Copyright 2010, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Mining, April 2010
On March 17, 2010, the Committee on Agriculture, Fisheries, Energy and Natural Resources of the National Assembly of Quebec announced that beginning May 12, 2010, it will be holding public hearings regarding Bill 79 entitled An Act to amend the Mining Act.
Bill 79 proposes important changes to Quebec's mining regime, such as the tightening of rules regarding required exploration work, a new public consultation for mining and peat leases, and increased eco-friendlier and public health and security-friendlier land rehabilitation and restoration obligations for participants in exploration and mining operations, including higher financial guarantees, special rules for uranium discoveries, and increased statutory liability for offences under the Mining Act. In order to ensure a smooth transition under the proposed new rules, mining executives, explorers, investors and other participants in Quebec's mining industry should carefully consider the impact of Bill 79 on their mining interests in the province. Parties interested in expressing their views on the proposed amendments must submit a brief or a request to voice their views without a brief, to the Secretary of the Committee on Agriculture, Fisheries, Energy and Natural Resources of the National Assembly of Quebec by no later than April 26, 2010.
Bill 79 - An Act to amend the Mining Act was tabled by Quebec's Minister for Natural Resources and Wildlife (Minister) on December 2, 2009. It has its origins in the Mineral Strategy adopted by the Government of Quebec in June 2009 and, as such, implements some of the measures announced in the Mineral Strategy. See the July 2009 Blakes Bulletin on Mining: Quebec Government Unveils Mineral Strategy for a discussion of the Mineral Strategy.
The following is an overview of the key changes proposed by Bill 79:
Minimum Exploration Work: The Minister proposes a series of measures aimed at fostering mining exploration work, essentially targeting the so-called dormant claims (claims artificially maintained by paying the cost of the minimum exploration work required in lieu of actually conducting such exploration work or by reallocating excess amounts expended for exploration work conducted in respect of other applicable claims or mining activities). Some of these measures include the following:
- Payment in lieu of exploration work will be permitted only with respect to the work required during the first two-year term of the claim.
- Any excess amounts disbursed during a term in respect of exploration work on a claim will be eligible for four subsequent terms of the same claim only. The same rule will apply to any excess amount accumulated for a claim on the date of the coming into force of the amendments proposed by Bill 79.
- The radius circle of adjoining claims between which the reallocation of excess amounts of work performed is permitted will be reduced from 4.5 km to 3 km; however, such radius will be 4 km for any claims situated north of 50 degrees 30 minutes latitude.
- It will no longer be possible to reallocate to a mining claim any portion of the amounts spent to perform work in respect of a mining lease or mining concession.
- A report will be required for all work performed and for all work for which an exploration allowance or additional exploration allowance is deducted from the claim holder's annual profit under the Mining Duties Act.
It should be noted that full compliance with exploration work obligations is required in order to obtain the renewal of a claim for a subsequent term.
Common Claim Expiry Date: Holders of multiple claims may currently choose a common claim expiry date for all or part of their claims. In practice, while this mechanism may be useful in managing large quantities of claims, it also proved to create difficulties and unnecessarily encumber the management of the exploration work compliance. Bill 79 proposes to abolish the common claim expiry date option.
Notice of Claim Acquisition: Where a claim is acquired on land owned or leased by another mining right holder or a third party, any person acquiring such claim will be required to notify the landholder of the claim acquired within 60 days following the registration of the claim. This measure is intended to prevent or mitigate against disputes between landholders (e.g., cottage owners or holders of exclusive leases to mine surface mineral substances) and owners of newly acquired claims on the same land by forcing the owners of claims into an early disclosure of the newly acquired claims with a view to having them negotiate a mutually acceptable access agreement early in the process.
Public Consultation for Mining and Peat Leases
Bill 79 introduces a mandatory public consultation for mining and peat leases. This public consultation will be required to be carried out in the manner to be prescribed by regulation. While it is difficult to assess the full impact of the proposed public consultation, here are a few principles that emerge from Bill 79:
- The proposed public consultation is a new process to be managed by the Minister and will be independent of the public consultation process required under environmental legislation.
- The public consultation will need to be conducted in the region concerned by the lease prior to applying for a mining or peat lease, presumably by the applicant and at the applicant's expense.
