On November 30, 2020, OJAMS was invited to deliver a presentation on the legal framework for mining in Ontario to Bimaadzwin. Bimaadzwin, Anishinaabe for “life” or “good path,” was incorporated in July 2018 by former Ontario Regional Chief Isadore Day. Bimaadzwin seeks to “create happy, healthy communities through economic development that focuses on First Nation jurisdiction.”
Attached below are the slideshow presentations (in .pdf format) outlining the main topics of our presentation.
(Ottawa) A report released today by MiningWatch Canada concludes that every new mine, smelter or refinery in Ontario – or major expansion – must have a thorough environmental assessment before it can go ahead.
The report, written by Ontarians for a Just Accountable Mineral Strategy (OJAMS), commissioned by MiningWatch Canada and endorsed by Northwatch, Friends of the Attawapiskat River, the Canadian Environmental Law Association, Greenpeace Canada, and Kebaowek First Nation, is being submitted to the Ontario government in response to changes it made to the Environmental Assessment Act as part of the omnibus COVID-19 Economic Recovery Act, Bill 197.
Environmental Assessment (EA) is the procedure of studying the projected impacts of proposed projects to people, lands, waters, and the health of future generations. Ontario is holding consultations to decide which developments will be subject to these environmental studies. The consultations on this project list close on November 10. Ontario is the only jurisdiction in Canada that does not legally require an EA of new or expanding mine developments.
Out of 31 mines and mills currently operating in Ontario, only four have gone through an EA, and only one of those was by the province; the other three were reviewed by the federal government. With one exception, mines and smelters in Sudbury, Timmins, and Kirkland Lake have never completed an EA. Meanwhile, Ontario’s unfunded liability for cleaning up all its mines may be as high as $7.6 billion.
For decades, Ontario has been relying on piecemeal reviews of mines by the federal government, only applying provincial reviews to mining infrastructure like roads and transmission lines. However, the new federal Impact Assessment Act (IAA) does not include smelters or refineries on its Project List, and only covers the very largest metal and diamond mine proposals.
As communities’ and Indigenous Peoples’ concerns about environmental and social impacts are causing delays for extractive projects, investors – and the general public – are demanding better evaluation of the impacts of mining developments before they are built or undertake major expansions. Both Québec and B.C. have created project lists that automatically include most mines and smelters.
This report recommends that all mines, mills and extractive metallurgy facilities in Ontario – and significant expansions of the same – undergo a comprehensive environmental assessment. At the very least, Ontario should meet the standards set by Québec and British Columbia. Their project lists, recently updated, require EAs for mineral developments that create the greatest risk to our environment. Both are mining jurisdictions like Ontario, dependent on global investment to develop and expand their mining sectors – and with a large number of unfunded liabilities for abandoned mines.
The recent approval of the Coté Gold mine shows all that is wrong with the environmental assessment of gold mines in Ontario.
between Sudbury and Timmins near Gogama, it is only one of many new gold mines
being approved in northern Ontario as the price of gold reaches an all-time
high due to COVID.
All, so far, have been found to have “no significant environmental effects”.
the time the mine closes in 17 years or earlier, the footprint of the mine will
be over 10 sq. km. (not including roads, a transmission line and downstream
effects on water). The open pit will be at least 145 hectares and 550 meters
deep; the 560 million tonnes of waste rock will cover 300 hectares and the
tailings facility will be another 478 hectares, storing 200 million tonnes of
water saturated tailings. IAMGold, the mine operator, plans to process 36,000
tonnes of ore per day, using a cyanidation process.
construction a man camp for over 1000 workers will be constructed on site, but
once operations begin, it is estimated that 350 workers will be needed.
Water will be taken from
Mesomikenda Lake and discharged into Three Ducks Lake. To build the mine, Coté
Lake will be dewatered and other water bodies near the mine will be redirected
to create “New Lake”.
At closure, it will take at least
25 years for the open pit to fill with water and reconnect with existing water
systems; the waste rock piles will be contoured. The tailings impoundment will
have to be monitored forever to prevent leakage or catastrophic dam collapse.
The company also believes that
there is possibility for expansion through more gold deposits nearby. The
footprint could become much larger.
Coté Gold mine underwent a federal environmental assessment under CEAA2012
that started March 2013. The federal EA was approved in April 2016. However,
the company undertook a pre-feasibility study and, based on these results,
changed a number of parameters for the mine. This resulted in an amended
Environmental Assessment, which was approved in February 2019.
The Ministry stated in its
decision: “I have determined that the Designated Project
is not likely to cause significant adverse environmental effects referred to in
subsection 5(1) of the Canadian
Environmental Assessment Act, 2012.”
