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Robb Trend Project Socio-Economic Assessment Submitted to Coal Valley Resources Inc. & Sherritt Coal By Nichols Applied Management Inc. Management and Economic Consultants Suite 2401, 10104 – 103 Avenue NW Edmonton, Alberta T5J 0H8 March 2012

Robb Trend Project Socio-Economic Assessment · CVRI Robb Trend Project SEA . 4 The SEA examines Project effects in the context of the existing Mine operation, relevant cumulative

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Page 1: Robb Trend Project Socio-Economic Assessment · CVRI Robb Trend Project SEA . 4 The SEA examines Project effects in the context of the existing Mine operation, relevant cumulative

Robb Trend Project

Socio-Economic Assessment

Submitted to Coal Valley Resources Inc. & Sherritt Coal

By

Nichols Applied Management Inc. Management and Economic Consultants Suite 2401, 10104 – 103 Avenue NW Edmonton, Alberta T5J 0H8

March 2012

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Table of Contents

Summary of Findings ......................................................................................................................... i

1. Introduction ......................................................................................................................... 1

1.1 Background ............................................................................................................. 1 1.2 Project Description ................................................................................................. 1 1.3 Scope of the Socio-Economic Assessment ............................................................. 2

2. Regional and Local Setting .................................................................................................. 9

2.1 Regional Setting ...................................................................................................... 9 2.2 Local Setting ......................................................................................................... 20

3. Current Operations & the Robb Trend Project ................................................................. 26

3.1 Current Operation ................................................................................................ 26 3.2 Effects of Project Changes from Current Operations ........................................... 32

4. Other Activity in the Region .............................................................................................. 40

5. Conclusion ......................................................................................................................... 42

LIST OF TABLES Table 1.1 Terms of Reference Requirements for the Socio-Economic Assessment .............. 2

Table 2.1 Workforce by Occupation (% of Total) ................................................................. 10

Table 2.2 Population Growth ............................................................................................... 11

Table 2.3 Apartment Rental Rates and Vacancy .................................................................. 13

Table 2.4 Summary of RSA Health, Emergency and Social Infrastructure ........................... 14

Table 3.1 Permanent Mine Workforce Residency Pattern .................................................. 27

Table 3.2 Mine Operating Expenditure ................................................................................ 28

Table 3.3 Mine Operating Expenditure by Geography ........................................................ 28

Table 3.4 Mine Operations Total Income Effects ................................................................. 30

LIST OF FIGURES Figure 1.1 Socio-Economic Study Areas .................................................................................. 6

Figure 2.1 House Sale Prices - Edson and Hinton .................................................................. 13

Figure 2.2 Hamelet of Robb …………………………………………………………………………………………….23

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Summary of Findings

The Robb Trend Project (Project) represents continued operations of the Coal Valley Resources Inc. (CVRI) Coal Valley Mine (CVM), which is an important contributor to the regional economy and employment market. The Mine directly employs 490 Regional Study Area (RSA) residents in well-paying jobs. It is estimated to indirectly support an additional 250 person years (PY’s) of employment through local suppliers of goods and services as well as in the broader local economy. This total employment effect represents roughly 5% of total employment in the RSA. The population associated with the Mine’s total employment effect is estimated at roughly 1,700 people, or 6% of the current RSA population.

Annual mine operations spending amounts to $226 million, of which $54 million is spent in the RSA, primarily in the form of direct wages and salaries. The Mine contributes $230 million to provincial gross domestic product (GDP) and $109 million in provincial household income every year. It also contributes roughly $2.8 million annually in royalties to the Province of Alberta, and pays provincial and federal corporate taxes. Municipal tax payments of $500,000 represents roughly 1% of property and education tax revenue collected annually by Yellowhead County. Through its community investment funding, CVRI donates about $250,000 in cash and in-kind support to events and initiatives in the RSA.

CVRI will spend an additional $85 million over a six-year period in site preparation and support infrastructure required for the start-up of mining in the Project area. The majority of onsite construction activities will be handled by the Mine’s existing workforce, but this additional activity will create approximately 250 PY of employment over the six-year period, much of which will be done by RSA contractors.

At a regional level the Project effects are minimal, as it represents status quo in terms of operations and related socio-economic effects to the region. At the local level, the Project creates some effects that require mitigation. The Project will require ongoing inter-industry cooperation to mitigate Project effects to the Robb Road, forestry and energy company needs. Current working relationships indicate this is achievable.

The mining near the hamlet of Robb is expected to have a short term negative effect on residential property values during the periods in which active mining is occurring in close proximity to the hamlet.

The Project represents continued operations of the CVRI CVM, which in its 33 year existence has been an integral part of the RSA. The RSA, and especially the Robb area, has been host to mining for over 100 years.

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1. Introduction

1.1 Background

The Coal Valley Mine (CVM) is operated by Coal Valley Resources Inc. (CVRI), a wholly-owned subsidiary of Sherritt International Corporation (Sherritt). The mine, which has been in operation since 1978, is located approximately 100 kilometers (km) south of Edson, Alberta in Yellowhead County. The closest community is the Town of Robb, located roughly 5 km northwest of the existing mine.

The Mine currently produces approximately 4 million tonnes per year (mtpy) and has produced to date over 60 million tonnes of thermal coal. Produced coal is shipped via train to ports on the west coast of British Columbia and sold in the export commodity market. In order to maintain production at current levels, the Mine must be extended to reach new resource deposits. CVRI is in the midst of an expansion plan, consisting of three projects:

• Mercoal West Project (approved and currently in production);

• Yellowhead Tower Project (approved); and

• The Robb Trend Project (the subject of this assessment).

1.2 Project Description

The Robb Trend Project (Project) is located adjacent to the original CVM and subsequent extension projects. The Project, scheduled to begin in 2014, will permit the mine to continue production at current rates until the year 2038. This represents an additional 25 years of operations beyond the mine’s current operating life expectancy without the Project.

The Project is fully integrated with the existing CVM. Actively mined areas shift within the Project area throughout the Project life. At two distinct periods of the Project, mining activity will take place within 1 km of the hamlet of Robb. During the first six years of the Project some capital construction activities will take place, including new roads and water management infrastructure. The estimated capital budget for the Project is $85 million. All other aspects of the mining operation, including employment, procurement, taxes and royalties and reclamation are essentially comparable to their current state.

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1.3 Scope of the Socio-Economic Assessment

1.3.1 Terms of Reference

The Project Socio-Economic Impact Assessment (SEA) addresses the information requirement specified by the Final Terms of Reference: Environmental Impact Assessment Report for the Coal Valley Resources Inc. (CVRI) Proposed Robb Trend Project (AENV 2011) (TOR). Table 1.1 provides a list of the specific requirements of the SEA based on the TOR.

Table 1.1 Terms of Reference Requirements for the Socio-Economic Assessment

TOR Section 7: Socio-Economic Assessment 7.1 Baseline Information

[A] Describe the existing socio-economic conditions in the region, including for the communities in the region. [B] Describe factors that may affect existing socio-economic conditions including:

a) population changes; b) CVRI’s policies and programs regarding the use of regional and Alberta goods and services; c) workforce requirements for the Project, including a description of when peak activity periods will occur; and e) planned accommodations for the workforce for all stages of the project.

7.2 Effects Assessment [A] Describe the socio-economic effects of construction and operation of the Project, including:

a) effects related to: i) housing, ii) recreational activities, iii) hunting, fishing, trapping, and gathering, and vii) effects on First Nations and Métis (e.g., traditional land use and social and cultural implications;

b) estimated total Project cost, including a breakdown for engineering and project management, equipment and materials, and labour for both construction and operation stages. Indicate the percentage of expenditures expected to occur in the region, Alberta, Canada outside of Alberta, and outside of Canada; c) effects of the Project on the availability of affordable housing and the quality of health care services. Provide a summary of any discussions that have taken place with the local municipalities and the local environmental public health office of Alberta Health Services concerning housing availability and health care services respectively; d) the effect on local and regional infrastructure and community services, including consideration of municipal “hard services”, education/training services, social services, urban and regional recreation services, law enforcement and emergency services; and g) municipal growth pressures as they relate to the Project and the need for additional Crown land to meet these needs.

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[B] Discuss options for mitigating effects including: a) CVRI’s policies and programs regarding the use of regional and Alberta goods and services; b) plans to work with First Nations and Métis communities and groups and other local residents and business regarding employment, training needs, and other economic development opportunities arising from the Project; c) the potential to avoid overlap with other Projects that are reasonably anticipated during the life of the Project; e) mitigation plans that will be undertaken to address issues related to the availability of affordable housing and the quality of health care services; and f) strategies to mitigate socio-economic concerns raised by the local municipality and other stakeholders in the region.

8 [A] Residual Effects Describe the residual effects of the Project following implementation of CVRI’s mitigation measures and discuss plans to manage those effects. 9 [B] Monitoring Describe the monitoring programs proposed to measure the effectiveness of mitigation plans.

1.3.2 Study Focus and Key Issues

The SEA is informed by:

• feedback gathered by CVRI through their ongoing consultation with area residents, a number of whom are employees;

• written submission of concern submitted by the Robb Hamlet Protection Association (RHPA);

• Project-specific consultation and interviews with key regional service providers;

• the operating experience of the existing CVM; and

• regulatory assessments prepared in support of previous CVRI extension projects.

Key concerns related to the Project raised through consultation are:

• close proximity of mining activity to Robb residents, as it relates to:

- property values;

- traffic;

- annoyances, including noise, dust, vibrations and visual effects; and

• limitation of land access for recreational and traditional land use pursuits.

