Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The mining industry in BC is built upon the free entry system of mineral claim staking. The future of this regime is now very much in question because of a Court of Appeal for Yukon decision at the end of December.
The Ross River Dena Council (RRDC), who have not signed a treaty with Canada, had sued the Yukon government stating no mineral claims should be allowed without first consulting and accommodating RRDC aboriginal title and rights.
The Supreme Court of Yukon ruled in November 2011 that the government did not need to consult with the RRDC until after a claim had been formally registered and then notification to the RRDC of the existence of the mineral claim constituted enough consultation by the government.
This decision was appealed by the RRDC and on Dec. 27, 2012 the Court of Appeal for Yukon released their decision on the lawsuit. The core of the ruling was as follows:
[56] I would allow that appeal by granting the following declarations:
a) the Government of Yukon has a duty to consult with the plaintiff in determining whether mineral rights on Crown lands within lands compromising the Ross River Area are to be made available to third parties under the provisions of the Quartz Mining Act.b) the Government of Yukon has a duty to notify and, where appropriate, consult with and accommodate the plaintiff before allowing any mining exploration activities to take place within the Ross River Area, to the extent that those activities may prejudicially affect Aboriginal rights claimed by the plaintiff.
The decision effectively means that the government needs to consult before allowing any mineral claims to be staked. How this would work with the current law in use in Yukon is not at all clear.
The decision does not take effect for a year and is only for the RRDC, but because of precedence it will hold true for elsewhere in the Yukon as well as any other Canadian jurisdiction that uses the free entry system such as BC.
It is also important to know that the Court of Appeal for Yukon is primarily staffed by justices from the BC Court of Appeal which means in many ways this is a BC court decision.
The ruling means that staking will not be possible in any form until the government consults with the First Nation about their whole traditional territory.
Once the territory wide consultation is done, the government will have to have some system in place to consult with First Nations each time any mineral claim is registered. Likely any new regime would not allow for a claim to be fully registered until consultation with the First Nation is complete.
The judges did not make their decision lightly did so with full knowledge of the importance of the free entry system:
[43] I am of the opinion that the judge erred in his analysis. I fully understand that the open entry system continued under the Quartz Mining Act has considerable value in maintaining a viable mining industry and encouraging prospecting. I also acknowledge that there is a long tradition of acquiring mineral claims by staking, and that the system is important both historically and economically to Yukon. It must, however, be modified in order for the Crown to act in accordance with its constitutional duties.
[44] The potential impact of mining claims on Aboriginal title and rights is such that mere notice cannot suffice as the sole mechanism of consultation. A more elaborate system must be engrafted onto the regime set out in the Quartz Mining Act. In particular, the regime must allow for an appropriate level of consultation before Aboriginal claims are adversely affected.
There is a potential for this ruling to create a temporary no staking zone for almost all of BC until First Nation traditional territory consultations are complete. The judges in the decision went as far to say something like this could be the outcome:
[49] A prohibition on locating claims in all or part of the claimed territory is the most obvious method (though, perhaps, not the only method) of accommodating Aboriginal title claims. Claims to Aboriginal rights other than title raise other issues. The location and recording of a quartz mining claim, in and of itself, is not likely to interfere with claims to Aboriginal rights other than title. It is the actual performance of work on the land that may affect such claimed rights.
There is a large task ahead for the governments of BC and Yukon to change the mineral staking laws to fit with the the court decision.
With a provincial election coming in BC it is unlikely that the civil service will get clear political direction until the summer of this year on how to implement this ruling.
On a positive note, the decision is not likely change any current tenures. For all existing mineral claims the First Nations are likely owed consultation and accommodation but this should not scare industry.
The responsibility for consultation and accommodation should fall 100% on the government and not industry.
The decision is likely to be appealed by the government of Yukon to the Supreme Court of Canada.
It is very hard to know how the Supreme Court of Canada will rule, but until they make a decision, this ruling of the Appeal Court of Yukon is the law of the land.