The company volunteered to
undertake a provincial EA concurrently with the federal one, to assist
decision was issued on January 19, 2017. It should be noted that the
Ontario approval is for the EA that was federally approved in 2016, and is for
a larger mine. The Ontario Ministry of Environment and Climate Change decision
(EA-05-09-02) found that “the
environmental effects of the undertaking can be appropriately prevented,
changed, mitigated, or remedied.”
both decisions, the conditions of approval deferred all decisions regarding
specific requirements to the permitting stage for the project. For example:
5.5 The Proponent shall, in
consultation with Indigenous groups, develop and implement a follow- up program
related to the effects of changes to the environment caused by the Designated
Project on harvesting, fishing, hunting or trapping activities for traditional
purposes by Indigenous groups, to verify the accuracy of the environmental
assessment and to determine the effectiveness of the mitigation measures
implemented to address those effects. The Proponent shall implement the
follow-up program during all phases of the Designated Project.
Since the ecology of the region
has already been severely altered by over a century of mining in the Timmins
and Sudbury areas, there are few other options for the First Nations and
settler populations of the area. Flying Post and Mattagami First Nations have
signed impact benefit agreements with the mining company which, they hope, will
compensate for the damage and provide jobs and contracts.
However, the mine will have serious effects on the forest, water, wildlife and people in the region for decades to come. How did we get to a place where creating such massive, long-term damage to the ecosystem is the only way people can see to survive?
All this to provide gold for wealthy people in other parts of the world, and huge rewards to the major IAMGold investors.
A September 2020 report from law firm Olthius, Kleer and Townshend (OTK) compares the implementation of best practices in mining law in five different Canadian provinces and territories to a Best Practices standard developed by the Initiative for Responsible Mining Assurance (IRMA).
Ontario fails to meet the standards in every single category.
The Initiative for Responsible Mining Assurance (IRMA) standard is a leading example of international standards which was developed over 10 years engaging more than 100 organizations on how best to address environmental and social issues in mining. IRMA’s members include Anglo American, ArcelorMittal, Microsoft, Tiffany & Co., Jewellers of America, BMW, IndustriALL, United Steelworkers, First Nations Women Advocating Responsible Mining, Human Rights Watch and Earthworks.
The OTK report measures the extent to which these Canadian jurisdictions achieve best practices by comparing them to the IRMA Standard and making recommendations for improvements.
The report focuses on key elements of mining laws and
policies such as: Community Engagement; Environmental Assessment; Free, Prior
and Informed Consent; Biodiversity, Ecosystems and Protected Areas; Water
Management; Waste Management; and, Reclamation, Closure and Security.
Although almost all Canadian jurisdictions do poorly in the comparison, Ontario is the only jurisdiction that fails the “community engagement” subsection in environmental assessment and the only jurisdiction with no environmental assessment for large mines. Ontario also allows some mining companies (like Vale) to self-assure instead of requiring reclamation bonds.
Although the Act says it is illegal to “put deleterious substances into waters frequented by fish,” the MDMER creates a number of exemptions for the mining industry. As of July 2020, across Canada there are 64 “water bodies” that are exempt.
Prodigy Gold, the mine owner, now has the key permit to proceed with one of the largest gold mines in northern Ontario.
The final area disturbed by the mine will be 1,135 hectares. This figure does not include elevated arsenic, copper, manganese and cadmium in Herman, Otto, Spring, and Goudreau lakes, and in McVeigh Creek.
Nor does it include the risk of a catastrophic tailings dam failure of the waste rock dams holding water saturated mine wastes. The Tailings Management Facility will eventually hold 150 million tonnes of thickened tailings (45-65% water), in an area where “the water surplus must be carefully managed.” Another 400-430 million tonnes of waste rock will be generated. Fortunately, less than 5% of this is expected to be acid-generating.
The area where the mine will be is no stranger to mining. Magino is on the site of a former underground mine and is considered a “brownfield site.” Around Wawa, the legacy of arsenic contamination from historic mines and mills continues to be a problem, and in the area near the Magino project there are ten abandoned mines. In addition, the Wawa Plume — “a 24 km trail of environmental destruction,” the legacy of the Algoma Ore iron sintering plant — remains clearly visible from space.
Abutting the east side of the project, Alamos Gold has the producing Island Gold Mine, and to the south, the Eagle River and Mishi Pit gold mines are in production. Not far away, at Hemlo, there is the Williams Mine. But these mines have much lower production rates: Island Gold mills only 900 tonnes per day; Eagle River mills 1500.
