The Canadian Extractive Industry in Context

The following article was written by author and journalist Yves Engler, author of The Black Book of Canadian Foreign Policy and The Ugly Canadian: Stephen Harper’s Foreign Policy, among others.

Documentation for this information can be found in The Black Book of Canadian Foreign Policy, particularly the chapters on mining, Papua New Guinea, and Colombia.

[CIRDI] needs to be understood as part of a larger Canadian foreign policy phenomenon of supporting the resource extraction, particularly with international development funds.

With nearly 75 percent of the world’s mining companies listed on this country’s stock exchanges, Canadian corporations operate thousands of extractive projects outside this country and many of these mines have displaced communities, destroyed ecosystems and provoked violence.

From Papua New Guinea to Ghana, Ecuador and the Philippines — and all over the world you will find Canadian-run mines that have caused environmental devastation, been the scene of violent confrontations, social opposition, or that have remained impoverished despite the vast wealth being extracted from their land.

There have been so many conflicts that even the industry associations effectively admit the problem.

A leaked report commissioned by the Toronto-based Prospectors and Developers Association of Canada found that Canadian companies were responsible for a third of 171 high-profile Corporate Social Responsibility (CSR) violations surveyed by mining companies between 1999 and 2009. The report concluded: “Canadian companies have been the most significant group involved in unfortunate incidents in the developing world. Canadian companies have played a much more major role than their peers from Australia, the United Kingdom and the United States. Canadian companies are more likely to be engaged in community conflict, environmental and unethical behaviour.”

This doesn’t seem to bother Stephen Harper’s government.

The Canadian government has largely ignored these issues, as it is close to the most retrograde problematic sectors of the industry.

In early 2007 a pan-Canadian roundtable launched by the previous Liberal government crossed the country to interview a wide variety of social actors about Canadian mining. You can find the report here. The roundtable put forward 27 recommendations to better address the human rights and environmental effects of Canadian companies operating abroad. Mining Watch explained: “The final CSR package at the core of the 2007 Advisory Group report included comprehensive human rights norms in the standards set, and the possibility of sanction (but not remedy) in the form of withholding of government financial and political support for companies found by the Ombudsman and Compliance Review Committee not to be living up to the adopted standards.”

Even though the Mining Association of Canada helped formulate the 27 recommendations — and tepidly agreed to them — other powerful forces opposed the plan. Barrick Gold, which operates some of the most controversial mines in the world, the Prospectors and Developers Association of Canada and the Canadian Chamber of Commerce lobbied the Conservatives to reject the roundtable’s recommendations. They found a sympathetic ear. After stalling on the issue for two years, in March 2009 trade minister Stockwell Day rejected the roundtable’s proposal to make diplomatic and financial support for resource companies operating overseas contingent upon socially responsible conduct.

When it became clear the Conservatives would not act on the 2007 roundtable’s recommendations, Liberal MP John McKay introduced An Act Respecting Corporate Accountability for the Activities of Mining, Oil or Gas Corporations in Developing Countries (Bill C-300). The bill was designed to put into law a number of the main recommendations from the 2007 roundtable. Under Bill C-300 companies that failed to adhere to (relatively lenient) standards of social responsibility would lose the support of Canadian embassy officials and taxpayer-funded agencies such as Export Development Canada, a crown corporation that provides billions of dollars of insurance and advice to companies operating outside of the country. In October 2010 Conservative MPs led the defeat of bill C-300.

The Conservatives have blocked efforts to regulate the mining industry’s social conduct all the while lobbying ferociously on behalf of mining companies. The Conservatives established diplomatic relations with a country simply to advance mining interests (Mongolia), signed a free trade agreement largely to protect Canadian mining investment (Peru), got caught spying on a country’s ministry of mines (Brazil) and obstructed international efforts to reschedule a poor country’s foreign debt after the government revoked a Canadian company’s concession (the Congo).

The Conservatives also diverted large sums of Canadian aid to promoting mining interests. Between 2006 and early 2012 the Canadian International Development Agency approved at least $50-million in projects linked to the mining industry, according to a Globe and Mail investigation.

Through Canada’s Corporate Social Responsibility Strategy for the Canadian International Extractive Sector (“Building the Canadian Advantage”) and CIDA’s “Sustainable Economic Growth Strategy”  the government put up $27 million in 2011 for projects in Colombia, Peru, Bolivia, Ghana and Burkina Faso.

CIDA said its partnership with mining companies was designed to “improv[e] the competitive advantage of Canadian international extractive sector companies by enhancing their ability to manage social and environmental risks.” One example of the aid agency’s efforts was a $4.5-million grant to Lundin for Africa, the philanthropic arm of mining giant Lundin Group of Companies. Another example was the $20 million Andean Regional Initiative in Peru, Bolivia and Colombia intended to “promote corporate social responsibility through partnership arrangements between extractive sector companies and other stakeholders aimed at socioeconomic development and support to governance.”

As part of the government’s promotion of Canadian mining companies last year they announced $25 million in funding for an extractive industries Institute to be housed at a Canadian University. The five-year $24.6 million [Canadian International Resources and Development Institute (CIRDI)] will be based at the University of British Columbia, in partnership with Simon Fraser University and Ecole Polytechnique de Montreal.

[CIRDI] may have some parallels with an initiative CIDA spearheaded 15 years ago. In 1997 Ottawa began an $11 million project to re-write Colombia’s mining code. CIDA worked on the project with a Colombian law firm, Martinez Córdoba and Associates, that represents multinational companies, and the Canadian Energy Research Institute (CERI), an industry think-tank based at the University of Calgary.

Once completed the CERI/CIDA proposal was submitted to Colombia’s Department of Mines and Energy and became law in August 2001. “The new code flexibilised environmental regulations, diminished labour guarantees for workers and opened the property of Afro-Colombian and indigenous people to exploitation,” explained Francisco Ramirez, president of SINTRAMINERCOL, Colombia’s State Mine Workers Union. “The CIDA-backed code also contains some articles that are simply unheard of in other countries,” added Ramirez. “If a mining company has to cut down trees before digging, they can now export that timber for 30 years with a total exemption on taxation.” The new code also reduced the royalty rate companies pay the government to 0.4 percent from 10 percent for mineral exports above 3 million tonnes per year and from 5 percent for exports below 3 million tonnes. In addition, the new code increased the length of mining concessions from 25 years to 30 years, with the possibility that concessions can be tripled to 90 years.

Canadian officials were happy with the results. According to CIDA’s summary of the project, “Canadian energy and mining sector companies with an interest in Colombia will benefit from the development of a stable, consistent and familiar operating environment in this resource-rich developing economy.” Or as Maclean’s magazine put it, “from the beginning, the aim [of CIDA’s mining project] was far from altruistic.”

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