©2014 VICE Media LLC

    The VICE Channels

      The Harper Government Has Refused to Fill a Position to Oversee the Mining Industry

      August 19, 2014

      Photo via Flickr user leandrociuoffo.

      The Harper government is dragging its feet on filling a nearly year-old vacancy for a job to oversee Canada's controversial mining industry. The position has already been widely criticized as an astroturfing effort to boost the damaged image of Canadian mining interests worldwide, despite its supposed mission of addressing the issues of our mining companies that are marauding throughout the Global South. But even though the job was panned for being ineffective, not having an overseer at all is clearly much worse than having a neutered one.

      And things may soon get even more out of hand.

      If you aren't already familiar, 75 percent of the world's mining companies are headquartered in Canada. Domestically, mining is a $50 billion a year industry that employs hundreds of thousands of people. The vast majority of the world's mining capital flows through Toronto Stock Exchange. Canadian mining companies are spending some $130 billion abroad.

      So when reports spring up about mining companies behaving badly, which is a frequent occurrence, there's a very good chance the company is Canadian.

      But Ottawa has fought any attempt to slap regulations on Canadian companies, instead opting for an underfunded and barely-staffed overseer with no real powers. Marketa Evans, who was appointed as the Federal Corporate Social Responsibility Counsellor, resigned abruptly last year. Her office was ridiculed as being, at best, ineffective and, at worst, a PR effort for Canadian mining interests.

      Now activists and industry alike are on the same page—it's time for the government to do something. The government, however, is slow to react, and is giving new powers to companies who want to go after uncooperative governments.

      Miners behaving badly

      Canadian mines have spent much of the last two decades getting a bad rap through resource-rich Global South.

      Canada's mining industry "stained Canada's international reputation," according to Human Rights Watch senior researcher Chris Albin-Lackey. That reputation was a big factor in Canada's surprising defeat in its bid to win a seat on the UN Security Council, according to left-wing academic Yves Engler. One report cited the reputation of Canadian mining companies as "buccaneers at best and Ugly Canadians at worst.

      That growing consensus is thanks to a spate of stories that make Canadian companies look more and more like they're governed by Bond villains.

      Human Rights Watch singled out Toronto-based Barrick Gold for ignoring repeated gang rapes at one of its Papua New Guinea mines. El Salvadorian activists raised the alarm after a slew of local anti-mining activists kept winding up dead, and they blame Vancouver-based Pacific Rim Mining. In Kyrgyzstan, Saskatoon-based Cameco drew the ire of the local government following three chemical spills and workplace accidents that may have killed half a dozen workers and nearby residents. The wife of one activist, shot to death by security forces employed by Toronto-based Hudbay Minerals and its Guatemalan subsidiary, came to Ottawa to put pressure on MPs to do something. She's pushing a long-shot lawsuit in order to try and make the company pay.

      Then there was the time that Montreal-based Anvil Mining facilitated war crimes in the Congo by arming, transporting, and paying soldiers to kill a half dozen rebels in a nearby town. In the end, they killed more than 100—mostly civilians. A UN report found that they also carried out summary executions, looting, and rape.

      In many of the cases, it's impossible to tell whether the reports are accurate, and just who is responsible, because of a lack of good governance in many of these countries' rural areas.

      Even a report by the Prospectors and Developers Association of Canada (PDAC), leaked to advocacy group MiningWatch, says Canadian companies are responsible for four times as many violations as other mining-heavy countries.

      The problem is huge.

      Barrick Gold's reputation for poor international behaviour has sparked frequent protests. Image via ProtestBarrick.com

      An attempt to regulate

      Given the litany of horror stories, and the blowback they've had on the mining companies with spotless records, it seemed all but certain that Ottawa would be pushed to act.

      The public relations fight finally coalesced around 2009. Liberal MP John McKay introduced bill C-300. The legislation would have required the Minister of Foreign Affairs to create an office to oversee Canadian mining companies and pull any funding going to companies that ignore human rights, environmental protections, or labour laws.

      Canadian funding to these companies is not insignificant. As this journalist reported in 2011, government bodies like Export Development Canada, the Canadian Pension Plan, and the Department of Foreign Affairs have kicked in billions in investment and loans to these companies, including those who have been repeatedly flagged for human rights abuses. Meanwhile, the Canadian International Development Agency is shoveling huge sums of money towards helping mining companies clean up their act in their host countries.

      McKay's bill would have kneecapped any ne'er-do-wells operating abroad. It, however, faced stiff opposition from organizations like PDAC and the Mining Association of Canada (MAC). Nevertheless, the bill passed its first vote in the House of Commons. Conspicuously, however, a large number of opposition MPs skipped the vote—many of them have large mining interests in their ridings.

