Ontario Mining Association (OMA) – August 2009 Submission to the Ontario Government on the Far North Act (Bill 191) and the Mining Act (Bill 173)

The Ontario Mining Association (OMA), is an organization that was established in 1920 to represent the mining industry of the province.

Please note that the order of this document has been slightly changed. The Bill 191, the Far North Act material has been placed at the beginning of the posting for the reader’s convenience. – Stan Sudol

Bill 191, the Far North Act

1. Clarifying the Ambiguity and Imbalance

Once again, we are appreciative of the government’s efforts to foster a multi-stakeholder dialogue and build consensus through the Far North Advisory Council. We also agree with the goal “to strike the right balance between conservation and development”, which was set out in the Premier’s July 14, 2008 announcement.

However, Bill 191 presents many challenges for our members, which if not rectified, will cause unprecedented delay, unnecessary conflicts and diminishing economic benefits for the province and communities of the Far North. The nature of the mining industry is one that requires long-term certainty and clarity – given the long planning cycles of our industry, as well as the significant capital expenditures and detailed permitting process required for the development of a mine. Additionally, mineral exploration is a highly risky undertaking; only 1 in 10,000 prospects becomes a mine. 

Industry would appreciate greater balance between industry, community and conservation components in various aspects of Bill 191 so that the Bill achieves the desired goal of economic development and conservation. Without this balance, Bill 191 may be seen as an impediment to future investment and development in Ontario’s Far North for mineral exploration and mine development, forcing companies to look elsewhere for mineral development projects. 

While the proposed legislation is a start in putting a process in place to ensure partnership building between government and Aboriginal peoples, it has not provided a specific role for other stakeholders, such as the mineral industry. Given the importance of  mineral development to the economic development and prosperity of the Far North and its people, it is critical that the mineral industry have a seat at the table.

The OMA supports active participation of Aboriginal peoples in the mineral industry and understanding and co-operation between the industry and Aboriginal communities where mineral development and extraction occur. The members of the OMA have collectively more than 50 agreements with the First Nations. If we are to respect the integrity of the Premier’s words, and ensure the wellbeing of Far North communities, there needs to be a balanced interest in development and the consultation aspects, which are currently nonexistent in the bill.

We recommend a target of 10 new mines in the next 10 years. One just needs to look at the benefits which the Musslewhite and Victor mines have brought to their respective communities and the province in terms of, jobs, training, business opportunities and tax revenue. While targets on conservation are mentioned, there are no economic or social targets.

Another area of concern is how the act discusses the importance of respecting Aboriginal and treaty rights and consultation. The current government consultation aspects are limited in their scope, and we would encourage the Government of Ontario to expand this to include a broader swath of stakeholders, inclusive of the mining sector, to ensure a balanced approach to land-use planning is achieved. 

This requires clarification for our members to assist them in their relationship building with the First Nation communities and other business decisions.  
 
2. Building First Nation Capacity

Given the level of effort involved in land use planning and review, including the need to conduct comprehensive, long range data collection and geological mapping, a key determining factor in the success of the government’s land use planning initiative is the sustained availability of adequate resources, both financial and human. Proposals for land use planning in the Far North place a large responsibility and scope of work on First Nations, local authorities and companies alike. The legislation cannot achieve its goals unless greater governmental resources are dedicated to enhance the capacity for land use planning in the Far North.

The government has allocated $40 million to implement the Mining Act and it will require much more – hundreds of millions of dollars as well as significant planning expertise and resources – to achieve the goals set out in the Far North Act. In embarking on the monumental task of land use planning in the Far North, the government needs to ensure that the necessary funding mechanisms, as well as manpower and related resources are in place.

3. Exploration within Protected Areas

The proposed ban on mineral exploration in 50% of Ontario’s Far North means that the mineral geology of that area may never be known, with the result that significant mineral development opportunities will be missed.  Given that mineral exploration has very limited environmental impacts, we suggest that mineral exploration be allowed in protected areas, subject to a ban in highly sensitive areas identified based on clear scientific or cultural evidence. These areas could be given a “no-go” protection designation.  This would help achieve the balance between conservation, historical preservation and economic development that is the stated intention of the Bill and the government.