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The SEA examines Project effects in the context of the existing Mine operation, relevant cumulative mining and other industrial activity in the region as well as local and broader socio-economic trends. The assessment discusses general effects to the transportation network.

1.3.3 Measurable Parameters

Based on the general categories of socio-economic effects listed above, a number of measurable parameters (key indicators) are used to assess the effects of the Project on communities in the study area, including:

• workforce;

• spending and employment;

• income;

• land use effects;

• population change, and its related effects on service providers and municipal physical infrastructure; and

• effects specific to local residents.

The key indicators used to assess the Project’s income and taxation consequences for governments are:

• municipal taxes;

• provincial resource royalty income; and

• federal corporate tax income.

Many of the key indicators identified above allow for quantifiable measuring of potential effects. Effects on service providers and area residents are based, in part, on key respondent interviews and results from consultation and are treated primarily in a qualitative sense. Similarly, provincial and federal corporate and personal taxes are discussed qualitatively.

1.3.4 Temporal, Spatial and Administrative Boundaries

The SEA addresses the Project effects during construction as well as its operating period, to begin in 2014 and lasting 25 years, to 2038.

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The study employs both a regional and local study area, depending on the socio-economic effect being assessed.

The Regional Study Area (RSA) is defined by:

• residency patterns of the current CVM operations workforce;

• procurement pattern and tax payments of the existing CVM; and

• boundaries of responsibility for the host municipality, key service providers and regional population centres.

For the purpose of the socio-economic analysis, the RSA includes:

• Yellowhead County and the hamlets within its boundaries, including Robb;

• the Town of Edson; and

• the Town of Hinton.

Recognizing that much of the consultation input focuses on effects felt in close proximity to the CVM, the Local Study Area (LSA) is defined as the Project mine permit area and the Hamlet of Robb.

The RSA and LSA definitions are not intended to preclude the identification and discussion of effects elsewhere. Depending on the indicator discussed, the SEA presents Project effects and broader trends in different geographic regions, as appropriate.

Most socio-economic effects of the Project fall in areas of explicit municipal or provincial government responsibility. For example, Yellowhead County is responsible for local roads, Alberta Transportation is responsible for provincial highways, including Highways (Highway) 47 and 40, and Alberta Health Services is the key agency in providing health care services to residents of the RSA.

Figure 1.1 on the following page shows the socio-economic study areas.

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Figure 1.1 Socio-Economic Study Areas

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1.3.5 Assessment Cases and Methods

Due to this limited scale of construction activities, which represents roughly 5% of the CVM’s existing operation spending on an annual basis, Project construction is considered as part of the CVM’s existing operations. The Project represents essentially no change in effects from the existing CVM operation, with the exception of local effects due to new lands involved. Therefore, Project effects are assessed in terms of the current operations and their effect on the region.

Recognizing that Project effects take place in a broader economic and social context, the SEA summarizes activity from other major operations in the region in cases when their activities are expected to overlap with those of the Project. The effects of the Project not proceeding are also briefly examined.

Economic and Fiscal Effects

The geographic distribution of Project expenditures is addressed through an analysis of current CVM procurement patterns and industry-specific supply relationships derived from the Alberta input-output model (Alberta Finance 2011). The input-output model is also used to estimate the total wealth created by the Project.

Property tax payments are estimated using historical CVM property tax information, and assume the current non-residential mill rates for properties in Yellowhead County. Royalties are similarly estimated using historical payment and production data from the existing CVM operation.

Population Effects

Population estimates are based on:

• historical and current regional population trends, based on municipal and federal censuses;

• size of the current CVM workforce and any Project-related changes; and

• estimates of the region’s economic capture rate that translates to indirect and induced jobs linked to the Project.

Service Provider and Municipal Infrastructure Effects

The capacity of regional service providers, including host and neighbouring municipalities, in responding to Project-related effects is assessed through:

• an analysis of measurable statistics related to service provision and financial position; and

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• key respondent interviews with service provider and municipal representatives.

Land Use and Local Resident Effects

An assessment of local Project effects is based on concerns expressed by Robb residents regarding mine operation nuisances (noise, vibration, dust, visual and local roadway changes) as possible effects on property values. Land use is examined through expected effects to backcountry recreational activities and trapping. The SEA assesses local and land use effects from a socio-economic perspective, referencing the reader to specific assessments for more information, including:

• Land and Resource Use, found in Section E;

• Consultant Report #12: Traditional Ecological Knowledge and Land Use;

• Consultant Report #8: Noise;

• Dust, addressed in Consultant Report #1: Air; and

• Section F: Conservation and Reclamation.

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2. Regional and Local Setting

This section provides an overview of the socio-economic setting of the RSA, including the economy, major industry and labour market demands; population trends; and associated demands on the social, housing and municipal infrastructure systems. The hamlet of Robb is examined as the local setting in proximity to the Project.

2.1 Regional Setting

2.1.1 Economy, Industry and Labour Force

The RSA economy is based on forestry, oil and gas and mining industries. The majority of activity occurs in Yellowhead County. Agriculture is an important secondary sector of the RSA economy, comprised of a combination of grain and livestock farming.

Edson and Hinton host service and supply companies supporting industry activities. Both towns have well-developed commercial and hospitality bases, serving their local trading areas as well as mobile industrial workers equiring accommodation, meals and entertainment. Both communities actively target the travel and tourism markets, taking advantage of their locations on Highway 16, a major east-west travel route in the province. Hinton serves as a secondary hospitality market for visitors to Jasper National Park.

The importance of industry to the regional economy is reflected in the composition of its labour force. Table 2.1 shows the relative breakdown of the RSA community and provincial labour forces by occupational categories. Over one-quarter of the labour forces of Edson, Hinton and Yellowhead County work in trades, transport and equipment operation. Another 3-5% work directly in forestry, mining or oil and gas, while an additional 5-7% work in processing, manufacturing and utilities. Employment in these sectors is above the provincial average.

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Table 2.1 Workforce by Occupation (% of Total)

Occupation Category Edson Hinton

Yellowhead County RSA Alberta

% of Total Labour Force Trades, Transport & Equipment Operators 26 27 29 28 18 Agriculture (Incl. Primary Production Labourers) 4 2 15 7 5 Forestry, Mining, Oil & Gas (Unique to) 3 4 5 4 1 Processing, Manufacturing & Utilities 7 7 5 6 3 Business, Finance & Administrative 15 13 12 13 18 Sales & Service 24 25 17 22 23 All Other 21 22 17 20 32 Total 100 100 100 100 100

Source: Statistics Canada Federal Census 2006.

Examples of major industry employers in the region include:

• Hinton Wood Products division of West Fraser (West Fraser) which employs roughly 550 people in its two wood and pulp processing mills and woodlands operations;

• CVRI, which employs 630 people between its Obed and CVM’s; and

• TECK Cardinal River operations which employs 340 people.

Other major industry employers are Talisman Energy, Weyerhaeuser Canada OSB plant and Sundance Forest Industries sawmill.

There are a number of smaller oil and gas exploration companies active in the RSA. Employment is driven by drilling activity, which in turn is linked to commodity prices. Based on the number of drilling rigs present in Yellowhead County over the past number of years, the oil and gas exploration sector represents roughly 500 to 1500 jobs in the region at any given time. The number of wells drilled in Yellowhead County went from approximately 1200 per year in 2007 and 2008, down to 470 in 2009, a reduction of 60%. Drilling levels have since seen some recovery, with drilling up 50% in 2010 with 710 new wells, and an additional 9% in 2011 with 774 wells. Current activity is still below the 2007-08 peak (Yellowhead County, 2011).

According to key municipal and community services respondents, while the region did experience an economic slowdown in 2009, it appears the region was less affected than others.

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2.1.2 Population

Permanent Population

The latest Federal Census data available indicates an RSA population of 28,584 (Statistics Canada 2011). The RSA population is fairly equally distributed between the Towns of Edson and Hinton and Yellowhead County. The region as a whole experienced an average annual increase of 0.5% between 2006 and 2011. Edson experienced stronger growth, averaging 0.9% per year, while Yellowhead County grew by 0.8% annually. Hinton experienced a slight decline at -0.2% annualized. Population growth in the RSA as a whole, as well as in its three principle population centres, lagged provincial growth, which grew at 2.1% annually in that same time period. Table 2.2 presents a summary of population counts and growth rates.

Table 2.2 Population Growth

Municipality 2006 2011 5-Year Change

Average Annual Rate of

Change Edson 8,098 8,475 377 0.9% Hinton 9,738 9,640 -98 -0.2% Yellowhead County 10,045 10,469 424 0.8% Total RSA 27,881 28,584 703 0.5% Alberta 3,290,350 3,645,257 354,907 2.1%

Source: Statistics Canada Federal Census 2006, 2011.

Hinton is the only municipality in the RSA to conduct a municipal census since 2006. The town’s 2009 census results indicated a population of 9,825 (AMA 2011). This reflects a growth of 0.2% annually since the previous municipal census conducted in 2006, or an increase of 87 persons above the 2006 Federal Census count.

Non-Permanent Population

Depending on industry activity levels, the RSA can have a sizeable non-permanent population residing in the region. These workforces, present for periods of time, are accommodated primarily in area hotels and motels, and to a lesser extent in camp-based accommodations in Yellowhead County.