The approval process for the Magino Mine illustrates everything that is problematic with mineral strategy in Ontario:
The mine has obtained the approval of all the First Nations affected and they have signed Impact Benefit Agreements (with the exception of Garden River First Nation). These agreements are confidential. Submissions from First Nations during the environmental assessment process show that the Magino Mine area has been an important one for Indigenous people, providing food, cultural activities and spiritual renewal for centuries. That they have been forced to eliminate these long-term benefits for a gold mine that will last less than fifteen years, is an indication of the desperation created by on-going colonial policies of dispossession and impoverishment. Once the mine is operating, it is unclear how they can enforce the terms of their agreements.
Prodigy Gold began its environmental assessment (EA) process in September 2013 and got a federal EA decision in January 2019. As a result, the EA was conducted prior to the Impact Assessment Act of 2019 (in force since 28 August 2019), and was under CEAA 2012. The new Act would have required more extensive and earlier public and Indigenous consultation, would have required gender-based analysis of impacts, and more thorough consideration of cumulative effects. It would also have required a “sustainability assessment” and more discussion of the “need and purpose” of the project, but it is not clear if this would have made a difference.
The federal EA approval had a number of conditions that had to be met before mine construction could take place. Many of these conditions have not yet been met, and the company says a decision to proceed has not yet been taken.
The federal Fisheries Act requires a fishery compensation plan as part of the Schedule 2 amendment discussed above, as well as a letter of credit for the cost of undertaking this plan. However, at the time Schedule 2 was approved, the plan was still being developed and it was not clear what would be done if the company failed to follow through or if the plan itself failed.
Ontario did not then and still does not require mines to undergo an EA. Ontario does not require environmental assessment of private projects, unless they are specifically designated by regulation (for example hazardous waste sites). Ontario maintains that the staking of mining claims and leases is “not discretionary” and that it cannot refuse them. As a result, the only MNDM activities that require EA are “discretionary land grants,” reversals of land withdrawals, and the government remediation of mine hazards. Prodigy Gold “volunteered” to have a provincial EA concurrent with the federal one, to ease the permits it might require later for water-taking, road construction, power-lines, etc.
For many analysts, including the US bank Citigroup, gold has nowhere to go but up, as hedge fund managers and other “sophisticated investors” bet on the metal in fears that central bank measures to contain the economic crisis will debase major currencies. For investors, the fear is that governments will either have to raise taxes or print money — leading to inflation — to pay down their coronavirus debts, possibilities that make holding real assets like gold more attractive than currency-denominated assets.
Wall Street, Bloomberg reports, is now “throwing billions” at gold miners: Gold mining companies raised $2.4 billion in secondary equity offerings during the second quarter — seven times more than they raised last year. While big players like Barrick and Newmont have been the main beneficiaries, “juniors” (mining exploration companies) are also starting to get in on the action.
These trends are already having ripple effects in Ontario, where, once marginal projects now appear profitable. Toronto-based IAMGOLD, for instance, announced its plans to move ahead with its “massive” $1.3 billion Cote Gold mine near Gogama in partnership with Japan’s Sumitomo Metal Mining Co. after having previously shelved the mine in January 2019, citing “poor market conditions.”
Argonaut Gold is also benefiting from the COVID-19 gold rush: On July 23, the company announced that it had raised more than $126 million through a public offering of 49 million shares to advance mine construction.
While it’s hard to predict how long the current boom will last, Wall Street’s newfound love affair with gold does not bode well for Ontario’s environment, nor for the province’s or industry’s relationship with communities and Indigenous peoples. Mining investors are notoriously irrational. Though it takes years to get from finding an orebody to turning into a profitable mine, mine financing is driven almost entirely by short-term price considerations.
If the recent past is any guide, Ontario’s junior gold sector can count on a big influx of cash to fund new exploration projects in the short term. Despite “modernizing” its mining legislation a decade ago, Ontario continues to offer mining companies a free hand to scour the province for profitable minerals. As the province’s Guide for Crown Land Use Planningputs it: “The Mining Act establishes a free entry/open access environment where as much land as possible is open for exploration and mine development.” Renewed conflicts like the ones we saw at Kitchenuhmaykoosib Inninuwug and near Sharbot Lake a decade ago are all but inevitable, as Ontario continues to allow mining companies to stake claims on culturally and ecologically sensitive lands as well as traditional Indigenous territories without first gaining their consent.
The Magino mine approval in the context of the latest gold staking frenzy underscores the the vital need to reform Ontario’s mineral strategy to put people and the environment ahead of the industry and Wall Street’s short-term profit.
The following bulletin was sent over the Ontario Mining Action List-serv:
Legal experts have written to Ontario Minister of Energy, Northern Development and Mines, Greg Rickford, calling for an immediate halt to mineral staking and permitting processes in the province on account of difficulties remote Indigenous communities face in responding to consultation and permitting processes when they are already under extreme pressure due to the COVID-19 pandemic.
