CORE: A key decision for Canadian mining companies

The Canadian Ombudsperson for Responsible Enterprise (CORE) is a business and human rights grievance mechanism established by the government of Canada in 2019. The CORE has jurisdiction to investigate and report on certain complaints of alleged human rights abuses concerning Canadian companies’ mining operations abroad. CORE presents Reports to the Minister of Export Promotion, International Trade, and Economic Development. While the CORE cannot issue any fines or penalties, an unfavourable report from the CORE can lead to the denial of trade support from the government of Canada and cause reputational damage to the targets of the investigation.

The CORE investigates Dynasty Gold Corp., but declines to investigate GobiMin Inc.

The CORE published two reports on Canadian junior mining companies Dynasty Gold Corp. (Dynasty) and GobiMin Inc. (GobiMin) this summer. In July, the CORE concluded that a forced labour investigation into Dynasty’s operations was warranted following a lack of full and active participation with the CORE’s dispute resolution process. However, the CORE reached a different conclusion in August, finding that a full investigation into GobiMin’s operations was unwarranted since GobiMin had engaged in good faith participation in the CORE’s process.

The allegations facing Dynasty and GobiMin each arose from the companies’ former mining operations in the Xinjiang Uyghur Autonomous Region of China that were accused of using or benefitting from the use of Uyghur forced labour. The CORE became involved in these matters following receipt of complaints filed by a coalition of 28 organizations that alleged forced labour in these companies’ foreign operations.

The CORE receives increasing number of complaints

Besides the CORE’s reports on Dynasty and GobiMin, the CORE has issued several other initial assessment reports this year concerning Canadian garment sector activities abroad. Nike Canada Corp., Ralph Lauren Canada LP, Walmart Canada Corp., Hugo Boss Canada Inc., and Diesel Canada Inc. have now each become the subject of a CORE complaint. These investigations are indicative of increased activity by various organizations filing complaints with the CORE. In the 2021-2022 fiscal year, the CORE received five complaints, whereas that number increased fourfold to twenty in 2022-2023.

The CORE has a low threshold for evaluating the admissibility of a complaint. An admissible complaint concerns an alleged abuse of an international recognized human right. The alleged abuse arises from the operations abroad of a Canadian company in the mining, garment, or oil and gas sector. The abuse must have occurred after May 1, 2019, or, if it allegedly occurred before May 1, 2019, must be ongoing at the time of the complaint.

Upon receipt of an admissible complaint, the CORE will undertake an initial assessment and will review and publicly report on recommendations. Mediation processes are also possible if agreed-to by the parties. If the CORE opts to begin an investigation, it will engage in a joint fact-finding exercise with the parties or an independent fact-finding exercise where collaboration is not possible.

Early engagement with the CORE process

The CORE’s conclusions with respect to GobiMin may provide a useful roadmap for other mining companies engaging with the CORE. The GobiMin complaint did not proceed to a full investigation, in part because the company was able to respond credibly to the allegations at the earliest possible stage. Although GobiMin strongly disputed the allegations and deemed them to be ill-founded, the CORE specifically noted that GobiMin’s good faith participation in the process was an important consideration in not launching an investigation. This suggests that full and active participation in the initial CORE process, alongside experienced legal counsel, may constitute the most advantageous path forward.

By contrast, Dynasty was unable to sufficiently rebut (i) the allegation that it did not have operational control over the Chinese gold mine at issue and (ii) the allegation that the alleged human rights abuse arose after it exited the region. In response, the CORE has launched an investigation using its independent fact-finding into the process and form of termination of Dynasty’s investment activities in the Chinese mine, including into its leverage with former local partner Western Region Gold Co. Ltd., a wholly owned subsidiary of a Chinese state-owned enterprise.

Risk of civil liability for Canadian mining operations abroad

In considering whether to voluntarily engage with the CORE, Canadian mining companies should be mindful of possible civil liability that may arise to purported victims of breaches of customary international law. The 2020 Supreme Court of Canada decision, regarding Nevsun Resources Ltd. versus Araya, has paved the way for plaintiffs to bring legal actions in Canadian courts against Canadian miners operating abroad, concerning violations of customary international law. Such claims may include allegations of use of forced labour, slavery, cruel, inhuman, or degrading treatment, and crimes against humanity. This decision arose from allegations by Eritrean workers that they were allegedly conscripted into the military and forced to work at a mine owned by Canadian mining company Nevsun Resources Ltd. in Eritrea between 2008 and 2010.

Committee recommendation to expand the CORE’s mandate

In September 2023, the House of Commons Standing Committee on International Trade recommended that the government of Canada, in consultation with relevant stakeholders, explore all options for expanding the CORE’s mandate to ensure that the CORE can review complaints in an adequate and timely manner. This recommendation signals that the Committee anticipates Canadian firms will encounter increasing scrutiny from complainants and the CORE. The expansion of the CORE’s mandate could have a significant impact on many Canadian firms’ access to financing and corporate reputations. Furthermore, any modifications to the CORE’s mandate permitting the levying of fines or penalties on Canadian businesses could significantly increase the risk associated with the CORE’s investigations. 

Robert Wisner and William Pellerin are partners and Lisa Page is an associate at McMillan LLP.

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