Canada: Québec Adopts The Reform Of Its Mining Act After Months Of Uncertainty

On December 9, 2013, legislators in Québec agreed to adopt Bill 70, which will reform Québec's Mining Act, RSQ, c. M-13.1, thus settling months of negotiations and uncertainty on the matter.

In May 2013, the Parti Québécois Government tabled Bill 43, which proposed a new Mining Act to replace the existing one. Given its minority status, the Government required the support of members of the opposition in order for Bill 43 to pass. However, the opposition refused to offer its support to the bill, and the bill was defeated at an early stage of its adoption process in October 2013. (Please refer to our article entitled " Defeat of the New Bill to Amend Quebec's Mining Act" for a more detailed analysis of the defeat of Bill 43.)

While many believed that the odds for the reform discussion to be revived this year were minimal, a window of opportunity was created for the Government of Québec and one of the major opposition parties to cooperate on a new attempt at drafting a new bill. As a result, on December 5, 2013, the Government tabled Bill 70, which proposed reforming Québec's Mining Act by way of amendments to the existing act rather than proposing a rewriting of the act. The bill was passed on December 9th and assented to on the following day.

The content of the new bill demonstrates that the Government was receptive to the criticism directed at Bill 43 from interested parties, which included the opposition parties, the mining industry and Aboriginal communities. A summary of some of the major modifications proposed by Bill 70 and a comparison with the provisions of Bill 43 is provided below.

Right of Municipalities to Designate Mining-incompatible Zones on Their Territory

Bill 70 will allow regional county municipalities to delimit mining-incompatible territories in their land use and development plan. Bill 70 provides that a mining-incompatible territory is a territory in which the viability of activities would be compromised by the impacts of mining. The controversial arbitrary power that Bill 43 gave to Quebec's Minister of Natural Resources (the "Minister") to revise a municipality's designation of mining zones has been removed from the new bill.

Scoping and Market Study with Respect to Ore Processing in Québec

Bill 43 required that any application for a mining lease be accompanied by a feasibility study on ore processing in Québec. After submission of such study, the Minister would then have had the discretion to require the mine operator to enter an agreement for the purposes of maximizing economic spinoffs within Québec. Bill 70 alleviates this obligation by replacing the requirement to submit a feasibility study on ore processing in Québec with that of submitting "a scoping and market study" with regard to processing in Québec. The Government may, "on reasonable grounds", require that the economic spinoffs of the mining activities within Québec be maximized. This reasonable requirement is unique to Bill 70.

Monitoring Committees to Foster the Involvement of Local Communities in Mining Projects

Bill 43 required the establishment of an "economic spinoff monitoring and maximization committee". The new bill renames this committee a "monitoring committee to foster the involvement of the local community in the project as a whole". The committee must be established within 30 days after the mining lease is issued and must be maintained until the completion of all the work provided for in the rehabilitation and restoration plan. The lessee determines the number of representatives who are to sit on the committee, which must include at least one representative of the municipal sector, one representative of the economic sector, one member of the public and, if applicable, one representative of an Aboriginal community consulted by the Government with respect to the project.

Agreements with Communities to Remain Confidential

Under Bill 70, information pertaining to extracted tonnage and royalties paid annually by mine operators are made public. However, information with respect to agreements between mining companies and communities shall remain confidential and may only be used by the Government for statistical purposes. Bill 43 required that any agreement between a holder of a mining lease and a community be made public, a provision that was strongly opposed by Aboriginal communities.

Provisions Specific to Aboriginal Communities

A novelty of Bill 70 is the addition of provisions specifically addressing the rights of Aboriginal communities. These provisions provide that, in applying the Mining Act, the Government shall consult with Aboriginal communities separately, if the circumstances so warrant. Moreover, the Government must draw up, make public and keeps up to date a "Native community consultation policy" specific to the mining sector. Bill 70 further specifies that taking into account the rights and interests of Aboriginal communities is an integral part of reconciling mining activities with other possible uses of the territory.

Obligation to Provide a Financial Guarantee with the Rehabilitation and Restoration Plan

Bill 70 allows the Minister to require that a financial guarantee be submitted along with the rehabilitation and restoration plan to cover the anticipated cost of completing the work required under such plan. The rules for payment of the amount of the guarantee are established by regulation.

Environmental Assessment Required Only for Large-scale Projects

While Bill 43 made all mineral processing plant construction and operation projects and all mine development and operation projects subject to an environmental assessment regardless of the processing or production capacity of the project, the new bill limits the application of this requirement to large-scale projects, namely projects where the processing or production capacity of the plant or the mine is 2,000 metric tons or more per day.

Where a rare earth processing plant or mine is involved, an environmental assessment is required regardless of the processing or production capacity of the project. Moreover, in the case of a metal mine project where the mine has a production capacity of less than 2,000 metric tons per day, a public consultation must be held before a mining lease may be granted.

Environmental Conditions for Granting a Mining Lease

Bill 70 provides that a mining lease cannot be granted before the approval of a rehabilitation and restoration plan in accordance with the Mining Act, and the issuance of a certificate of authorization in accordance with the Environment Quality Act, RSQ, c. Q-2. However, the Minister has the discretion to grant a lease before the issuance of the certificate of authorization, if the time needed to obtain such certificate is unreasonable. It will be interesting to see how this provision will be applied in practice.

Bill 70 further provides that the rehabilitation and restoration plan, which will be submitted to the Minister for approval, shall be made public for public information and consultation purposes.

Government's Discretion with Respect to Projects for Processing of Sand, Gravel and Stone

Bill 43 allowed the Minister to reject an application for a lease to mine surface mineral substances or to terminate such lease on public interest grounds. Under Bill 70, the Minister will only have this discretion with respect to sand, gravel and stone. Moreover, under the new bill, a public consultation must be held before a lease to carry on an industrial activity or to engage in commercial export may be issued.

Entry into Force of the Modifications

The majority of the provisions of Bill 70 came into force on December 10, 2013, with the exception of certain provisions, which will come into force upon the entry into force of the corresponding modifications to the Regulation respecting mineral substances other than petroleum, natural gas and brine in certain cases, and at a later date to be set by the Government in other cases.

Towards Further Predictability and Certainty for Québec's Mining Industry

The passage of Bill 70 constitutes a compromise among politicians in order to save the much-awaited reform of Québec's mining law. The various political factions agreed on the importance of adopting a legislative framework to ensure greater certainty that would benefit both Québec's mining industry and investors willing to benefit from the opportunities to invest in that industry. Although the new bill may not accommodate all of the demands of the interested parties, regulatory stability will be a first step in the right direction for achieving further predictability and certainty, which the industry certainly needs in the current economic environment.

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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