Canadian mining industry wins with Bill C-300’s defeat

A weight was lifted from the shoulders of many in the Canadian mining industry recently when Bill C-300 was defeated in the House of Commons. Bill C-300 (An Act respecting Corporate Accountability for the Activities of Mining, Oil and Gas in Developing Countries Act) failed to pass in a close vote, 140 to 134. Thirteen Liberals and four NDP members did not attend when the vote on this private member’s bill was taken.

Bill C-300 sought to establish prescriptive CSR (corporate social responsibility) guidelines that would be binding on Canadian mining companies operating in developing countries. Bill C-300 contemplated imposing sanctions on Canadian companies found to be operating inconsistently with these CSR guidelines. Sanctions included the withdrawal of financing from Export Development Corporation (EDC) and divestment by the Canadian Pension Plan Investment Board (CPP/B).

There were many concerns raised by the Canadian mining community regarding Bill C-300 (which was not consulted regarding the drafting of the Bill) including jurisdictional issues as to whether such legislation could pre-empt or override the laws of local authorities. Most importantly, the implementation of Bill C-300 would negatively impact Canada’s competitiveness as a world leader in mining. No other country is contemplating legislating activities of its domestic mining industry in such a manner, and the enactment of Bill C-300 would have created a strong incentive for Canadian companies operating in the developing world to relocate outside Canada or avoid financing and investment from EDC and CPP. Since the credit crisis, export credit agencies such as EDC have been important sources of financing and capital for Canadian mining companies operating in the developing world. Bill C-300 would have not only put at risk access to this financing and capital but would also restrict Canadian companies from acquiring other mining companies due to the risk that the target company would be offside these legislative requirements.

With Bill C-300 defeated, what is next?

It is clear that CSR is here to stay and that it will likely become increasingly important for Canadian mining companies in the future. The Government of Canada has recognized this and in March 2009 released its comprehensive strategy on CSR. Unlike Bill C-300, the strategy was a culmination of intensive consultation with various stakeholders both in Canada and overseas. As part of this strategy, the Government of Canada created the Office of the Extractive Sector Corporate Social Responsibility Counsellor, who is charged with advancing CSR performance of Canadian mining companies operating outside Canada through the enhanced use of CSR performance standards.

A voluntary dispute resolution process has been adopted in which the Office will act as an impartial advisor and facilitator to bring parties together for the purposes of fostering dialogue and problem-solving. The dispute resolution process is not adjudicative or investigative. As CSR disputes are often fact specific and based on the needs or concerns of a particular community or region, a collaborative and dialogue driven process will likely be more effective in improving the situation on the ground than a punitive and adversarial approach as was contemplated in the Bill.

Canada has been recognized as global leader in CSR, and the strategy on CSR developed by the Government of Canada will likely enhance our leadership position while at the same time not hinder the growth and competitive advantage of our Canadian mining sector here and abroad.

CMJ