The experts, recognised authorities in Aboriginal law, Crown-Indigenous relations, and natural resources and environmental law, write: “In many of these communities the pandemic is placing unique burdens on leadership and community members. The challenges remote Indigenous communities face with respect to housing, health care, and clean water exceed those faced by the rest of Ontario. Pre-existing social emergencies have been exacerbated by the pandemic, and already depleted resources are stretched thin. In our view, the pandemic requires an immediate cessation of mineral staking and permitting processes in order to avoid placing additional burdens on the limited resources in these communities during a time of crisis.”
Mining Watch Canada supports this position and has written to Minister Rickford to learn his response.
OJAMS joins Mining Watch in endorsing this position. The full letter can be downloaded here:
Joan Kuyek, Ontarians for a Just Accountable Mineral Strategy
Ontarians for a Just Accountable Mining Strategy (OJAMS) is voluntary association of people from diverse communities and interests in Ontario that want to see a mineral strategy that
Sustains the environment and the resources for future generations,
Protects the public from the risks associated with mining, smelting and refining,
Heals the damage already caused by the industry,
Captures a fair share of the revenues generated by the industry for Ontarians and First Nations, and
Respects the rights of First Nations to free, prior, informed consent to development on their lands.
This paper provides a critique of the Mining Association of Canada Towards Sustainable Mining (TSM) initiative from the perspective of communities affected by mining impacts.
The TSM webpage describes the initiative’s objectives as follows:
[Towards Sustainable Mining]’s primary objectives are to drive performance improvement and, through demonstration of this improvement, to build trust with communities of interest. This means that communities need to understand TSM and trust the performance results that the mining companies report. To build this trust, the program includes a number of checks and balances to ensure that reported results present an accurate picture of each facility’s management system and performance.
We ask: to what extent is the TSM process worthy of that trust?
The Towards Sustainable Mining (TSM) initiative of the Mining Association of Canada (MAC) is one of the more sophisticated iterations of voluntary Corporate Social Responsibility (CSR) programs in the mining sector.
Introduced in 2004, TSM has now been evolving and in operation for fifteen years. Until 2018, it produced an annual public report on the TSM progress of MAC members. In 2019, MAC has decided to cease the annual report and instead have participating companies report directly on line. It has also updated and modified its “Guiding Principles”. (see Appendix A)
TSM is a voluntary Code of Conduct for mining companies. The standards and indicators are developed by the mining company association for their members. Although a company has to agree to participate in TSM in order to belong to MAC, after fifteen years of the program just over one half of MAC companies and their facilities report. They are only required to report on facilities in Canada. For those that do report, there is no penalty for poor grades and no failing grade at all.
Sustainable Mining is an oxymoron. Mining is not – and cannot be – sustainable, as it depletes the very resource it depends upon. It is a rapid, ferocious and continuous assault on the earth no matter how carefully it is done. It is a waste management industry, leaving behind massive amounts of tailings and waste rock that will, in most cases, be toxic and have to be managed forever in order to prevent them from poisoning aquifers and surface waters. The corporate members of the Mining Association of Canada are major contributors to global warming and climate breakdown, not only through their energy consumption and greenhouse gas (GHG) emissions, but also through the very products they produce, such as coal and other fossil fuels.
As the industry tells us repeatedly, we do need fossil fuels, minerals and metals, and our economy has been created around the extraction of oil, coal, industrial minerals, gems and metals. Transition to a sustainable economy – “one that meets the needs of the present without compromising the ability of future generations to meet their own needs” – means a massive paradigm shift away from activities like mining towards closed-loop ecologically responsible economies that heal the damage already done. It means challenging the very power and authority of the mining industry.
This report is organized as follows:
A History of Towards Sustainable Mining
Regulatory vs. voluntary standards
How the TSM process is structured
A critique of TSM assessments
Beyond the TSM: an ecosystems approach
Can the mining companies reporting to TSM be trusted? (company-specific critiques)
What has been the impact of Covid-19 on communities, workers and mining operations in Ontario? What are governments doing about it? It is still early days in the pandemic and information about impacts at (and from) specific mining operation is hard to get. This review will piece together what we know to date from publicly available documents.
What is the risk from Covid-19 to mining workers and communities in Ontario?
The spread of Covid-19 in northern Ontario may just have started. At the start of May, there are 76 cases in the Thunder Bay District Health Unit, 61 in Porcupine District Health Unit and 57 in Sudbury District. By April 20, 14 have been identified in northern First Nations.
Mine and exploration sites are often remote, and require transportation in planes, car pools and buses to get there. The workers are often in confined spaces for meals, accommodation and bathing. Much of the workforce is transient and contracted out, returning home to communities where they may spread the virus.
The skilled workforce and management rarely live in the community where the mine is located, and rely on travel by air to work. They are often also global travelers during their vacations.
