MAC: Mines and Communities

Canada Update

Published by MAC on 2006-07-10

Canada Update

10th July 2006

Canada's chief mining newspaper, the Northern Miner, has made some interesting, even sympathetic, observations on the conflict between the country's First Nations and mining companies.

At the same time Canada's international development agency is roundly criticised for boosting the industry against community interests. "Why", demand aid groups, "is CIDA, a publicly funded humanitarian organization, promoting outside investment to the benefit of mining companies?"

A US court has ruled that Teck Cominco must clean up its messes south of the border, even though they originated in Canada.

Court battle brings native land rights to fore Aboriginal Groups Say Province to Blame for Dispute

By Alisha Hiyate, The Northern Miner

10th July 2006

Protesters gathered outside Queen's Park in Toronto recently in support of aboriginal land claims in northern Ontario.

A conflict over land in northern Ontario that has seen a junior explorer launch a $10-billion lawsuit against a First Nations community could have major implications for the mining industry, including changes to the way claims on First Nations territory -- which comprises about two-thirds of the province -- are staked.

The 1,300-member Kitchenuhmaykoosib Inninuwug (KI) First Nation, is being sued by Aurora, Ont.-based Platinex (PTX-V) for interfering with its exploration program near Big Trout Lake, 580 km north of Thunder Bay, Ont. The company says although it did nothing wrong and its claims were acquired legally, protests by community members -- who have land claims pending on parts of the property -- forced Platinex to abandon its camp just one week after it started drilling for platinum group elements in February.

Until its claim for damages can be heard, the company has applied for an injunction against KI members so it can access the property.

"From Platinex's point of view, either the claims were properly issued -- and if they were, then we'd like to be able to continue to exploit those claims -- and if they weren't, then we'll have to have a discussion with the government if they didn't have the authority to issue those claims," says Neal Smitheman, a lawyer representing Platinex.

In the meantime, the recently listed company -- whose shares have plunged from a high of 60¢ in February to less than 20¢ at presstime, mostly on the heels of the dispute -- says it needs to continue exploration as soon as possible to stay afloat.
Platinex president and CEO James Trusler argues the case is of life-or-death importance not only to his company, but to the entire industry.

"If we don't get this injunction, the mining industry in Ontario will collapse because there won't be one claim that's in good standing," he told The Globe and Mail recently.

Meanwhile, KI says that its very way of life is in danger.

"What is at stake (is) basically the right for our First People to exercise their aboriginal treaty rights," said KI spokesperson John Cutfeet during a recent press conference at Queen's Park.

KI says that it was never properly consulted about the project, and although the community has launched a counter-suit against Platinex for $10 million and its own injunction to keep the company off the land in question, it lays responsibility for the dispute squarely at the feet of the provincial government.

"(The government is) choosing to ignore the highest law of the land, which is the Canadian Constitution," Cutfeet said. "Although aboriginal treaty rights are recognized and affirmed in section 35 of the Canadian Constitution, these governments (federal and provincial) continue to stick their heads in the sand and pretend that those rights do not exist. By their inaction, they create conflict."

Constitutional challenge

KI has launched a separate legal action challenging the constitutionality of the Mining Act, which is says fails to protect treaty rights. The First Nation has also launched a third-party claim against the government, which is essentially an attempt to redirect the Platinex suit. The claim could make it to court sometime next year.

A decision on the injunctions is expected soon from the Superior Court in Thunder Bay. The case was heard over two days in late June.

Although cases such as this are often portrayed as a battle between industry and First Nations, Don Bubar, chair of the aboriginal affairs committee of the Toronto-based Prospectors and Developers Association of Canada, says that's not accurate.

"The issue is really between First Nations and the government over land claim issues and Platinex is really just caught in the middle as a sort of victim of that issue," he says.

Shin Imai, a professor at York University's Osgoode Hall Law School, and a specialist in aboriginal law, says there's no question that the province was in error for issuing permits for exploration without first consulting KI.

