Canada: New Amendments To Québec Mining Act

On December 10, 2013, new amendments to Québec's Mining Act were adopted by the Québec National Assembly. This is the fourth attempt by the Québec government in recent years to reform Québec's mining legislation. The newly amended Québec Mining Act significantly modifies the original Mining Act rather than replacing it entirely. Amendments to the Mining Tax Act were also proposed in 2013, however these amendments have yet to be made law.

What's New?

The amendments to the Mining Act significantly change the Québec mining regime. Changes pertain mainly to rights and authority for municipalities, increased environmental oversight, and additional public interest considerations, economic benefit measures and consultation requirements.

In addition, the granting of a mining lease is now subject to the filing or submission of a rehabilitation and restoration plan, together with a market study on the feasibility of mineral processing in Québec. Metal mining projects with a capacity over 2,000 metric tons per day, other than rare earth minerals, are now subject to a public consultation process before a mining lease can be granted by the government. The government may impose conditions to be established by regulation regarding the economic benefits of the mining activities for Québec in the lease. In order to enforce these conditions, the lessee is now required to establish and maintain a committee with the local community to supervise their implementation. In connection with the economic benefit conditions, holders of mining rights must provide certain information to the Minister of natural resources in respect of the quantity of ore extracted, its value, and the duties paid under the Mining Tax Act and other contributions paid to the government of Québec. This information is made public, except for data or information contained in reports on exploration work, which will remain confidential for a period of five years.

The power of expropriation for holders of mining rights is now exercisable only during the mining stage, and mining rights holders are required to provide financial support to property owners during negotiations for the purchase of their homes.

It should be noted that the changes to the Mining Act have no retroactive effect and therefore apply from the date upon which the newly amended Act came into force.

Municipalities

The amended Québec Mining Act grants new rights and authority to municipalities. For instance, a claim holder is now required to notify a municipality that it had acquired a right on municipal lands and to inform the municipality prior to carrying out work on the claim.

The amended Act has also modified the Act respecting land use planning and development to allow regional county municipalities to designate portions of their lands as "incompatible" with mining activity or subject to specified conditions. Under the amended Mining Act, the regional county municipalities would set these conditions and the Minister would only be allowed to establish them only to the extent that the regional county municipalities had not done so. The Minister may not exempt a holder of mining rights from these conditions.

These amendments would likely apply to land under the jurisdiction of the Cree First Nations governments, which covers more than 300,000 square km in Northern Québec. The Québec government is currently required to notify First Nations governments, on a monthly basis, of the grant of any new mining claims on land below the 55th parallel.

Environmental Considerations

The newly amended Québec Mining Act requires that mining operators provide a financial security to the government to cover the entire anticipated cost of rehabilitating and restoring a mining site. This security must be given at the same time as the mining operators' site rehabilitation and restoration plan and is subject to conditions established by the government through regulations under the Mining Act.

The grant of a mining lease is also subject to a certificate of authorization under the Environmental Quality Act, as well as the approval of the mining operators' site rehabilitation and restoration plan. The formalities for obtaining such certificate of authorization may be streamlined, however, if the Minister deems them unreasonable or detrimental to the realization of the mining project under consideration.

Metal mines projects involving a projected daily production of 2,000 metric tonnes or more are now subject to an environmental assessment. Projects with lower projected daily production are subject to public consultations co-ordinated by the project developer.

Public Consultation and Public Interest

Under the amended Mining Act, the grant of any mining lease for surface mineral substances for peat, industrial activity or commercial export is subject to prior consultation. The Act allows the Minister to refuse or cancel such a lease for reasons of public interest. Mining claim holders now have to declare when they have found uranium.

Economic Benefits

The amended Mining Act contains several provisions aimed at increasing local and regional economic benefits. For instance, mining leaseholders must create and maintain a follow-up committee to maximize local employment and procurement. The majority of the committee must be comprised of independent stakeholders from the region affected by the mining activity. The committee must remain in place until the completion of the leaseholder's site rehabilitation and restoration plan.

The application process for a mining lease under the amended Mining Act requires the applicant to submit a market study on the feasibility of mineral processing in Québec. Based on the conclusions of the study, the Minister could require the mining operator to enter into an agreement to ensure maximum economic benefits for Québec in exchange for the mining lease. Mining leaseholders are also required to provide detailed information on extraction tonnage and royalty payments in order to comply with recent proposed changes to the Québec mining tax regime. The changes to the Mining Tax Act, if made law, would mean that mining operators in Québec would pay the higher of (i) a minimum mining tax based on the total output value at the mine shaft head for each mine operated, and (ii) a progressive mining tax on profits based on the profitability of the annual output of all of an operator's mines (ranging from 16% to 28%).

First Nations Consultations

In its introductory provisions, the amended Mining Act incorporates the government's general obligation to consult with Aboriginals. In addition, at least one Aboriginal representative must sit on the follow-up committee mentioned above for projects that would affect First Nation communities. The modified Act also prohibits the expropriation of Aboriginal burial grounds. The Minister is also now required to adopt and publish a specific policy for the consultation of First Nations.

Other Changes Under the Amended Québec Mining Act

The newly amended Act provides for the following:

  • Claim holders must report all exploration work carried out with respect to the claim;
  • Work credits now expire after 12 years;
  • Certain information obtained through the application process under the Mining Act is rendered public; and
  • Fines under the Act's penal provisions have been increased.

Looking Ahead - What Will the Amendments to the Mining Act Mean for the Mining Industry?

The amendments to the Mining Act have been met with mixed reaction from industry stakeholders, municipalities and First Nations. Although the amended Mining Act has been adopted, mining industry representatives are quick to point out that the regulatory framework for the Mining Act has yet to be laid out by the government. For instance, neither the economic benefit requirements of a mining project nor the municipal zones that are incompatible with mining has been articulated through regulation.

In addition, the Québec mining industry is closely monitoring the abovementioned proposed changes to the province's Mining Tax Act tabled by the Québec government in May 2013. The new regime would be effective as of Jan. 1, 2014. Due to the fact that Québec currently has a minority government and that there are rumours of a 2014 election, however, it is not certain whether the changes to the regime will be adopted by the government.

Last year (2013) represented another down year for mining investment in Québec and much of the world. Regardless of the changes brought on by the amendments to the Mining Act, economic projections for the Québec mining industry for 2014 have not been overly positive either. It remains to be seen whether the impending regulatory developments will help or hinder mining development in Québec.

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