Almost all protocols at mines are based on identifying carriers through symptoms like fever, when in fact, it is now believed that the virus can be transmitted before any symptoms show. When a worker does get sick, isolating them safely may be very difficult, and getting treatment even more so.
Many northern communities near mines are impoverished and several pre-existing conditions that put people at serious risk are common: cardiovascular disease, asthma, diabetes and tuberculosis. Access to clean water and sanitation is likely to be in short supply. Homes are over-crowded. Health resources are very limited, as is testing.
In a statement issued on April 15, Matawa Chiefs said: “an effective on-reserve containment plan faces numerous barriers that are beyond their control, including:
inadequate supplies of personal protective equipment
unequal distribution of PPE supplies
lack of COVID-19 testing kits
unclear protocols on how/where tests are analysed, and who is responsible for contact tracing when a positive case is confirmed
inadequate internet service to access telehealth and to connect to information, support and learning resources
ongoing boil water advisories
overcrowded housing and lack of infrastructure for effective self-isolating
ongoing opioid crisis
acute medical conditions among a large segment of the population
lack of primary health care services (access is affected by self-imposed community lockdowns)
The Chiefs said they are concerned that staff and volunteers supporting COVID-19 responses in their communities will suffer burn-out before the first wave of the pandemic ends this summer.[i]
As the Matawa Chiefs say, the toll on governance resources from dealing with the pandemic in these under-resourced communities is frightening. As a result, Northern Ontario First Nations want the province to put a hold on mining exploration permits and pause the operation of a system that allows for the remote staking of mining claims while they deal with the coronavirus pandemic.
Neskantaga Chief Chris Moonias said all the band resources of his community of 300 people, which sits about 400 kilometres north of Thunder Bay, are stretched thin on COVID-19 prevention and preparation work. “Right now we are in the middle of a pandemic and pretty much my staff is all hands on deck dealing with this,” said Moonias.
“We don’t have the tools, the resources to look at permits. We are not like the government that has many different departments.[ii]
How many mines are there in Ontario?
Annually, the Ontario Prospectors Association produces the Ontario Mining and Exploration Directory.[iii] The 2020 directory was published at the end of February.
There are 31 metal mines operating in Ontario, 20 of them gold mines, as well as nine industrial mineral mines (salt, gypsum, talc, etc.). The directory provides a list of the operating mines, information and contact numbers for exploration companies and projects, as well as key suppliers.
Most of the base metal mines are located in the Sudbury area. The Ferromin Iron Mine is near Madoc and the Kidd Creek lead-zinc mine is near Timmins. All the gold mines are in Northern Ontario, many of them located on the traditional territories of First Nations. There are also two nickel and copper smelters in Sudbury. Cameco (a uranium producer in Saskatchewan, has refineries in Port Hope and Blind River.
What are Ontario mining operations doing about Covid-19?
On April 27, the Mining Association of Canada released “Pandemic Action Summaries” about the measures being taken by their members to protect workers and communities from Covid-19. Eight of their 43 member companies reported on their operations in Ontario, as follows:
Barrick Gold Hemlo Operations: Still operating, with enhanced safety measures (meeting Ontario guidelines). These include: social distancing (i.e., no more than 6 workers in the cage at one time), staggered shift implementation to reduce crowding in meeting rooms, at security, etc., and work at home for non-essential staff where possible. They also said that they were: “Partnering with our First Nations Rightsholders communities to aid them in the lock down of their communities to ensure they are not vulnerable during this time by allowing workers to self-isolate for 14 days’, and by reducing travel.[iv]
Cameco: The Blind River Refinery has been placed on care and maintenance and the UF6 plant in Port Hope was shut down for most of April. Cameco says it has been having trouble getting workers to operate the facilities.[v]
De Beers Canada: The Victor Mine was already closed last year. In Ontario, the company donated $50,000 over four different communities in Ontario and the North West Territories. Timmins’ Living Space Hub and Women in Crisis were among the grant recipients.
Glencore, Sudbury Integrated Nickel Operations: Still operating with enhanced safety. Partnering with Med-I-Wall Services to provide a Covid-19 fact sheet and do online coaching for workers and their families. $50,000 was also donated to the Sudbury Food Bank[vi]
New Gold, Rainy River. Production at the mine was on hold for two weeks in late March but ramped up again after May 3 using workers from the local area.[viii] Fly-in/Fly-out operations have been greatly reduced.[ix] New Gold said the majority of its staff, about 70 per cent, live in the mine’s immediate area, and its close proximity to the United States means staff often go across the border (which they can no longer do easily).
Newmont, Musselwhite Mine. The company reported that it stopped production on March 23, limiting personnel to care and maintenance activities. A donation of $200, 000 was set aside to help community efforts in their partner First Nations ($170,000 for transport and food, $30, 000 to the Thunder Bay Community Relief Fund). At their Porcupine project, $100,000 was donated to the Cochrane District Social Service Administration Board and $50,000 to the Town of Chapleau.
