A Miner’s Play to Undermine Alberta Democracy

The Australian billionaire Gina Rinehart wants the good residents of the Crowsnest Pass to vote “yes” in an upcoming referendum on her controversial Grassy Mountain metallurgical coal project.

Her company, Northback Holdings (formerly Benga/Riversdale Resources), has even offered to drive people to the polls on Nov. 25. The company promises jobs and prosperity.

Which raises some big questions.

Why would an Australian company engage in an Alberta election?

Why would one local community get to vote on a project that could impact the water quality of 200,000 Albertans downstream?

And most incredibly, why would one municipality get to hold a referendum on a project that is actually located in another municipal district?

The answer spells a disquieting story about the power and reach of Danielle Smith’s government and its support for a highly controversial project that the province’s citizens, courts and regulators have repeatedly rejected. It is a master class in how to undermine democracy.

The Municipality of Crowsnest Pass, which represents five historic towns in a mountainous part of Alberta, sits in an old coal mining region that the industry abandoned more than 40 years ago. The mine owners left behind a legacy of pollution and poverty.

Now just as the region has started to grow again and attract newcomers, the municipality abruptly proposed to hold a referendum two months ago on whether or not it should turn back the clock and return to coal mining as a mainstay.

Councillors in favour of the $27,000 referendum argued that the region just needed to increase its tax base. They nodded and winked and suggested Rinehart’s open-pit mine proposal offered the best remedy.

One community voting on another’s fate

The question being posed to the municipality’s 6,000 citizens reads like this: “Do you support the development and operations of the metallurgical coal mine at Grassy Mountain?”

However, there is one glaring problem hidden in the question along with a massive lie: the bulk of proposed mine, except for a rail terminal, isn’t located in the Municipality of Crowsnest Pass.

It’s actually located in its northern neighbor: the Municipal District of Ranchland. And guess what? That municipal district doesn’t need a referendum. It wholeheartedly opposes the mine.

A 2021 joint panel review by federal and provincial regulators, that rejected Rinehart’s proposal as uneconomic and ruinous for water, spelled out these very geographic realities.

“The M.D. of Ranchland would contain most of the project footprint, and Benga (now Northback) confirmed that it expected to pay the district about $1 million per year in property taxes.” The Municipality of Crowsnest, in contrast, would get less than half that.

But Ranchland, a vibrant ranching community that contains some of the last remaining fescue grasslands in the province, has made it clear it doesn’t want Rinehart’s mine, taxes or pollution. Full stop.

It also doesn’t believe that it is in the public interest to damage critical headwaters of the Old Man River basin with open-pit coal mining, and thereby send coal dust and selenium pollution downstream as far as 350 kilometres affecting tens of thousands of Albertans.

Just take a glance at Glencore’s Elk Valley mines (formerly Teck) in British Columbia, argued Ranchland. That’s where metallurgical coal mining has created multibillion-dollar liabilities by contaminating waterways, deforming fish and sending toxic selenium and other heavy metals into U.S. watersheds.

Toxic clouds of coal dust from B.C.’s mines also blow into Alberta’s watersheds.

During environmental hearings on Rinehart’s project in 2021 the Municipality of Crowsnest Pass chose to send no representatives or councillors to the proceedings because, well, the mine isn’t actually located in the municipality. It just wrote a letter of support for the mine. But Ranchland fully participated in the proceedings and spelled out its objections.

It said its primary concern was about “preserving a unique way of life within its borders,” namely ranching.

The municipal district told the regulatory panel that, “Benga’s position that the region needs ‘investment in its natural resources and its people,’ is paternalistic and ignores the concerns of the residents of the M.D.”

And now the Municipality of Crowsnest Pass, at the behest of an Australian company owned by a litigious billionaire, proposes its own brand of paternalism by holding a referendum on the future of proposed development that isn’t even located in its borders because the true residents are 100 per cent opposed.

It is like asking Calgarians to vote on a proposed housing project or waterworks program that nobody wants in nearby Airdre so it can be approved. The same twisted logic, if applied to British Columba, would give the citizens of Vancouver a chance to vote on rejected boondoggles impacting the residents of Surrey.

Smith’s long-standing support

This democratic perversion gets worse because of an undeclared open conflict of interest by the Municipality of Crowsnest coupled with promises made by Premier Danielle Smith.

In 2021 the Municipality of Crowsnest signed a deal agreeing to transfer water from York Creek basin water licence to Riversdale Resources or what is now known Northback Holdings for $1.2 million. The municipality has an option to renew the agreement in the future.

“To call a referendum without informing voters of this already-done deal with the coal speculator is a clear case of deception, malfeasance and underhanded collusion with a foreign entity,” said David Thomas, the communications co-ordinator for Crowsnest Headwaters, a group opposed to the project.

Meanwhile Crowsnest Pass Mayor Blair Painter, a UCP supporter, has denied that the deal was secret. He explained it was done “in the open, during council meeting,” and that the non-binding referendum is just an information collection exercise.

But that’s not the full story either.

