Base metal smelters (Hudbay): environmental agreement

Official title: Performance agreements concerning air pollutants from base metals facilities

(herein “agreement”)

between

Her Majesty the Queen in Right of Canada, 

as represented by the Minister of the Environment who is responsible for the Department of the Environment

(herein “EC”)

and

Hudbay Minerals Inc.

(herein “Hudbay”)

Each of the above is individually referred to as “party” and collectively as “parties”.

Preamble

Whereas the production by base metals facilities results in atmospheric emissions of sulphur dioxide (SO₂), particulate matter (PM) and other air pollutants;

Whereas the notice requiring the preparation and implementation of pollution prevention plans in respect of specified toxic substances released from base metals smelters and refineries and zinc plants published in 2006 has resulted in significant reductions of emissions of SO₂ and PM;

Whereas, in October 2012, federal, provincial and territorial environment ministers took action to better protect human health and the environment by endorsing and implementing the new Air Quality Management System (AQMS). The AQMS includes Canadian Ambient Air Quality Standards for fine particulate matter and ground-level ozone, base level industrial emissions requirements (BLIERs) and local air zone management by the provincial/territorial jurisdictions. For the base metals sector, BLIERs were developed for SO₂ and PM;

Whereas the Minister of the Environment recognizes voluntary action of industry as an efficient means to achieve environmental objectives; 

Whereas EC will encourage a new company which opens a new base metals facility to sign a similar agreement;

And whereas the parties share a common interest in continuing efforts to reduce atmospheric emissions of SO₂ and PM.

Therefore, the parties hereby agree as follows:

1.0 Purpose

The purpose of this agreement is for Hudbay, at its zinc plant, to:

• achieve and maintain the BLIERs for emissions of PM, indicated in section 9.0
• agree to continual improvement, where reasonably feasible, with respect to:
  
  • further reducing emissions of PM
  • reducing emissions of metals and fugitive PM
  • implementing the applicable recommendations in the code of practice referred to in section 2.0

2.0 Definitions

3.0 Legal status

This agreement does not and is not intended to create legally binding obligations between the parties, nor does it constitute any admission of liability by either of the parties. 

This agreement and all the annexes listed throughout constitute the entire agreement between the parties. There are no undertakings, representations, promises or warranties, expressed or implied, other than those contained in the agreement and its annexes.

By signing this agreement, each party agrees to fully conform to its commitment for as long as it is a party to the agreement.  

Nothing in this agreement precludes a party from implementing any other environmental or human health initiatives as it sees fit. 

Adherence to this agreement does not in any way exempt Hudbay from complying with any and all applicable laws and regulations.

4.0 Duration

The agreement shall be effective as of the date that the Minister’s signature is affixed to the agreement and shall expire on December 31, 2025, unless terminated earlier in accordance with section 5.0.

5.0 Termination

The parties may on mutual consent and in writing terminate this agreement at any time. 

Either party may terminate this agreement at any time, without cause and for its sole convenience, by giving at least one year’s written notice of its intention to terminate to the other party.

6.0 Amendments

This agreement may be amended at any time by mutual consent of the parties. In order to be valid, any amendment to this agreement shall be in writing and signed by the parties.

7.0 Assignment and successors

This agreement will apply to the successors and assignees of Hudbay.  

8.0 Understandings

In the event of the definitive closure of the Hudbay facility, Hudbay will be relieved of its responsibilities under this agreement for that facility.

This agreement is not intended to prevent the Government of Canada from recommending or taking any legislative, regulatory, or other measures necessary for the protection of human health or the environment or any measure that it deems appropriate, and nothing in the agreement may be construed as having such an effect. 

If the objectives and the requirements of this agreement are not being achieved, the Minister will determine whether other measures, including regulations, are needed to further prevent or reduce adverse impacts on human health or the environment.

9.0 Risk management objectives

9.1 SO₂ and PM BLIERs for existing facilities

Hudbay agrees to achieve and maintain the following BLIERs, for its facility:

9.2 SO₂ and PM BLIERs for new facilities

Hudbay agrees to achieve and maintain the following BLIERs for its new facilities:

SO₂ BLIERs for new facilities

Table notes

¹ Note that the sulphur capture rates do not apply to facilities which only have hydrometallurgical operations

PM BLIERs for new facilities

• A target will be negotiated when a new facility becomes operational

9.3 Working group on quantification and reporting of metals and fugitive PM

Hudbay agrees to participate in a working group, with representatives from EC, provincial governments, other companies in the base metal sector, and the Mining Association of Canada, to assess the consistency and robustness of the data reported to the National Pollutant Release Inventory. This would include developing sector-wide recommendations with respect to:

It is recognized that some differences in quantification and reporting among facilities are a result of different provincial requirements. Consideration will be given to account for these differences, where possible.

