If passed, new Canadian bill would curb miner's activities overseas

Mining industry waits on fate of bill

Peter Koven, Financial Post

14 September 2009

With another session of Parliament starting up this week, Canadian resource executives will be casting an uneasy eye away from their mining developments and toward the halls of Ottawa.

This is the session that could determine the future of Bill C-300, a private member's bill that proposes to increase government oversight of Canadian mining and oil and gas companies operating in foreign countries, with penalties for those that run afoul of the good governance standards expected here at home.

The bill has passed second reading in the House of Commons, and will be debated in committee in the fall. If it clears the committee stage, it would go back to the House of Commons for voting.

Private member bills have an extremely low success rate in Ottawa, and an election may be called and C-300 derailed and need to be reintroduced. But it has started an interesting debate about how much influence government should exert on Canadian companies working outside of Canada's borders, one that is certain to continue in the years ahead.

Predictably, the resource industry has treated the legislation like the plague amd has quietly mounted a vicious and expensive offensive against it.

"The Government of Canada can't just show up in some foreign country and say it's going to investigate some alleged problem. It just can't. So there's a lack of understanding of how these things work," said Shirley-Ann George, senior vice-president of policy for the Canadian Chamber of Commerce, which is representing mining companies.

Despite its reservations about the bill, industry representatives have nothing but good things to say about its charismatic creator, Liberal MP John McKay. He is still amazed at the firestorm his bill has created.

"On the NGO side, I've been staggered by the amount of support the bill has received," he said.

"On the industry side, I've been kind of depressed by the hardening of positions against it. There are certain folks who see this as the end of western civilization as they know it."

His goal was simply to make sure Canadian companies apply good practices in developing countries. And in most cases, he believes this is the case.

But after many consultations with industry stakeholders, in which he heard about alleged abuses by Canadian mining companies (he won't name names for fear of lawsuits), he decided Canadian miners are not always living up to their environmental and human rights obligations. That led him to introduce the legislation.

Under C-300, people can take complaints about Canadian resource companies directly to the federal government, regardless of what foreign country they are working in. If the complaint is accepted, an investigation would begin that would need to be completed within eight months. If the company is found to be guilty of environmental or human rights abuses, it would be ineligible for financing from Export Development Canada (EDC) or the Canada Pension Plan Investment Board (CPP), neither of which appears to be thrilled with the legislation.

For anti-mining NGOs, this bill is being treated as a godsend. It would give them a legitimate government outlet for their endless complaints against the mining industry.

The industry hates it for pretty much the same reason. While a company such as Barrick Gold Corp. has gotten used to demonstrators accusing it of premeditated genocide at its annual meeting every year, it is another thing entirely to have the same complaints dragged through government-run inquiries.

"There would be so many frivolous complaints, there would be so much loss of reputation by companies, and there would be so much cost to companies to defend themselves over what are often trivial misunderstandings," said Jon Baird, president of the Prospectors and Developers Association of Canada (PDAC).

Mr. McKay's argument is that mining companies that are doing a good job have absolutely nothing to worry about from C-300, as frivolous complaints would be quickly rejected.

"What I've been saying to them is, ‘Look, you can have these demonstrations, you can have these allegations in newspapers and documentaries, or you can bring it to a resolution with a minister mandated to conduct an investigation and make a finding,' " he said.

"Their preferable state seems to be to fight it out in the press and engage lawyers and public relations people, while doing happy little magazines of happy little folks singing Kumbaya at the mine site."

The industry's opposition to C-300 goes far beyond the possibility of losing support rom EDC or CPP. It also argues that this bill would put undue costs on Canadian companies versus their peers, meaning many could decide to relocate outside of Canada. The bill is also seen as a slippery slope, as this type of intervention in the resource industry could easily spill into other sectors.

Most important, the industry claims this legislation is not needed, as it already spends a great deal of time and effort to make sure it is a world leader in corporate social responsibility, with such groups as PDAC and the Mining Association of Canada establishing very thorough guidelines for companies to follow. EDC also has its own rules that companies are expected to live up to if they want any financing, as does the World Bank and other international bodies.

"The controls are already in place. You'd be nuts to think you can rape and pillage and ignore human rights and still have a mine," Mr. Baird said.

He said that the real underlying problem is not weak governance by Canadian companies, but weak governance and corruption in the developing countries themselves. That often causes problems for the miners, who have jumped into volatile countries as far-flung as Papua New Guinea or the Democratic Republic of the Congo in search of riches, only to run into problems they never anticipated.

A good example came earlier this summer, when three Canadian mining companies operating in Honduras woke up one morning to find that the country had undergone a military coup. They dealt with it and kept working.

Even if Mr. McKay's bill fails, his efforts have already had a major impact on the industry.

Back in March, the government ended three years of work by releasing a document called Building the Canadian Advantage, which commits the government to help Canadian resource companies uphold high CSR standards around the world. If not for Mr. McKay's work, experts said this document might have remained on the backburner for years. And while Mr. McKay thinks it does not go nearly far enough, it has brought the topic to the forefront of Canadian policy.

And for C-300 specifically, the spirited debate will continue in the months ahead.

"We support more work being done to help Canadian companies be good corporate citizens," Ms. George said.

"What we don't support is a bill that punishes companies and is simply not needed."

For further information, contact Miningwatch Canada:

End Corporate Impunity
Legislate Accountability

Support Bill C-300
www.miningwatch.ca

email: ramsey@miningwatch.ca
tel: 613.569.3439 / fax: 613-569-5138