Shortly after regulators flatly rejected the project in 2021, Painter later held an “in camera” session about amending and extending the water agreement with Riverdale Resources (now Northback) on Aug. 24, 2021.

Two months later Rinehart’’s company submitted a renewal of the water agreement till 2028 on the company's letterhead.

No public disclosure of agreement was made by MD’s council at the time.

While running for the leadership of the UCP in 2022 Danielle Smith explicitly told members of the community that she would be open to reviving the controversial project if locals approved the mega-mine in a referendum.

Eric Lowther, a former MP for the Canadian Alliance and a member of Citizens Supportive of Crowsnest Coal, confirmed the deal: “If there was a strong referendum in the area in support of it, (Smith) would be more inclined to help us out,” Lowther explained to the Canadian Press in 2022.

In other words, Smith signalled to her party base that she would defy regulatory and court decisions and find a way to push the project forward. (Since then Rinehart has lobbied Smith’s administration relentlessly to good effect: It has already agreed to hold a hearing on Northback’s applications for coal exploration even though courts question their legality.)

In preparation for the referendum, Northback has sought to woo local hearts and minds by donating $75,000 to a local school nutrition program.

It’s plain to see that the referendum has nothing to do with collecting information but building a mandate for Smith’s 2022 promise.

Such a mandate would give the government a political opportunity to muddy the waters and push forward a mine that the public clearly doesn’t want.

This fact was made clear by the findings of the 2021 Coal Policy Committee. It was tasked with finding out how Albertans really felt about coal development in the Rocky Mountains after a string of proposals by Australian miners exploded into the largest environment protest in the province’s history.

Here's what the committee reported: More than 70 per cent of responders to the committee’s survey agreed that coal would put the environment and water at risk. And more than 60 per cent judged that coal wasn’t a significant breadwinner in the province. It also placed a moratorium on further development which the government has already violated.

Ignoring damning research

Meanwhile Mike Young, the CEO of Northback, has been aggressively trying to drum up support for his coal mine among UCP supporters.

Last summer, in preparation for the referendum, he talked to right-wing media outlets such as True North and the Western Standard. Both outlets have deep political ties to Premier Danielle Smith.

The Western Standard, for example, headlined its remarkably biased piece: “Let’s get coal rolling.” True North, another right-wing publication partially funded by fracking pioneer and anti-climate activist Gwyn Morgan, ran a story on “why environmentalists are wrong about coal.”

(William McBeath, chief operating officer for the publication, previously served as a senior advisor to Danielle Smith while she led the Wildrose Party.)

Northback’s CEO Mike Young told these propaganda platforms that selenium wasn’t a problem because it was just “an education issue.” He also promised the mine would create hundreds of jobs and a better tax base.

But neither platform questioned Young’s claims or cited what the research actually says on such matters. That research is damning.

A recent study by the respected economist Robyn Allan and several colleagues looked at what three major metallurgical coal projects promised B.C. residents in terms of jobs and taxes.

Then they compared promises with realities 20 years later. The three mines studied include Willow Creek, Brule and Wolverine between the years of 1999 and 2019.

The developers, of course, promised a veritable bonanza of $250 million in corporate taxes for the government. But the mines only delivered a paltry $86 million.

Or as the report puts it: “Actual corporate taxes paid were 34 per cent of the corporate taxes promised.” The authors found the companies overstated corporate tax revenues by 2.9 times.

The three coal mining projects also didn’t deliver on the job front either.

Their proponents promised 583 jobs but only 59 per cent (346 jobs) ever materialized. “That is, forecasted employment overstated actual employment by 1.7 times,” said the report.

The developers also pledged a full slate of jobs based on the expected lifetime of the mines.

But global price booms and busts for steel-making coal (a highly cyclical resource) produced a different reality whereby, “hiring and layoffs rose and fell as mines were opened and shuttered in response to volatile coal prices.”

The boom-and-bust nature of employment also had a well-documented and unhealthy impact on local communities. The volatility “increased rates of addiction, crime, family conflicts, domestic abuse and gender violence.”

On average the three mines were shuttered almost a third of their operating lives.

Allan noted that the mining companies will duly manufacture rosy job forecasts with no reference to the reality of damaging boom and bust cycles. She also found that claims to fix the environmental damage (everything from coal dust, caribou protection and heavy metal pollution) didn’t amount to a hill of beans.

Regulators also failed the public because they “do not test the reasonableness of proponents’ projections, and they fail to ensure that the benefits upon which project approval is based actually materialize.”

Well, actually, the 2021 regulatory decision tested the reasonableness of Rinehart’s projections and found them terribly wanting. Now the billionaire thinks she has found a powerful ally to reverse that finding.

So that’s why an Australian company is supporting a Alberta referendum on its highly dubious promises made in an municipality where the mine will not be located.

It’s all designed to create a mandate for Premier Smith so she can dismantle regulatory decisions supported by the majority of Albertans that rejected Rinehart’s coal gamble as ruinous for Old Man watershed.

It’s social engineering by a corporation and a government at its finest. Foreign miners undermining Albertan democracy.