The working group will be chaired by representatives from the industry and is to be created within six months of the effective date of the agreement.

9.4 Facility-level analysis

Hudbay agrees to work bilaterally with EC to better understand its facility’s metal emissions and identify possible technologies and/or actions which could reduce the emissions of metals identified in table 2 of annex 1.

9.5 Code of practice

Hudbay agrees to continual improvement towards the implementation of applicable recommendations of the code of practice at its facility. 

10.0 Testing, quantification and reporting

For its facility, Hudbay agrees to follow the testing and quantification specifications for PM and PM emission intensity outlined in annex 2 of this agreement. Additional details specific to the facility are outlined in table 1 of annex 1.

10.1 Calculation of sulphur capture rate

This section does not apply to Hudbay.

10.2 Reference manual

For its facility, Hudbay agrees to document in detail (e.g. in a reference manual), the methodologies used to determine the PM emission intensity as required by section 9.1.

10.3 Annual reports

Hudbay agrees to prepare and submit annual reports for its facility and ensure that data included in each annual report is complete, accurate, and verifiable. The annual report will include data and information related to the following:

10.4 Reporting on the SO₂ BLIERs

This section does not apply to Hudbay.

10.5 Exemption for reporting on SO₂ BLIER

Hudbay does not need to provide the required information related to meeting the SO₂ BLIER in the annual report as there is no target identified for the facility in section 9.1.

10.6 Reporting on PM BLIERs

Hudbay agrees to use EC’s template (referenced in annex 3) to quantify and report particulate matter releases and emission intensity.

With respect to the PM BLIERs, the annual report will include, as a minimum, the following:

10.7 Exemption for reporting on PM BLIER

A Hudbay facility is not required to report PM emissions under this agreement if that facility achieves an annual PM emission intensity < 1 kg/tonne for three consecutive years at any time during the lifetime of the agreement.

The verification in accordance with section 12.0 may take place up to two years before the effective date of this agreement. In this case, any years subsequent to the verification may count towards the three consecutive years, if Hudbay attests that the quantification methodology used in those years is consistent with the year of verification. Alternatively, up to two years preceding the verification may count towards the three consecutive years, if the auditor attests in the verification report that the quantification methodology used in those years is consistent with the year of verification. To obtain an exemption, the facility must submit an annual report with the verification report for the corresponding year.

Notwithstanding this exemption, the facility is required to continue its annual emissions reporting obligation to the NPRI.

10.8 Revocation of exemption

An exemption granted under condition 10.7 could be revoked, if in subsequent years or at any time during the life of the agreement, the annual PM threshold < 1 kg/tonne is exceeded. In this case, the facility could be required to begin or resume reporting, unless and until a reasonable explanation of the circumstances, under which the exceedance occurred, is provided to the satisfaction of EC.

10.9 Status update for BLIERs implementation 

This section does not apply to Hudbay.

10.10 Reporting on the code of practice

As part of the annual report for its facility, Hudbay agrees to report on the implementation of the code of practice as set out in annex 4, as it relates to the zinc plant only. Where it is not feasible to report specifically on the zinc plant, Hudbay may report on the metallurgical complex as a whole.

10.11 Submission of reports

Hudbay will submit its first report, for the 2017 calendar year, by June 30, 2018. All subsequent reports covering each calendar year of the agreement will be due no later than June 30 of the following year. Reports will be sent to the following address:

Subject title: BMS PA
Regulatory Innovation and Management Systems
351 St. Joseph Blvd, 20^th floor
Gatineau, Quebec
K1A 0H3
Canada
Phone: 1-844-580-3637

Or electronically to ec.epa-epe.ec@canada.ca

10.12 Retention of records

Hudbay will retain all records related to the agreement, including data and worksheets used for emissions quantification, for seven years from when the data was created, and make them available to EC upon request.

10.13 Reporting to the National Pollutant Release Inventory

Hudbay agrees, where possible, to use the same quantification methodology prescribed for the PA (see annex 2), when reporting process emissions to the National Pollutant Release Inventory for PM.

Hudbay agrees to work toward implementation of the recommendations of the working group, where applicable, for quantification and reporting of fugitive PM and metals at its facility.

11.0 Public progress summary by EC

EC will publish public progress summaries describing results, performance and activities that have taken place within the base metal sector under this agreement and other performance agreements related to air pollutants from this sector. In preparation of this report, EC will consult with Hudbay and other base metal companies which have signed similar performance agreements with EC.

EC will publish the public progress summary in electronic format on the Government of Canada’s website.

12.0 Independent verification of PM emissions

Hudbay agrees to retain, at its own cost, the services of an independent auditor to verify the results in its facility’s reports, as outlined in annexes 2 and 3, once within two years of the effective date of the agreement. Hudbay should ensure that the auditor follows the verification protocol as outlined in annex 5.

