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.