Canada: Bill 43 : Mining Act

Last Updated: July 20 2013
Article by René Branchaud

On May 29, 2013 the Minister of Natural Resources introduced Bill 43 to the National Assembly, amending the Mining Act. The Bill must go through all the hoops before being adopted by the National Assembly.

Here are a few comments on certain provisions of the Bill:

- Section 102 makes it mandatory to conduct a project feasibility study and an ore processing feasibility study to obtain a mining lease; this is a new requirement that will lead to significant costs for mining companies and create uncertainty. What will the Minister do once the study is filed—force mining companies to process the ore in Quebec by refusing to issue a mining lease? Such a decision could, in each case, require an additional investment of several hundreds of millions of dollars. In theory, processing in Quebec is always possible, but at what cost? We believe it would be preferable and especially more advantageous to encourage processing through tax or financial incentives (ex: preferential hydro rates for smelters), not by forcing companies to process the ore here.

- Section 104 provides for the creation of an economic spinoff monitoring and maximization committee; some mining companies have taken the initiative of setting up this type of committee without being required to, with encouraging results. This is a positive aspect of the Bill—it complies with industry best practices and is in the interest of companies and it will help them obtain social acceptance of their mining projects.

- Under sections 123 and 163 of the Bill, agreements entered into with a community must be sent to the Minister, who will make them public. We believe that this measure is in the interest of the mining industry: companies will have comparables and will be able to judge whether community demands are consistent with other agreements. Agreements should therefore be harmonized over the years.

- Section 181 par. 5 provides that the rehabilitation and restoration plan of an open-pit mine must include a backfill feasibility study; this is a new requirement that will lead to significant costs for mining companies and create uncertainty. What will the Minister do once the study is filed? Will he force the mining company to do backfill work, which could require an additional investment of tens of millions of dollars? In theory, backfill is always possible, but at what cost?

- In the "Expropriation and Compensation" division, a new provision (section 198(5)) will prevent a company from moving or demolishing a family residence before a mining lease is issued. The legislator wants to prevent a repeat of what happened at Malartic. The company bought or moved homes by private agreement before obtaining its mining lease. In doing so, it took a huge financial risk in order to gain precious time and allow it to begin operating the mine very quickly after obtaining its mining lease. The company did not force any owners to sell or relocate their homes; several dozen homes were already for sale and the owners had the option of selling, relocating or staying put. Nonetheless, all the residents but one chose, by agreement, to sell their home or relocate at the mining company's expense and received a price higher than the market value, plus moving expenses. Owners are not obliged to sell and if they do so, they must believe it is in their best interests. Why would the legislator intervene? This prohibition could delay some projects by several years, leading once again to considerable costs without any benefit for local residents. On the contrary, since projects will be delayed, the creation of jobs will be postponed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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