Canadian mining firms agree to clean up global act

Activists block the entrance to the Canadian embassy in Mexico City last month to protest against a mining project planned by Minera San Javier, a subsidiary of Canadian company Metallica Resources Inc. It wants to extract gold and silver in the Mexican state of San Luis Potosi, which protesters claim will damage the environment. The sign reads: Canada: Don't Pollute Mexico.

OTTAWA - In a move that could revolutionize global mining, Canadian mining representatives have struck an unprecedented accord with environmentalists and human-rights advocates on ways to ensure mining and oil companies act ethically in their overseas operations.

The report would create the world's first independent mining ombudsman and sketches out environmental and social standards for projects in the developing world, where standards are often lax or poorly enforced.

It also calls on government to withdraw services, such as diplomatic support and tax breaks, if companies fail to uphold those standards.

If the federal government implements the proposal, the repercussions would be felt around the world since Canada is a colossus in the industry.

Canadian mining firms have "interests in more than 8,000 properties in over 100 countries around the world," says Tony Andrews, of the Prospectors and Developers Association of Canada.

The groundbreaking report, released today, is the fruit of 10 months of intense negotiations between representatives of industry, advocacy groups such as Ottawa-based MiningWatch Canada, academics and government.

In recent years, the industry has been dogged by a growing international outcry over allegations of human rights abuses and environmental disasters at Canadian projects in more than a dozen countries in the developing world.

In June 2005, an all-party parliamentary committee urged the government to take action. That fall, the federal government announced it would set up a series of national round tables, just days after the Ottawa Citizen ran a seven-part series on the issue.

The report urges the government to adopt a made-in-Canada set of corporate-responsibility standards based on benchmarks established by agencies such as the Organization for Economic Co-operation and Development and the International Finance Corporation.

It would also improve upon those rules on controversial issues, such as the compensation of people displaced by mining projects, the use of forced or child labour by suppliers and mine-closing protocols.

An independent ombudsman would monitor firms to make sure they follow the rules and would refer serious concerns to a panel that could recommend government sanctions.

Gordon Peeling, president of the Mining Association of Canada, which represents more than 50 mining and related companies, says the report reflects the fact that "Canada's extractive sectors are committed to improving their social and environmental performance."

The recommended government sanctions for not following the new Canadian standards would be significant:

- Firms that commit a serious breach of the Canadian rules would be cut off from any financial support from Export Development Canada, which offers millions of dollars in financial and insurance support for Canadian projects overseas.

- Firms eligible to deduct the tax they pay to a foreign government from their Canadian taxes would lose that privilege.

- Companies would lose the support they receive from Canadian consulates abroad.

The report also recommends offering refundable tax credits to companies that adopt the Global Reporting Initiative, which sets common standards for measuring a company's sustainability.

The report urges the government to adopt the Voluntary Principles on Security and Human Rights, a key accord that sets out guidelines for the corporate use of security forces.

The role of security forces has been at the centre of a string of alleged human-rights abuses associated with some Canadian firms in recent years.

Private security forces and government troops at other Canadian mines have injured dozens of civilians in recent years, including an Ecuadoran congressman who says he was nearly killed by troops in a December protest against one mine.