      When it came back to a vote again, the lone Conservative supporter—Michael Chong—flipped his vote, and enough opposition MPs were no-shows to ensure its defeat.

      But the government didn't want to be seen to sit on its hands. That's where Marketa Evans came in. She was appointed as the "Federal Corporate Social Responsibility Counsellor."

      There was some cautious optimism.

      Evans was a well-heeled player in the NGO and corporate world. She had been the Director of Strategic Partnership for Plan International, and had been a market manager for a decade at CIBC.

      Fittingly, she had also spent six years heading up the Munk School for International Studies at the University of Toronto. While the school is regarded as independent, its patriarch is Peter Munk who happens to be the founder and chairman of the world's largest mining company—Barrick Gold.

      Optimism faded quickly. The new gig was so limited that, in its initial consultations with NGOs and representatives of the mining sector, stakeholders referred to the office and its mandate as "a joke." One coalition called the post "hopelessly ineffective."

      Paradoxically, the office was not just for those affected by mining, but it also acted as an "avenue of recourse for mining, oil and gas companies who feel they've been unfairly targeted," a spokesperson for the office told this journalist in 2010.

      Basically, Evans was playing defence for misbehaving mining companies.

      The core function of her role was to be able to intake complaints against Canadian mining companies abroad. That's where the job's power began and ended. From there, the office could invite the offending company to join mediation. If the company refused, the file was closed. If mediation began and the company withdrew, the file was closed. If the company stuck with it, the counsellor had no power to impose solutions, damages or sanctions onto the company. It played referee, but the company was always free to take its ball and go home.

      In notes from the consultations held by the office, obtained via Access to Information Request, a handful of stakeholders lambasted the effort.

      "Have $ for one complaint a year—goes to the seriousness taken of issue, is a joke—calls into question legitimacy of whole exercise," reads a note about one participant's objections regarding the office's limited funds.

      "Hopes—see [development] of procedure that is effective, genuine means of redress if rights negatively impacted. Fear—we won't see it," reads another participant's complaint who didn't see the office improving any time soon. They were right.

      The names of all participations were withheld.

      The documents obtained from the Department of Foreign Affairs include reams of flipcharts, which have been the hallmark of insufferable public presentations since the dawn of time.

      "Office = white elephant -> mandate to protect reputations," reads one piece of chart paper.

      The office dropped about $58,000 to do a marathon of consultations in Canada and abroad, with the vast majority of participants coming from industry.

      One note from the office, on the consultation documents, reads: "speaks volumes who is not here—already shows a lack of trust??"

      In four years, the office received just five complaints. In four of those, the company either refused to enter into the process, or quickly withdrew from it. The fifth complaint is supposedly ongoing, with the last report coming out nearly a year ago.

      The complaints show just how ineffective the office was.

      In one, Excellon Resources brought in Mexican state police to inspect a copper theft at one of its mines. While investigating, police reportedly beat a number of mine workers, who were ultimately innocent of the theft. The workers complained and the company did nothing, so they went to Evans. As the counsellor notes, in closing the file, "Excellon stated that the process does not provide value to the company."

      In another request, indigenous groups in Argentina complained to the office after heavy rainfall led to local drinking water mixing with toxic runoff from Silver Standard Resources' nearby mine. When they told the company, management ordered water testing—and subsequently refused to release the results. The company initially agreed to the dispute resolution process, until the counsellor suggested she conduct a field visit of the mine. Silver Standard refused and withdrew.

      A 3-D rendering of the Silver Standards mine in Argentina.

      In October 2013, Evans quietly resigned, a year before the end of her mandate.

      Since then, the office has been in limbo.

      No counsellor, no strategy

      The Department of Foreign Affairs, International Trade and Development (DFATD) say they're drafting a new strategy to deal with wayward mining companies, and along with that will come a revamping of the counsellor's job.

      However, Minister of International Trade Ed Fast has been undergoing those consultations since December 2013, and no progress has been announced.

      VICE asked Fast's office to offer an update, strictly for background purposes.

      "To answer your question for background information, a new CSR Counsellor will be appointed in due course," wrote a government spokesperson.

      VICE followed up, asking for details about the appointment process, the timeline, and the drafting of a new strategy.

      "As previously stated, a new CSR Counsellor will be appointed in due course," they repeated.

      All other questions were ignored.

      Ian Thompson, Program Coordinator at faith-based social justice organization KAIROS—the ones who had their funding unceremoniously re voked by then International Development Minister Bev Oda—isn't too surprised that Evans resigned.

      "Implementing that mandate had to be demoralizing," says Thompson.

      An alliance of groups, to which KAIROS is party, has been calling for more effective oversight for years. Amazingly, industry is getting on board.

      "It really didn't work. And I think that was clear to industry folks," he says.

      Now the only people left to convince are the government.