Hotels and motels in Edson and Hinton count on regularly business from work crews. According to the Alberta Tourism, Parks and Recreation annual accommodation statistics (2006 to 2009 - most recent available), industrial crews represented on average 73% and 58% of room demand in Edson and Hinton, respectively. This is well above the provincial average of 19% experienced during the same period.

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Discussions with area accommodation providers indicate the presence of workers in the region for multiple months at a time. Block room bookings for month-long periods is common practice by energy companies in the region. Based on accommodation statistics, hotel demand by industry peaked in 2007 with roughly 850 rooms in Edson and Hinton on average throughout the year booked by industry crews.

Less information is available regarding the region’s camp-based population. Yellowhead County permit data indicates a limited number of camp facilities in the past few years. Discussions with municipal and provincial government staff, and the existence of an open camp in the Hinton area, suggest that the 2007 camp-based population was approximately 500. Together with hotel demands, a high level estimate of the 2007 non-permanent population in the RSA is in the order of 1,500 to 2,000. Current activity levels suggest this number is lower in 2011.

2.1.3 Housing

The region has a well-developed housing stock, estimated by the 2011 Federal Census at 12,550 dwellings. Compared to the provincial average, the RSA shows slightly higher ownership tenure than the province as a whole (77% versus 74%) and similar level of housing density (number of dwellings as a percentage of population) (StatsCan 2006). The housing stock in the region has increased by 1,230 units, or 11% in that past five years.

Edson, which manages the release and development of residential lots within its boundaries, has been developing a new residential area on the north side of town. The 105-lot first phase has been underway since 2005, and is approaching sell-out. Five lots were sold last year and six in 2011 to August. A second 150-lot phase is planned, which provides adequate land for new housing demand in the foreseeable future (TOE, pers. comm. 2011a).

Hinton has seen 215 new housing units constructed over the past five years. According to the Town’s administration, the current area structure plan shows sufficient land capacity to accommodate a population of 30,000 (TOH, pers. comm. 2011a). Yellowhead County has seen a number of country residential developments come forward in recent years. Housing permit data indicates 680 new dwellings developed since 2007, of which roughly half are located in proximity to Edson. County administration reports adequate land capacity to accommodate future projected housing demands (YC, pers. comm. 2011a).

Housing in the region is more expensive now than it was in 2006, but prices remain lower than in other communities, like Edmonton. Figure 2.1 shows sale price trends in Edson and Hinton over the past five years, comparing them to that of Edmonton.

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Figure 2.1 House Sale Prices - Edson and Hinton

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

2006 2007 2008 2009 2010

Aver

age

Sale

s Pr

ice S

F Dw

ellin

g

Hinton Edson Edmonton

Source: Alberta West Realtors Association 2011; EREB 2010.

The average sales price of a single family dwelling in Hinton was $336,411 in 2010, 12% lower than the average price of $377,340 in Edmonton. The 2010 average price in Edson was $277,756, 36% lower than in Edmonton and 17% lower than in Hinton. The housing market in Edson saw a 11% decline in average prices between 2008 and 2010, partly as a result to the overall economic slowdown. The market in Hinton appears more insulated, with prices in that same timeframe increasing by 3%.

Apartment rental rates are in line with other communities. The average rental rate for one and two-bedroom apartments in Edson in 2010 (the most recent data available) was $783 and $895 per month. Average rates in Hinton were $752 and $888 respectively. Rental rates in both communities are higher than in Grande Prairie, and lower than in Edmonton. Table 2.3 presents apartment rental and vacancy rates.

Table 2.3 Apartment Rental Rates and Vacancy

Apartment Type 2010 Average Montly Rental Rate ($)

Edson Hinton Grande Prairie Edmonton 1 Bedroom 783 752 728 838 2 Bedroom 895 888 851 994 Vacancy Rate (All Types) 10% 10% 14% 5%

Source: AHUA 2010; CMHC 2011 (2010 rates).

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The vacancy rate for Edson and Hinton was 10% in 2010, indicating availability of rental accommodation. It is lower than that seen in Grande Praire (14%), but double that of Edmonton’s rate (5%).

2.1.4 Public Services

Health, Social and Emergency

The RSA has a well-developed health and social service infrastructure. The majority of infrastructure and services are located in Edson and Hinton, which also services Yellowhead County residents. Table 2.4 presents a high-level summary of social, health and emergency services and infrastructure and key respondent feedback regarding the current level of demand in the RSA.

Table 2.4 Summary of RSA Health, Emergency and Social Infrastructure

Sector Infractructure / Services Key Respondent Feedback Health Medical • Full-service hospital with 1 operating

room, emergency care; 24 acute and 50 continuing care beds.

• 12 physicians operating out of town-owned medical centre, which offers physicians subsidized rental costs as retention incentive.

• Regularly-scheduled visits from obstetrics, surgery, rheumatology, neurology and pediatrics specialists.

• Resident psychologist in town.

• Emergency room (ER) facilities in Edson and Hinton are busy, serving a broad geographical area. Demand has remained consistent over the past few years at about 1500 visits/month at each facility. Both ER facilities handle industry visits (workplace issues and personal medical for workers without family doctors) along with visits from residents and highway collision patients.

• Issues in Edson include: some minor physician retention challenges and physician wait times; aging hospital infrastructure and waiting list of hospital patients waiting for seniors lodge spaces (AHS pers. comm. 2011a)

• Issues in Hinton include: extra ER demand during mill shutdowns and pipeline projects; space constraints and aging infrastructure in the hospital and waiting lists at the seniors lodge and long-term care facility (AHS pers. Comm. 2011b)

Edson

Hinton • Full-service hospital with 2 operating rooms, 22 acute care and 1 palliative care bed; emergency care and many programs including: regional stroke centre, cardiac rehabilitation, radiology and cancer clinic.

• Regularly-scheduled visits from 15 specialists.

• 15 family physicians, 1 surgeon; 2 private clinics with night/weekend hours.

• Partnership with 25 bed long term care facility adjacent to hospital site.

Yellowhead County

• AHS delivers homecare nursing/aides and community health nurse visits from nearest centre (Edson and Hinton)

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Sector Infractructure / Services Key Respondent Feedback Substance Abuse

• Alberta Health Services (AHS) Alberta Alcohol & Drug Abuse Commission (AADAC) – provides addictions counseling, prevention, family counseling and wellness services to Edson, Hinton and Yellowhead County.

• Drug action coalition – collaboration between AADAC, Town of Edson, Family and Community Support Services (FCSS), RCMP and Town Council focusing for past 12 years on drug avoidance and education for area youth.

• Availability of illegal drugs and alcohol and other substance abuse issues.

• Higher disposable incomes mixed with a transient nature of some employment sectors, where workers are away from their normal support networks, contributes to substance abuse issues.

• Shift schedule effects, including day/night changes, can trigger substance abuse issues.

• AADAC office at capacity due to staff shortage.

Edson & Hinton

Yellowhead County

• Services accessed in Edson or Hinton

Emergency Response & Policing Edson • Emergency services department with 1 fire

hall, 6 trucks, 2 full time equivalent (FTE) staff and 38 volunteer firefighters.

• Department provides fire coverage to about one-third of Yellowhead County through a contractual agreement.

• RCMP detachment providing coverage to eastern portion of County. Complement includes: 14 regular members (RM) including 1 enhanced school/community liaison position; 6 highway patrol / sherriff positions; major crimes and GIS (special cases) staff.

• Ambulance service in the RSA provided through Western EMS, with stations in Edson and Hinton, 8 units, 24 FTE and 12 part-time staff.

• Traffic enforcement and emergency responses on Highway 16.

• Traffic issues, including speeding on industry roads: Willow Road north of Hinton and Robb Road south of the Yellowhead Highway.

• Policing demands in Edson includes oilfield theft, transient workforce-related calls, alcohol, drugs and general calls (RCMP, pers. comm. 2011a). A drug issue in Hinton exists, but is being addressed (RCMP, pers. comm. 2011b).

• Fire coverage in Edson is well-resourced with a sufficient volunteer base (TOE, pers. comm. 2011c).

• Fire coverage in Hinton is well-resourced, but face challenges including: need for up to 12 additional volunteer staff, increased training regarding vehicle extrication (highway and industry) and response times linked to increasing size of town (TOE, pers. comm. 2011c).

• Fire coverage in Yellowhead County is well-resourced, but would like to increase their volunteer base by about 40 people (YC, pers. comm. 2011c)

• All three fire departments report shared challenges, similar to nation-wide trends, in recruiting younger volunteer firefighters and filling daytime workday shifts.

• Ambulance provision is well-staffed, without much turnover. The ambulance per capita ratio is higher than in some other jurisdictions. Industry incidents

Hinton • Emergency services department with 1 fire hall, 8 trucks; 2FTE staff and 24 volunteer firefighters. Provides coverage to the eastern portion of Yellowhead County through a contractual agreement.

• RCMP detachment providing coverage to eastern portion of the county. Staffing includes: 24 regular members (RM), including 2 enhanced positions: one focussing on industry roads, including the Robb Road, through West Fraser agreement with Yellowhead County; another enhanced position focusses on community policing).

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Sector Infractructure / Services Key Respondent Feedback Yellowhead County

• Emergency services department with 8 fire halls across County, including Robb, with roughly 2 trucks per hall. Staffing includes 4 paid full time staff supported by a volunteer force of 113, including employees of industry.

• Manages the 911 call centre with 6 staff, as part of a joint initiative between Yellowhead County, Edson and Hinton.

• RCMP coverage provided through agreements with Edson and Hinton detachments.

make up a small percentage of calls handled. Health and safety focus in the energy sector seems to be decreasing calls over past number of years (WEMS, pers. comm. 2011).

