• Do Canadian mining companies operating abroad face weaker environmental regulations?

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    Transnational companies must comply with increasingly stringent domestic regulations and may adopt voluntary practices that exceed regulations.

    There is a misperception that free-market policies implemented in order to attract mining investment have led developing countries to weaken their environmental regulations. This is simply not true. In fact, in the past two decades developing countries have become more aware of environmental issues, and have taken steps to regulate and to protect their environment. Many voluntary measures have also been implemented by mining companies to achieve and maintain their social licence to operatei.

    Strengthened National Laws and Regulations

    Since the 1990s developing countries have implemented environmental regulations and established administrative structures to enforce these laws. Legal and administrative reforms have improved environmental rights and legal protection of the environment in African and Latin American countries.[1]

    For example, in Tanzania, the 1997 National Environmental Policy identified policies to minimize pollution from the mining sector, including controlling the use of mercury by Artisanal & Small-scale Mining.[2] In Ghana, the 1994 Environmental Protection Agency Act (Act 490) created the Environmental Protection Agency, which regulates the undertaking of environmental impact assessments and establishes the mandate of national Environment Protection Inspectors.[3] Bolivia, Chile, and Peru all have "modern mining codes and all mines must follow modern environmental laws, undertake environmental impact assessments, and undergo inspection by representatives of the central government."[4, p.9]

    National courts of justice ultimately enforce the fulfilment of these regulations. For example, in Chile the Court of Copiacó ordered Codelco Mining Company to stop disposing waste from the El Salvador Copper Mine into the Pacific Ocean.[1, pp.59-60]

    International Standards and Treaties

    At the international level, environmental standards have also been strengthened. Environmental treaties from the 1990s include the International Convention to Combat Desertification in those Countries Experiencing Serious Drought and/or Desertification (1994), the Bamako Convention on the Ban of the Import into Africa and the Control of Transboundary Movements of Hazardous Wastes within Africa (1993), and the European Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters (1998).

    Finally, the perceptions of companies working overseas further dispel the idea that environmental regulations are stricter in developed countries than in developing ones. According to top executives of mining companies surveyed by the Fraser Institute, more companies would not invest in Latin America (30%) due to constraints or uncertainties from environmental regulations than would not invest in Canada for this reason (11%).[5] However, regulatory uncertainty is a concern since environmental regulations that lack clarity and stability can result in different interpretations, higher compliance costs, and political interference.[6]

    Voluntary Environmental Actions

    Transnational mining companies use environmentally efficient technologies in all their operations. According to the World Bank, “with some exceptions international mining companies use the same technology in developing countries as they do in their home countries, and they often supersede local environmental standards.” [4 p. 9] These technologies have improved in recent decades to permit new reserves to be located with less environmental disruption, extend the life of existing mining operations, and use less energy in smelting and refining.[7] A recent study of 419 mines observed for up to 10 years found that multinational gold mining companies are equally environmentally efficient in developing nations as they are in developed countries.[8]

    Transnational mining companies must also meet increasing expectations and scrutiny from local and international environmental, community and indigenous groups. In recent years, opposition to mining on the basis of environmental concerns has risen, in some cases limiting access to mineral resources.[9] In addition, community support must be earned and maintained throughout a project’s life. Mining companies have responded to environmental concerns by adopting voluntary measures such as Corporate Social Responsibility (CSR), ISO 14001 and supporting the Dow Jones Sustainability Indexes.

    Towards Sustainable Mining (TSM) in Canada

    Canadian mining companies in the Mining Association of Canada are also required to participate in the Towards Sustainable Mining (TSM) initiative.[7, p.58] The TSM includes guiding principles and standards for tailings management, greenhouse gas and energy management, aboriginal and community outreach, crisis management, water and mining, biodiversity conservation, and mine closure.[10] Companies must report on TSM progress each year and these reports are subject to external verification.[11] Canadian mining companies are also involved in environmental initiatives such as the Mine Environment Neutral Drain (MEND) program and the National Orphaned and Abandoned Mines Initiative (NOAMI).[7]

    Mining companies are also being asked to demonstrate to their stakeholders and financial institutions that they are managing environmental risks. Investors recognize that managing environmental risk is necessary for maintaining long-term market value, and frameworks such as TSM can help companies to identify and manage these risks.[11] In addition, companies requesting financing from Export Development Canada, the World Bank, or commercial banks that have adopted the Equator Principles must comply with their environmental and social requirements.[7]


    iSocial licence refers to local communities accepting and welcoming mining companies. Good relationships between companies and communities are established by good communication, respect, and transparency of information that may affect local communities. Mining companies should also be clear about the responsibilities they assume in the local communities. According to the World Bank’s report Large Mines and Local Communities: Forging Partnerships, Building Sustainability it is important for mining companies to be perceived as "a member" of the local society.



    Case Study: Peru: Continuous improvement on environmental regulations

    Up until the 1990s, few companies addressed environmental issues in Peru. This situation began to change in the early 1990s with the enactment of the Environmental Code (1990) and the Law for the Promotion of Investments in the Mining Sector (1991). These regulations stipulated that mining licences were conditional on preserving the environment and required a study of environmental impacts.

    In July 2004, the Peruvian Congress regulated the treatment of mining waste (environmental legacies). However, some loopholes remained. Concerned for this situation, the World Bank pointed out that “one of the flaws in the law is that it opens up the opportunity for mining companies to unilaterally rescind their concessions and waive their mining right, shifting all the daunting burden and obligation of remediation and rehabilitation to the government.”[12].

    By the time the World Bank issued its report, the Ministry of Energy and Mines of Peru had already proposed that Congress amend the law, and on May 25, 2005, the Peruvian Congress established that the State would only assume the remediation of mining environmental legacies when those responsible could not be identified. Furthermore, the amendment of the law specified that mining concession holders would remain responsible for repairing environmental legacies even when they lost or rescinded their concessions.



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    References

    1Martínez, I., El Acceso a la Justicia Ambiental en América Latina durante la década de los noventa: reformas y desarrollos, in Environmental Law in Developing Countries: Selected Issues, N. Islam, et al., Editors. 2001, IUCN.

    2The United Republic of Tanzania, National Environmental Policy, Vice President's Office, 1997, www.tzonline.org.

    3Ghana, Environmental Protection Agency Act, 1994 Act 490, 1994.

    4World Bank and International Finance Corporation, Large Mines and Local Communities: Forging Partnerships, Building Sustainability, 2002, International Finance Corporation.

    5McMahon, F. and M. Cervantes, Survey of Mining companies 2010/2011, 2011, Fraser Institute.

    6The World Bank, Wealth and Sustainability: The Environmental and Social Dimensions of the Mining Sector in Peru, 2005, The World Bank.

    7The Mining Association of Canada, A Report on the State of the Canadian Mining Industry: Facts + Figures 2010, 2010.

    8Koop, G. and L. Tole, What is the Environmental Performance of Firms Overseas? An Empirical Investigation of the Global Gold Mining Industry. Journal of Productivity Analysis, 2008. 30(2): p. 129-143.

    9PriceWaterhouseCoopers, Mine 2011: The game has changed 2011.

    10The Mining Association of Canada, Progress Report 2010: Towards Sustainable Mining, 2010.

    11The Mining Association of Canada, Towards Sustainable Mining 101: A Primer, 2010.

    12World Bank, Republic of Peru Wealth and Sustainability: The Environmental and Social Dimensions of the Mining Sector in Peru, 2005.

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