      "They've heard the message, whether they're going to listen..." Thompson says, trailing off.

      Ben Chalmers, Vice President of Sustainable Development at the Mining Association of Canada, says it makes sense that they haven't appointed a new counsellor while they finalize the strategy, but a beefed up strategy is much needed.

      In what constitutes a come-to-Jesus moment for associations like MAC, industry is now getting behind a more comprehensive strategy to combat bad deeds done by the extractive sector.

      While they're not exactly pushing for the ombudsman that McKay envisioned, the mining associations are asking for a more effective system.

      In a submission by MAC sent to DFATD, they recommend re-vamping the whole system, linking the dispute resolution with the trade department, and turning the counsellor's job into more of an advisory role. In other words, they want to give the powers to bureaucrats who can actually use them. And, most importantly—some of the process would be mandatory.

      Both MAC and PDAC are also calling on the government to work to build capacity in resource-rich countries — an idea that PDAC says is "under-conceptualized, under-resourced and undervalued"in Ottawa's current plan.

      When industry gets behind an idea, the government tends to move a lot quicker. When the extractive sector backed an initiative to have mining companies make public some of their financial documents—'Publish What You Pay,' they call it—Ottawa made a big to-do about announcing it.

      Presentation aid obtained via Access to Information Request from DFATD. Image via the author.

      Indeed, bad press has pushed many companies to get more onboard with strategies aimed at ensuring that its various international operations don't freelance when it comes to security, workers' rights, and environmental protections.

      The problem is, even if the big players like Barrick and their spokespeople at the various organizations get onboard with being good global citizens, that doesn't mean that all of the various junior mining companies will play by the rules.

      No oversight, no appeal

      Enter Infinito Gold.

      Thanks to Canada's uber-fertile atmosphere for mining companies—made possible by the barely regulated venture capital markets where small mining companies can raise millions overnight—any wealthy psychopath with a plan can fly off to far-away places and plunder resources on the cheap.

      Calgary-based Infinito Gold had set up shop in Costa Rica, with plans to open up a huge open-pit mine. The government of Costa Rica found some irregularities with the approval process—and, given that they banned open-pit mining in 2011— they rejected Infinito's application.

      So Infinito decided to sue Cosa Rica for a billion dollars.

      If that sounds incredible, that's because it is.

      Infinito is making use of a little-known treaty that Canada ratified late last year—the World Bank-run Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID).

      It basically serves as an international courtroom for companies who figure that a country isn't respecting the provisions of all its trade deals. Technically, it's 'arbitration.' But, realistically, it's a forum for companies to sue countries. Decisions cannot be appealed or overturned by domestic courts.
       

      Interview requests to Infinito went unanswered.

      It has thus far been used by tobacco giant Phillip Morris to sue Uruguay for slapping anti-smoking ads on its cigarette packages. They're demanding  $2 billion. It's also being used by Swedish company Vattenfall, whose executives are trying to squeeze over $4 billion from Germany, because they're phasing out nuclear power.

      ICSID should be something of a dream for small Canadian mining companies that don't want to go through the messy business of actually winning approval for their projects. Instead, they can just sue the government and force their way in.

      And, so long as dispute resolution in Canada remains a voluntary and ineffective regime, it's so much easier to threaten a state for billions of dollars.

      "It allows companies to bypass local mechanisms," says Scott Sinclair, senior research fellow with the Canadian Centre for Policy Alternatives.

      And if this gaggle of judges on the Washington-based ICSID tribunals decide that a country isn't respecting its trade agreements, it can force the country to pay. Even if the decision was made by a country's democratic institutions.

      Indonesia tried to tell the tribunal that it had no authority to hear a lawsuit against the country's mining laws. The tribunal, unsurprisingly, thought otherwise.

      "It's a whole industry of lawyers who run around the world suing countries," says Thompson. "It reduces governments' space to implement effective programs around environmental protections or protection of worker or other things in the public interest."

      Now that Canada has signed on—it resisted doing so for years because the provinces hated the idea—things could move quite quickly.

      "I do feel like the flood gates are opening—or are already opened," says Sinclair.

      Canada only ratified ICSID last December. On top of Infinito's claim, it looks like Toronto-based Gabriel Resources will also be looking to  take Romania to the cleaner's for holding up its huge gold mine project.

      Thompson says this is something Canadians should be worried about.

      "If they can do it to Costa Rica, they can do it to us too."

      -

      Topics: Barrick Gold, justin ling, Justin Ling VICE, the harper government, Mining Issues, mining, politics, Canada, NEWS, Stephen Harper, Canada's mining industry, Infinito Gold, Phillip Morris, canadian mining companies, canada's mining companies, Prospectors and Developers Association of Canada, MiningWatch, Human Rights Watch, Pacific Rim Mining, Cameco

      Comments