Social Services Edson • Town of Edson Community Services

Department • Family and Community Support Services

(FCSS) • AHS / AADAC office • Youth interagency group – collaboration

between local teenagers and youth-serving agencies in Edson.

• Various community-based groups, including: Friendship Centre, Citizens of Patrol, Emergency Centre and the Food Bank, among others.

• A number of common issues were identified (listed below) by municipal social program managers (TOE, pers. comm. 2011b, TOH pers. comm. 2011b, YC, pers. comm. 2011b).

• In Edson, the incidence of family violence experienced a decrease in the economic slowdown, but appears to be increasing again. Housing shortage and crowding was an issue that improved as vacancy increased. Rents remain high.

• Issues mentioned in Hinton include a shortage of childcare spaces and the disparity between high income and low income earning households.

• Challenges in Yellowhead County include the effect of high incomes on high school graduation and higher education attainment rates, and challenges regarding program delivery around industry shift schedules.

Hinton • Town of Hinton Community Services • FCSS office • Various community-based groups,

including Friendship Centre,YES Emergency Women’s Shelter, Pregnancy Care Centre

• Public transit system Yellowhead County

• Community Services Department • Aging-in-place supports

Recreation & Community Edson • Town of Edson recreation programming.

Pool, arena, curling rink, sports fields including large baseball park.

• Daycare Centre and Early Learning Child Care Centre

• Community issues (listed below) were identified by municipal community program managers (TOE, pers. comm. 2011b, TOH pers. comm. 2011b, YC, pers. comm. 2011b).

• Issues related to resource sector work, including: long work schedules and overtime putting strain on family life; instability from employment turnover in energy sector; higher rate of absentee parents working away from home.

• Worker and family retention challenging over long

Hinton • Town of Hinton recreation program. Two arenas, pool, recreation centre, curling rink, skating park, arts guild, sports fields.

• Parenting centre, youth centre, daycare • Active not-for-profit sector

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Sector Infractructure / Services Key Respondent Feedback Yellowhead County

• County recreation programming, including children’s programs

term; residents moves affect community cohesion • The lack of a central recreation and community

gathering facility in Edson affects community cohesion. Citizen-led initiative is pursuing funding for a field house.

• Volunteerism is declining, and community event attendance in Hinton has been below average.

Sources: AADAC/AHS Edson; Town of Edson; Town of Hinton; Yellowhead County, RCMP, Western EMS.

The provision of health care services to RSA communities falls within the responsibility of Alberta Health Services (AHS). The communities are included in Area 4, which extends roughly from Mayerthorpe to Jasper and forms part of the larger North Zone. The region was previously covered by the Aspen Health Region before the health region amalgamation in 2008.

A review of health statistics (AHW 2011) indicate that communities in the RSA show similar levels in terms of health and social issues to other communities with resource-based economies. As well, for many indicators, health and social well-being levels match similarly to provincial averages, reflecting the fact that many issues are systemic in nature across society.

The Government of Alberta has plans to construct a new health centre (hospital) in Edson to replace the existing 50-year old health centre. It will increase the current acute care bed count from 24 to 30, and have an additional operating room. Construction is scheduled to begin in early 2012 with a planned opening in late 2014. Representatives from AHS indicate that both Edson and Hinton have strong health service systems, which have been successful in attracting and retaining adequate physicians, complemented by visiting specialists (AHS, pers. comm., 2011a,b).

The social setting in the RSA reflects a society which is a combination of long-term residents who make a home in a community and people that come to the region for temporary work. According to AHS, various social indicators show high incidences of alcohol and tobacco use, video lottery terminal (VLT) gambling and family violence. This is in turn linked to higher disposable incomes in the region (AHS pers. comm. 2011c). Research has shown that communities with resource-based economies, like Hinton, have a number of underlying factors that can contribute to higher substance abuse rates (Parkins et al, 2006). Positive aspects of the region’s social setting are a sense of closeness, tight-knit communities where people know and support each other and prosperity.

In summary, RSA health, emergency and social service providers experience the mining sector, including the CVRI CVM, in the following ways:

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• It offers stable, well-paying employment which tends to be filled by residents with families who stay long-term in the region, and form an important base as contributing community members. That said, past slowdowns/layoffs by area mines created noticeable effects for social and municipal service providers;

• It generates some requirements for substance abuse treatment and family counseling, linked to shift demands including night/day changes; shift length and absences from home scene; and differences in days off versus other family members; and

• It creates comparable demand on social and health services as the forestry / wood processing sectors, and less demand than the energy sector, which has more transient and variable employment levels.

Municipal Infrastructure

Edson and Hinton have well-developed municipal infrastructure. Both communities are 100 years old, and report challenges regarding aging infrastructure and the current and future maintenance costs. In terms of current and future capacity for growth, the two towns report sufficient water, wastewater and sewage treatment capacity and adequate staffing levels (TOE, TOH, pers. comm., 2011a). Hinton benefits from a private-public partnership with West Fraser, which operates the water and wastewater treatment plants. As regional centres, Edson and Hinton provide a number of services to Yellowhead County residents, as well as non-resident workers in the region.

Municipal infrastructure in Yellowhead County consists of the municipal road network and water and sewage treatment facilities in most of the hamlets. The County operates a major landfill by Hinton and a number of smaller landfills and transfer stations throughout its boundaries. Administration reports adequate capacity in its hard infrastructure and land to accommodate growth (YC, pers. comm., 2011a).

A number of principal roads, such as Highway 16, 40 and 47, are provincial responsibilities. While the forestry and oil and gas industries builds and maintain a number of roads linked to their operations, industrial traffic places demands on the County’s road network. The County is conducting early engineering work for a proposed new bridge over the McLeod River.

Municipal Fiscal

Yellowhead County is the host municipality for the majority of mining, timberland and oil and gas operations in the RSA. It provides some services to and collects property taxes from these activities. A portion of these industry workforces are County residents who pay property taxes.

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The Town of Edson hosts and collects property tax revenue from two major industrial operations: the Talisman natural gas processing plant and the Weyerhaeuser oriented strand board mill. West-Fraser owns and operates two mills, wood products and pulp, within the Town of Hinton’s boundaries.

A high level comparison of the fiscal situation of the RSA municipalities with provincial municipal averages (AMA 2011) show that on a per capita basis:

• Edson has less assessment, similar expenditures, higher revenues and lower levels of debt than the average of all Alberta towns;

• Hinton has more assessment and revenue, higher expenditures, and debt than other towns; and

• Yellowhead County has less assessment, higher revenues, higher expenditures but lower debt than the average of Municipal Districts in the province.

Both Edson and Hinton raise concerns regarding $1 million unbudgeted cost requirement to meet upcoming revised Alberta Environment (AENV) water and wastewater treatment standards.

As is the case in other jurisdictions within the province, the municipalities in the RSA face a challenge in matching service demands to tax revenues. Yellowhead County collects property and linear assessment from the industrial facilities and related infrastructure, with less service delivery requirements than the urban centres in the RSA. Recognizing the disparity between service provision and assessment, the RSA municipalities established two fiscal programs a number of years ago, consisting of:

• A cost-sharing agreement whereby Yellowhead County makes annual contributions to Edson and Hinton towards programming and infrastructure; and

• A revenue-sharing agreement involving annual lump-sum contributions of tax revenues from Yellowhead County to Edson and Hinton.

Feedback from municipal respondents indicates approval of the programs in principle, acknowledging that the long term financial sustainability of urban municipalities remains a challenge. This concern is similar to that held by urban municipalities across the country.

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2.2 Local Setting

2.2.1 History

The community of Robb has its roots as an early 20th century mining camp, serving coal development in the region. Along with roughly 20 other communities and mining camps, including Mercoal and Coalspur, Robb was part of the historic Coal Branch region of mining in western Alberta. Development of the mining region was driven by the construction of the Coal Spur Branch line, opened in 1912 by the Grand Trunk Pacific Railway (GTPR) Corporation. Produced coal was used for domestic consumption, as well as sold to railways as fuel for steam engines.

At its peak, the Coal Branch region represented an important contributor to Alberta’s total coal production. Robb expanded from an initial mining camp to an permanent community. The majority of residents worked for what became known as the Minehead operation, with the remaining working on individual small-scale mining, logging and in the town’s general economy.

Coal production slowed during the 1930’s Depression but saw a brief resurgence during World War II. The introduction of diesel-electric rail engines and the use of oil and natural gas for domestic heating resulted in failing markets for coal production. Minehead closed in 1955, and the production era of the Coal Branch was over by 1960 (HH 2007, CCE 2011, HCF 2010). Coal mining returned to the area in 1978 with the opening of the Luscar-Sterco mine (now the CVRI CVM).

The area depopulated during the decline in coal production, with only a couple communities, including Robb, remaining. For example, Coalspur had a handful of cabins, seasonally-occupied by leaseholding residents. The dwellings were demolished by Yellowhead County in 2010 when a decision was made not to allow further land lease extensions. Mercoal, another seasonal community located nearby, remains with approximatley 25 cabins.

2.2.2 Economy

Robb is a population centre linked to nearby industrial activity. During the decline of coal production, Robb residents found employment through the forestry and the emerging energy sector, including the Petro-Canada Hanlan-Robb Gas Plant (now Suncor), which began operations in 1983.

The hamlet’s resident workforce is approximately 150. Forty (25%) are employed directly by CVM, while the remaining 75% predominantly work in the forestry and energy sectors. Commercial activity within the hamlet is limited to the J & J General Store and gas station, and the Bryan Hotel.

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2.2.3 Population

As of the 2006 Census (the most recent count available), the population of Robb was 190, remaining essentially unchanged from the 2001 census (StatsCan 2001, 2006). A summary of community demographics1

• It is a relatively older community, with a median age between 40 - 45, higher than the RSA (36.7) and provincial (36.0) averages; and

based on Census results indicate:

• the working age population (20-64) is comparable to the provincial average;

• there are fewer children and youth under age 19.

The population base is more stable than the provincial average, with 76% of census respondents indicating living in the same address for the previous 5 years, as opposed to the provincial average of 55%.

2.2.4 Housing Market

As per the 2006 Census, there are 85 private dwellings in Robb, spread out in three clusters within the hamlet boundaries (Figure 2.2), of which approximately 95% are owner occupied and 5% are rented. There are a number of dwellings that are treated as vacation properties and occupied on a part-time basis.

The overall housing stock in Robb is of relatively low quality. Almost one-quarter of the 85 dwellings need major repairs, well above the provincial average of 7%. Eighteen percent of hamlet dwellings are mobile homes, higher than the the provincial average of roughly 3% (Statistics Canada 2006).

The real estate market in Robb is limited, with eight transactions registered on the multiple listing service (MLS) in the past 11 years. Sales included single detached dwellings as well as mobile homes with lots, with prices ranging from $70,000 to $170,000, with one sale at $250,000. This range is in line with the average dwelling value of $166,000 as indicated in 2006 Federal Census responses in the hamlet. Contrasted against the past five year average single family dwelling sales prices in Edson ($284,000) and Hinton ($317,000), sale prices in Robb are anywhere from 25% to 50% lower (WCAREB, 2011).

A number of private transactions also take place which do not register on the multiple listing service. According to key respondents, some homeowners set higher prices, hoping that Robb’s natural setting in the foothills will attract interested buyers. A few

1 Due to small sample size and Statistics Canada rounding practices, statistics for the hamlet should be taken as indicative and subject to variance (2006 data).

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properties may sell for higher values; however sales statistics indicate a housing market with limited transactions occurring at sale prices below the RSA average.

There were no development permits issued for single detached dwellings in Robb for 2010 & 2011. Yellowhead County estimates the existing land base could accommodate up to 30 additional properties. There are no current plans to develop additional housing in the hamlet (YC, pers. comm. 2011d).

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Figure 2.2 Hamlet of Robb

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2.2.5 Public Services

Yellowhead County delivers the following public services in Robb:

• wastewater treatment, connected to residences in the northern half of the hamlet

• a waste transfer station;

• a community hall and curling rink, constructed in 2007; and

• a Fire hall, which is currently being expanded with additional truck bays, personnel and training space.

There is no municipal water system in Robb. For all other services, Edson tends to be the service provider community due to proximity and a paved highway connection. Since the closure of the school in 1997, children have been bussed to Edson schools. Hinton serves as the secondary service community to Robb residents.

2.2.6 Land Use Pursuits

Recreation

The Robb-Cadomin area is a popular destination for backcountry pursuits, including hiking, fishing, hunting and outfitting, ATV and horseback riding. There are a number of campsites in proximity to Robb, including Lovett, Fairfax Lake and Pembina Forks campsites located south and west of Robb on Highway 40 and the McLeod individual and group campsites located on the Robb road to Hinton.

Management of the campsites is spearheaded by West Fraser, who took over management of area campsites from another private contractor in 2000. West Fraser’s encouragement of backcountry participants to use campsites is motivated by a desire to reduce wildfire risk, as well as to contribute to sustainable forest management. In 2010, the company spearheaded the formation of the Foothills Recreation Management Association (FRMA), an cross-industry and municipal group, including CVRI, with a focus on providing safe and affordable outdoor recreation opportunities. Statistics indicate roughly 7,600 user-nights registered across 15 campgrounds in 2010. Campground use has nearly doubled in the past 10 years.

Backcountry camping is also allowed in the area, with a number of sites popular for ATV users , hunters and berry pickers. For the last number of years Robb has played host to

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a popular quad rally, which draws hundreds of participants from the region and includes a community fundraising component.

Trapping and Traditional Land Uses

There are a number of trap lines operated in the Robb region, owned and operated by both aboriginal and non-aboriginal persons. There is traditional land use in the region by a number of First Nations and Metis. Refer to Consultant Report #12 Traditional Ecological Knowledge and Land Use for further information.

2.2.7 Transportation

Traffic in Robb includes industrial and workforce traffic to linked to energy activity, including the Robb-Hanlon Gas Plant as well as logging trucks. An active rail line runs through the hamlet carrying unit coal cars from TECK and CVRI in addition to unit rock cars from the Cadomin limestone quarry.

2.2.8 Interaction with the Mine

Since its founding, the community of Robb has been closely tied to mining. This link remains today. One-quarter of the hamlet’s population is directly employed by CVRI, with a number of other residents employed, either on a full- or part-time basis at the CVM. CVRI is a supporter of community events and initiatives. The CVM also generates traffic on area roads, changes land use patterns, and occasionally causes disturbances, such as noise, dust and blasting vibrations.

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3. Current Operations & the Robb Trend Project

This section provides:

• an overview of the current CVM operation

• a summary of changes to existing operations posed by the Project;

• an analysis of local and regional socio-economic effects posed by the Project;

• proposed mitigation and enhancement measures by CVRI to manage effects; and

• an assessment of residual effects in the context of the local and regional setting.

3.1 Current Operation

3.1.1 Operations Employment

The CVM is one of the largest employers in the RSA, with 530 FTE employees working at the mine site. The CVRI workforce is comprised of 403 (75%) hourly mine operators, machinists and mechanics and other support functions, and an additional 97 (18%) are management/supervisory, technical and administrative staff. The 530 employee workforce also includes 18 contract positions on-site as well as 34 summer and temporary positions, which together equate to 30 (6%) FTE positions. Mine activity also employs approximately 11 additional FTE positions offering technical, accounting, information technology and administrative support out of CVRI’s and Sherritt’s corporate office in Edmonton.

Two-thirds (330 or 66%) of the CVM’s permanent workforce lives in Edson. An additional 70 (14%) live in Hinton, 40 (8%) live in Robb, and 20 (4%) live elsewhere in Yellowhead County, including the hamlets within its boundaries. In total 460, or 92% of the CVM direct workforce is resident to the RSA. An additional 40 workers (8%) live outside of the RSA. The majority of summer and temporary employees also live within the RSA. Table 3.1 shows the current residency pattern of the permanent CVM workforce.

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Table 3.1 Permanent Mine Workforce Residency Pattern Area # Employees % of Total Edson 330 66% Hinton 70 14% Robb 40 8% Other Yellowhead County 20 4% Subtotal RSA 460 92% Outside RSA 40 8% Total Workforce 500 100%

Note: Does not include FTE contract (18) and FTE summer/temporary (10) positions.

The age of the workforce is relatively evenly distributed, with 38% of workers under 36 years old, 31% are between 36 and 50, and 31% are older than 50. Sixty-one percent of the workforce has five or less years of service at the CVM, while 21% have been there six to ten years, 7% have 11-30 years, and another 11% have been there for over 30 years.

The hourly operations workforce follows a 12-hour, four day on/off rotating day/night shift schedule. The CVM is a unionized site with workers represented by the international Union of Operating Engineers (Local No. 955). Most non-union salaried staff works a five day on/two day off schedule.

To date, CVRI has been able to source sufficient workers from within the RSA to satisfy its labour force requirements. It has experienced some spot shortages in particular skill sets, such as heavy duty mechanics and electricians, from time to time. Some technical and supervisory positions have been filled from outside the region by workers who have relocated to the RSA. CVRI maximizes hiring from within the region through:

• informing area residents by advertising employment opportunities in local papers and word-of-mouth;

• giving preference to qualified applicants from within the RSA, all other factors being equal; and

• supporting local labour force development programs such as an emerging apprenticeship program.

Other employee incentive and support programs include:

• competitive industrial-level salaries and comprehensive benefits; and

• optional free daily bus transportation for Edson and Robb-based workers.

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3.1.2 Operations Expenditures

The Mine’s current operation expenditures provide a stimulus to the local and provincial economies through wages and salaries paid to employees, the direct purchase of goods and services such as equipment, contract services and professional engineering services. Wage and procurement spending from the CVM circulates in the RSA and beyond, creating additional employment and income with suppliers, and in the general economy.

The CVM’s total annual operating budget is in the order of $226 million per year. This represents production costs up to the facility gate. In addition to this, CVRI incurrs additional rail, shipping and infrastructure costs required to bring the produced coal to market. The Mine’s annual operation expenditure varies year by year depending on required capital expenditures. Table 3.2 presents a summary of the annual operating expenditures of the CVM.

Table 3.2 Mine Operating Expenditure

Category Annual Spending

($millions) % of Total Machinery and Equipment 70 31% Direct Salaries and Wages 58 25% Tires, Fuel and Lubrication 46 20% General Services and Infrastructure 52 23% Total Operating Budget $226 100%

The spending breakdown is roughly 31% equipment and machinery costs, 25% wages and salaries, 20% for fuel, electricity and tires, and 23% for all other operating costs, including general services, infrastructure, taxes and community investment.

Table 3.3 shows annual mine operating expenditures by geographic location.

