Government warned about risk of mining accidents overseas
Ministry briefing highlighted danger, but prompted no changes in rules
SIMON TUCK (Globe & Mail)

OTTAWA -- Senior government officials were warned more than two years ago that Canadian mining companies with overseas operations could "seriously embarrass Canada" if they didn't take steps to reduce the risk of a major environmental accident.

The warning, contained in a June, 2004, briefing note to the top bureaucrat at the Department of Natural Resources, also includes a suggestion that the government prepare a communications plan to deal with the possibility of an overseas accident involving a Canadian mining company.

The warning, however, has not led to any real changes in legislation or to the rules that govern Canadian mining companies operating in developing countries.

"Under current circumstances, there is a continuing risk of an incident occurring at a Canadian mining operation in a developing country that would seriously embarrass Canada," says the government document, obtained by Ottawa researcher Ken Rubin through access to information legislation. "It is, therefore, necessary to prepare for the question of what Canada has done to reduce that risk."

The warning was issued about five years after a series of accidents involving Canadian-owned mines operating in the developing world. The highest-profile of those was a tailings dam collapse at Cambior Inc.'s Omai gold mine in Guyana in 1995.

A parliamentary committee looked into the issue and later recommended that Ottawa should abandon its voluntary code of conduct, in favour of a mandatory set of rules. The Liberal government issued what many groups viewed as an overly tepid response, including the launch of a series of round table discussions, and the Conservative government has yet to address the issue.

The first of four discussions took place last month in Vancouver, with the next one to be held in Toronto in September.

Critics say Canada needs to take responsibility for its companies' overseas activities and recognize that developing countries often don't have adequate safeguards to protect their own citizens.

Nadja Drost, a co-ordinator for the Canadian Council for International Co-operation, a coalition that fights global poverty and promotes social development, said the federal government provides an array of support for Canadian mining companies but yet insists on no control over their overseas actions. Ottawa should crack down with a new set of environmental and human rights rules, she added.

Dan Dugas, a spokesman for Foreign Affairs Minister Peter MacKay, said the government will wait for the completion of the round tables before deciding what to do. "The government wants to see the process through."

The mining industry, however, says it realized a few years ago that it couldn't afford to wait. Pierre Gratton, spokesman for the Mining Association of Canada, said the industry has done its best to ensure there will be no more serious accidents, and that it will do a better job of dealing with a crisis if one occurs. "It's a serious issue."

Mr. Gratton said the industry did some "real soul-searching" following the flurry of accidents about six years ago.

The Cambior accident released 2.9 million cubic metres of cyanide-bearing waste into the Essequibo River.

Residents of western Guyana later launched a $2-billion (U.S.) lawsuit for damages in connection with the incident. Although there were no human deaths, the plaintiffs claimed the spill led to health problems, tainted drinking water and contaminated fish. Montreal-based Cambior said the suit had no merit and argued that the spill occurred in the Omai Creek, a small tributary that flows into the Essequibo, and that cyanide never built up to dangerous quantities in either waterway.

Questions about overseas operations aren't the only big issue facing Canada's mining sector, as it's also going through what is expected to become a major corporate shakeup.

Two of the country's largest mining companies, Inco Ltd. and Falconbridge Ltd., have agreed to be acquired by Phoenix-based Phelps Dodge Corp. in a deal valued at about $39.5-billion.

Like most major mining companies, Phelps Dodge has large overseas operations, including mines and processing facilities in South America and China.