining companies are very motivated to reduce their carbon footprint. One way to do that is through renewable energy and long-term investments in wind, solar and other renewable energy projects which can cut expenses and clean up their operations. Companies such Rio Tinto PLC and Glencore Xstrata have wind-farm projects in the Northern Territories under way that will reduce energy costs and the expected carbon tax.
How can we help?
One thing that all miners seem to agree on is that the cost of inaction will be very high. Magemi Mining can help your company address effectively the looming carbon taxes. Our team of experienced mining and computer sciences professionals has developed a software scheduler called Magemi Mine Optimizer that optimizes handling and re-handling costs in all areas of mine operations and eliminates or substantially reduces GHG emissions from re-handling. Initial results show that Magemi scheduler can result in 50-80% of fuel for handling and re-handlingand GHG emissions reduction in the mining and processing areas and contribute to over $1.1M of savings a year in an average mine project. Now that’s worth having a conversation about. If you are interested in learning more about Magemi Mine Optimizer, feel free to contact our CEO: