Mexico’s proposed higher mining royalties could block nearly $7bn in investments
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Canada could improve its attractiveness for mining investment by allowing private ownership of mineral rights, particularly if mineral rights were given to First Nations, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Mining development in Canada is fraught with uncertainty related to First Nations land claims and requirements that miners consult with First Nations. The result is often endless rounds of negotiations with no end in sight,” said Kenneth Green, Fraser Institute senior director of energy and natural resources.
“Providing First Nations with private ownership of mineral rights will create a framework grounded in property rights and common law that would bring clarity to negotiations between First Nations and miners over project development.”
The study, Divergent Mineral Rights Regimes, compares mineral law and policies in Canada and the United States. Mineral rights in Canada belong to individual provinces (the Crown) but can be leased to miners, allowing them to develop the resource. But miners must negotiate within this Crown-based ownership system, making development of mining opportunities in First Nations jurisdictions particularly challenging. By comparison, in the United States mineral rights are privately owned.
Why is this important to investors?
Due to private ownership of mineral rights in the U.S., notes the study, land claims disputes are less of a deterrent to mining investment. While mining under any mineral rights regime involves a social contract between the community and the miner, secure private mineral rights provide both sides with more secure and clearly defined bargaining power.
“The ownership of mineral rights is the biggest difference in mining between Canada and the United States and one of the greatest impediments to investment in Canada,” Green said.
“Mining investment is inherently international, and if Canadian policymakers wish to maintain or improve Canada’s competitiveness in attracting mining investment, they should consider reforming Canada’s mineral leasing system and introducing private ownership of mineral rights, particularly for First Nations.”