Recent Supreme Court decisions, most notably the Mikisew Supreme Court ruling in November 2005 confirmed that the government has a duty to consult and accommodate aboriginal stakeholders before it allows development that could affect native treaty rights such as hunting, fishing and trapping on treaty land. The Mining Act, however, allows the province to issue permits for exploration without any consultation with affected First Nations.

The situation can be problematic for companies working on First Nations traditional territory. Even after following the rules, companies could find themselves in trouble.

Imai says companies in Ontario should follow the lead of firms in British Columbia, which are pushing for their province to comply with the rulings.

"They're putting pressure on the (B.C.) government saying: 'Do this right. Don't get us halfway involved and then find out that because you haven't done a good job, we're screwed.'"

While court rulings have made it clear that the government is responsible for consultation, the Ontario government is still in the process of developing guidelines that would help it meet that obligation. It is currently seeking input on draft guidelines from aboriginal groups and industry, and says they should be available sometime this year.

Until then, some companies may find themselves in limbo.

"That's a bit of a problem because we still don't know where we are with what we have to do to consult as industry," says Garry Clark, president of the Ontario Prospectors Association.

End to free entry?

As for the potential implications of the Big Trout Lake conflict and ensuing lawsuits, the industry is divided on what it could mean for miners. Although Clark says the case could put an end to "free-entry" staking -- which means anyone can stake land freely at any time on Crown land -- contrary to Platinex's claims, it would not likely devastate the industry. Instead, it could lead to other, less intrusive forms of staking, such as map-staking, which is used in other jurisdictions.

The worst-case scenario for the industry, Bubar says, would be any change that results in less security over claims than is currently enjoyed under the free-entry system.

"When you invest in exploration and development, you know you're going to have title to the minerals at the end of day," Bubar says of free entry.

On the plus side, Bubar says the case could result in greater aboriginal participation in the industry -- something he's been advocating for.

"Once that's achieved on a more widespread basis, then these conflicts that arise between First Nations and mineral companies will start to fall away," Bubar says.

Clark, too, sees a potential positive outcome to the case.

"If it all falls on the ministries to consult, that could be good for industry," he says. "Then the ministries would actually have to go in and spend the time to get the communities to understand what's going to happen (with) exploration."

But most important for industry, Clark would like to see some formal guidance on working with aboriginal communities.

"We're used to working through these things in the industry, but we do need some direction from the governments and from the First Nations on how they want us to deal with working in their traditional lands."

Muskrat Dam

Platinex is not the only resource company to find that it's stepped on the toes of northern Ontario aboriginals lately. In April, exploration activity by De Beers around the Agusk Lake area disrupted a seasonal goose and caribou hunt by members of the Muskrat Dam First Nation.

Muskrat Dam Chief Vernon Morris says the activity, which included helicopter surveys, has caused "extensive hardship" for his community of 350.

"A jug of milk in the north is fifteen dollars," he says. "We need our traditional food sources for the health of our families and our children. We cannot have our customary territory and our life on it disturbed to the point where we cannot get our livelihood."

Muskrat Dam and KI were among a number of communities that declared a moratorium on mining in their traditional territories last October.

Although De Beers says it did meet with multiple aboriginal communities before conducting its exploration program, it simply didn't know that Agusk Lake -- over 100 km north of Muskrat Dam -- was part of Muskrat Dam traditional territory.

Still, there are plenty of examples of aboriginal communities and miners working together in Ontario's north. Recently, De Beers began construction of the Victor diamond mine in northern Ontario, but only after signing employment and impact benefit agreements with the Attawapiskat First Nation.

Even Morris says his community recognizes the importance of resource development as a potential source of wealth and hasn't ruled out mining on traditional lands.

"We are in support of development (but) it has to be a balanced approach," Morris says. "We want to be meaningful participants in determining the future developments on our homelands and territories."

CIDA goes for the gold

Is the aid agency helping the poor -- or our mining companies?

