Canada: Québec Finally Adopts Its Reform Of The Mining Act

On December 10, 2013, Bill 70 – An Act to amend the Mining Act (Bill 70), tabled by the Minister of Natural Resources (the Minister) on December 5, 2013, was adopted by the Québec National Assembly. Bill 70 is the current government's second attempt to reform Québec's mining legislation after Bill 43, tabled in June and which sought to replace the existing Mining Act, was blocked by the opposition on October 30.

Bill 70 includes most of the changes proposed by Bill 43 (see our Osler Update of June 14, 2013,  Plan Nord – Parti Québécois Advances Reform of Québec's Mining Act) for the main provisions of Bill 43); however, in order to obtain the opposition parties' support, the government had to make certain concessions, discussed below, on important aspects of the bill.

Conditions for granting a mining lease  

First, with respect to the conditions for granting a mining lease, the ore processing feasibility study proposed in Bill 43 and which mining investors viewed as a major irritant, has been replaced by a scoping and market study, expected to be both less costly and less time consuming.

Another controversial proposal of Bill 43 concerned the power given to the Minister to require, when granting a mining lease, that the lessee maximize the economic spinoffs of mining the mineral resources in Québec. While Bill 70 reiterates this proposal, it specifies that this requirement may only be imposed by the Minister on reasonable grounds. However, the obligation contained in Bill 43 for mining lease holders to establish and maintain a committee to monitor and maximize economic spinoffs for local communities remains as is.

Lastly, in the same manner as Bill 43, Bill 70 stipulates that a mining lease cannot be granted until a rehabilitation and restoration plan, for which the certificate of authorization required under the Environment Quality Act has been issued, has been submitted to the Minister. However, Bill 70 allows this condition to be waived if the time required to obtain the required certificate proves to be unreasonable and is likely to undermine the project's realization.

Provisions applicable to claims

Concerning the provisions applicable to claims, Bill 70 maintains the current rule allowing the claim holder to use any excess amount spent for a claim on other claims located within a radius of 4.5 kilometres, unlike Bill 43, which proposed reducing this radius to 3.5 kilometres. The other amendments announced in Bill 43 remain, including (i) limiting the carry-forward period of work credits to 12 years; (ii) increasing the amount to pay to avoid performing mandatory exploration work to twice the cost of the work that should have been performed to renew a claim; and (iii) the obligation to send the Minister a report on the work performed in the previous year on each anniversary of the registration of the claim. Note that on this last point, unlike Bill 43, Bill 70 eliminates the obligation to also submit a plan of the work to be performed in the coming year. In addition, as provided in Bill 43, the new claim holder must notify the municipality and the landowner concerned of his claim within 60 days of registration; however, Bill 70 reduces to 30 days (compared to 90 days in Bill 43) the period within which the claim holder must notify the municipality and the landowner before performing work. Lastly, Bill 70 does not give the Minister the power to auction off certain claims, a measure that was proposed by the Québec Liberal Party during its attempt to reform mining legislation in 2011 and that was included in Bill 43.

Environmental assessments, public consultations and Native communities

Under Bill 70, theRegulation respecting environmental impact assessment and review is amended in order to make all mining projects with processing or production capacity of more than 2,000 metric tons per day subject to an environmental assessment while all projects relating to rare earth processing will be subject to this assessment regardless of their processing or production capacity. This is a compromise between the former regime which targeted mining projects of more than 7,000 tons per day and Bill 43, which sought to subject all mining projects to such  environmental assessment.

While mining projects with a production capacity of less than 2,000 tons will not be subject to this environmental assessment, they will be required to hold a public consultation in the region concerned before applying for a mining lease.

Lastly, in response to criticism that Bill 43 did not sufficiently address Native issues, Bill 70 introduces a new chapter to the Mining Act providing that it be construed in a manner consistent with the obligation to consult Native communities and obligating the Minister to develop a Native community consultation policy specific to the mining sector.  

Disclosure of information

As announced in Bill 43, mining companies will have increased disclosure obligations requiring them to make public the quantity and value of the ore extracted and royalties paid annually, as well as their rehabilitation and restoration plan. That said, Bill 70 tempers these disclosure requirements by specifying that data contained in exploration work reports in relation to amounts beyond the allowances that may be claimed under the Mining Tax Act remain confidential for five years. As well, in contrast with Bill 43, it provides that agreements between mining companies and communities do not have to be disclosed and that the data contained therein may only be used for statistical purposes.

Other amendments to the Mining Act

With the assent of Bill 70, a number of other changes that had been proposed during past attempts to reform the Mining Act will be implemented, including the following: (i) mining companies must provide a guarantee covering the anticipated cost of completing the work required under the rehabilitation and restoration plan, (ii) mining companies are required to report any discovery of uranium ore, (iii) the Minister may refuse to grant a sand and gravel lease for reasons of public interest, (iv) mining rights holders' power of expropriation may be exercised only at the extraction stage and companies holding such power must provide financial support to expropriated owners to cover the cost of certain professional services, (v) the Act respecting land use planning and development is amended to increase the land use planning and development powers of regional county municipalities, and (vi) fines for offences under the Mining Act are increased substantially, now reaching a maximum of $6 million.

Conclusion

While some observers would say the process of reforming Québec's mining legislation has been anything but smooth, the adoption of Bill 70 will undoubtedly appease the mining industry and investors alike by increasing the predictability and stability of the legal framework and investment conditions. It should be recalled that this is the fourth attempt in as many years to reform the Mining Act, which has not been amended since 1987. Bill 70 has been in force since December 10, its date of assent.

Lastly, it is worth noting that on November 12, Bill 55 – An Act to amend the Mining Tax Act was tabled in the Québec National Assembly by the Parti Québécois, implementing its new mining royalty regime announced on May 6. See our Osler Update of May 9, 2013 – ;Plan Nord - Québec's New Mining Royalty Regime for more details on the new method of calculation and the tax base of the reformed mining royalty regime set forth in Bill 55, expected to come into force on January 1, 2014.

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