It is difficult for some to escape the notion that the proposed amendments were made not only to improve outdated legislation, encourage exploration and development, and enhance mining activity in the province, but to help the government escape potential embarrassing confrontations. Confrontations such as the one that led to the jailing of aboriginal community leaders in their contest with Platinex Inc., a junior mining company, and with irate cottage owners in southern Ontario seeking a moratorium on uranium mining and exploration.
In fact, the Ontario government has lagged almost all provincial jurisdictions in making fundamental changes to its mining law and has also had to reconcile its laws with decisions of the Supreme Court of Canada affirming aboriginal rights in our country and to meet the expectations of aboriginal people regarding the propriety and benefits from exploitation on their ancestral lands.
Five major changes in the legislation are:
• the introduction of map staking and a graduated approach to exploration activity while also requiring notification after staking;
• recognition of aboriginal and treaty rights through a consultative process;
• introduction of a dispute resolution process through regulation;
• a new approach for mineral exploration on private surface rights; and
• a prohibition on new mine openings in Northern Ontario until a community-based land-use plan is in place.
The process for developing the new mining legislation began with Ontario’s Mineral Development Strategy released in 2006. While there was a consultative process undertaken by the government with respect to revisions of the Mining Act commencing in August 2008, critics have questioned the process by noting public hearings were scheduled to begin before the draft legislation was available for review and comment at the first hearings.
Responses to the major initiatives outlined in the legislation have been mixed.
Large industry players and associations including the Ontario Mining Association and the Prospectors & Developers Association of Canada have welcomed the proposed legislation.
On the introduction of map staking, an ad hoc committee report to the Prospectors & Developers Association of Canada in January 2004 determined that map staking was in effect in many Canadian jurisdictions and within limits, and would recommend Ontario adopt map staking. The ad hoc committee report noted, as other critics have, that map-staking disadvantages small, independent prospectors who work in the field while providing larger companies (and foreign competition) with significant benefits.
A rift in opinion could be a result of the proposed legislation’s geographical division of the province. Bill 173 proposes Ontario be divided into north and south.
In Northern Ontario property owners would have to seek an exemption to prevent claim staking and exploration, which will be subject to the discretion of the government.
Prospectors in southern Ontario will be prevented from staking claims on property where sub-surface rights are owned by the Crown. The government has reinforced the foregoing ban on staking in southern Ontario by passing an order-in-council on April 30 to withdraw immediately from staking, sale, and lease, all mining rights where there is a registered fee simple owner.
The government’s recognition of aboriginal rights has been widely criticized in the past and this disapproval continues with the introduction of bill 173.
Critics note the recognition of aboriginal rights and interests in bill 173, while encouraging, does not deal directly with the issue of revenue sharing from resources and that recognition without giving rights or veto powers is ineffective.
Some aboriginal leaders also insist the legislation should require mining companies to enter into impact and benefit agreements before a mining project moves into an advanced stage of development.
However, supporters of bill 173 are quick to mention that $30 million has been set aside by Ontario to affirm resource benefits sharing with aboriginal communities and that this represents a good faith gesture on the part of the government.
The government also notes that aboriginal consultation is key to the proposed amendments. While the legislation states that the government will consult with aboriginal communities and requires new mining development in Northern Ontario to conform to community land-use plans, critics have noted that there is little “flesh on the bones” concerning the consultation obligation.
It should be noted that the courts have been no more helpful in defining a process since they have only required government “consultation” and not provided clarity on the meaning of that term nor indicated what the process should be in carrying out consultation and providing, where required, so-called “accommodations” to respond to infringements of aboriginal rights.
Others question why the requirement to conform to community land-use plans does not apply to the entire province, rather than just the north.
The requirement to give notification of staking after the event (which protects the interests of the party who has identified the prospect and avoids a staking rush) has also been criticized as a disadvantage to aboriginal communities. What the nature of the “notice” is and what constitutes sufficient notice has not been defined.
While bill 173 does recognize aboriginal and treaty rights, the Ontario government retains an overriding right to permit a new mine opening for a project that it determines is “in the social and economic interests of Ontario” (described by some commentators as a “notwithstanding clause” to permit the government to override the interests of aboriginal people).
As in most statutes, most of the implementation of the goals in the legislation will be achieved by the enactment of regulations by the government and, unlike statutes, regulations do not stand or fall under approval by the Legislature but can be changed by the government of the day depending on the priorities and political philosophy of that government. Aboriginal commentators have expressed the concern that this will make their rights susceptible to modification without proper scrutiny.
Taken as a whole, the amendments to the Ontario Mining Act are the beginning of a process to accommodate the needs of the industry, balanced by the rights of property owners and aboriginal and treaty rights that have been established by the courts.
It is clear that there are problems, concerns, and issues that will remain after the act is amended, however this is a beginning of a new chapter for mining in Ontario. The umbrella of compromise will, at least temporarily, provide some protection to all parties affected by this significant industry while they establish a stronger roof to shelter the many different and varied responses that the future will require.
John Sabine is a partner at Fraser Milner Casgrain LLP, practising in the areas of corporate finance, mining, and mergers and acquisitions. He represents various public companies and investment banking firms in public and private offerings of equity and debt securities. Lee-Ann Gibbs is an associate in the business law group at FMC. Lee-Ann’s practice focuses on corporate/commercial law, securities, and mergers and acquisitions.
