I THINK MINING

    The bill that may determine the future of Canadian mining is called the Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries—Bill C-300 for short.  

Since I originally posted this piece, a great deal of comment has appeared on the web. I have been surprised by how slow and muted industry response has been.  Today I came across the posting at this link that attempts to put forward a defence of the industry and a set of reasons why the bill should not be passed.  I recommend the article.  As always for every one posting against the bill, there is one in favor.  The posting at this link looks at the reality of threats by Canadian mining companies to leave Canada if the bill were passed.  Even the students in the mining department at UBC have gotten into the act.   

Here is the original posting:

Here is how one news source describes the “progress” of the bill through hearings and in Parliament:

A proposal to regulate Canadian mining companies operating overseas is continuing to gain ground in Ottawa.  “It demonstrates Canadians have certain expectations of how companies do business around the world,” Liberal MP Michael Savage (Dartmouth-Cole Harbour) said Tuesday in an interview.  The House of Commons standing committee on foreign affairs and international development is reviewing a private member’s bill introduced by Toronto Liberal MP John McKay earlier this year. Mining companies are expected to make presentations Thursday.

   versus    

The main attack on the bill is that it is unnecessary, burdensome, may drive Canadian mining companies to move to other countries, and leaves accused mining companies to be judged by bureacrats not judges.   If passed the bill would:

Give the federal government the power to investigate complaints that Canadian mining operations overseas were not in compliance with international human rights and environmental standards. A company found not to be living up to those standards would be denied federal financial support by the Export Development Corp.

    And a whole lot more would be denied to mining companies accused and found “guilty” –  see the text of the bill itself for details.  Or read the following quote from another news source, which writes this about the bill’s impact (I edit for readability):

• The Department of Foreign Affairs would be required to investigate any alleged misdeeds by Canadian mining firms in developing countries and publish what it finds;
• Export Development Canada would then be entitled to withdraw financing from mining projects that are found to violate corporate social responsibility standards in poor states;
• Mining companies found to breach those standards would be ineligible for investment from the Canada Pension Plan.

   Fasken Matineau, a leading international business law and litigation firm that does a lot of work for Canadian mining companies abroad, issued a press statement saying:

This legislation was written in haste without input from Canada’s resource and extraction companies.  “Canadian mining and energy companies are respected as leaders worldwide, so it is a surprise to see legislation proposed in Canada that would undermine their competitive position on the world stage. Those with investments in foreign countries are very concerned about the devastating effects if this Bill passes.  Bill C-300 ignores the extensive work done by Canada’s mining industry and the federal government. On March 26, 2009, the government released Building the Canadian Advantage: A Corporate Social Responsibility Strategy for the Canadian International Extractive Sector, which embodies its corporate social responsibility (CSR) strategy for Canadian extractive sector companies operating abroad. Canadian companies in the extractive sector are generally supportive of the Strategy, describing it as workable and pragmatic, and have applauded the extensive and thoughtful process through which it was created.

   The main supporting arguments for the bill are that Canadian taxpayers pay to help Canadian mining companies operate in foreign climes and hence taxpayers are entitled to see only the best behaviour by such companies.  Thus if a Canadian mining company misbehaves in a foreign country, the taxpayer should be entitled to with-hold taxpayer support from such miscreants.  A good example of what may prompt a complaint (accusation) is detailed in a report from which I quote as follows:

A former Argentine environment minister told Members of [Canada's] Parliament today that she had been personally threatened and rendered ineffective as a result of the aggressive activities of foreign mining companies who objected to the government’s efforts to clean up mining operations in that country.   Testifying by video hook-up at hearings of the House of Commons foreign affairs committee, Romina Picolotti said foreign mining companies stood out from other business sectors in their resistance to Argentina’s bid to tighten up control over the environmental consequences of large-scale mining projects.  “I found, over and over again, that foreign mining interests in Argentina were extremely adept at leveraging their interests within the local political institutions, many times co-opting government officials and ministries to get their way on sensitive environmental and social issues that typically arise from large-scale mining investments,” she said.

