Editorial: MAC pitches transparency, free trade

For Mining Association of Canada (MAC) president and CEO Pierre Gratton, the future of the nation’s mining industry lies in clear-cut regulatory reform, and in cultivating global free-trade arrangements geared towards expediting the flow of goods and capital across international borders. In a speech at a Vancouver Board of Trade luncheon on Sept. 7, Gratton outlined his vision of a unified Canadian resource sector operating under clearly defined regulatory legislation.

One of the perceived problems with the current Canadian regulatory model lays in the layers of reviews that criss-cross provincial and federal jurisdictions. Gratton is quick to point out that when Canada first initiated its Environmental Review Actin 1993 the majority of provinces did not have comparable pieces of legislation.

“If you clear away the rhetoric with what is going on, and focus on the dual [provincial-federal] review regulations, it will make things better. As proponents of the industry we hear from communities expressing frustration they experience by being consulted twice on the same project,” Gratton explained during a question period. “What we’re doing twenty years later is taking a step back and saying: ‘Do we really need these two systems doing this in parallel? Does that benefit governments and communities?’ I don’t think so. We feel the measures will result in better outcomes from a social-acceptability viewpoint, because it will be more focused and more co-ordinated.”

Another consideration for MAC is the implementation in the U.S. of the Dodd-Frank Act, which requires resource companies to annually report all payments to governments on a project-by-project basis. Gratton says it’s important for the industry to “get out ahead” of any government-imposed reporting requirements, and address transparency concerns internally.

MAC teamed with the Prospectors and Developers Association of Canada (PDAC) and two advocacy groups in early September to develop mandatory reporting rules that could be legislated or incorporated by security commissions across Canada.

“If it comes to pass and we’re successful, it will be public reporting through the Toronto Stock Exchange, so there will be those reporting requirements, but we’re used to that,” Gratton said during an interview. “We looked at this issue and knew it was coming, so we could either allow it to be done to us, or we could get ahead of it and design something that’s consistent with the U.S. and Europe.”

When asked about the potential impact on junior explorers, which often complain of being bogged down by costly excess regulation, Gratton acknowledged it was a concern, but said he would work closely with the PDAC to ensure its members had adequate input on any new regulatory proposals. In addition, MAC is holding a workshop in Vancouver for exploration-stage companies in a bid to alleviate any concerns.

MAC and PDAC are hoping to develop reporting rules that would complement voluntary efforts undertaken through the Extractive Industries Transparency Initiative. The new regulations would include producers and explorers working in foreign lands to improve the industry’s accountability at home and abroad. Gratton stressed the need for Canada to emerge as a leader on a global stage.

“There are a number of things [Canada] is known for, it isn’t limited to mining technologies. Our legal and financial expertise is becoming dominant around the world, and we have some of the best environmental engineering firms and accountants,” he explained. “Our industry is so complex that we have a need for such an incredible amount of brain power across a wide spectrum.”

There is also wide discussion on Canadians’ willingness to embrace inflows of foreign direct investment, and how potential foreign ownership of some of the country’s best companies and assets might affect economic sovereignty over the long-term.

There remains a sour taste among many in the industry in Canada after the acquisition of Canadian-based Falconbridge and Inco by foreign mega-corporations Xstrata and Vale in the mid-2000s.

Recognizing a little late that true nation-building can’t be left to the get-rich-quick business crowd, the federal government has since rejected BHP Billiton’s attempted takeover of Potash Corp. of Saskatchewan, and is reviewing with a skeptical eye China-based CNOOC’s bid for Calgary-based energy company Nexen.

Gratton says the issue is complicated by the fact that Canada’s national identity is so closely tied to natural resources.

“I go back to the fundamental principle that the mining industry believes in the free flow of goods and capital. We invest abroad and acquire assets, and we have to be open to being acquired,” Gratton said. “Sometimes we can let our personal feelings as Canadians get in the way of the long-term views and beliefs on what is good for the industry and the country. We want to make sure that other parts of the world allow us to do the same thing. What is damaging is when there is political intervention, and it becomes a political issue. That isn’t the message Canada should be sending.”