Look to public-private partnerships to build infrastructure for Ontario’s Ring of Fire

Chromite deposit could spawn thousands of jobs for several decades of mining.

Canada’s courts create uncertainty on aboriginal rights

The past year has seen a lot of Canadians paying attention to aboriginal land rights.

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Mining and Aboriginal Rights in Yukon

Legal uncertainty is a topic often raised in discussing unresolved Aboriginal land claims, such as those in British Columbia. Mining and Aboriginal Rights in Yukon examines legal uncertainty on Aboriginal rights in a different way, and in an under-examined Northern context. We examine what we identify as growing legal uncertainty in Yukon. This topic is not one that would have been expected a few years ago. In Yukon, modern land claims agreements with 11 out of the territory’s 14 First Nations once seemed to have established a high degree of certainty on Aboriginal claims. This certainty was even seen as a significant advantage for Yukon in the global competition for mining investment.

However, changing perceptions in the mining industry now suggest that this advantage has been undermined in recent years. The phenomenon of growing legal uncertainty in Yukon may also have implications for the whole country. It may be that modern land claims agreements—long seen as the best tool for establishing certainty on outstanding Aboriginal claims—are not living up to their promise in the current legal environment.

Analysis of data from the Fraser Institute’s annual Survey of Mining Companies shows that there has been a measurable shift in the mining industry’s perceptions of legal certainty on Aboriginal land claims in Yukon since 2012. In order to identify if changes have occurred that affect Yukon specifically, we also drew on comparative data from a jurisdiction without pertinent legal shifts during the same time period and a jurisdiction with the same shifts on general Aboriginal title issues. These data support the claim that something unique happened in the Yukon legal environment. Drawing on both the quantitative data and qualitative discussion of legal uncertainty in Hansard and the media, we find that the shift in perceptions was both very recent, dating from the years after 2012, and quite significant.

Several key legal changes related to the duty to consult and modern treaties can be correlated with this shift, and we suggest that these developments can explain a significant change in investors’ perceptions. In particular, court decisions in two areas seem to have been especially important in changing perceptions of legal certainty. First, courts have shown a willingness to go beyond the terms of highly detailed modern treaties to impose additional, unforeseen obligations on governments. Second, courts have extended obligations to consult Aboriginal groups to new types of government decision-making, in one case effectively discarding the legislative framework governing mining in Yukon. Investors appear to have taken notice of these recent legal trends. This, we argue, explains the dramatic shift in investors’ perceptions of legal certainty in Yukon in recent years.

Why does legal certainty matter for resource sector investment? How do the details of decisions in Aboriginal rights cases affect legal certainty? In answering these questions, we arrive at a framework that distinguishes necessary forms of legal uncertainty—which may have to be tolerated in order to protect certain Aboriginal interests—and unnecessary uncertainty, which is not required in order to protect such Aboriginal interests. A number of trends in recent cases seem to have led to elevated levels of unnecessary legal uncertainty.

We conclude with the following recommendations, which are addressed primarily to courts deciding Aboriginal rights cases, especially the Supreme Court of Canada. Courts can enhance legal certainty by:

  • seeking to minimize recourse to terms outside modern land claims agreements, which are detailed documents intended to govern the relationship between Aboriginal groups and governments in a comprehensive manner;
  • continuing to develop the doctrine of the duty to consult in an incremental manner that both defers to existing precedent and provides greater clarity of purpose;
  • encouraging the resolution of underlying, substantive Aboriginal rights claims, both by adhering to the expressed intent of the parties to modern agreements and by providing streamlined processes for resolving Aboriginal claims;
  • seeking to develop Aboriginal case law in an incremental manner, and avoiding the dramatic shifts in the jurisprudence that have characterized the past three decades.

Mining exploration spending sharply declining in Ontario

Exploration graph

Mining exploration spending is tightening in Ontario. So where is the province's policy environment faltering?

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Divergent Mineral Rights Regimes

The current state of mineral law and policies related to mining non-fuel minerals, and public attitudes towards mining are substantially different in Canada and the United States. Yet from an historical perspective, these two countries started out with the same laws respecting mining and mineral rights. The obvious questions are how did the systems diverge, why, and what are the implications? The key observations are that US mineral law and policies have been developed in a much less ordered process than those in Canada. In the United States, this process has yielded some useful adaptations of basic British common law such as ownership of minerals in fee simple title. The Canadian approach to policy, however, produces more intergovernmental collaboration and decentralization on matters such as environmental regulation.

After reviewing the literature, we found two key differences between the two mineral rights systems. The first is that in Canada, minerals are reserved by the provinces, while in the US minerals are either associated with surface ownership (primarily in the eastern US) or reserved by the federal government (primarily in the western US). The second is that in Canada, mineral rights are retained by the Crown or the provinces while in the United States mineral rights are privately owned.

These fundamental differences in property rights yield differences in regulatory and tax regimes that are predictable based on legal and economic theories and are tested using results from the Fraser Institute Annual Mining Survey. We examined differences between the United States and Canada on five policy parameters from the Fraser Institute 2012 Mining Survey that touch on critical differences in mineral rights regimes in Canada and the United States. These factors are:

  • uncertainty over disputed land claims;
  • uncertainty over protected areas;
  • uncertainty over environmental regulations;
  • regulatory duplication and inconsistencies;
  • US and Canadian mining tax regimes.

Mining companies show increased confidence in British Columbia

British Columbia was once regarded by miners as hostile to investment and ranked last in Canada for the attractiveness of its mining policy environment. However the tide has turned in recent years and British Columbia has again improved its ratings for global mining investment.

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