GUEST COLUMN — Claim jumping government style

In September, 1991, Michael Harcourt, then leader of British Columbia’s opposition, said: “We believe that compensation should be paid for the loss of pre-existing mineral rights in new park or wilderness areas based on the costs incurred by the developer.”

On May 2, 1992, Glen Clark, minister of Finance and Corporate Relations, was quoted in Victoria Time Colonist to have said: “I personally reject the notion that those resources are owned by them and we have to compensate, but that’s something we are reviewing.”

Later Bill 32, the Resource Compensation Interim Measures Act, was tabled. This Bill was to put on hold until June 15, 1993, all compensation actions unless the lieutenant-governor in Council decides otherwise. The Bill was later set aside. On March 31, 1992, Richard Schwindt, an economics professor at Simon Fraser University, was appointed commissioner to inquire into compensation for the expropriation of resource interests.

We had hoped that the commissioner would take the “collective wisdom” as set out in the briefs presented by the mining community and recognize three basic non-geologic factors essential to a sustainable mining industry — security of mineral tenure, time and market value. All were savaged in Schwindt’s 150-page report released on Nov. 12, 1992.

The report’s first two general recommendations are surprisingly straight- forward and acceptable to the mining industry — compensate resource interests taken for public purpose and leave the term “taking,” or expropriation, undefined. However, the four recommendations made in the section entitled “Compensation for Mineral Interests” display a remarkable lack of understanding of our industry.

The commissioner recommended the current tenure system be changed to provide for two types of security. First, mineral claims with a minimal type of security that can be expropriated with compensation limited to costs accrued for only the last five years. The second or “more secure” type of mineral tenure is when a mineral claim can be converted to a mining lease, but only with the development of a “bankable” feasibility study. Where leases are expropriated, compensation would be based on market value. I suspect that in British Columbia today there is not one project capable of producing a “bankable” feasibility study.

Compensation based on costs accrued is grossly unfair in two regards. History has shown us that most claims when staked have no value and it’s not fair for the public to pay for the exploration program that proved this. On the other hand, any claim that shows the potential to produce ore should at the very minimum have the opportunity to demonstrate this potential through ongoing exploration.

The British Columbia & Yukon Chamber of Mines provided a short submission entitled “Proposed Procedure to Determine Fair Market Value of Mineral Properties — for Compensation to be Paid Under the Expropriation Act.” Much of this was adopted in the “Dispute Resolution” section in the “Summary of Recommendations.” The chamber’s proposal, if applied to all expropriations of mineral claims and leases, could provide guidance to fair compensation at reasonable costs.

In 1989, the province published a map giving the location, tonnage and grade of 345 current, past and potential producers. Most of these past and potential producers were largely explored more than five years ago, but, unless they happened to be part of the province’s 441 mining leases, have no value in the commissioner’s view. An inventory discovered and explored for more than 150 years is deemed valueless. Hard to understand. If the government follows through with the recommendations of the Schwindt report, it will destroy the security of mineral tenure and make valueless the mineral inventory we have accumulated for more than 150 years. This is too high a price to pay, for the province’s mining community and residents. — Jack Patterson is managing director of British Columbia & Yukon Chamber of Mines.