Table 3.3 Mine Operating Expenditure by Geography

Category

Annual Spending ($millions)

RSA Other

AB Other Can

Outside Can Total

% of Total

Machinery and Equipment 0.2 14 12 45 70 31% Direct Salaries and Wages 53 5 - - 58 25% Tires, Fuel and Lubrication 0.3 34 6 6 46 20% General Services and Infrastructure 0.3 36 6 10 52 23% Total Operating Budget 54 88 23 61 $226 100% % of Total 24% 39% 10% 27% 100%

Note: Totals may not sum due to rounding.

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Approximately one-quarter of annual operating expenditures, or $54 million, is estimated to accrue to the RSA. This is overwhelmingly through wages paid to employees and contractors. Based on the residence pattern of employees, of the $53 million in local salaries and wages, an estimated $38 million accrues to Edson, $8 million to Hinton, $4.5 million to Robb, and an additional $2.3 million accrues elsewhere within the RSA.

Just over one-third (39%) of annual operating expenditures, or $88 million, is estimated to accrue elsewhere in the province. These expenditures are split roughly equally across machinery and equipment; tires, fuel and lubrication; and general services and infrastructure needs. Much of these expenditures accrue to the greater Edmonton area. In total, $142 million (63%) of Mine expenditures accrue to Alberta.

A further $23 million (10%) and $61 million (27%) is estimated to accrue to other parts of Canada and other countries, respectively. Approximately $46 million of annual operating spending represents capital expenditures, predominantly for purchases and leases of mining mobile equipment. Rail and port costs, head office expenses and royalty payments are additional to the annual operating expenditures shown above.

3.1.3 Total Employment

In addition to the operations (direct) employment, the CVM’s ongoing operation has employment effects on suppliers of goods and services (indirect employment) and employment effects from spending on general goods and services in the economy by employees and suppliers (induced employment). Indirect and induced employment estimates are derived from the Alberta Finance economic input-output model, which estimates employment effects at a provincial level. Based on 530 direct full-time operations positions (including contract/summer), the indirect and induced employment effects accruing within the province are estimated (AF 2011) at:

• 405 person-years (PY)2

• 500 PY of induced employment.

of indirect employment; and

The combined direct, indirect and induced employment effect of CVM activities is estimated to be 1,435 person-years of employment in Alberta. The direct workforce represents full time jobs. The balance of indirect and induced employment equates to a variety of full-time and part-time equivalent positions across a variety of businesses.

2 PY = Person-Year of employment: a unit of measurement of employment input, representing one entire year worked by a person working full time (based on industry average). It is a defined measure of employment input, as compared to “job,” which can be full-time or part time.

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Local Effects

As indicated in Table 3.3, roughly $53 million from the CVM’s annual operations spending accrues to the RSA, in workforce wages. An additional $0.8 million accrues to the RSA, in the purchase of goods and services generated within the region. The CVM’s actual local procurement number is higher, roughly $22 million; however this reflects the ‘point of purchase’ for goods and services where the majority of value is generated elsewhere. While the majority of local purchasing reflects flow-through to economies outside the RSA, it does create employment effects associated with local supply businesses and contractors.

The circulation of wages paid to the direct workforce and procurement with regional suppliers supports employment of workers in the RSA’s general economy. Regional employment multipliers are not available for the RSA; however rough estimates of the spin off employment effects in the RSA are 50 indirect and 200 induced jobs. These estimates are included in the provincial estimates for total employment provided above. Total employment associated with the CVM is estimated to represent approximately 5% of total employment within the RSA. The population associated with the CVM’s total employment effect is estimated at roughly 1,700 people, or 6% of the current RSA population.

The majority of the CVM’s local procurement is with Edson-based businesses, with some accruing to enterprises in Hinton. Examples of goods and services procured locally include welding and mechanical repairs, bussing, light vehicle purchases/leases, janitorial, catering and consulting services. Procurement in Robb is limited to a few contract services performed on site. Whenever possible, CVRI procures within the RSA from qualified vendors and contractors that meet safety requirements, equipment standards and are cost competitive.

3.1.4 Total Income

Operations expenditures constitute income for contractors, suppliers and workers, who in turn, spend part of their income on supplies and services, compounding the income effects of the CVM operation. Table 3.4 presents the estimated direct, indirect and induced GDP and household income effects to the province of the CVM’s operational expenditures, based on published statistics (AFE 2011).

Table 3.4 Mine Operations Total Income Effects Expenditure

(Annual $millions) Direct Effects GDP Household Income Mine Operations 226 230 109

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3.1.5 Royalties and Taxes

CVRI pays roughly $2.8 million annually in royalties to the Government of Alberta, as the owner of the coal resource. Royalty payments fluctuate year by year, depending on the particular classifications of land leases being mined and mining volumes achieved.

In 2010 the CVM paid $500,000 in municipal property and education taxes to Yellowhead County. This represents roughly 1% of all property and education taxes collected by YellowheadCounty.

In addition to property tax and royalty payments, the mining operation also generates corporate and personal income taxes for the provincial and federal governments.

3.1.6 Community Investment

In 2010, CVRI donated approximately $250,000 in cash and in-kind support to local communities. Examples of initiatives, events and groups supported include:

• in-kind work donated towards construction of the Robb community multiplex, donation of a barbeque and awning to a local recreation group,; and

• assistance to the minor hockey association, Kinsmen Club, and Habitat for Humanity.

CRVI is in discussion with Robb residents regarding financial assistance to the outdoor skating rink.

3.1.7 Land Use and Local Roadways

According to the Land and Resource Use study (Section E), the existing CVM permit accounts for approximately 19,964 ha. As of the end of 2010, 2600 ha, or 49% of the amount of impacted land, had been reclaimed and is awaiting government certification. Upon certification, affected lands will be returned to the provincial government and general public use.

A network of private and public roads cross the mining permit area with most traffic linked to oil and gas, forestry and CVM operations and exploration; some is linked to backcountry recreation. Over the years a number of local roads have been closed and new ones developed as the mining area moves within the current permit area. Road changes are negotiated with other lease holders and the provincial government.

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3.2 Effects of Project Changes from Current Operations

The Project maintains the current operations, and represents virtually no effects to the current state of the RSA. There are some local Project effects, linked to its proximity to the Hamlet of Robb.

3.2.1 Regional Effects

3.2.1.1 Direct Workforce

The Project extends mining operations at current production levels until the year 2038. The fulltime operations workforce at the CVM is not expected to change due to the Project.

3.2.1.2 Operations Expenditures and Employment

A number of activities are required in preparing the site and support infrastructure required for mining the new area, including:

• exploration;

• timber harvesting;

• construction of haul roads, facilities and power distribution; and

• water management.

These “start-up” activities are expected to occur over six-years beginning in 2012, with the majority of activities taking place between 2014 and 2016. The cost of these activities is estimated at $85 million or on average $14 million per year. The annual construction expenditures represents approximately 5%-6% of current annual operations spending between 2012 and 2018.

The majority of onsite construction activities will be handled by the CVM’s existing workforce. Some limited contract workforce will be required for some activities. The Project will create approximately 250 PY of employment over the construction period, predominantly for equipment operators, surveyors, carpenters and welders. The onsite workforce is estimated to range between 20 to 30 persons from 2014 to 2016. Based on past experience, CVRI expects to be able to source the majority of required construction services from within the RSA. Construction activities represent economic opportunities for contractors, suppliers and professional firms, both in the RSA and beyond.

Over the life of the Project additional construction activities will be undertaken as mining advances through the Project area. Such activities are considered part of normal

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operations and are typically acomplished through a combination of onsite resources and local contractors.

Hourly operations wage levels at the CVM are negotiated within the collective bargaining agreement, and this arrangement is not expected to vary widely in the future from current practices. Procurement of goods and services is expected to remain fairly constant in real dollars until 2030, at which time they are expected to decline until CVM closure. The geographic procurement pattern is expected to stay generally the same. Employment, income and GDP effects of ongoing Project operations are expected to remain roughly constant to current levels.

Effects Management and Enhancement

As with its current operations, CVRI will seek to maximize RSA-based goods and services in Project construction procurement that meet quality, cost and schedule requirements. Activity scheduling will take into consideration capacity and availability of local contractors with the intent to maximize their ability to participate.

Residual Effects

Successful procurement of local contractors for Project construction activities may affect the availability of other businesses and individuals to secure those same services. This constraint will be periodic due to the nature of contracting assignments and the multi-year construction schedule.

Project construction activities are very similar to the types of work procured periodically by the CVM and form part of RSA contractors’ regular business. The construction market in the RSA has demonstrated in the past an ability to deliver necessary services through a combination of local and out-of-region resources.

3.2.1.3 Population

The Project will have no permanent population effect. Construction activities may have a short-term population effect to the extent they involve non-resident workers. Based on typical contracting procedures, non-resident workers will be in the region for a limited period (weeks) until their particular work package is complete. The size of the total construction workforce is not expected to exceed 30 at any given time, representing 0.1% of the permanent population in the RSA.

3.2.1.4 Housing

The Project will have no effect on the current availability and affordability of housing in the RSA. The size of the non-resident workforce, estimated at 30 worker or less at any given time, represents roughly 3% of the regular industrial crew business in Edson and Hinton hotels. The RSA hotel and motel market has sufficient capacity to accommodate

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this requirement, with many establishments counting on this type of business as a key component of their market.

3.2.1.5 Royalty and Property Taxes

Municipal and education tax payments, as well as annual royalty revenues to the Province of Alberta are expected to remain relatively constant, subject to any changes within the relevant tax regimes.

3.2.1.6 Community Investment

CVRI plans to continue its community investments at current levels.