Vale, Sudbury Operations. The mines and smelters are still operating, using thermal cameras to test for fever in workers. The company has donated $100,000 to the Sudbury Food Bank and has posted a $1 million “Covid Challenge”: “to propel innovative COVID-19 solutions into the marketplace. The challenge is open in Canada and Brazil with each selected solution eligible to receive up to USD $200,000.”
The Mining Association of Canada, the federal lobby for producing mines, says on its website that “18 national and regional industry associations and partners came together to donate a total of $36,000 to the Ottawa Food Bank, Food Banks Canada, and to food banks across the country.”
There are also number of mining companies operating in Ontario that do not belong to the Mining Association of Canada.
Among these is Impala Canada’s Lac De Iles platinum mine which operated until April 13, despite a major outbreak of Covid-19 beginning in late March. By April 27, 25 workers had tested positive for the virus and one worker had died.[x] The company had planned to reopen at the end of April, but has now postponed these plans indefinitely. The platinum mine is on the territory of Kiashke Zaaging Anishnaabek (Gull Bay First Nation), a community of 300 people, which now has seven confirmed cases and are awaiting the results of 27 further tests. The Chief Wilfred King believes the outbreak stemmed from the mine. “Why the Ford government would allow the mine site to operate as an essential service. I can’t understand that. I can’t see how platinum and palladium is essential,” he said in a CBC interview on April 24, 2020. Greg Rickford, Minister of Energy, Mines and Northern Development and Indigenous Affairs says that the province is providing immediate support “to support capacity needs”.
At Kirkland Lake Gold’s Detour Lake mine[xi] – the largest gold mine in Canada – one worker tested positive in early April. The company was already having trouble at its Holt, Holt Mill and Macassa Mines, as many of the workers were from Quebec and were affected by the provincial border closure, so these mines were temporarily shuttered. Their Holloway Mine went on care and maintenance in early March for other reasons. At Detour Lake, work continues at about 30% capacity, using local labour.
Kinross Gold has no mines in Ontario, but had to shut its head office in Toronto after one of its employees tested positive for the virus.
What about exploration companies?
The first weekend in March, the Prospectors and Developers Association of Canada (PDAC) held their annual conference in Toronto. Attended by over 23,000 people from all over the world, including a number of representatives from indigenous governments in Ontario, at least three participants tested positive after they returned home. One was an employee of the Ontario Ministry of Energy, Mines and Northern Development;[xii] another worked for Troilus Gold in Quebec and the third was the Minister of Mines in Burkina Faso.[xiii] Burkina Faso is now facing one of the worst Covid-19 outbreaks in Africa.
In Ontario in 2018 there were approximately 150 mineral exploration companies with over 200 projects and $580 million in expenditures. These companies are having trouble accessing their properties because of community concerns, lack of transportation options and access to sufficient capital. [xiv]I was unable to find any information on safety measures taken by individual exploration companies. Most of them will not be eligible for government subsidy programs, because they have no revenues except investments.
What is the role of the Ontario Government?
Ontario is doing everything it can to protect the mining industry, as the list below illustrates:
On March 17,2020, Ontario passed an Emergency Declaration under Section 7.701 (1) of the Emergency Management and Civil Protection Act. This gave the provincial government power to make a number of changes favouring the mining industry.
On March 20, all limitation periods for hearings before the Environmental Review Tribunal were suspended and hearings under the Ontario Water Resources Act and Environmental Protection Act were adjourned to at least May 29 (Regulation 73/20)
On March 23, Ontario released its list of essential services, and included mining. Ontario’s definition of “essential” is broad, including “businesses that ensure global continuity of supply of mining materials and products (e.g. metals such as copper, nickel and gold) and that support supply chains in northern Ontario including:
Mining operations, production and processing;
Mineral exploration and development; and
Mining supply and services that support supply chains in the mining industry including maintenance of operations, health and safety.
On April 3, the Environmental Bill of Rights was suspended (temporary regulation 115/20). This exempted proposals for changes to policies, acts, regulations and instruments from public notice, consultation or input until 30 days after the Emergency Declaration comes to an end.
Also on April 3, the requirement that proposals submit a Statement of Environmental Values was removed.
The requirement to complete work on claims within a year in order to maintain the mineral tenure has also been extended, but requires an application by the claim holder.
Ontario has also passed requirements for enhanced safety measures at worksites and in the community to halt the spread of COVID-19.
The government is proposing a temporary increase to the Employer Health Tax (EHT) exemption from $490,000 to $1 million for 2020. This will exempt most mining companies altogether.