If the verification occurs after the effective date of the agreement, then the verification by the auditor must cover the same period as an annual report prepared in accordance with section 10.0. If the verification occurs prior to the effective date of the agreement, then the verification by the auditor must cover a calendar year as if an annual report were being prepared in accordance with section 10.0.

 As outlined in annex 5, the verification will include, but may not be limited to, verifying: 

Upon the completion of the verification, Hudbay will:

13.0 EC verification of the facility’s annual reports

EC will verify the data submitted annually by Hudbay under section 10.0. As part of the verification, EC may also review NPRI reported data for consistency and notable changes to metals and fugitive PM emissions. This could be followed by interviews and submission of additional supporting information by Hudbay. EC may also perform additional verification by means of one or more site visits to the facility, following an appropriate notice.   

14.0 Roles and responsibilities

For its facility, Hudbay agrees to: 

EC agrees to:

15.0 Availability of the agreement and confidential information

A copy of this Agreement and Environment Canada’s progress reports will be made available on the Government of Canada’s web site.

Confidential information

Environment Canada agrees to keep confidential and not disclose any confidential information obtained from the parties under this agreement that has been identified as being confidential provided that a written request for confidentiality is made at the same time as the information is submitted. The request must specify the information that is considered to be confidential and the reason why it should be treated as such.  

Nothing in this agreement shall be interpreted so as to preclude Environment Canada from disclosing information that Environment Canada may be required or ordered to disclose pursuant to any applicable federal laws or court orders, including, the Access to Information Act, R.S. 1985.

16.0 Signatures

The parties acknowledge that they have read and accepted all of the provisions of the agreement.

Her Majesty he Queen in Right of Canada, as represented by the Minister of the Environment

By: ___________________________________ (print name)

Title:__________________________________ (print title)

Signature: _____________________________ 

[If there is no delegation instrument in place, add:] For and on behalf of the Minister of the Environment

Signed this _____day of ______________, 2017 

[if desired/required:]

In the presence of:_______________________ (signature)

Hudbay

By: ___________________________________ (print name)

Title:__________________________________ (print title) 

I represent and warrant that I am duly authorized to bind Hudbay Minerals Inc.

Signature:______________________________

Signed this _____day of ______________, 2017

[if desired/required:]

In the presence of:_______________________ (signature)

Annex 1: Facility specific information

x: indicates metals that were reported to the NPRI in 2012

Annex 2: Testing and quantification procedures

Particulate matter

Measurement: Particulate matter emissions measurement could be done by source testing, continuous emissions monitoring (CEM) or a combination of the two. Where source testing and CEM is not operationally feasible, other methodologies, as identified in annex 1, may be used.

Methodology: Any of the following standard methods should be used for source testing: 

• Environment Canada’s EPS/1/RM/8 (Standard reference method for source testing: Measurement of releases of particulate matter from stationary sources)
• Environment Canada's EPS 1/RM/55 (Reference method for source testing: Measurement of releases of fine particulate matter from stationary sources)
• US EPA method 5: Determination of particulate emissions from stationary sources
• Ontario source testing code, method 5: Determination of Particulate Emissions from Stationary Sources
• Alberta stack sampling code
• Any other method that complies with requirements under applicable legislation, permits or agreements with provincial regulatory authorities

For measurement by a continuous emissions monitoring system (CEMS), it is expected that the CEMS would have, at a minimum:

• Correlation by source testing on a regular basis according to Environment Canada’s EPS 1/RM/8, or any other equivalent method

Frequency: Source testing should be performed, at a minimum, according to the frequency specified in table 1 of annex 1.

Particulate matter emission intensity

Materiality of products: For calculating PM emission intensity, a facility may exclude a product or products from the denominator without adjusting the numerator, only if this exclusion does not alter the emission intensity value by greater than 1%.

Annex 3: Quantification and annual reporting of SO₂ and PM

EC will provide a template for:

• sulphur mass balance and sulphur capture calculations and reporting
• particulate matter emission intensity calculations and reporting

The template may be updated from time to time. Hudbay will be given sufficient time to review and provide comments on the updated version.

Annex 4: Implementation of code of practice

As part of the annual report for its facility, Hudbay will provide information regarding the implementation of the code of practice.

In the first year, Hudbay will provide a summary of the recommendations that have been implemented at its facility, and a summary of recommendations that are not applicable, according to the following table.

Table notes

¹ A qualitative description is acceptable, if a quantitative estimate is not possible.

In the first year and each year thereafter, Hudbay will report on the recommendations that have yet to be implemented at its facility using appendix B of the code of practice. 

