Policy & Positions Manual
Policy Priority Area - A Vibrant Resource Sector
Mineral Exploration Investment and Permitting (2011)
Although mineral exploration expenditures (and mineral tenure acquisition in the province) continues to rise, the proportion of BC’s expenditures (investment) had been declining relative to other Canadian jurisdictions.
Mineral exploration expenditures are rising because of high commodity prices, but the province of BC cannot take high commodity prices for granted. Even if BC reaches record exploration expenditures of $494 million in 2011 as projected by Natural Resources Canada, the province’s share of mineral exploration expenditures in Canada will still only be 15.5%. This is a significant improvement from 11.2% in 2009, but well below 18.0% in 2006, and a peak of 29.2% in 1990. Commodity prices are drivers of increased mineral exploration expenditures, but there are several factors that prevent mineral exploration in BC from reaching its full potential.
Principal causes for this situation are perceptions that BC denies access to and for exploration without due consideration for mineral potential, or mineral resource values. Further when the province arbitrarily removes mineral lands from exploration and development, it is seen to be unwilling to provide both fair and timely compensation for rights taken. (e.g. Flathead, Boss Power).
In both of the examples above rights were taken without due process or consultation; indeed in the Flathead case, an extensive Land Use Plan was prepared with full public participation designated those lands as ‘Special Management’, a designation which specifically allowed for resource development. Yet despite this direction from the public planning table government has now disallowed mining.
If mineral rights are taken from tenure holders under the Parks Act the Act specifies that Fair Market Value compensation is to be paid. The Act defines Fair Market Value is defined as “the value that would have been paid to the holder of the expropriated mineral title if the title had been sold on the date of expropriation, in an open and unrestricted market between informed and prudent parties acting at arm's length.”
However, if those same rights are not taken under the Park Act there is no established legal mechanism to provide compensation for minerals rights expropriated, and government proceeds in an ad hoc fashion, often forcing companies into long drawn out court proceedings.
In the Flathead example given above government is proposing to compensate tenure holders only for ‘sunk costs’, not Fair Market Value. Further, while the Province has estimated the compensation (required to be paid in this case by the United States under an MOU with BC) at only $17 million, Governor Schweitzer of Montana has publicly stated “It is British Columbia who is walking away from $7 billion,” strongly implying there has been no adequate socio-economic impact analysis completed and disclosed to British Columbians on this withdrawal of their resources from development.
The resulting uncertainties in the international investment community, and consequent lack of confidence in the security of their investments, (and that they will actually be able to develop the mineral resource, or that they will receive fair treatment from the province), is negatively impacting our ability to attract investment. Indeed, there is a perception of a ‘BC Discount’ for these reasons.
Concomitant with these perceptions is another perception that exploration companies may not enjoy due process in areas where proposed activities may be controversial, even in areas where Land Use Plans have been negotiated and agreed with all-sector and community involvement and processes.
Moreover, mining industry organizations report continuing numerous complaints of government failing to issue exploration permits in a timely manner, that there is a lack of consistency between government offices across the province, and that several government offices are understaffed and under-resourced to fulfill their permitting (and geological) responsibilities. Few of the complainants are willing to go on record for fear of government retribution making it difficult to quantify the extent of the problem; however the numbers of complaints received make clear that there is a problem.
An example of understaffing is a current Ministry proposal to have a single Regional Geologist serving both the Smithers and Prince George offices instead of one in each office – effectively one person to cover some 65% of the province.
A Regional Geologist is governments ‘eyes and ears’ on the ground enabling government to keep informed about industry activities and discoveries in their regions. In addition to keeping track of all activities they work with other government agencies and First Nations, regarding mineral resources, geology and mineral exploration and development to facilitate the development of mineral resources and to balance the best interests of the mining industry and the public. They are the first point of contact and assistance for local prospectors and other citizens respecting rocks, minerals and exploration issues, and they perform a very valuable integrity function by conducting site and property visits; they also provide a first line of defence against potential investment market scandal.
THE CHAMBER RECOMMENDS
That the Provincial Government;
conduct a full and comprehensive mineral potential analysis of land under consideration for withdrawal from mineral exploration and development, including a full socio-economic impact analysis of lost resource values and opportunities before any additional lands are closed to mineral exploration;
provide full and fair market value compensation in a timely manner when expropriating mineral titles;
provide increased staff and funding resources to the mineral exploration and mine permitting administrations of provincial ministries, and ensure consistency across the province; and
provide Regional Geologists in both Smithers and Prince George offices.