TORONTO — Vancouver-based Teck Resources pulled its application for the massive $15.5 billion Frontier oil sands mine in northern Alberta on Sunday night, saving Prime Minister Justin Trudeau from making what was widely considered a no-win decision on the controversial project this week.
In a letter to Jonathan Wilkinson, Canada’s environment minister, Teck chief executive Don Lindsay said he was “disappointed.”
“Global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate change, in order to produce the cleanest possible products,” he wrote. Canada, he added, does not.
“The growing debate around this issue has placed Frontier and our company squarely at the nexus of much broader issues that need to be resolved,” Lindsay said. “In that context, it is now evident that there is no constructive path forward for the project.”
The company, which released disappointing earnings results last week, said it will write down the $855 million carrying value of the project. Last month, Lindsay said that the mine would not be built — even if it secured government approval — unless there were more pipelines, higher oil prices and a partner to work with on the project.
The decision is likely to come as a relief for Trudeau, who has been trying to balance pledges to fight climate change and to support Canada’s struggling oil and gas sector — all while mending the country’s relationship with its indigenous people.
He is facing one of his toughest tests as prime minister in the wake of several nationwide protests in support of some members of the Wet’suwet’en Nation in British Columbia, who oppose the construction of a natural gas pipeline through their traditional territory. For more than two weeks, they’ve thwarted rail traffic along key corridors, leading to thousands of temporary layoffs.
The proposed 71,600-acre Frontier mine project was expected to pump an estimated 260,000 barrels of bitumen oil per day and produce 4.1 megatons of emissions each year, making it more difficult for Canada to reach domestic and international emissions targets.
A federal-provincial review panel found last year that the project would have “significant adverse environmental effects,” but concluded that it was in the public interest because of the thousands of jobs it would create and the $52 billion it would inject into government coffers.
If Trudeau approved the project, he risked irritating environmentalists, who are still smarting over his government’s purchase of the Trans Mountain pipeline project last year.
But if he gave the project a thumbs-down, he was likely to anger many in the oil-rich provinces of Alberta and Saskatchewan, who viewed the decision as a referendum on the government’s support for the future of the fossil fuel industry.
Alberta Prime Minister Jason Kenney, who promised a “swift and serious” reaction if Ottawa rejected the project, said Sunday that Teck’s decision was a “grave disappointment” and that the factors that led to it would further “weaken national unity.” But, he added, it was “not surprising,” given the anti-pipeline protests of the past few weeks.
“It is what happens when governments lack the courage to defend the interests of Canadians in the face of a militant minority,” he said.
Lindsay said in his letter that “the nature of our business dictates that a vocal minority will almost inevitable oppose specific developments,” but he said the company was not “merely shying away from controversy.”
The timing of Teck’s decision was curious: On Sunday afternoon, Kenney tweeted the “good news” that the provincial government had secured the “unqualified support” of the Athabasca Chipewyan First Nation for the project, confirming support for the mine from all 14 of the “proximate” First Nations.
Trudeau and Kenney spoke by phone on Sunday night, according to a readout from the prime minister’s office, and “agreed on the importance of Canada’s natural resource sector to our economy.”
In a joint statement, Wilkinson and Seamus O’Regan, Canada’s natural resources minister, said they “appreciate that Teck has made a difficult decision.”
“Important parts of Canada’s economy have been built on our natural resource sector and the workers across the country who have powered it for generations,” they said. “Our government is committed to developing our natural resources sustainably and to creating good, middle class jobs. A strong economy and clean environment must go hand in hand.”