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Article

Mining Law Update: Bill C-300

Date

March 1, 2010

AUTHOR(s)

Matthew DeBock
Roger Taplin
Adam Wanke


Bill C-300, a private member’s bill put forth by Ontario Liberal MP John McKay, purports to promote corporate social responsibility (CSR) in the Canadian mining industry’s site country operations. However, the perverse result of Bill C-300 could be that mining companies move to countries with less of a commitment to CSR, ultimately making matters worse for site countries.

The core of the bill, titled An Act Respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries, is captured in two requirements: first, that the federal government issue CSR guidelines meeting the requirements of the bill within 12 months, and, second, that the Ministers of Foreign Affairs and International Trade investigate any complaint regarding a Canadian mining company that is made by any citizen or resident of Canada or of a developing country where that company operates.

Under the proposed regime, the Ministers would only be able to decline to investigate if a complaint were clearly frivolous, vexatious or made in bad faith. However, even this determination would require at least some minimal level of investigation. Under this regime, therefore, no mining company could avoid being the target of such investigations, no matter how robust its own CSR policies and practices.

Canada’s mining companies already operate in one of the most regulated industries in the world, a fact ignored by Bill C-300. Additionally, other, more general legislation also exists that regulates all Canadian companies with international operations. For example, the Corruption of Foreign Public Officials Act makes it a crime for a Canadian entity to bribe, attempt to bribe, aid someone in bribing, or counsel someone to bribe a foreign official. This offence is punishable in Canada by a prison term of up to five years, an unlimited fine, or both.

Additionally, Canadian mining companies are heavily dependent on access to institutional financing. Most international banks, including all major Canadian banks, have subscribed to the Equator Principles (EP), which are the industry standard for environmental and social issues in global project financing. If Canada’s mining companies do not ensure that their projects are developed in a socially and environmentally responsible fashion, they will be unable to secure debt financing for those projects.

In addition to the existing regulatory framework, and the ongoing CSR efforts of Canadian mining companies, Bill C-300 ignores the federal government’s National Roundtable Process on Corporate Social Responsibility (CSR) and Canadian Extractive Industries in Developing Countries. This year-long, government-led effort included the participation of multiple stakeholders, including mining, oil and gas companies, labour organizations, Canadian and international non-governmental organizations and others. The final report of the Roundtable noted that Canadian extractive companies "have been recognized domestically and internationally for their leadership on [CSR] issues."

As a result of its consultative efforts, the federal government launched its CSR strategy in March 2009, Building the Canadian Advantage: A Corporate Social Responsibility Strategy for the Canadian International Extractive Sector. The strategy includes:

  • a new CSR counsellor for the extractive sector to assist in resolving social and environmental issues relating to Canadian extractive companies operating abroad;
  • continued support and assistance, through the Canadian International Development Agency, for foreign governments to develop and manage their own natural resources in a sustainable manner; and
  • promotion of internationally recognized, voluntary guidelines for CSR.

On January 13, 2010, the federal government, in conjunction with the Canadian Institute of Mining, Metallurgy and Petroleum, launched a new website (www.cim.org/csr/) designed to help Canadian mining, oil and gas companies meet and exceed their social and environmental responsibilities while operating abroad. The new website will:

  • offer an inventory of experts, contacts, activities, reference materials, policies and regulations, country profiles and existing Canadian and international tools to assist companies in developing solid CSR policies;
  • provide a forum in which companies, CSR practitioners and stakeholders in Canada and abroad can share experiences and CSR best practices by posting case scenarios, stories and advice; and
  • facilitate the development of education programs for industry and stakeholders.

This leadership position on CSR could be undermined by Bill C-300, which could lead mining companies to relocate to jurisdictions with less onerous regulatory regimes. By encouraging such an exodus, Bill C-300 would not only hollow out Canada’s mining industry, but also encourage mining companies to locate in jurisdictions with less regulation and no commitment to CSR efforts.

Bill C-300 is premised on the flawed theory that the Canadian mining industry is inherently abusive of the developing site countries in which it operates, and that the industry must be subjected to an arbitrary, unbalanced and punitive process to embarrass mining companies into being better corporate citizens. While this belief may have had some merit in days past, it is out of step with the modern Canadian mining industry and the complex realities of operating in developing countries. Bill C-300 ignores Canada’s leading role in both the mining industry generally and CSR in particular.

As part of its leadership position, Canada’s mining industry has encouraged, and will continue to encourage, the development of CSR standards and practices in its site countries. Rather than imposing new burdensome and ill-considered regulation on Canadian companies, with little to no positive effect, Canada would be well-served to continue to assist developing site countries in establishing the resources needed to effectively monitor corporate behaviour for themselves. These efforts, which are a key part of the government’s ongoing CSR strategy, would ensure that CSR standards are adhered to by all mining companies, not only those from Canada.

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