Press Responses: March 29, 2007

Canadian accord sets ethical mining norms

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 pact 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," said Tony Andrews, of the Prospectors and Developers Association of Canada.

The Toronto Stock Exchange alone accounts for 60 per cent of the world's public mining companies, with more than 1,200 firms, and raises more than 40 per cent of the world's financing for mining, according to the Mining Association of Canada.

The groundbreaking report, being 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.

"Industry and civil society members have worked together in an unprecedented way and it is now up to government to implement these recommendations," said Catherine Coumans of MiningWatch Canada.

The report would also improve upon rules relating to 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.

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.