- For a mining lease, the rehabilitation and restoration plan for the proposed mine must be finalized and made available to the public at least 30 days before the public consultation begins.
- Prior to granting a mining or peat lease, the Minister will decide on the adequacy of the public consultation. However, Bill 79 does not make the public approval of a proposed mining project a condition for the granting by the Minister of the lease. The public consultation appears therefore intended mostly to enable regional and local communities to voice their concerns well before the approval of a mining project by the Minister, without, however, enabling such communities to block any undesired project. The final decision regarding the granting of a mining or peat lease will remain with the Minister. To navigate the delicate balance of public/mining development/mining lobby interests, the Minister will have the power to subject the granting of a lease to conditions aimed at addressing community concerns expressed during such public consultations.
- Where public consultations will have resulted in the mining lease holder undertaking to comply with certain obligations, such holder will be required to establish a committee, in the manner to be prescribed by regulation, to ensure compliance with such undertakings.
Land Rehabilitation and Restoration and Financial Guarantee
As announced in the Mineral Strategy, Bill 79 proposes to increase and tighten the requirements in regard to the protection and rehabilitation of land subject to exploration or mining activities. In this respect, Bill 79 revisits both the land rehabilitation and restoration plan requirements and the financial guarantee for the completion of such requirements:
- The rehabilitation and restoration plan will continue to be required to be submitted to the Minister for approval before commencing exploration or mining activities, as applicable. In the case of mining leases, however, the plan will now need to actually be approved before a lease can be granted.
- In the case of holders of mining rights engaged in, or permitting the performance of, certain exploration work on the land subject to their mining rights, the amount of the financial guarantee required to be provided by such holders will be increased to 100% of the anticipated costs of completing the work required under the rehabilitation and restoration plan, and the guarantee will need to be furnished before the work begins, subject to certain relief measures in case of rehabilitation and restoration plans approved by the Minister before the entry into force of the amendments proposed by Bill 79.
- In the case of operators engaged in mining operations, operators of concentration plants and persons engaged in mining operations in respect of tailings, the financial guarantee will be required to be an amount equal to 100% of the anticipated cost of rehabilitation and restoration of accumulation areas, geotechnical soil stabilization, stabilizing mine openings and surface pillars, water treatment, and road work. This guarantee will need to be furnished in five annual payments (first payment of 25%, then three payments of 20% and a final payment of 15%), the first payment being due within 90 days following receipt of approval of the plan, and each subsequent payment being due on the anniversary of the date of approval of the plan. Bill 79 provides for some transitional relief measures for rehabilitation and restoration plans approved by the Minister before the entry into force of the amendments proposed by Bill 79 and for mining activities that ended before March 9, 1997. However, the existing guarantees will need to meet the new proposed requirements within three years after the entry into force of such requirements.
- The Minister will continue to have the right to subject the rehabilitation and restoration plan to additional conditions, including to advance the date by which the financial guarantee must be furnished, to increase the amount of the guarantee, as well as to require the furnishing of the full amount of the guarantee.
- As is currently the case, the restoration and rehabilitation obligations will subsist until a certificate of release is issued by the Minister. The release conditions, however, will be more rigorous, and in particular, the Minister will need to be satisfied that the land affected by the mining activities no longer presents a risk for the environment or for the health and safety of individuals. The Minister will continue to have the power to release a person of its restoration and rehabilitation obligations upon the assumption of these obligations by a third party, with the consent of the Minister. The Minister will issue a certificate of release only after obtaining a favourable opinion from the Minister of Sustainable Development, Environment and Parks.
- Bill 79 introduces harsher fines for failure of required persons to comply with their rehabilitation and restoration obligations. Failure to submit the plans prior to the beginning of the exploration or mining work, as applicable, will be punishable with a fine of C$50,000 in the case of an individual and C$100,000 in the case of a legal person. Any person failing to comply with the financial guarantee requirements will be liable to a fine corresponding to 10% of the total amount of the guarantee.
Exploration and mining of uranium recently has raised many concerns and significant public opposition in western Quebec and Sept-Îles. While Bill 79 does not introduce a moratorium on the exploration for or mining of uranium, as requested by certain citizens' groups, Bill 79 introduces a few measures aimed at increasing the disclosure of uranium discoveries and the protection of public health:
- The holder of a claim will be required to declare to the Minister any discovery of mineral substances containing 0.05% or more of uranium within 60 days of the discovery. A person who contravenes this obligation will be liable to a fine of C$5,000.
