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Canada's Northwest Territories mutes pro-investment angle to mining law makeover

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Canada's Northwest Territories mutes pro-investment angle to mining law makeover

As Canada's diamond-rich Northwest Territories considers how to reshape its mining laws and regulations, the minister overseeing the process threw cold water on some pro-mining talk outlined in a discussion paper the government issued in August.

A key plank of the discussion paper, "Unlocking our potential together," was that the Northwest Territories, or NWT, had fallen behind in attracting investment for exploration and to reverse course, new legislation might help attract business.

To that end, it floated a series of proposals on which it wants public consultation, from introducing a new claim-staking system to creating special mining zones in the territory.

Speaking with S&P Global Market Intelligence in a recent interview, NWT Minister of Industry, Tourism and Investment Wally Schumann pushed back strongly against the view expressed by his own department that the NWT lagged in exploration owing to regulatory hurdles and dismissed a proposal to create special mining zones as a means to increase investment.

"I think the big parts of us falling behind on exploration are commodity prices [and] lack of infrastructure," he said. These were at fault, he said, not so much legislation.

In the paper, which calls for public feedback on the push to create a Mineral Resources Act, a first for the territory, the government outlined the key role mining plays in the NWT, where diamond mining is an important source of revenue and employment. It points to the need to be competitive and ties the new legislation to turning the exploration sector around.

"Without an increase in exploration, the NWT's overall mining activity level is set to decline in the coming years," the government wrote. "Increased exploration will require a new legislative framework that encourages exploration and streamlines our regulatory process."

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Schumann downplayed the role increasing investment has in driving the creation of the Mineral Resources Act. "I would say, probably, it might be a very small part of it," he said.

Brooke Clements, a former head of the NWT & Nunavut Chamber of Mines and a knowledgeable diamond explorer, disagreed with Schumann's position that regulation is not a key issue affecting exploration and mining in the northern Canadian region.

"Principally because of the cost, infrastructure challenges and regulatory issues, investment in NWT exploration has decreased dramatically over the last 10 years," he said via email. "For the NWT to attract necessary investment in mineral exploration, many challenges need to be addressed."

Solutions?

Seeking public input, the government outlined ideas that new legislation might address in the discussion paper. The ideas included online claim staking, redefining some of the consultation processes to better set expectations and the possibility of special mining zones, where regulations might be streamlined.

Schumann expressed support for modernizing claim staking but blasted the possibility of special mining zones. "We're not setting up zones for mining," he said. There would not be areas where explorers might "just go over here and drill for gold and over here for diamonds," he said. "That's not how it works."

"Our regulations would be for the whole NWT," Schumann said. "So it's not going to favor one zone over another or one claim over another."

The minister's comments on special mining zones and the issues the NWT face in attracting exploration investment suggest he will advise against some of the more pro-mining aspects outlined in the discussion paper as the government formulates the new Mineral Resources Act.

The impetus for creating the act was devolution of power from the Canadian government to the NWT in 2014. Before that, the federal government had responsibility over lands and resources, which meant the NWT had no need for stand-alone mining-related legislation.

Clements had a long list of things that could help attract mining to the region. In particular, he viewed aspects of consultation with stakeholders such as First Nations as confusing.

"The revised mining regulations should crystallize the rules for consultation with communities affected by exploration and mining projects," he said. "Officially, it is the responsibility of the government or 'Crown' to consult with communities. However, they historically have passed this responsibility entirely to the proponent with no consistent rules or guidelines, which creates confusion among proponents and potential investors."

Schumann also stressed the crucial role of consultation with First Nations and expressed the view that relative to other places in Canada, the NWT was getting it right. "The rest of the country needs to look at how we do aboriginal consultation because we're the leader in this country,” he said, noting the process in the NWT has to consider myriad land claim groups, some that are settled, and multiple review boards.

One concern flagged by Clements was the possibility the NWT might require pre-staking consultation for explorers. This is not a typical arrangement in Canada and is not addressed in the discussion paper. But Clements said it is something the government is talking about.

"The government is currently contemplating whether consultation should be required prior to acquiring mineral claims," he said. "This is a terrible idea and should be resisted, because if implemented, it will be a strong deterrent to mineral exploration. Confidentiality is required at the early stages of exploration."

Mike Westwick, a spokesperson for the NWT government, responded to a follow-up question after S&P's interview with the minister about pre-staking consultation but did not directly address the issue.

"As we're in the engagement stage, there are no policy prescriptions as yet," he said. "We're looking to spark conversations and take input from people to eventually inform policy decisions."

Schumann said the aim was to have a bill passed by 2020.