4. Review Process for Land Use Plans

While operating mines occupy a very small footprint – about 5 square kilometres – they are rare and very hard to find, especially in a vast remote area like the Far North, where the geology is largely unknown. Because geological survey work would be ongoing over an extended period of time, the Far North Act needs to make provisions for a regular review of the community based land use plans and areas designated as protected. We suggest that a five year review is warranted and that these reviews include the opportunity for companies to be actively consulted and contribute together with other affected stakeholders. New mineral discoveries (assuming exploration is permitted in protected areas), new science, the changing needs of the local residents, technological changes and shifting circumstances may all trigger reviews of the community based land use plans.

As with our earlier comments on the Mining Act, we would like to stress that the review process needs to be objective, fair and transparent with all stakeholders.

Conclusion

In conclusion, the OMA would remind the committee that mining companies function in a fiercely competitive mobile global market. Ontario needs to remain open for business. Recent turbulence in the economy has had a negative impact on our industry, but there are steps that the government can take to ensure Ontario remains in an optimal position to take advantage of the next boom in commodity prices. Bill 173 and Bill 191 are a start in that direction, but only if this committee ensures that the amendments recommended are in fact implemented in a manner that will foster the growth of mining in the province. The sustained success of mining as an economic engine of Ontario’s economy requires the following:

• Certainty of the rule of law and land title
• Land access for mineral exploration
• Investment in infrastructure, technology and training
• Regulatory certainty and efficiency
• Certainty on Aboriginal rights and engagement

The OMA believes that in developing the proposed legislation there is an unprecedented opportunity to foster a mining environment that promotes fair and balanced development that will benefit all Ontarians and ensure all of us a healthy and prosperous future. We look forward to continued cooperation with the government and appreciate your consideration of our input. Should you require further clarification of any of our positions, please contact Chris Hodgson, OMA President, or John Blogg, OMA Secretary and Manager Industrial Relations at 416 364-9301.

Please remember that the order of the original document has been changed for this blog posting. – Stan Sudol

Introduction

On behalf of the members of the Ontario Mining Association (OMA), we welcome the opportunity to present our comments on Bill 173, Mining Amendment Act, and Bill 191, The Far North Act.

The OMA is an association representing operating mines, mining contractors, metallurgical plants, engineering consultants and service suppliers. The Association has actively participated in the representation of its members’ views to government since 1920 and has participated in the consultation initiatives of this government on each of these bills.

The OMA has a long history of working in concert with the government, communities of interest and the public to ensure that the mining industry in Ontario is competitive and serves to benefit everyone in the province. As an industry association, we realize that it’s not enough just to provide economic benefit to communities. We are committed to continual improvement, as it relates to economic, environmental and social performance. We see value in operating in a responsible way to generate prosperity today, without compromising the opportunities of future generations.

We are proud of the accomplishments of our members, who collectively have over 50 agreements with First Nations. These agreements include substantial opportunities for the Aboriginal people of Ontario to share in the wealth that can be created from the geology this province has. The government can be assured that OMA members will continue to forge opportunities for jobs, training, business development and a better standard of living for Aboriginal peoples of Ontario.

The Legislative Proposals

The OMA views Bill 173 and Bill 191 as opportunities for government (federal, provincial and local), First Nations, investors, the mining industry and all Ontarians to move forward in a positive manner to advance the importance of mining in society, to share in the wealth and growth opportunities generated by our industry and to realize the jobs, training and entrepreneurial opportunities it provides to all people in the province.

In addressing the views of our members on the two proposed pieces of legislation, we will be commenting only on what we believe is the overall thrust of the legislative proposals, as currently drafted. There is no doubt that there is considerable redrafting required to ensure that not only the people of the North, especially the First Nations communities, can better share in the benefits of mining, but that the mining industry as a whole will continue to flourish in an environment of trust, respect and strong partnerships. The economic and social impacts of a mine are in many ways like the geological nature of a mine itself: That is, the bulk of the activity is hidden below the ground and not readily visible at first glance. 