You can find much more in favor and against the bill on the web. I have previously blogged about this bill at this link where you will find the links to many background materials and the text of the bill itself.  With all the arguments floating around, it is difficult to comment, but my role as a blogger gives me a small leeway, so here goes. 

    The argument that the Canadian mining industry has “cleaned up its act” is sound, but irrelevant.  I am sure most Canadian mining companies do it nice in foreign countries, but the fact is that some do not.  There is always somebody who delights in playing the odds, breaking the rules, and ignoring the recommendations of the “sanctimonious” majority.  Why, I have even consulted to some of them.  They demand fast services,they fight hard, and they pay well.   Nothing that is illegal in the operating country; only hard and furious.   I myself am sometimes personally guilty of not behaving in accordance with the manuals on good manners you find in airport book stores.  And having grown up in South Africa under apartheid, I have a most healthy disrespect for laws that claim the moral high-ground.   Most of my best friends in South Africa broke the laws regularly.  We justified it on the basis of youth and idealism.  Now even some Afrikaners admit those same laws were horrendous.  I must have some sympathy with Canadian mining companies who break so-called “Canadian norms of good conduct” in places like Zambia, Zimbabwe, Cuba, and Guatemala.  Damn, it is hard enough just to be nice in such countries with their peculiar laws and customs.

   The argument that because most Canadian mining companies do things properly in other countries, thus no action is needed, is a most spurious and misdirected approach.  Most people do not steal, murder, rape, or drive too fast (well maybe not the last one.)   But that is no good reason not to have laws against theft, murder, or driving too fast.  The fact is that ninety-nine percent of people are nice.  The trick in any civil society is to deal justly and effectively with the one percent who are not nice. 

Let us dispense with the argument that because there are voluntary codes of good conduct formulated by the mining industry, there is no need for a bill.   There is a vast difference between a code of conduct and a law–or regulations following from a law.  Codes of good conduct are generally formulated by the good people and generally followed by the good companies.  It gives them a basis for action, a bragging right, and higher share values.  But bad people and bad companies have no regard for codes of conduct any more than they have regard for laws.  The existence of a code of mining conduct is irrelevant verbiage to the mining company intent on bribing a corrupt foreign politician, displacing indigenous people, razing a village in the way of an ore body, or of denying that their actions had tangible results.  The lure of higher profits is too great to induce servile obedience to mere codes of conduct in most malfeasance-inclined managers.  A code of conduct is at best an expression of intention.  It is a toothless hag when it comes to enforcement.  It has no teeth, no bite, no sanction.  Even more, a code of conduct provides no avenue of recourse to the truly impacted.  What can they do?  Get their church to grouse about the mining company’s conduct?  

Only a law, which by one definition must include both a prescribed form of conduct and provide a sanction in the event of a transgression, provides an incentive to decent behaviour and a recourse for the negatively impacted.  Thus arguments that the mining industry has formulated and generally follows its own voluntary codes of conduct are flaccid and worthless:  the code of conduct is admirable; adherence by most is to be commended; but those fact are irrelevant in discussing the right of a society to act to enforce its wishes and culture.  Only by laws can a society act to set standards of conduct and punish those who fail to follow the prescribed conduct.    True, we need a debate on this law; but it must be a debate founded on logic, not red herrings. 

We could argue that the countries in which the Canadian mining companies operate should get down to doing something themselves.  I have long believed that the only way for a country to control inappropriate and irresponsible mining is to enact its own set of laws and to enforce them.  Sadly that is not about to happen.  There are simply too many examples of venial governments run by small groups of privileged and entrenched tribes and groups, who benefit from mining at the expense of the general populace, for good laws to be enacted in all mining countries.  Consider Zimbabwe as the most obvious.  Even those old men who rule Cuba to their advantage know how to manipulate Canada into controlling the populace for the benefit of the ruling tribe. 