Working in conjunction with the government of Ontario, the Workplace Safety and Insurance Board (WSIB) will allow employers to defer payments for a period of six months.[xv]
It appears that mine inspections during the pandemic are not being done in person but by phone and video communication with mine management, and that no orders to rectify problems are being issued. On April 23, the United Steelworkers sent a letter to the Ontario Minister of Labour decrying this practice saying it put workers at risk.[xvi]
It should be noted that Ontario also exempts corporate lobbyists from reporting on their activity if they have received a written invitation to provide comment from the government.[xvii]
What is the role of the federal government?
From the industry point of view the most significant is theCanada Emergency Wage Subsidy (CEWS). On March 30, Canada announced that it would subsidize a company for 75% of an employee’s salary up to a maximum of $58,700 to prevent layoffs, back dated to March 15.[xviii]
The Mining Association of Canada was thrilled with this announcement and said that ““The support being offered through this new program will enable mining companies to retain their workforces in the face of significant economic hardship brought on by the COVID-19 pandemic….Over the past several weeks, MAC has worked closely with government decision makers from different departments to ensure the mining industry’s voice is being heard when economic recovery efforts are discussed. MAC will continue to engage with the government as the COVID-19 pandemic continues to unfold.”[xix]
There has been a less enthusiastic response from mining companies in northern Canada and from exploration companies, as the subsidy is contingent on showing that the company had losses based on either last year’s financial statements or on income in January and February 2020. Exploration companies never have income, and producing mines engage in a number of BEPS (Base Erosion and Profit Shifting) measures to avoid taxation, which is likely to affect their eligibility for CEWS.
Flow Through Shares (FTS) The major source of income for mining exploration companies, FTS usually requires exploration work to be completed within a year, or the exploration company become liable for the increased taxes that have to be paid by the investor. PDAC is lobbying very hard to get exemptions to this requirement. [xx]
There can be no doubt that the mining industry in Ontario is being dramatically affected by COVID-19 through loss of capital, disruption of their supply chains and markets, reduced workforce and loss of community support. As a result, mining and exploration companies have multiplied their lobbying of governments to decrease regulation of their industry and to increase the extent of subsidy. They want to make us more dependent on extraction. In future, companies will also be increasingly automating the work at their mines and offices, eliminating the jobs that are currently unsafe.
What Covid-19 brings home is the folly of creating an economy dependent on mineral extraction. It is not sustainable. It is a waste management industry that depletes the very resource it depends on and externalizes its costs to land, waters and communities. Justifying the mining of gold as an “essential service” defies logic, when all the gold we could ever need can be found in our recycled cellphones. We need to put mining in its place, to develop just transition strategies for workers and communities and to respect the true cost of those minerals we take for granted.
Announced last spring, Ontario’s new resource revenue sharing agreements (RRS) with three northern First Nations councils are set to come into effect this fall. The agreements were marketed with lofty rhetoric. The government press release described them as “an historic step on Ontario’s journey of healing and reconciliation with Inidgenous peoples.” The MacDonald Laurier Institute’s Senior Munk Fellow Ken Coates partnered with IAMGOLD Corporation’s Stephen Crozier in penning a glowing editorial in the Globe and Mail, calling RRS a “transformative development” that would change “the very foundations of resource development in Ontario.” Coates and Crozier praised the agreements for their simplicity, noting the details were “straightforward.” Under RRS, the province will allocate 45 percent of forestry stumpage fees as well as 40 percent of mining tax payments associated with active mines to participating First Nations, “with no strings attached.”
In many respects, RRS appears to meet the longstanding demands of Indigenous peoples and their allies, who have been pressing the government for a more equitable distribution of the province’s mineral wealth for the better part of a decade.
Yet, RRS is hardly about “healing” or “reconciliation.” Instead, RRS is consistent with the Ontario government’s longstanding policy of opening up as much public land to private mineral extraction as it can.
The problem is obvious to anyone familiar with Ontario’s mining tax, which serves as the province’s royalty for the use of the public’s non-renewable resources. The mining tax is so riddled with loopholes, exemptions and deductions that, oftentimes, even the most profitable companies pay no tax at all.
Take Glencore, for example. Glencore is the world’s biggest commodities trader, with a huge stake in everything from soybeans to base metals to thermal coal. With operations spanning six continents, Glencore controls assets worth $129 billion. In 2018, the company reported sales revenues of just under $220 billion, good for 16th place among the world’s largest publicly-traded corporations. Recently, Glencore made a splash when it announced that it would “improve transparency” and cut down on its use of offshore tax havens. Yet, the company is notably opaque when it comes to its Ontario operations. There is no way for the public to know how much revenue the company earns from its three mines in the province. Its annual reports lump together its Sudbury-area nickel operations with its other “nickel assets” in Quebec and Norway forming its “Integrated Nickel Operations.” Similarly, its Kidd Creek copper-zinc mine near Timmins is but one piece of the company’s much larger “North America zinc assets,” which include the Bracemac-McLeod mine in Matagami Quebec, the CEZ Refinery in Valleyfield, Quebec and the Brunswick Lead Smelter in Belledune, New Brunswick.
