Skip to content

Industry Spotlight: Canada’s mining industry

Gold mine or regulatory minefield?
|Written By Jeremy Hainsworth

Canada’s mining industry can often find itself at the fulcrum of competing interests. From First Nations land claims, to environmental concerns, to jurisdictional boundary issues, the industry more often resembles a regulatory minefield than a gold mine.

The industry must be on guard to ensure scientific facts and adherence to legislation, rather than emotion and politics, rule the day in decision-making processes.

“Fear and emotion beat science and fact every day of the week,” says Brian Abraham, a partner with the Vancouver office of Fraser Milner Casgrain LLP, explaining the issues that can hamper obtaining capital and approvals for projects.


Abraham explains, environmental issues occur more often because of the lack of harmonization between Canadian jurisdictions than the concerns of environmental groups. Still, the industry doesn’t discount the work and concerns of those groups, says Association for Mineral Exploration British Columbia (AMEBC) president and CEO Gavin Dirom.

“We’re trying to connect with [non-governmental organizations] that consider themselves reasonable,” he says. “We’re looking to government to have accountability for NGOs.”
What is a challenge, says Dirom, is the lack of streamlining between the federal and provincial regulatory processes. While mining is a provincial responsibility under the division of powers, environmental concerns are split.

“You don’t have to look far for challenges between the federal and provincial systems,” Dirom says, noting a project can be approved at a provincial level only to be stalled on the federal level. “It can be unbelievably frustrating having Ottawa delaying on a project because it can’t decide on a process. That results in court challenges. Why duplicate the process?”
Crae Garrett, a partner at Macleod Dixon LLP in Calgary, says the confusion doesn’t help the Canadian industry. “It’s very difficult to get a straight answer to questions regarding environmental issues,” he says.

“By contrast, you could go to other countries where they could [not] care less.”  He says big mining interests such as metal giant Teck Cominco Ltd. can afford the expenses of the Canadian regulatory maze. “We as Canadians are not a very easy country to do business with if you’re a junior mining guy.”
That said, Garrett believes Canada is going to see more opportunities in areas such as northeast Alberta, the Northwest Territories, and Saskatchewan. But, he cautions, “You’ve got three different sets of regulatory regimes and three different sets of aboriginal treaties.”

And there, the industry also must deal with the as-yet uncharted territory of revenue sharing with First Nations. “You can deal with the scientific matters and economic matters. But if somebody introduces the societal matters, it’s much more difficult,” says Abraham.
Some provinces, though, are addressing that issue. Last year, the B.C. government announced it would be involved in revenue sharing with First Nations, but details on how that would occur and who would provide the revenue were scant.

A release from the B.C. Ministry of Energy Mines and Petroleum Resources said the industry was clear First Nations need to be included in the revenue stream. AMEBC, however, noted the revenue sharing would come from provincial taxation revenue once mines are operational. Abraham says the concept itself is simple. “Carrying it out is going to be very difficult,” he adds.
He says there will undoubtedly be problems as bands with mining interests could find themselves having to share the pot of cash with other First Nations without mining interests. “You’re going to find the bands themselves fighting about this revenue,” adds Abraham. “In theory, it’s like Santa Claus. We all like Santa Claus, but someone’s got to pay for him.”
But, says Abraham, the industry has gone out of its way to resolve First Nations’ concerns “because you need community and First Nation support” for mining projects. “There’s a sense out there that the First Nations have an effective veto over development in the process,” Abraham says.

“It’s not a de jure veto; it’s a de facto veto.”
Abraham and Garrett are both concerned about conflicting land claims. Garrett says counsel spend a lot of time building consensus around proposals in areas with competing claims. “B.C. is by far the major problem.

It’s a complete mess. It’s nobody’s fault. It’s not been resolved yet.” Theoretically, Garrett says, it’s the federal Department of Indian and Northern Affairs which is supposed to have a trustee relationship between First Nations and is mandated to arbitrate their interests.

He calls the rules for engaging First Nations, “Byzantine.” However, he does have ways around the issue. “As counsel to a mining company, we try to identify the most influential people and the most important people in an area. We sit down with them and make it their problem to bring other people into the loop.”

The B.C. government seems to have picked up on the process. In early April, Victoria and the Stk’emlupsemc of the Secwepemc Nation as represented by the Tk’emlúps (formerly Kamloops) Indian Band and the Skeetchestn Indian Band signed a mining and minerals agreement with a view to increasing clarity in the consultation process by clearly defining timelines, creating guidelines, and establishing regular meetings.

The federal government, as well as industry sector groups like AMEBC, do have guidelines and toolkits for assisting those starting to work with First Nations negotiations.

It’s timelines, however, that are part of the shifting sands between the provincial and federal mining approval processes that the industry wants resolved. Dirom says jurisdictions like B.C., Saskatchewan, and the Yukon have legislated timelines for approval processes while the federal level has none.

So, says Dirom, groups such as AMEBC have successfully advocated for the establishment of a major project management office in Ottawa under the watch of a deputy minister at Natural Resources Canada.

“They can be the go-to people in Ottawa,” he says. “These folks are charged with the responsibility to move [projects] through the process, to get it right through the system. In this climate of economic downturn, we need to be more efficient.”

While Ottawa may be starting to fall into line on regulatory streamlining, MiningWatch Canada claims the federal government is walking a fine line as it promotes “shovel-ready” projects in attempts to stimulate the economy. The pitfall, MiningWatch points out, is that prospects for a sustainable economy could be damaged in the process. And that’s something the industry wants to avoid.

Garrett says the careful money now is on mining operations that are looking at the life of operations up to, and including, environmental cleanups in post-operational phases.

“People just don’t decide to start until they’re comfortable now,” he says. “If you’re a responsible miner, you’re going to self-regulate.” And that’s where the smart money will go, Garrett says. “You’re valued for your beliefs and your alleged beliefs anywhere in the world. That’s a perfect self-regulator.”

It’s a situation that might work in Quebec. While the province is touted as one of the world’s most important mining jurisdictions, a provincial auditor general’s report released April 3 says despite production values in the millions, little is being paid in royalties, and the government and Quebec citizens are being left with massive liabilities.

Garrett says in situations such as that, it’s ultimately the market that will make the hard choices in new projects. “The legacies of environmental cleanup means people are very careful when they look at a project.”

Dirom adds it’s now incumbent on companies and jurisdictions to ensure they build, support, and take responsibility for business decisions. “It’s a new century and a lot of investors are looking for projects they can feel good about,” Dirom says.

“That just makes good business sense. It’s reflected in investor relations. It’s a safer, less risky undertaking.”

  • Mike Orlando
    Very well written.

SPECIAL REPORTS



Save

PROFESSIONAL DEVELOPMENT