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The province claims amendments to its Mining Act, which recently came into force, bring the legislation “into the 21st century.” But some feel the changes are already hurting investment.
Controversial changes to Ontario’s Mining Act officially came into effect on April 1, and there’s evidence that some exploration firms are having trouble adjusting to them.
Although the new rules were only fully implemented three weeks ago, the provincial government asked miners to voluntarily follow the new rules starting November 1, 2012. The changes are part of the government’s efforts to modernize the Mining Act, which hasn’t seen a significant update since 1906. The Liberal government passed Bill 173, which contains the amendments to the Act, in 2009.
“I know of a couple projects that have been stalled,” said Garry Clark, executive director of the Ontario Prospectors Association, in an April 19 phone interview. “It’s mostly to do with people not keeping up with changes in the regulations, which is pretty common when new policies like this come in. But in six months or so, companies should be up to speed.”
“Free entry” has been replaced by notification and consultation
The amendments aim “to promote mineral exploration and development in a manner that recognizes Aboriginal and treaty rights, is more respectful of private landowners and minimizes the impact of mineral exploration and development on the environment,” according to the Ministry of Northern Development and Mines’ website.
As we reported in October, the new rules require exploration firms to submit detailed exploration plans to the ministry and to notify landowners before they undertake certain early exploration activities — essentially anything more than hand samples. After they submit their plans, companies must wait 30 days before they can start work. During that time, the government distributes the plans to all affected First Nations communities for feedback.
Further, any work that requires heavy equipment now requires an exploration permit, which explorers must obtain using a similar process. The ministry is aiming for a 50-day turnaround from the time it hands out the plans to First Nations to when it makes a decision on whether to issue a permit, unless more time is needed for consultation. First Nations communities can also apply to have sites of cultural significance declared off limits to mining.
These changes replace the so-called “free entry” system under which prospectors have been permitted to carry out early exploration activities without an obligation to consult or report their efforts to the province, landowners or First Nations.
CEO sees new regulations as “downloading”
The new regulations come at a difficult time for the junior mining industry, which continues to face an extremely difficult financing market. Some commentators, such as John Kaiser, are predicting that as many as 500 juniors could be wiped out. Moreover, according to a March 26 article in Mining Markets, exploration spending is declining in Ontario, from over $1 billion in 2011 to $900 million in 2012 and a forecast $750 million in 2013.
Alan Myers, the interim CEO of Solid Gold Resources (TSXV:SLD), has noted that the new rules had a negative effect on his company even before April 1. In January 2012, Solid Gold was ordered to stop drilling on its claims near Timmins after the nearby Wahgoshig First Nation, which claimed the area as sacred ground, won an injunction from the Ontario Superior Court of Justice. Solid Gold had acquired the claims in 2007.
The company launched an appeal, but has noted that the Divisional Court declined to hear it, partly due to the new rules. “At Ontario’s urging, the Divisional Court found that the appeal was ‘moot’ due to the new legislative regime under the Mining Act,” the company said in a January 30, 2013 press release.
“The government leased these claims, and we spent millions of dollars under the Mining Act as it then stood,” said Myers in an April 19 phone interview. “Then they changed the rules and downloaded the responsibility to consult and accommodate onto us. This created problems with the local First Nation. Our former CEO held consultations, but they came to an impasse, and the First Nation wasn’t prepared to accommodate us.” Myers also said the government required Solid Gold to obtain an exploration permit before April 1, but the company didn’t have time to do so and was unable to conduct exploration work.
Opposition critic worries about lost competitiveness
“From what I’ve heard, companies see the new process as more bureaucratic, and I’ve heard complaints about timeliness,” said Norm Miller, a Progressive Conservative member of provincial parliament and his party’s Northern Development and Mines critic, in an April 19 phone interview. “I think the new rules make it more difficult for exploration firms to invest in Ontario, and I think more are now investing outside the province as a result.”
“I don’t think a lot of prospectors thought the previous system was broken,” he added.
Miller said his party will put the new rules under review if it wins the next Ontario election, which is tentatively scheduled for October 2015. However, the Liberal government of Premier Kathleen Wynne, who recently took over leadership of the party from former premier, Dalton McGuinty, controls only a minority of seats in the legislature, so the opposition Progressive Conservatives and New Democratic Party could force a vote earlier.
“I think the process has to be much simpler for mining companies,” said Miller. “I want to see Ontario become the number-one destination for mining, and I don’t see that happening right now.”
First Nation asks government to hold off on new rules
First Nations, too, have raised concerns about the new rules. On April 4, Mining Weekly reported that the Anishinabek Nation, which represents about 55,000 people in Northern Ontario, had asked Northern Development and Mines Minister Michael Gravelle to hold off on implementing the new rules to give their leadership time to discuss the concerns about the regulations with their people. Anishinabek also called for a meeting with the minister.
There are also questions about whether First Nations communities are prepared to deal with the rising number of requests for consultation under the new regime. “With the number of requests we are receiving, we are already missing deadlines,” said Shawn Batise, executive director of the Wabun Tribal Council, in an April 12, 2013 Toronto Star article.
Clark feels the government has made a significant effort to help First Nations adapt to the new rules. “I know the government has put multimillion-dollar funds in place that First Nations can access,” he said. “I think mining companies probably have less capacity than First Nations when it comes to these changes.”
Myers sees little chance that the Ontario government will change its approach to mining regulations any time soon. “Maybe when all of Northern Ontario is out of work because everyone has gone to friendlier jurisdictions, like Mexico, Argentina — or just about anywhere else,” he said.
Clark, however, is more optimistic. “I don’t think the new rules will hurt in the long term. Most provinces have similar systems in place, and these rules help build knowledge between First Nations and miners,” he said. “Ontario also has very attractive geology.”
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.
Related reading:
New Exploration Rules Spark Debate in Ontario’s Mining Industry