Natural Resources Minister Joe Oliver told mining executives Monday morning that the federal government is upholding its G8 commitment to ensure mining companies disclose payments made to governments both at home and abroad.
In his keynote address at the Prospectors and Developers Association of Canada's (PDAC) convention in Toronto, Oliver said the federal government's "preference is to work with the provinces and territories to implement mandatory reporting standards through the securities regulators."
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However, he said if the provinces don't implement adequate standards, the federal government will step in to enact legislation by April 1, 2015.
"There must be a pan-Canadian approach to mandatory reporting standards," Oliver said. "We do not want to see some provinces implement standards, while others do not."
The natural resources minister outlined the government's specific requirements, which are meant to curb potential corruption and and bring greater sunlight to companies securing contracts or resource rights in developing countries.
"We will require Canadian extractive companies to publicly report payments over $100,000 to all levels of government, both domestic and international," Oliver said.
This would apply to medium and large publicly traded companies on a project by project basis.
"We want to make it as easy as possible, so we will not create a central database. Instead, we would require that reports be posted to company websites, with the government and public notified."
Oliver said details on penalties for noncompliance have yet to be worked out.
Oliver's announcement comes as the government is still consulting with various levels involved — including provinces, Aboriginal groups and industry and non-governmental organizations — to design reporting standards.
The Conservative government first committed to adopting these standards last June at a meeting with mining, oil and gas executives in London, England.
The New Democrats said they themselves have been pushing for transparency and they're "cautiously optimistic" about this development.
"The problem we’ve found with this government is that they make the show of the announcements without actually putting in place the resources to ensure compliance," said energy and natural resources critic Peter Julian.
"That’s going to be our concern and what we’re going to be looking for in the coming months."
The mining industry itself has long called for greater transparency.
In January, a coalition including industry associations and transparency watchdogs, released a report with recommendations for mandatory disclosure.
"A lack of clarity around who benefits from resource extraction breeds mistrust between communities, governments and companies, generating unstable business environments, threatening the security of supply, and even, in extreme cases, contributing to violent conflict," the report reads.
The working group notes improved revenue transparency could help provide citizens and communities with information to hold their governments accountable, "deter corruption and bribery," assist investors and "help companies secure a social licence to operate."
While many of the report's provisions align with the government's proposal, the working group report goes a step further and recommends junior public companies disclose payments over $10,000.
When asked why the government would not lower the threshold, Oliver said it's a "question of balancing the economic cost of a policy with the public purpose" and that $100,000 is a reasonable cutoff.
"To lower it significantly would create very significant administrative costs," Oliver told reporters following his speech. "We don't think that, frankly, it's really called for or necessary and it's not the standard — internationally."
Other revenue transparency regulations have been implemented worldwide.
In the United States, more than 100 of the largest Canadian companies listed on U.S. stock exchanges are already required to disclose payments, or face the penalty of getting delisted. Mandatory reporting regimes are also currently being enacted in the EU.
The government's proposal is similar to Liberal MP John McKay's private member's bill, currently making its way through the House of Commons.
However, McKay's "sunshine" bill would impose more stringent conditions upon companies, such as the annual disclosure of all payments made to governments, not just ones over $100,000.
As well, the annual reports would have to be independently audited and submitted to both the Foreign Affairs and Natural Resources ministers or else companies could risk fines anywhere from $20,000 to $5 million.
The Liberal MP is skeptical of Oliver's announcement that there will be legislation introduced by April 2015.
"If he said April 1, 2014, I'd be a bit more impressed," McKay said in an interview with CBC News.
He said though there has been discussion with various provincial securities regulators, this initiative "may not be as high up on the legislative agenda” for some provinces.
“You’re going to have this Swiss cheese approach to these kinds of things.”
And taking into account the parliamentary cycle, even if the government introduces federal rules, McKay said it is likelier they will come into force in 2017 or 2018.
"It's an announcement essentially without substance," he said.
The Liberal MP said that while he does not expect his private member's bill to be passed, he's leaving the door open for the natural resources minister.
"I'm perfectly willing for Joe to take over my bill."
New Prosperity mine rejection
Oliver also addressed the government's decision to reject the New Prosperity mine in British Columbia, which he said was due to "significant adverse environmental effects."
"Government has a responsibility to balance economic and environmental considerations when reviewing resource projects," he said in his speech.
Oliver said the mine underwent a rigorous review process by an independent panel, which identified the adverse environmental effects, similar to those identified in an earlier panel report in 2010.
"Based on that finding, the project was not approved," he said.
Prime Minister Stephen Harper reiterated Oliver's points in response to a question posed by PDAC president Glenn Nolan during a sit-down session at the convention.
He said the environmental assessment was "extremely negative, particularly with the hydrographics system in the region" and "the project as previously and presently conceived would not address essentially the long-term destruction of that system."
"I may as well be frank," Harper said. "It's also in an area where there's unresolved land claim issues and local aboriginal groups feel equally strongly and do not approve the project.
"I think all of the weight of the environmental assessment, plus all of the legal advice the government received, we just did not have grounds to approve this project."
But Harper indicated the government would keep an open mind.
"We always encourage proponents to take a close look at the details of the assessment themselves to see what they could do to propose a project that would meet our environmental criteria. They're always in a position to examine the environmental assessment and to propose a new project," he said.
More than 30,000 attendees from 126 countries are present at the PDAC convention.
Canada is home to more than 75 per cent of the world's mining companies — 57 per cent in Toronto alone.
The government is also expected to complete a five-year review of its corporate social responsibility strategy for the mining, oil and gas industry this month.