Hudbay should provide, if needed, any additional information on each recommendation.

After the first annual report, for a facility which has fully implemented all of the applicable recommendations in the code of practice, Hudbay will only be required to submit a summary every 3 years (e.g. highlight any improvements which have further reduced emissions) for that facility.

Annex 5: Verification protocol for the BMS performance agreements

1.0  Verification objectives and scope

This protocol establishes verification procedures for the third party verification of the requirements of the performance agreement between Environment Canada and individual companies in the base metals sector for the implementation of the base level industrial emissions requirements (BLIERs). It also outlines the roles of the verifier and the signatories of the agreement. The objective of the verification is to confirm that the emissions data reported by Hudbay for its facility reasonably reflect actual circumstances and that the requirements outlined under section 10 of this agreement have been followed in computing and reporting the results.

The scope of the verification is limited to:

• the review and confirmation of the data utilized towards achieving the risk management objectives outlined under 9.1 of this agreement
• objective assessment of the proper applications of quantification methodologies and reporting, and documentation requirements outlined under the subsections of 10.1, 10.2,10.4 and 10.6 of this agreement
• an evaluation and assessment that the weighing, sampling testing and quantification methodologies applied to determine the sulphur capture rate and particulate matter emissions at the facility:
  • were performed according to provisions outlined under section 10 of this agreement
  • conform to the facility’s documented procedures and reference manuals

2.0 Roles and responsibilities

The verifier or verification team will visit the facility, review and evaluate data/documents related to emissions measurement and quantification to prepare a verification report for that facility.

Hudbay will make every possible effort to make available, for its facility, all pertinent documents, and information needed to conduct the verification, including, but not limited to:

• emission monitoring testing data including process operating conditions during the testing
• log-books, process descriptions, flow sheets and reference manuals
• equipment performance and maintenance records

Hudbay will provide access to employees and individuals within the company to seek further information, if needed.

Environment Canada will:    

• review the verification report
• contact Hudbay for clarification, as needed

3.0  Qualifications of the third party verifier or verification team

The verifier or verification team (if more than one) is an entity that verifies and provides assurance of the quality of emission testing and quantification of data.

The verifier or a member of the team must have:

• a degree in engineering, environmental science, environmental management or related discipline, and a minimum of five years of demonstrated work experience in performing emissions audits/verifications in industrial installations, and preparing verification/audit reports
• certification as an Environmental Professional specialized  as a Compliance, Environmental Auditor (EP(CEA))
• a good understanding of:
  • the base metal sector and the basics of smelting and refining processes, operations and functions of equipment utilized in the processes, potential sources of emissions, good knowledge of emissions estimation and quantification methodologies and techniques
  • source testing methodologies and specifications
  • continuous emissions monitoring systems (CEMS), and their operations, if used as part of the facility’s testing and quantification methodology

4.0  Verification process

The verification activities will consist of the following main parts:

4.1  Information gathering

Before, after and during the on-site visit, the verification team will gather documents pertinent to the verification process.

4.2  On-site visit and document review:

The verification team will visit the site to conduct the verification. The verification team will review all relevant documents, including but not limited to the following:

• process flow-sheets, sulphur mass balance, particulate matter emissions determinations procedure/reference manuals
• procedures for data collection, processing and calculations
• reported data and information to ascertain completeness, consistency over time, and performance against targets
• emission monitoring or testing results
• raw data used for calculations and any documentation deemed necessary to verify the total emissions from the facility (e.g. quantity of sulphur input and sulphur captured)
• procedures for estimation of annual production levels
• measurement techniques utilized, and release quantification methodologies applied

The verification team will also:

• cross check data provided with emission sources (e.g. stacks, point sources), the number of sources and the corresponding source’s specific ID or other identifier (e.g. numeric, alpha-numeric ID or source name)
• conduct field observation of selected pertinent activities and sources for which the collected data applies
• document additional data and information obtained through provisions of supplemental documentation or, if needed, through interviews of facility management or staff. Identify any inaccuracies in the testing and quantification of emissions or missing data/information and other pertinent values related to the quantification process, and bring these issues to the attention of the responsible person in the facility and seek clarification and/or correction

4.3  Verification report:

The verification report summarizes the findings of the verification process and should, at a minimum, contain:

• an executive summary
• key findings of the verification
• observations on the overall techniques and procedures relating to data collection, emissions measurement techniques and quantification of emissions
• an overall statement on completeness, soundness, and consistency of the data used to determine emission and production levels
• a list of any errors that were identified for corrective action
• any other specific observations relating to the procedures and practices employed that would have positive or negative impacts on the overall emissions testing and quantification methodologies and results
• the date of verification
• the names of the members of the verification team and the organization they represent

The report should be submitted as outlined in section 12.0 of the agreement.