- The holder of a mining right or an operator who is engaged in exploration for or discovers or mines mineral substances that contain or may contain 0.05% or more of uranium will be required to take the protective measures to be prescribed by regulation. The Minister will also have the right to impose additional protective measures, presumably in order to respond to particular concerns raised by a uranium exploration or mining project that cannot be sufficiently addressed by the general protective measures to be prescribed by regulation. Any person who fails to comply with any such protective measures will be liable to a fine of C$10,000.
Mining Register, Registration of Mining Titles and Other Mining and Property Matters
Bill 79 introduces a number of changes to the list of mining titles, the instruments subject to registration in the public register of real and immovable mining rights maintained pursuant to the Mining Act (Mining Register), as well as proposals to repeal the provisions of the Mining Act currently providing an exemption from registration at the Quebec land register for claims and some other exploration titles.
- Promises to purchase relating to claims will need to be registered in the Mining Register.
- The list of instruments that will need to be registered (and that will be accepted for registration) in the Mining Register will be reduced to instruments relating to mining leases, mining concessions, leases to mine surface mineral substances, leases to produce petroleum and natural gas, leases to operate an underground reservoir, authorizations to produce brine and exploration licences for petroleum, natural gas, and underground reservoirs (but not mining exploration licences or claims). The transfer, renewal, surrender, abandonment, revocation or expiry of all mining rights will continue, however, to be subject to registration in the Mining Register. In this respect, it should be emphasized that the Mining Register remains an administrative register for mining rights, and registration therein of transfers and instruments relating to mining rights determines the effect of such transfers and instruments against the Government of Quebec and not third parties.
Land Register: Claims and a number of other exploration titles currently exempt from registration, and various instruments affecting such rights, will need to be registered at the Quebec Land Register in order to establish the opposability thereof against third parties.
Abolition of Certain Mining Titles:
- Seabed exploration licences and seabed mining leases will no longer exist. Holders of seabed exploration licences and holders of seabed mining leases will become, on the date of coming into force of the proposed amendments, holders of mapdesignated claims and holders of mining leases, respectively, and will be subject to the legal regime of the latter mining titles.
- Exploration licences for surface mineral substances, which ceased to be issued since November 22, 2000, will be abolished altogether. Persons wishing to mine surface mineral substances must directly obtain a lease to mine such substances.
Separate Property: Bill 79 will proclaim and make it clear that ownership of a mining right is separate from the ownership of the soil (land) affected by such mining right. While this is not a new concept, in principle, this change will reinforce the separate treatment of mining rights versus land rights.
Ownership of Surface Mineral Substances in Private Land: Owners of lands granted or alienated by the Government of Quebec for purposes other than mining purposes will be granted ownership of surface mineral substances found in such land.
Lease to Mine Surface Mineral Substances:
- The Minister will be entitled to refuse an application for a lease on public interest grounds and will also be entitled to refuse a sand and gravel lease in order to avoid conflicts with other uses of the territory affected by the proposed lease.
- Where the lease has been granted, the Minister will have the power to terminate it at any time on public interest grounds. In such a case, the Minister will grant the lease holder a lease in respect of another parcel of land, failing which the Minister will compensate the holder for the loss suffered.
- The holder of the lease will be required, before the date of expiry of the lease, to remove all property and any extracted surface mineral substances from the land covered by the lease.
Offences and Fines: Bill 79 introduces important changes to the statutory liability for non-compliance with the Mining Act. Among such changes, it will streamline the amount of fines by introducing fixed fines and will increase the amounts of such fines.
New Fees: Bill 79 proposes to allow the Minister to set, by regulation, new fees payable by applicants for various actions taken under the Mining Act, e.g., fees for the referral notices from the registrar of the Mining Register in case of contested claims, for authorization for a claimholder to extract and dispatch mineral substances in excess of 50 metric tons or for purposes other than sampling, for filing a notice of abandonment of a claim, lease or concession, for the analysis of rehabilitation and restoration plans and for the issuance of certificates of release from rehabilitation and restoration obligations. A regulation setting forth these new fees is expected to follow the approval of Bill 79.
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.