Survey: Should Canada Allow Private Ownership of Mineral Rights?

At 42 pages, the Fraser Institute’s Divergent Mineral Rights Regime report, published last week, isn’t short. However, thus far the mining community has latched onto just one idea presented therein: that Canada should consider giving First Nations private ownership of mineral rights.

John Dobra, an associate professor of economics at the University of Nevada and the report’s author, arrives at that conclusion by looking at why mining-related laws and policies, along with attitudes toward mining, are so different in Canada and the United States even though they started out with “the same laws respecting mining and mineral rights.”

In doing so, he identifies two main differences between the countries’ mineral rights systems. Namely:

1. In Canada, “minerals are reserved by the provinces,” whereas in the US they are “either associated with surface ownership … or reserved by the federal government.”
2. Mineral rights are retained by the Crown in Canada, but in the US they are privately owned.

That second difference, states Dobra, is the one that’s truly crucial. That’s because Canada’s Crown-based ownership of mineral rights can make it difficult to develop mining opportunities in First Nations jurisdictions.

The result, as Kenneth Green, the Fraser Institute’s senior director of energy and natural resources, states in a press release, is that “[m]ining development in Canada is fraught with uncertainty related to First Nations land claims and requirements that miners consult with First Nations.” Unfortunately, those consultations often result in “endless rounds of negotiations with no end in sight.”

As mentioned, the solution suggested by the Dobra is private ownership of mineral rights. Specifically, he’d like to see “provincial governments and First Nations [explore] avenues to create, strengthen, or emulate private property rights regimes on First Nations’ lands.”

First Nations not so keen

While any solution that will remove barriers to mining is likely to please resource companies, First Nations people have already expressed their doubts about the ideas expressed in the report.

For instance, CBC News quotes John Rampanen, a Tla-o-qui-aht cross-cultural leader, as saying, “‘[p]roviding’ First Nations with mineral rights would imply that Canada has the authority to determine the inherent rights of our peoples. It is imperative that indigenous people know and believe that our rights are ours to define and exercise … not the other way around.”

Expressing a similar sentiment, Jennifer Duncan, a lawyer who specializes in negotiating agreements for First Nations, told the news outlet, “I don’t agree with the underlying position that the provinces would ‘sell’ or ‘grant’ rights to First Nations because this assumes that provinces have those rights to grant and this is exactly the position that creates uncertainty as First Nations argue that they have never given up those rights to the provinces.”

Evens so, she does think that privatization is a smart move in that it “will reduce uncertainty and increase mining investment,” thereby positively impacting “both Canadians and First Nations.”

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.