   The are dangers associated with this law.  If I were into that sort of thing, the first case I would seek to bring would be on behalf of the people of Summitteville, Colorado against a certain big Vancouver mining company that polluted and fled and is now in bed with Rio Tinto to develop properties in Mongolia.  Surely the American taxpayer deserves some relief for the cost of cleaning up that mess and is entitled to be chagrined that the Canadian taxpayers still support operations in foreign countries by the guilty company?  No wonder my American sons-in-law are so sarcastic about Canada and its purported “goodness.”   No matter how much I argue with them over dinner and wine, they revert to the argument that Canada is a socialistic society that acts like any wicked tribe to its benefit at the expense of other countries, including the USA.  Maybe they are just neurotic?  Maybe they just delight in baiting me?

   Then consider the foreign country where a heap leach pad designed by a Canadian consulting company fails and causes irrepairable environmental damage (aka Bellavista in Costa Rica).  Could the local villagers bring a law suite against the consulting engineering company in terms of Bill C-300?  Afterall the culpable mining company has fled, gone bankcrupt, and/or changed its name.  There is no recourse from or punishment possible against the mining company—but wait, what about the insurance policies of all those consultants who put pen to paper?  The bill provides for no recompense to the aggrieved party other than the illusory satisfaction of seeing them held guilty by the Canadian government and barred from receiving federal financial input.    But still, it may bring some sense of closure, or retribution, won’t it?     I doubt it, but then who am I to say?

It gets scary when you start formulating possible case histories.  I, for one, am unhappy about relying on the discretion of the government to make prudent decisions in such cases–although I concur that such an attitude is American not Canadian, for we Canadians revere and respect our government and trust it to do well by us in providing a civil society.  We Americans have an inherent distrust in the ability of government to do the right thing, even though we keep demanding more of the government.  Could you imagine Bill C-300 even been considered in the USA?   Canada and the USA are indeed totally different! 

  We will need skilled lawyers to deal with the case histories of the type I postulate, not government employees in minor departments.  At least the need for more lawyers is an American mode of action and way of life. 

Perhaps I have now been in north America too long, or perhaps I have gotten too old, for now I am conservative and long for a society of peace & calm, order & civility, justice & a swift retribution.  Maybe I have been over-influenced and now think uncivil thoughts like: “If they misbehave, then damn it, sanction and punish them.”

    Or maybe this attitude is just a hang-over from those days of disobedience as a youth.  I mean the attitude that says: there is surely an uber-norm of decency, and if people do not follow it, disobey them, protest against them, or do something to make them behave decently.  Maybe I have now subscribed to the uber-norm of Canadian decency that faces the fact that one percent of people are not nice, one percent of mining companies are not nice, and as a decent and civilised society, we should put laws in place to deal civilly and justly with such deviant people and companies. 

Thus I must come out in support of the ideal of the bill, even though I have many misgivings about the workings of the bill–but those can be fixed, and must be fixed.

PS:  The day after posting this blog piece, I went to see the new old man’s movie Old Dogs.  First us two old dogs went to supper–beer drinking actually—and we talked about Bill C-300.  My drinking companion, who is wiser in these things than I am, said, “Jack, stop worring about this bill.  The Conservatives will never allow it to pass.  They will ride a bit of publicity out of it, and then kill it in the Senate.  For the Canadian Senate does what it is told to do by the government in power.  The senators do not think for themselves like Senators in the US.  Here they are appointed hacks who do the bidding of those with real power.  They are there to stop things no elected politician has the courage to block.”  

PPS.  The debate rages on today (Friday 27 November 2009) but the only new argument I have seen is that if passed, it might even be good for Canadian mining companies, who would be welcomed in the knowledge that these truly are the good guys who come from a country that does mining nicely.   The argument goes: given a choice of a mining outfit from say post-C-300 Canada, China, Delaware, or Imperial England, which would you choose?  The purported answer is of course post-C-300 Canada for they do things right because they are from a country that has laws to incentivise responsible mining—and if we do not like what they do we can go squeel to the Ottawa government who can bring them to heel and heal.   Maybe!