3.2.2 Local Effects

Local Project effects include effects of operation on local residents, users of affected lands, and local roadways.

3.2.2.1 Local Resident Effects

The Project will result in active mining in closer proximity to Robb residents than is the case with existing operations. Mining will occur:

• nearest the east side of Robb between 2022 to 2025; and

• nearest the west side of Robb between 2035 to 2038.

Normal effects from operations, such as dust, noise and vibrations, are expected to be experienced more acutely by residents during these years. Mining equipment and landscape changes may be visible from some areas of the hamlet.

The landscape disturbance will be obviously visible for a one to two year period after the end of mining activity until replanted grass coverage appears at the beginning of the reclamation process. The Project will not result in the displacement of any residences. Refer to Consultant Report #8: Noise and Consultant Report #1: Air (dust) for specific assessments related to these effects.

Management and Mitigation

CVRI plans a number of measures to minimize or mitigate mining effects on residences in Robb, including:

• designing the mine plan to avoid active mining on both sides of Robb concurrently and minimizing the duration of development nearest the community;

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• keeping major haulroads and dump sites futher away from the community;

• planning the sequence of mine operations to keep equipment at lower elevations and situated behind benched pit walls and dumps;

• leaving natural barriers, such as hills and trees in place as long as possible to minimize effects;

• continuing the use of dust reduction strategies, such as watering of haul roads;

• using of noise reduction strategies such as reduced production rates, lowered night-time activity, use of alternates to equipment horns and alarms;

• prioritizing reclamation activities on lands in close proximity to Robb; and

• maintaining forested areas located between the CVM and the community.

CVRI will continue its present monitoring of blasting vibration and noise levels in Robb. Monitoring will also include dust and groundwater supply and quality.

Residual Effects

While mining is not scheduled to occur on both sides of Robb concurrently, active mining will be taking place in proximity to Robb over a number of years. Planned mitigation measures are expected to decrease, but not eliminate noise, dust, visual and vibration effects experienced by Robb residents in this timeframe.

The effects are expected to be short-term in nature (for the one-to-three year period when mining is in close proximity to either side of Robb). The visual effects will be medium-term, changing over time as reclamation moves from early vegetation planting to tree growth.

Refer to the specific Noise and Dust effect assessments for information on predicted residual effects.

3.2.2.2 Property Values

The residual noise, dust, visual, and vibration effects of the Project are expected to have an effect on property values in Robb. The effect will be limited but not negated by the fact that Robb’s current population is overwhelmingly linked to industry in the area and that noise, dust, visual, and vibration effects from mining are common occurances in Robb and environs.

In the opinion of one experienced realtor active in the Robb housing market, potential buyers for properties in Robb primarily come for either employment in the region or

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out of interest for backcountry pursuits, like snowmobiling and quadding. Active mining in the vicinity would likely influence the buyer’s offer price (Boxma, pers. comm. 2011). This effect will occur over the six to ten year period when mining is taking place in close proximity of Robb. Based on historical sales records, this effect may extend to 25 to 50 transactions. The actual number is likely to be lower as fewer people than expected from historical patterns may put their property up for sale during the period that this downward pricing pressure is in the market.

Economic literature of the property value effects linked to industrial activity (e.g. de Vor and de Groot 2009, Boxall et al. 2005) supports the observations above. Studies suggest:

• a negative price effect on property values, of between 5% and 8%, which dissipates as the distance from the industrial site increases; and

• employment creation linked to the industrial activity can temper, or override negative property value effects associated with the Project.

This offsetting effect is explained by the desire of individuals to live within a reasonable commuting distance to their job, thereby increasing demand for local properties. Increased local wages due to project employment may also cause upward pressure on housing prices near a project.

The fact that large-scale industrial projects have the ability to negatively affect property values is also shown by the practice of some projects to purchase properties that fall within a predetermined buffer zone. Current examples include Shell and its Scotford Upgrader near Fort Saskatchewan and the Genesee Mine west of Edmonton, owned by Capital Power Corporation. In both of these cases, the disturbance is larger and the period more extensive than is the case with the Project.

Although the property value effect of the Project is expected to be negative during the period of mining activity close to Robb, actual prices will be influences by other effects as well. For example, startup of the new Coalspur operation is expected to have a positive effect on housing prices in the RSA, including Robb. Finally, general housing price fluctuations in the province are expected to influence housing prices in the region, including Robb.

Management and Mitigation

CVRI currently has no plans to manage or mitigate Project effects to property values.

Residual Effects

Unmitigated, the Project is expected to have a short term negative effect on property values during the period when active mining takes place is in proximity to Robb.

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Property prices are not expected to be affected before and after the period of mining near Robb.

3.2.2.3 Land Use

The Project will increase the current Mine permit area, although the amount of land in active mining is not expected to change substantially from the current situation. The majority of the affected area is crown land and will be taken out of forestry or energy production.

CVRI has an established practice to negotiate with West Fraser, as holder of the forest management agreement (FMA), before mining begins. With sufficient notice, the Project’s effect on tree harvesting is minimized by:

• timber salvage activity on the CVM permit area; and

• amendments to the overall harvesting plan to account for the Project.

Similarly, effects to energy companies operating in the region will be minimal, consisting of negotiations with CVRI regarding pipeline and well locations and timing of land access.

For other land use effects of the Project, see the Traditional Ecological Knowledge and Land Use studies.

3.2.2.4 Local Roadways & Traffic

The Project will result in the relocation of an approximate six km section of the Robb Road, owned and operated by West Fraser. The gravel surface high-grade road, open to public use, provides a connection between Hinton and Robb and sees roughly 500 vehicle movements daily. The current mine plan indicates mining of roadway lands will begin in 2028, removing the existing segment of the roadway from use.

Over the Project timeline, a number of other smaller resource roads will be closed and rerouted due to mining activity.

The Dust Assessment (Consultant Report #1) indicates that active mining in relatively close proximity to the current and future Robb Road alignment will likely result in an increase in dust experienced by motorists. The increase in dust is expected to be small relative to the dust generated by by traffic movement and will be limted to the period when topsoil stripping and initial mining occurs.

Operations workforce traffic will not change in volume, but will see a slight change in pattern. Currently a number of workers that drive from Hinton or Robb park in a lot at

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the intersection with Highway 47 and the Robb access road and take the bus to the main mine site. The current route does not pass through Robb.

The Project will have a new satellite operations base, serving approximately 125 workers, to be located roughly 10 km east of the Robb on the Denison South road area. Traffic to this site will consist of up to two buses and approximately 20 to 30 passenger and commercial vehicle two-way trips, passing through Robb on 53 Avenue during both the morning and evening shift changes. These trips will mostly occur outside the time of the daily school bus schedule in Robb.

Management and Mitigation

CVRI will relocate a section of the Robb Road on a roughly parallel alignment to minimize disruptions and ensure safety, CVRI will construct the new segment:

• to the same standard as the existing high grade road;

• connecting it to the existing Highway 47 intersection; and

• with proper signage and dust control measures in place.

Closure and reopening of local resource roads has been part of the operating procedure for the CVM since its inception. CVRI will continue discussions with other industry users and Yellowhead County officials to determine viable options for minimizing inconveniences and ensuring continued safety for those using the local transportation network.

CVRI will continue its safe-driving initiatives with its employees to ensure that new Project traffic passing through Robb does not create safety concerns. The company will continue bussing the majority of its Edson and Robb workforce to and from the plant site and new satellite operations site. This substantially reduces the overall daily traffic generated by the CVM and increases safety through the use of professional drivers and reducing the number of persons driving after working a 12-hour shift.

Residual Effects

The mitigation and management measures outlined are expected to minimize any residual effect of the road network. The Dust Assessment indicates that the residual dust effects to the Robb Road after mitigation are not expected to create safety concerns.

The local resource road network will remain in a state of change throughout the Project with periodic closures and re-opening of roads, as is the case now. Continued coordination between affected parties will be required and is planned.

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The expected 20 to 30 vehicle movements through Robb will be a noticeable, but limited increase in traffic. It is well-within the capacity of the local road network.

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4. Other Activity in the Region

Mining

Coalspur Mines Ltd. proposes to build and operate a new mine, consisting of the Vista and Vista South Coal Projects. The Vista Projects is located south of Highway 16, approximately 5 km from Hinton. Assuming regulatory approval, construction is planned for the 2013-14 period, and will involve an estimated peak onsite workforce of 500. Once operational, the mine will require a full-time workforce of approximately 400. This workforce demand represents new employment in the region. Due to its proximity to Hinton, the project will likely attract a number of current employees in other mines, as well as employees in other sectors. This incremental hiring will likely result in people moving into the RSA to fill employment gaps, with a resulting population effect.

The Obed Mountain Mine, located north and east of Hinton, currently employs 130 workers, most of whom are Hinton-based. Obed, also operated by CVRI, operated for two decades before idling operations in 2003 due to unfavourable market conditions. It subsequently reopened in 2009. The mine produces a lower grade thermal coal than the CVM, and its viability is more sensitive to market prices. The future of the Obed Mine is uncertain. CVRI’s current outlook is for continued production through 2012 and perhaps into 2013. Should international prices see an improvement, the Obed mine may remain open longer. It has a remaining reserve to support 10 or more years of production.