Bill 173, Mining Amendment Act

In its revision of the Mining Act, the government of Ontario laid the foundation for the continued success of the mining sector in the province by recognizing the need to preserve a mineral tenure regime that offers a level of confidentiality, security and certainty that will allow large and small companies to compete on a level playing field.

While retaining competitive staking, the government nonetheless addressed the concerns of private land owners by removing the need to physically access land prior to claim acquisition through the introduction of an electronic map staking system. The OMA is supportive of this approach, as it makes it possible to avoid unnecessary disturbance to the land, inconvenience to the surface rights holder and/or potential infringement on Aboriginal or treaty rights.

Other advantages to map staking include greater efficiency, avoidance of unnecessary costs and the ability to channel resources to more value added activities, avoidance of safety risks, as well as a reduction in the use of fossil fuels and thus, lower emissions of greenhouse gases.

The OMA commends the government for offering a workable and progressive solution that meets the needs of a variety of stakeholders and supports the provision of $40 million to assist with the implementation of the proposed changes to the Mining Act.

At the same time, there are five areas we would like to seek clarification, since the legislation as currently drafted is ambiguous and has the potential to incur conflict, court challenges and unintended harm to the mining industry and First Nations relationships if not amended. 

1. Aboriginal Relations and the Duty to Consult
 
It is our view that the proposed wording in the bill around the duty to consult is inconsistent with what the courts have clearly decreed. The Supreme Court of Canada has made it clear that the duty to consult lies solely, with a few exceptions, with the Crown. However, proposed subsections 78.1(1), 78.2(2), 139.2(4.1), 140(1) and 141(1) as proposed, strongly suggest that these duties are to fall primarily, if not exclusively, to the proponent (mining industry).

A basic foundation of mining success in Ontario – the thing that sets us apart and gives us an advantage over some other jurisdictions with significant mineral potential – is rule of law and certainty of title.  “Duty to consult”, as presented in the bill, seems to demand consultation by a proponent far beyond the requirements of case law. This ambiguity may be reflective of the current general practice in the province, which sees proponents, including our members, engage almost exclusively in consultation, both in the interest of relationship building and also in furthering results to meet business timelines and objectives. 

There is no doubt that relationship building from the outset is essential and has, indeed, become common practice among OMA members. However, when it comes to ensuring transparency and the supremacy of the rule of law, the duty to consult is placed unequivocally with the Crown. This means that the Act should make explicit reference to government-appointed Mineral Development Officers bearing full responsibility not just for the approval, but for the actual conduct of consultation, thus fulfilling the government’s duty to consult.

Given these clear provisions, and recognizing that they would constitute appropriate consideration of community interests, the industry would be prepared to accept the added regulatory burden of exploration plans and permits, the reintroduction of which runs counter to the government’s overriding Open for Business Policy. Needless to say, we expect that the government will work within the spirit of the Open for Business Policy by putting in place administrative measures that will ensure fixed timelines and an efficient process associated with all new regulatory measures.

2. Purpose Clause

At first glance, the purpose of the Act appears to promote the mineral industry. However, upon closer review, we have some concerns with the current wording in Bill 173. Our concern comes from our reading of section 78.2(2), which states that the purpose of the Act is one of the four principal criteria that the Director of Exploration would be obliged to apply in deciding whether or not to issue an exploration permit. As a result, section 2 could be expected to play a key role in this regard. It is to be expected that the Director would want to assume a gatekeeper role in the overall regulatory process and thereby exert influence over future exploration activities. It therefore strikes us that section 2 must be drafted with greater clarity.

