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Canadian miners wary of expansive new permitting rules

Canada's new environmental permitting process went into effect at the end August but it has yet to attract volunteers as the industry grapples with uncertainty, industry experts and watchdogs say.

"It's better the devil you know than you don't know," said Martin Ignasiak, a resource lawyer with Osler Hoskin & Harcourt LLP.

The Trudeau government revised federal permitting after fraught law making that now requires more consultation on climate change, first nations rights and gender-related issues, among other things. Leading energy sector companies cast the new rules as overly stringent and investment killing, while metal miners largely framed the changes as helpful in ironing out issues the industry has with the existing process, such as too little conversation between federal and provincial regulators.

And while the new laws allow some existing projects leeway about adopting the new regulations, few miners have done so, according to experts. The law went into effect Aug. 28 and has a 60-day window for companies with projects under the previous system to decide if they want to proceed under the new one.

Ignasiak said uncertainties over how the government will interpret the new laws and regulations may underpin the tentative approach, noting a pre-application process that takes longer and is broader in scope. He and others in the industry wonder how the government will react to expanded consultation and deal with revised timelines.

"At this point it's an unknown," Ignasiak said.

So far miners appear to be taking a wait-and-see approach, though there is an argument for going first, experts say. Ignasiak noted it may pay off to be first in line under the revamped permitting process as regulators may want to show the system is a success.

"Everyone will be watching the first few go through," Ignasiak said.

Trepidation over the new laws and regulations in part stems from how the government will handle them, said Pierre Gratton, President of the Mining Association of Canada. "They've got some new definitions in the act that will have to be interpreted and applied," he said, pointing to fish impact laws.

A few explorers in the midst of federal permitting told Market Intelligence they are sticking with the existing permitting criteria. Marathon Gold Corp., which is permitting the Valentine Lake gold project in Newfoundland, has decided not to transition to the new process, a spokesperson said. Osisko Mining Inc., which has submitted permitting documents under the previous federal process for its Windfall Lake gold project, said it was not advanced enough in its feasibility process to make the shift.

Among changes to other existing laws, Trudeau's new approach supersedes the Canadian Environmental Assessment Act, or CEAA 2012.

While the Mining Association is generally supportive of the new laws and regulations, there was a divide in its membership between energy and metal-mining companies, Gratton noted. "The hard rock miners continue to think that if it's well implemented it should be an improvement on CEAA 2012," he said.

Cautious miners

However, there are some in the mining sector that are more pessimistic. Taseko Mines Ltd., which has so far failed to permit its New Prosperity copper-gold project at the federal level, took a dim view of the new law and regulations, with President and CEO Russell Hallbauer saying in an email to S&P Global Market Intelligence, that "As a company we were totally offside on that."

Taseko COO John McManus outlined a number of concerns about the new rules in an email to Market Intelligence. He said it is more susceptible to political decisions than the earlier permitting process.

"The minister is given wide discretion to reject a proposal unilaterally and early in the process," he said. CEAA 2012, as the new laws, ultimately come down to a ministerial decision after the input and recommendation of the regulators.

McManus also said the new process amplifies the opinion of opponents to a project, even if they are not directly associated to a project. "Anybody who asks to be an intervenor is allowed into the process," he suggested, adding that that he felt the mandate to consider gender studies and the effects to climate lacked clarity.

Gratton pointed to potential advantages for miners. The new process revised a "project list" that for miners defines thresholds for inclusion based on tonnage intensity. It lifts many of them.

"There are some small gold mines that may find themselves no longer requiring a federal assessment," Gratton said.

The threshold for a gold mine was raised from 600 tonnes per day under CEAA 2012 to 5,000 tonnes per day under the new rules. Likewise, the threshold for some other kinds of metal mines was raised from 3,000 tonnes per day to 5,000 tonnes per day.

While industry experts question implementation of the pre-application process, Gratton pointed to longer timelines at the outset of environmental permitting as beneficial. He said a 45-day window at the front of the CEAA 2012 system was too short for federal and provincial governments to harmonize permitting in a country where there are shared responsibilities for regulation.

"We know that proponents are going to have to be proactive to really push both levels of government to cooperate," he said. "But if that happens it should be better."

Jamie Kneen, an analyst with MiningWatch, an organization that champions more stringent resource permitting, was ambivalent about CEAA 2012 versus the new laws. "There's the basis for a more thorough, more evidenced and more comprehensive impact review process," he said. But he said he dislikes the degree of ministerial control and the lack of specifics in the rules.

"There's no red lines. There's no backstops," Kneen said. "There's nothing that says what kind of trade offs are acceptable in terms of economic benefits and jobs versus the environment."