Forestry

West Fraser Hinton Wood Products is undertaking two upgrade projects in 2011. The wood mill is undertaking a $40 million equipment upgrade project, scheduled for completion in Q3 2012. It requires 60 on site construction workers. The pulp mill is completing a number of productivity and environmental performance upgrades. The work, which will be complete by the end of 2011 has a capital budget of $52 million, and a peak onsite workforce of 1,400. The workforce, predominantly from out of the region, is accommodated in area hotels. West Fraser plans to undertake upgrade projects of similar scope over the next five years, subject to market conditions. The company is in the midst of a strategic, long-term workforce reduction program, achieved through productivity investments and natural attrition/retirements.

Oil and Gas

Suncor operates the Hanlan-Robb gas plant, located roughly 15 km to the south-east of Robb, along with a number of wells in the region. Suncor’s current plans are to focus on production, and does not foresee additional drilling or plant expansion at this time.

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Tourmaline Oil Corp. operates a number of wells and one gas plant in the Robb region. The company has exploration plans to bring a number of new wells on line in the next few years.

Other

Other major projects (AFE 2011) currently underway or planned for the RSA include:

• $108 million Edson Healthcare Centre, to be constructed between 2012-14;

• power distribution projects including:

- $127 million AltaLink electrical system upgrades in 2011-12;

- $30 million Alberta Electric System Operator electrical system upgrades in 2010-13;

• $6 million Alberta Transportation Robb Road paving project, near Hinton, proposed for 2012; and

• $13.8 million Alberta Transportation paving project of a segment of Highway 40, north of Highwy 16, in 2012.

Summary of Activity

The current picture of cumulative planned activity, based on publicly-available information, suggests an period of increased activity in the region Observations from key community respondents and 2010 well drilling data suggest the energy sector is increasing activity levels above those seen in the post-2008 recession period. Much of the proposed activity is representiative of activity typically seen in the region. The new Coalspur Mine, if it proceeds, would represent a substantial uplift in mining activity and related employment and possibly population growth. Closure of the Obed Mountain Mine, if occurred, would serve to dampen but not negate this effect.

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5. Conclusion

The Project represents continued operations of the CVRI CVM, which is an important contributor to the regional economy and employment market. The CVM directly employs 490 RSA residents in well-paying jobs. It is estimated to indirectly support an additional 250 PY’s of employment through local suppliers of goods and services as well as in the broader local economy. This total employment effect represents roughly 5% of total employment in the RSA. The population associated with the CVM’s total employment effect is estimated at roughly 1,700 people, or 6% of the current RSA population. For the hamlet of Robb, the Project represents continued employment of 40 employees, representing roughly 25% of the hamlet’s population.

CVRI will spend an additional $85 million over a six-year period in site preparation and support infrastructure required for the start-up of mining in the new area. The majority of onsite construction activities will be handled by the CVM’s existing workforce, but this additional activity will create approximately 250 PY of employment over the six-year period, much of which will be done by RSA contractors.

Annual mine operations spending amounts to $226 million, of which $54 million is spent in the RSA, primarily in the form of direct wages and salaries. The CVM contributes $230 million to provincial GDP and $109 million in provincial household income every year. It also contributes roughly $2.8 million annually in royalties to the Province of Alberta, and pays provincial and federal corporate taxes. Municipal tax payments of $500,000 represents roughly 1% of property and education tax revenue collected annually by Yellowhead County. Through its community investment funding, CVRI donates about $250,000 in cash and in-kind support to events and initiatives in the RSA.

At a regional level the Project effects are minimal, as it represents status quo in terms of operations and related socio-economic effects to the region. At the local level, the Project creates some effects that require mitigation. The Project will require ongoing inter-industry cooperation to mitigate Project effects to the Robb Road and forestry and energy company needs. Current working relationships indicate this is achievable.

The mining near the hamlet of Robb are expected to have a short term negative effect on residential property values in Robb during the periods in which active mining is occurring in close proximity to the hamlet.

The Project represents continued operations of the CVRI CVM, which in its 33 year existence has been an integral part of the RSA. The RSA, and especially the Robb area, has been host to mining for over 100 years.

Whereas the Project ensures the continuation of the CVM until 2038 the absence of the Project will see a reduction of production by 2013 and complete closure soon after. This

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would mean layoff of the current workforce, except a limited number of positions continuing for additional years of reclamation activity. Over time, the end of operations would result in the loss of 530 direct, permanent and contract jobs. All other effects of the CVM on the region would also cease by 2018. These include the approximately $54 million of annual spending in the RSA; the associated procurement, tax and royalty payments and contribution to GDP to Yellowhead Country, Alberta and elsewhere.

The majority of expected effects from the cessation of the CVRI CVM would be offset if the Coalspur Vista Mine Project proceeds. The degree to which commencement of the new project would minimize the negative effects associated with closure of the CVRI CVM depends on the degree to which the startup and closure schedules align. A situation consisting of the cessesation of the CVRI CVM and the Coalspur project not proceeding would result in a contraction of the RSA economy.

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References Literature Cited

CMHC 2011 RMR Prov highlights, Spring 2011. Ottawa, 2011.

Boxall et al. 2005 Boxall, Peter, Chan, Wing, and McMillan, Melville. “The Impact of Oil and Natural Gas Facilities on Rural Residential Property Values: A Spatial Hedonic Analysis.” Resource and Energy Economics. 27. (2005).

de Vor and de Groot 2009 de Vor, Friso and de Groot, Henri L.F. “The Impact of Industrial Sites

on Residential Property Values: A Hedonic Pricing Analysis for the Netherlands.” Tinbergen Insititute Discussion Paper. (2009).

AENV 2011 Alberta Environment. Final Terms of Reference: Environmental Impact Assessment Report for the Coal Valley Resources Inc. (CVRI) Proposed Robb Trend Project.

AF 2011 Alberta Finance. Alberta Economic Multipliers 2007. June 2011.

AMA 2011 Alberta Municipal Affairs. Alberta Municipalities Financial Information System, 2008 data. Edmonton, Alberta.

Stats Can 1996 Statistics Canada. 1996 Federal Census.

Stats Can 2001 Statistics Canada. 2001. Federal Census.

Stats Can 2006 Statistics Canada. 2006. Federal Census.

Stats Can 2011 Statistics Canada. 2011. Federal Census.

Personal Communications

AHS 2011a Alberta Health Services, Wayne McEachern, Site Manager, Edson Healthcare Centre. Telephone Interview, October 14.

AHS 2011b Alberta Health Services, Fionna Murray-Galbraith, Site Manager, Hinton Healthcare Centre. Telephone Interview, October 14.

AHS 2011c Alberta Health Services, Edith Zuidhof-Knoop, Area Supervisor, Alberta Alcohol and Drug Abuse Commission. Telephone Interview, September 12.

Boxma 2011 Re/Max Boxshaw Four Realty, Henry Boxma. Telephone Interview, September 12.

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TOE 2011a Town of Edson, Brigitte Lemieux, Assistant CAO. In-Person Interview, August 25.

TOE 2011b Town of Edson, Mike Butler, Manager of Community Services. In-Person Interview, August 25.

TOE 2011c Town of Edson, Al Schram, Fire Chief. Telephone Interview, October 17.

TOH 2011a Town of Hinton, Bernie Kreiner, Town Manager. In-Person Interview, August 26.

TOH 2011b Town of Hinton, Olga Uloth, Manger FCSS and Laura Howarth, Manager Recreation and Culture. In-Person Interview, August 26.

TOH 2011c Town of Hinton, Peter Ensor, Fire Chief. Telephone Interview, October 20

YC 2011a Yellowhead County, Jack Ramme, CAO. In-Person Interview, August 25.

YC 2011b Yellowhead County, Debbie Charest, Director Community and Protective Services. In-Person Interview, August 25.

YC 2011c Yellowhead County, Cory Chegwyn, Fire Chief. Telephone Interview, October 17.

YC 2011d Yellowhead County, Brent Shepherd, Planning & Development Manager. E-mail correspondance, Aug 2011 – Jan 2012.

RCMP 2011a Edson RCMP, Sargeant Jack Poitras, Constable Theresa Nelson. Telephone Interview, November 25.

RCMP 2011b Hinton RCMP, Staff Sargeant Blair McDonald. Telephone Interview, October 19.

WEMS 2011 Western EMS, Russ McIntyre, Manager. Telephone Interview, October 17.

WCAREB 2011 West Central Alberta Real Estate Board, Sandy Atfield, Executive Officer. E-mail correspondence, June-Nov, 2011.

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Websites

AHUA 2010 Aberta Housing and Urban Affairs, Apartment Vacancy and Rental Cost Survey 2010, Edmonton, accessed October 25 at: http://www.housing.alberta.ca/535.cfm

AHW 2011 Alberta Health and Wellness. Interactive Health Data Application. Found at: http://www.ahw.gov.ab.ca/IHDA_Retrieval. Last accessed November 28, 2011.

AMA 2011b Alberta Municipal Affairs. Municipal and Regional Services Commissions Profiles, Accessed April 2011 at: http://www.municipalaffairs.gov.ab.ca/mc_municipal_profiles.cfm

HCF 2010 Heritage Community Foundation. Rockies, Coal Branch and Nordegg. Found at: http://wayback.archive-it.org/2217/20101215220301/http://www.albertasource.ca/abitalian/background/rockies_cb_overview.html. Last accessed Oct. 28, 2011.

HH 2007 Hinton History. Robb Mine. Found at: www.hintonhistory.com/mines/robb.htm Last accessed Oct. 28, 2011.

CCE 2011 Canadian Centre for Energy. Timeline of Coal Development. Found at: http://www.centreforenergy.com/AboutEnergy/Coal/History.asp. Last accessed October 10, 2011.