Given our reading of sections 2 and 78.2(2), and guidance received from the courts as it relates to the duty to consult, and if appropriate, accommodate Aboriginal people, the OMA recommends the following change to the purpose clause:

 The purpose of this Act is to encourage prospecting, staking and exploration for the development of mineral resources in a manner that minimizes:

(a) any adverse impact of these activities on public health, safety or the environment; and
(b) any potential infringement of existing Aboriginal and treaty rights of Aboriginal peoples of Canada that are recognized and affirmed pursuant to section 35 of the Constitution Act, 1982, or the exercise of those Aboriginal and treaty rights.

The omission of “including the duty to consult” is not to diminish the importance of consultation, but to ensure the Act is consistent with the decision of the courts. Again, the courts have established that the duty to consult falls solely on the government as one of several obligations it has when contemplating a decision or action that has the potential to infringe on Aboriginal or treaty rights, or the exercise of those rights.

As such, it appears to us that it is redundant to mention the duty to consult in the purpose clause, since as it is presently written, it could be interpreted to read that the duty to consult is one of the Aboriginal and treaty rights, recognized and affirmed by section 35 of the Constitution Act in 1982, which it is not.

3. Dispute Resolution – Aboriginal Rights

In terms of promoting fair and balanced development, the government has taken the right approach in proposing improvements to the dispute resolution process by introducing the notion of a tribunal. We would like to stress that a truly robust process needs to be unambiguous, fair and transparent. Therefore, in addition to being experienced mediators, tribunal members must understand the issues and the law. In defining tribunal nomination criteria, the government should consider the need to engage individuals with local expertise, including Aboriginal representatives.

As with the consultation process, clear timelines must be associated with the dispute resolution process, to ensure security of investment and business continuity, taking into account factors such as timing of flow-through share funding and the seasonal nature of work in the North (with access to some sites being restricted by the availability of winter roads).

4. Rights to Appeal-Penalties

The draft legislation contains a number of provisions which state that certain decisions made under the Act cannot be appealed while others can be. Section 51 provides that the Minister can issue an order restricting a claim holder’s rights to use his land and concludes that whatever the decision, it’s not appealable. However, we see a conflict with this in section 105 of the bill which allows an appeal to the courts in matters related to consultation with Aboriginal communities relative to their land, treaty rights, etc.

The OMA respects the interest of First Nations in preserving lands which are significant to their culture. However, it is our understanding that these cultural sites do not have a separate and independent basis in law and therefore fall within the umbrella of “Aboriginal rights”. As such, decisions of the Minister, or disputes which involve sites of Aboriginal cultural significance should be subject to the same right of appeal as all other decisions involving Aboriginal or treaty rights. It is therefore important that such disputes be subject to the rule of the courts. We recommend that section 51(6) denying the right of appeal be rescinded. 

5. Protecting the Opening of New Mines

The OMA respectfully submits that sections 204 and 205 of Bill 173 fail to provide the balance and certainty required in the event of a decision to prohibit new mining operations in the Far North until a community based land use plan is in place. As drafted, this section denies the legitimate expectations of mining companies to enjoy the results of their investment, which they likely have already made to acquire property in this vast region, by not permitting them to bring the mine into production. We only need to consider the financial and community embarrassment that would have occurred to DeBeers Canada at its Victor Mine operation, had this language been in effect and the loss that would have resulted to the local communities in terms of infrastructure, jobs, economic development and hope for a better life.

We are cognizant that section 205 states that if enacted, the existing mineral tenure held in the Far North, as well as related approvals, would remain valid even if a land use plan was inconsistent with mining. However, section 204 makes it unclear that the protection assumed by section 205 would likely be of value. Section 204 appears to clearly state that any protected land under section 205 cannot be taken to production if the community based land use plan is inconsistent with the opening of a mine. Also, section 204 ensures that until the land use plan comes into existence, the question of whether a new mine can be opened does not arise. Therefore, more clarity is required as to what occurs in the interim between no land use plan and the development of such a plan.

We believe the government should consider incorporating a mechanism, whereby existing projects that demonstrate significant economic potential, and have the support of local communities, be grandfathered on a case-by-case basis, which would allow them to proceed to production while the community completes and ratifies its land use plan. We suggest that without significant resources from the government both in terms of money and expertise to support capacity building for the communities to develop land use plans, it is unrealistic for the government to expect any mining development to proceed in the Far North for a decade or more. 