Together, Glencore’s Integrated Nickel Operations and North America zinc assets generated $3.9 billion in 2018. Meanwhile, Glencore’s taxes on income paid to the Ontario government totalled just $14.4 million – an amount equivalent to less than half of one percent of its Canadian-based nickel and zinc revenues.
Glencore is exceptional only for its massive size. Other mining companies receive similarly generous tax treatment. For instance, Detour Gold, controlled by Wall Street hedge-fund billionaire John Paulson, paid no tax to either the federal or provincial governments in the three-year period 2016-2018. Over that time, the company extracted more than $2.1 billion worth of gold from its single mine in the Detour Lake area.
These negligible tax payments raise an obvious question: If a company pays no mining tax, how much revenue can a signatory First Nation expect to receive in return? After all, 40 percent of 0 is 0! Further compounding the problem, company and mine-specific mining tax payments are confidential under the Mining Tax Act.
As it turns out, RRS won’t be based off company-specific mining tax payments at all. As a Senior Policy Advisor from the Minister of Energy, Northern Development and Mines explained by email, “specific mining tax and royalty data for each mine in the province is not available on a per company or per mine basis and is not being used to calculate the Mining Funds in the resource revenue sharing agreements.”
Instead, “Ontario has negotiated agreements that use a formula that assigns a notional allocation to each active mine.”
The notional allocation will be calculated using “publicly available information including gross revenues from all mining operations in Ontario and Ontario mining tax and royalty revenue as published in Ontario’s Public Accounts.”
If the details of this arrangement are hardly as clear as its proponents have made it out to be, its benefits to industry are. At no additional cost to themselves, mining companies have locked signatory First Nations into an economic development model that clearly favours enhanced mineral extraction. Perhaps unsurprisingly, the industry itself has advocated a form of revenue sharing, on condition that it be derived from existing tax payments. As Ontario Mining Association President Chris Hodgson explained to Sudbury Mining Solutions Journal, “We advocated for revenue sharing for a long time to try to align the interests between local communities and the Indigenous communities and the mining community. [RRS] aligns interests even further. You get paid when you have an actual mine in production.”
Given the structure of the agreements, even those companies that pay no mining tax will benefit from the goodwill generated by the funding allocations.
The implications for First Nations communities are clear. With RRS bringing in revenues to pay for much-needed programs and services in social welfare, education and health, First Nations will have to think hard about government policies that could reduce industry profits. And since new mines will come with an even higher allocation of 45 percent of their “mining tax payments,” signatory First Nations now have a strong incentive to welcome mineral exploration on their traditional territories.
The recent collapse of two Vale tailings dams at Mariana and Brumadinho, Brazil, ecological catastrophes that left hundreds dead, underscore the urgent need to reform Ontario’s Mining Act to provide greater security to mining communities, the environment and the public treasury.
The Ministry of Energy, Northern Development and Mines’ (ENDM) most recent Table of Financial Assurances, updated on March 31, 2019, continues to list seven of Vale’s sites as assured under the “Financial Test” despite the fact that in February Moody’s downgraded the company’s credit rating to junk status. Under the Mining Act, companies that have provided financial assurance in the form of the financial test must deposit realizable financial assurances in full within 30 days of having their credit rating downgraded.
There is no indication that the government of Ontario has acted to ensure Vale complies with this provision of the Act. An inquiry sent to the Ministry (ENDM) received no response to the time of writing.
Vale Canada estimates the costs of remediating and maintaining its Central Tailings Facility – forever – at $330.4 million. When the company includes its smelter, two refineries, and Copper Cliff North Mine in Sudbury and the refinery in Port Colborne, the total estimate comes to $548 million.
Without realizable financial assurances, these clean-up costs will revert to the public, should Vale declare bankruptcy, or find itself unable to pay.
An “Asset Retirement Obligation” line on the Vale Canada Inc.’s balance sheet is the only financial security for the public when (not if) the company closes the operations
The largest of the seven mine sites is the Copper Cliff Central Tailings Area, which (according to company documents available online) covers an area of 35 square kilometers and contains some 547 million tons of toxic mine waste. The wastes in the impoundment will have to be managed forever. The company says it is “one of the largest tailings operations in the world”. The screenshot taken from Google Maps below gives an impression of the severity of the environmental challenge.
Aerial Overview, Copper Cliff Central Tailings Area (Google Maps)