When members of the northern Ontario Wahgoshig First Nation stumbled across an exploratory drilling team preparing to clear forest and bulldoze access routes on its traditional land in the spring of 2011, the work crew was unwilling to disclose whom they were working for.
It had been almost two years since their employers, junior miner Solid Gold Resources Corp., received instructions from the Crown to contact the band for consultation over its plans for a 22,000-hectare patch of unpatented mining claims, and none had occurred.
When the Wahgoshig finally figured out who they were dealing with, they tried in vain to contact Solid Gold to get the consultation belatedly started. By November 2011, the province was moved to intervene with a letter that repeated its earlier instructions. The next day, the First Nation turned to the courts, initiating a claim against the province and Solid Gold, and later won an injunction that prevented any further drilling by the company.
In its 2004 decision in Haida Nation v. British Columbia, the Supreme Court of Canada said the Crown bears legal responsibility for the duty to consult and accommodate Aboriginal groups, but confirmed that procedural aspects of the duty may be delegated to third parties.
Lawyers representing both First Nations and mining companies say Ontario has taken delegation to the extreme, appearing determined to stay out of the fray; and in the process injecting uncertainty into the exploratory mining regime. For them, the Solid Gold case is emblematic.
“I think sometimes they can be charged with abdicating their responsibilities,” says Sara Mainville, a Fort Frances, Ont. lawyer who represents First Nations in the consultation process. “They don’t really get involved unless there’s a dispute. Just being present would help, but it’s like they’re waiting for a fight.”
Cindy Blancher-Smith, assistant deputy minister at the Ministry of Northern Development and Mines, admits there may be something to Mainville’s characterization. Solid Gold isn’t the only matter where the Crown has run into trouble.
“I can think of a few others,” she says. “We haven’t had the regulatory tools in the past to have that more hands-on approach.”
Blancher-Smith hopes that will all change with the recent introduction of new regulations under the Mining Act. Three years in the making, the new rules came into force on Nov. 1., sweeping away the province’s old “free entry” mining system and enshrining the duty to consult at the exploratory stage.
“We want to encourage that development and exploration in a manner that is consistent with Aboriginal rights,” says Blancher-Smith, acknowledging that it will mean more work for mining industry players.
“We intend to work very hard with them to help overcome obstacles,” she says. “We’ve developed policies to provide clarity on what we’re expecting when it comes to Aboriginal consultation.”
By April 1, 2013, all prospectors must provide an exploration plan to the ministry and all affected groups for comment when carrying out certain low-impact activities, including geophysical surveys using a generator, line-cutting, and drilling for mineral samples.
Anything more significant, such as when the drill used weighs over 150 kg, or when the line cut measures more than 1.5 m, requires the proponent to apply for an exploration permit from the ministry.
Blancher-Smith is keen to emphasize that this is “not a consent regime,” but says the ministry will be able to attach terms and conditions to a permit that address First Nations concerns about the adverse impact of exploration. The decision on whether or not to grant the permit will consider whether consultations have occurred and if any arrangements have been reached between the players. If an agreement can’t be reached, the province can refer the application to a dispute resolution provider.
Neal Smitheman, the Toronto partner at Fasken Martineau DuMoulin LLP who represented Solid Gold in its court fight with the Wahgoshig, says the new rules reinforce the image of a province washing its hands of its own duty to consult. “They’ve simply pulled a Pontius Pilate and downloaded the obligation to consult to the industry,” he says.
Smitheman warns junior mining companies have neither the time nor the money to invest in consultation efforts at the exploration stage that he argues should be the government’s responsibility, and says it could turn investors off pumping money into the province.
“They should stamp the new act with something like ‘investors beware,’” he says. “The more obstacles and difficulties you have in a certain jurisdiction, the less the money flows. If you look at other jurisdictions in Canada, exploration is certainly a lot more encouraged.”
Mainville also has her doubts about the new regulations. She says a number of her First Nations clients have independently developed their own frameworks for dealing with mining companies, involving early talks over resource benefit sharing.
“Those are being ignored under the new regulations because the process doesn’t accommodate them in the consultation process,” she says. “Permitting almost gets in the way of those types of relationships being developed.”
She commends Osisko Mining Corporation and Rainy River Resources Ltd. for their culturally sensitive and cooperative approach to First Nations affected by their projects in northwestern Ontario
“I think that in a lot of ways there’s already some best practices that the ministry should have taken notice of,” she says.
At McCarthy Tétrault LLP, Vancouver-based aboriginal law group head Thomas Isaac takes a more optimistic view of Ontario’s new exploratory rules.
“On their face, they read very well. The issue will be whether or not they’re implemented and carried out in a fair and transparent way. I go in totally optimistic,” he says.
Isaac says uncertainty over the rules of consultation have traditionally made Ontario one of the most challenging jurisdictions in Canada for mineral exploration. He says junior miners are willing to take on more of the heavy lifting if it means they can better predict the outcome of a permit application.
“If that’s the result, then it will be a good investment for companies,” he says. “But if it’s the same old situation, where the decision depends on the First Nation, what part of the province you’re in, or the political sensitivities of this particular week, then you haven’t got a level playing field, and it’s just another additional burden with little light at end of the tunnel…the proof is in the pudding.”
Blake Cassels and Graydon LLP partner Charles Kazaz says Ontario lags behind Quebec when it comes to mineral exploration. He credits 1975’s James Bay and Northern Quebec Agreement reached between the Crown, the Cree, and the Inuit of the region for giving all players a set of realistic expectations about the exploration process.
“There is a clear path, and yes, it takes some time to get through, but you can predict it to a certain degree,” he says. “For the first couple of years, there was a lot of mistrust between parties, but I think over the years, the relationship has evolved.”
Martin Ignasiak, a partner in Osler Hoskin and Harcourt LLP’s Calgary office, says many of his clients, which include oil sands players and electrical generation companies, prefer to err on the side of caution when it comes to consultation with First Nations, in order to minimize the risk their projects will fail to get approved. “The reality is that having local support is always a positive thing, and something most companies strive for,” he says.
He calls government involvement in the process a “double-edged sword” since they often operate on their own timetable, one which “may not always align with your own.”
But Smitheman says it’s unfair to expect junior miners to invest large sums in consultation ahead of exploratory work, in the same way a larger, more established company might. “Most of these companies are not much more than a couple of guys with a shovel. They’re hanging by a financial thread and they can’t afford to pay significant amounts of money to put in accommodations,” he says.
In September, Solid Gold won the right to appeal the Wahgoshig’s injunction at Ontario’s Divisional Court after a judge decided there was reason to doubt whether any duty to consult existed under the Mining Act in force at the time.
The new regulations clear up that confusion by making clear that a duty to consult would now exist, but Jocelyn Kearney, a lawyer at Norton Rose Canada in Toronto, says the appeal will still be useful for companies that deal with consultation issues. “Hopefully it will help clarify parameters of appropriate delegation by the government,” she says. “These new rules help to do that, but they only apply in the context of exploration, so there are other industries affected by the duty to consult where there isn’t such a framework in place.”