Auditor-General Slams Mines Ministry

In a report released on December 2, 2015, Ontario Auditor-General Bonnie Lysyk has slammed the Ontario Ministry of Northern Development and Mines for its handling of everything from the Ring of Fire development to protecting Ontarians from the costs and impacts of abandoned mines.

The “value-for-money” audit was intended to see if the Ministry had systems in place to:

  • support sustainable and responsible mineral development
  • ensure compliance with regulation and policies
  • measure its effectiveness in encouraging mine development while minimizing impacts on public health and the environment.

Given that the report was released at the same time as a number of other audits on the province’s energy policy and child protection services, the report on mining has received very little media attention. However, it is a damning indictment of the operations of OMNDM.

Among other matters, the Auditor-General found that:

  • Ontario is the only province that does not require environmental assessment before mines are developed.
  • Mining revenues to the province are less than 2% of the value of the minerals extracted; for diamonds it is less than 1% . Our “Marginal Effective Tax Rate” for mining is the lowest in the country at 5.6%.  Rents for mining leases are often not collected and arrears collection is not enforced.
  • Abandoned mines pose a significant risk to Ontario for contamination, physical hazards and financial risk. There are 4400 of them in Ontario. In the last 5 years, 63 mines have reverted to the province.
  • The Ministry has no estimate of the cost of rehabilitating the  abandoned mines in the province, and no long term plan for doing so. The Ministry estimates it could cost anywhere from $163 million to $782 million to rehabilitate these sites.
  • Ministry inspection of closed mine sites is woefully inadequate. In 2013 and 2014, only 6% of sites had been inspected.
  • Ontario has inadequate protection against footing the bill if operating mines close.  Closure plan implementation is “minimally inspected” and over 40% of financial assurance in the province is nothing but a line on the balance sheet of a subsidiary company. 66% of contaminated sites on Ontario’s books are former mineral extraction sites.
  • The Ministry does not have indicators to assess its effectiveness at meeting its goals.

The report makes 13 recommendations, consisting of 28 actions to address the audit findings. Many of the recommendations are a repeat of those made in their 2005 audit.

This is a shameful situation and speaks to the regulatory capture of the province by the mining industry.

 

Alarming Report from ECO: OJAMS response

News Release, Tuesday, November 10, 2015 –

Ontarians for a Just Accountable Mineral Strategy and Mining Watch Canada

Ontarians on the Hook for Water & Mine Site Clean-Up Costs – Alarming Report from Eco-Commissioner

In response to last week’s alarming report from Ontario’s acting Environmental Commissioner-  Ellen Schwartzel – MiningWatch Canada & Ontarians for a Just Accountable Mineral Strategy (OJAMS) are urging Premier Kathleen Wynne and her government to reform current water-user fees and environmental assurance requirements for mine site clean-up in Ontario.

“Just like the Commissioner, we are alarmed that most heavy industries in Ontario – including mining – continue to get a free ride for the million litres of freshwater they use every day,” says Ugo Lapointe, Canada Program Coordinator for MiningWatch Canada.

“We share the Commissioner’s ‘frustration’ that Ontario’s government has yet to act on the Drummond Commission recommendations and its own commitment to charge all large water users in order to recover the costs that it spends on water quantity permitting programs. Currently, large water users are only paying 1.2% of the 16.2 million dollars it costs to run the programs, leaving individual Ontarians to pay the remaining 98.8%. That’s unacceptable,” explains Joan Kuyek from OJAMS.

Billions potentially needed for mine site clean-up

“The Commissioner’s recent report also highlights the complete lack of transparency when it comes to getting a clear picture of the overall environmental and fiscal liability for contaminated mine site clean-up in Ontario. But when you start adding the bits and pieces of information you can find, the overall picture gets frightening,” asserts Lapointe.

“There are currently hundreds of active and abandoned mine sites in Ontario that pose a threat to the environment, waters, and communities. Some are very polluting, some will be very costly to fix – and some have no financial assurance at all to ensure their complete rehabilitation. We know the problem is big, but just not how big yet,” remarks Joan Kuyek.

The Eco-Commissioner’s report severely critiques the current financial assurance program meant to protect Ontarians and their environment for when mining companies are no longer able to pay for site rehabilitation. It stresses that financial securities are either insufficient, unreliable, or simply not collected by the responsible authorities. It also denounces the fact that Ontario is the only jurisdiction in Canada accepting the “corporate financial test” as a form of financial assurance. “That is the weakest form of assurance, yet it represents 40% ($654 million) of the total financial assurance held by the Ministry of Northern Development and Mines (MNDM) as of March 31 of this year,” states Lapointe.

Joan Kuyek: “The Commissioner is right. The problem is that the MNDM has no formal process for regularly reviewing the adequacy of collected financial assurance. In 2000, the MNDM revoked a regulation that previously required proponents to report annually on site rehabilitation, monitoring and any changes to the project. The government needs to reinstate this regulation and expand the financial assurance program to also address the huge environmental and fiscal problem that abandoned sites represent,” concludes Kuyek.

MiningWatch and OJAMS made a series of submissions earlier this year to both the Auditor General of Ontario and the MNDM in the context of the renewal of Ontario’s Mineral Development Strategy. Ontario’s new strategy should be released any time soon.