COLIN CAMPBELL, Maclean's magazine

6th July 2006

These are boom times for gold miners in Colombia. President Alvaro Uribe, a hardline conservative, was re-elected last month, bucking Latin America's leftist trend and clamping down on rebels that once made mining exploration too dangerous. Gold prices have been high, and the country, with its vast untapped resources, is wide open to foreign investment. Last month, AngloGold Ashanti Ltd., the world's third-largest gold miner, partnered with Canada's Bema Gold Corp. to begin exploring in Colombia -- the first major producer to enter that country in decades and a sign, many say, of things to come. "I started to look in 2002, and by 2003, 2004, it was pretty clear this was going to be a changed location for investment," says Ian Park, a consulting geologist for Colombia Goldfields Ltd., a U.S.-based gold exploration company operating in Colombia, but run by a group of Canadians. And while companies credit Uribe for this change, they also point to a new, liberalized mining code encouraging foreign investment, that was in part drawn up -- controversially -- by Canada's foreign aid arm, the Canadian International Development Agency, in 2001.

Mining companies love the new environment, and Colombia is no longer the mining world's Wild West. Vancouver-based Greystar Resources Ltd. returned to the South American country in 2003, after pulling out in the late '90s, and this year alone plans to spend $14 million on advanced exploration in the country. "All in all, we are seeing a much greater level of investment and it's been growing more so every year since 2004," says Greystar vice-president Frederick Felder, reached at his company's office in Bucaramanga, Colombia. But indigenous and labour groups across Colombia, while acknowledging that foreign investment brings wealth, say the new code has been a major step backwards. "These policies have been a disaster with respect to our sovereignty over our natural resources," says Francisco Ramirez, the head of Colombia's energy workers union.

CIDA certainly isn't gloating -- far from it. Within the agency, the mining code project elicits a chilly response (the agency refused repeated requests over a two week period for an interview). In recent years, CIDA has come under harsh criticism for its realpolitik tinkering with Colombia's mining laws (some would call the process "Canadianizing"), which helped create a more competitive tax and royalty structure for foreign companies. Why, other aid groups ask, was CIDA, a publicly funded humanitarian organization, promoting outside investment to the benefit of mining companies? And local groups complain that the laws were ultimately drawn up and passed without their input -- although they had been promised a voice -- stripping away earlier provisions that protected their land rights. "Just as the Canadian government has given money to 'reform' Colombia's laws to favour North American companies, they should now provide money to return the laws to their previous state so that our sovereignty over our natural resources can be respected," Ramirez says.

CIDA embarked on the wide-ranging $11-million project in 1997, in partnership with the Calgary-based Canadian Energy Research Institute, an energy industry think tank representing about 100 companies in Canada. For several years, CERI and CIDA canvassed the mining communities in Canada and Colombia, looking for input about how to make Colombia's mining sector more environmentally friendly, and more in line with the industry in developed countries. From the beginning, the aim was far from altruistic. "Canadian energy and mining sector companies with an interest in Colombia will benefit from the development of a stable, consistent and familiar operating environment in this resource-rich developing economy," read CIDA's summary of the project.

Greystar, one of the few foreign companies still in Colombia at the time, was involved in the effort for close to two years, says Felder, providing "input that reflected the mining industry's point of view as to what was important in such legislation to encourage mining." Another aspect of the project involved training Colombian mining officials, and was aimed at putting a "globalized perspective" on future mining activity, according to CERI-CIDA documents from 2001.

Historically, the country's gold and silver mines have been run only by small, local operators, unlike the coal and nickel sector, which is dominated by large-scale, modern operations. So foreign investment (and the jobs and wealth it brings) is welcome, but the transition to modern mining has not been smooth or well-managed by officials, local opponents say. In Canada, criticisms of CIDA's role were raised in 2002 by Ottawa's North-South Institute, an independent international development organization that had been working in Colombia at the time of the CIDA project. "Our project partners in Colombia regard CIDA as having played a large role in supporting and promoting a 'regressive' mining code that has weakened -- rather than strengthened -- democratic procedures," the institute's president, Roy Culpeper, told a foreign affairs committee. The project "has left a vital element of Colombian society feeling that their interests are excluded from the new mining regime," he added.