OMA Mining Backgrounder

Mining Profile

According to a 2008 study on the Economic Impacts of a “Representative Mine” in Ontario, conducted by Professors Peter Dungan and Steve Murphy, Policy and Economic Analysis Program, Institute of Policy Analysis, University of Toronto, the combined direct, indirect and induced economic impacts of a single nickel mine on a community are impressive. In its opening, or construction phase, a new mine adds about $140 million to Ontario in Gross Domestic Product and generates 200 jobs annually. In its production phase, for each year of operation, the mine adds $280 million to the provincial GDP and increases employment by almost 2,300 jobs, at the highest pay rate of any sector, when one adds the benefits of mining service contractors.

The combined impact on government revenues is also noteworthy. In the opening phase of a mine, government collects $49 million per year from the mine’s total activity, while in the production phase, this rises to $84 million in tax revenue per year. No other small sector can boast these kinds of impacts. This is particularly true in remote and northern regions of the province.

Another report, entitled; Ontario Mining, A Made-In-Ontario Success Story, released in March 2009 and jointly funded by the OMA and the Ministry of Northern Development and Mines, states that although mining is the smallest of the industries for which Statistics Canada keep economic and employment data, it ranks fifth of 18 sectors in labour productivity. In Ontario, each employee on average produced $666,000 of mineral output, up 66% since 1999.

In 2007, Ontario’s mining industry posted more than $3.9 billion in earnings and contributed beyond its size in tax revenue. Ontario is the largest single producer of most metallic and non-metallic minerals in the nation, producing 26% of Canada’s total minerals by value. Over two-thirds of this production is in nickel, gold and copper. At the time of the writing of the report, Ontario ranked first in Canada as a destination for mineral exploration.

Investment in mining construction and equipment more than doubled since 2002, from $723 million to $1.9 billion in 2007, with total capital investment over $2.7 billion in 2007. Until mid-2008, when the industry was hit with the results of the world-wide economic downturn, these economic increases were viewed as a reflection of renewed interest in mining in Ontario.

Toronto remains the world’s largest mining finance centre with most of mining capital raised through equity offerings on the Toronto Stock Exchange. The market capitalization of TSX-listed mining companies grew to $350 billion in March 2008.

Ontario’s mining industry employs over 16,000 people directly with an additional 6,000 in mine services. This leads all other provinces. Workers in Ontario mines are among the highest paid of all other sectors, earning on average a base salary of $1500 per week.  The average output of the mining workforce of $54 per hour, exceeds the all-industry average of $41.77. 

The workforce of the industry is among the best trained anywhere in the world with over $16 million, or about $1,000 per worker per year spent on safety training alone. Currently the accident prevention performance of the industry ranks first among all other mining jurisdictions with an average lost-time frequency of 0.6 per hundred workers. The industry is hopeful of achieving its goal of zero injuries by 2015. 

Ontario has 44 operating mines in the province including the mining of gold, nickel, copper, zinc, platinum, salt, gypsum, calcium carbonate, nepheline syenite and diamonds. The industry’s value of production in 2008 was 9.6 billion. It has an annual trade surplus of $3.3 billion. Over 80% of the mineral products of Ontario are exported and 94% of inputs to the mineral production are Canadian. The corporate tax revenue collected by government is more than $660 million annually.

Ontario’s mining industry invests $2.7 billion annually in research, development and exploration. Of importance in these discussions is that past and present mining operations occupy only 250 square kilometers, or 0.03% of Ontario’s land area. Also, Ontario’s mines make purchases of more than $835 million, representing 43% of their total procurement of goods and services, from suppliers located within a one hour drive of the mine sites.  Finally, mining is the largest employer of Aboriginal people in Canada, with 5.3% of the workforce being Aboriginal.

Cleary, mining is an economic engine in the province. In order to ensure the benefits that responsible mining contributes to all Ontarians, the rules must be clear and fair.  

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