Such charges have raised broader questions within the aid community about CIDA's objective to improve economic conditions through promoting freer trade and foreign investment -- especially when it doubly acts to promote Canadian industry. Foreign investment is widely considered an important aid tool for poorer countires, but is not a cure-all. "It's surprising to look at what CIDA's doing abroad," says Viviane Weitzner, a senior researcher at the North-South Institute. "Why aren't they also bolstering the social side of things and not just looking at economics or the environmental side? It's a gap that we've noticed."

In an email response, a CIDA spokesperson said the agency's Colombia project did involve the "development of a plan for consultations with indigenous peoples and ethnic minorities regarding the new mining code." CIDA's help in developing the code was also a "relatively minor" part of a broader project to strengthen Colombia's mining sector. Also, "the project itself did not draft mining-related legislation, which was of course the purview of the Government of Colombia." The trouble, says union leader Ramirez, is that the consultations simply never took place. Rightly or wrongly, CIDA's image has taken a beating. Colombia may be booming, but the bad taste from the project lingers in the mouths of many Colombians.

U.S. Superfund Law Applies to Canadian Company, Court Rules

SPOKANE, Washington, (ENS)

7th July 2006

The United States' Superfund law that governs cleanup of contaminated sites applies to Teck Cominco Metals of Canada, regardless of the fact that the pollution discharged by the company into Lake Roosevelt originated in Canada, an appellate court has ruled.

The decision was filed Monday in the Ninth Circuit Court of Appeals in Seattle. The court upheld an earlier decision by Federal District Court Judge Alan McDonald regarding discharges of mining waste into the Columbia River from Teck Cominco's smelter in Trail, British Columbia.

Two members of the Colville Tribe filed the original lawsuit under the citizen-suit provision of the Superfund law, to force Teck Cominco to investigate and characterize the extent of the contamination in the Washington state's Lake Roosevelt, the large reservoir behind Grand Coulee Dam.

The State of Washington intervened in the lawsuit because Governor Chris Gregoire and state environmental leaders believed that the company, not United States' taxpayers, should pay for the cleanup.

Cominco argued that the Superfund law does not apply to a Canadian company that discharged hazardous wastes from a Canadian facility, and appealed the District Court decision to the Ninth Circuit Court of Appeals.

"This decision is great news for all Washingtonians," said Governor Gregoire. "The Columbia River is a lifeline of the Pacific Northwest and the taxpayers should not have to foot the cleanup bill for contamination by a private company."

"Teck Cominco and its predecessors used our state as a dumping ground for 90 years and they should pay for the cleanup," said Gregoire.

This decision has implications for any state that borders a foreign country. If a foreign company contaminates land within the United States, the state can rely on United States law to govern cleanup and liability, instead of having to rely on less certain diplomatic processes.

"We expect this decision will result in Teck Cominco moving forward to investigate and clean up the contamination in the river and sediments to state and federal cleanup standards," said Washington Department of Ecology Director Jay Manning.

"We need Lake Roosevelt beaches, shoreline areas and bottom sediments of Lake Roosevelt to be cleaned up to the standards necessary to protect both human health and the environment from the effects of heavy-metals pollution," Manning said.

In early June, the U.S. Environmental Protection Agency (EPA) and Teck Cominco Metals, in Canada, entered into an unusual agreement by which the company agreed to complete an investigation of contamination and conduct an evaluation of cleanup options under EPA oversight. The agreement limited state and tribal ability to participate fully in the cleanup process.

Manning said, "We believe this decision will strengthen EPA's agreement with Cominco, which was executed as a private contract between the federal government and an international mining company."

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