Canada’s mining industry operates within a complex legal framework shaped by evolving regulations at the federal, provincial and territorial levels. As environmental sustainability, Indigenous engagement and global market dynamics become increasingly important, mining companies must navigate a shifting regulatory landscape to remain competitive. From environmental compliance to cross-border investment, understanding these legal requirements is essential for mitigating risks, seizing opportunities and ensuring long-term success in this ever-changing sector. Explore our in-depth analysis of industry regulations and their impact below.
What are the key regulations governing mining operations in Canada?
Mining operations in Canada are regulated by both federal and provincial governments. Provincial governments have jurisdiction over mineral exploration, development, extraction, management, reclamation, and closure of mine sites, while the federal government regulates broader aspects affecting the mining industry, such as Indigenous rights, and trade and commerce. There are areas of overlap between the two levels of government, particularly concerning environmental standards and taxation. Territorial governments in the Northwest Territories, Yukon and Nunavut, may have some jurisdiction over certain exploration and management of mines if authority has been delegated to them through regulations.
Each of the provinces and territories (excluding Nunavut) has enacted its own set of statutes to regulate mining operations. For example, in Ontario, key mining statutes are the Mining Act, the Mining Tax Act, and the Far North Act and in British Columbia, key mining statutes are the Mines Act, the Mineral Tenure Act, the Mining Right of Way Act, the Mineral Tax Act and the Mineral Land Tax Act. Other provinces have broadly similar legislation.
At the federal level, environmental statutes affecting the mining industry include the Canadian Environmental Protection Act, the Impact Assessment Act, and the Greenhouse Gas Pollution Pricing Act. Aside from these acts, other federal, provincial and territorial laws also apply in the context of environmental protection and impact assessments. Additionally, the federal government regulates mining investments and competition through the Investment Canada Act and the Competition Act. Other federal regulations pertinent to mining include the Export and Import Permits Act, the Extractive Sector Transparency Measures Act, the Fisheries Act, the Export and Import of Rough Diamonds Act, and the Transportation of Dangerous Goods Act.
Finally, any scientific and technical disclosure about a mineral project that is available to the public in Canada (whether from a reporting issuer or a private company), including but not limited to presentations to investors and corporate disclosures relating to mines, is governed by National Instrument 43-101 – Standards for Disclosure in Mineral Projects, administered by provincial and territorial securities commissions.
How do Canadian mining laws address environmental protection and sustainability?
Canadian mining laws place significant emphasis on responsible mining, reflecting a growing commitment to balancing economic development with environmental stewardship. Both federal and provincial governments have established comprehensive regulatory frameworks to ensure environmental protection and sustainability.
At the federal level, legislative jurisdiction extends over fisheries, navigable waters, federal lands (including Indigenous reserves and national parks), and environmental matters of international and interprovincial concern. The provinces and territories manage environmental issues within their borders, including mine effluent, solid waste management, noise, and other local environmental impacts.
Central to federal environmental regulation is the Canadian Environmental Protection Act (“CEPA”). This empowers the federal government to regulate a wide array of environmental issues, including the management of toxic substances, prevention of pollution, provision of emission controls, responses to environmental emergencies, provision of co-operation and partnership with other governments and Indigenous Peoples, and enforcement of environmental laws.
Under the regulatory framework, Canadian mining operations are required to undergo an environmental impact assessment before any necessary authorizations are granted. At the federal level, this process is governed by the Impact Assessment Act. Additionally, provinces and territories have their own regulations regarding environmental impact assessments. Depending on factors such as the project’s type, size, and potential environmental effects, it may be subject to federal, provincial/territorial environmental assessments, or both.
The assessment process also helps determine whether a project can proceed and under what conditions. Based on the findings, regulators may impose specific conditions or restrictions to mitigate adverse environmental impacts and ensure the project’s long-term sustainability.
Lastly, through the Greenhouse Gas Pollution Pricing Act, the federal government incentivizes greenhouse gas emission reductions (in order to help address climate change risks associated with excessive greenhouse gas emissions) by introducing carbon pricing on mining operations. The Greenhouse Gas Pollution Pricing Act encourages mining companies to adopt carbon dioxide removal solutions through the imposition of financial penalties for excessive emissions, which could potentially lead to significant cost overruns and reputational risk in the sector.
Provincial governments also address a number of environmental matters through their own legislative instruments. For example, the Ontario Mining Act and Environmental Protection Act require mine closure plans that provide for financial assurance to cover rehabilitation costs and enforce strict water and air quality standards. Similar acts in Quebec, such as the Sustainable Development Act and Mining Act, and in British Columbia, such as the Mines Act and Environmental Management Act, place a parallel emphasis on environmental regulation and proper management of mining operations.
How do you navigate regulatory complexities and cross-border legal issues in the mining sector?
As a global leader in mining, Canadian companies not only attract substantial foreign investment for mines located in Canada (highlights of some of the key Canadian mining regulations were discussed above), but Canadian companies also actively invest in mining operations abroad and engage in numerous cross-border mining transactions. Navigating these non-Canadian regulatory complexities as a Canadian company requires a strategic and well-informed approach to ensure compliance and optimize outcomes.
As a starting point, it is crucial to thoroughly understand the regulatory frameworks of all relevant jurisdictions. This involves researching federal, state, provincial, territorial, and local mining and mining adjacent regulations (e.g., Indigenous, labour, etc.) in the countries where the mining operations are located. Additionally, engaging legal experts in each applicable jurisdiction, particularly with specialized experience in mining and cross-border corporate, tax and regulatory areas, can provide invaluable guidance to help ensure that all regulatory requirements are met effectively.
There are additional issues that should also be considered when navigating regulatory complexities and cross-border legal issues in the mining sector. First, attention should be given to competition law and foreign investment controls within the relevant jurisdictions to minimize investment risks and ensure compliance. Due to the economic and geopolitical significance of minerals, cross-border mining investments often attract heightened regulatory scrutiny.
In addition, obtaining necessary permits and approvals for mining typically involves a comprehensive environmental impact assessment. This process typically requires submitting detailed project plans, conducting environmental evaluations, and demonstrating compliance with local regulations.
Taxation law plays a critical role in cross-border mining investments and operations. Understanding the tax implications and trade regulations is crucial, as mining projects often involve significant income across multiple foreign tax regimes. Investors should evaluate the tax and financial impacts in each jurisdiction, ensure compliance with diverse tax regulations, leverage available tax benefits and incentives, and avoid double taxation to enhance investment strategies and minimize taxes payable.
Finally, the environmental, social and governance principles in each jurisdiction are also important to consider, to deter any regulatory scrutiny that could arise from cross-border mining operations. Understanding the local norms, customs and practices to optimize community relations by fostering trust with new stakeholders should be a focus for foreign mining companies.
What emerging trends in mining law should be focused on in order to serve clients in this dynamic industry?
The mining sector operates in a volatile market influenced by numerous factors. Following a strong market recovery in recent years, three interconnected macro trends in mining law have emerged that those seeking to effectively serve clients in this dynamic industry should be aware of:
- Climate change and carbon management
The transition to a low-carbon economy is prompting new regulations on carbon emissions and carbon pricing. As global demand for clean energy and “green metals” rises, the shift toward renewable power and electrification will require a substantial increase in mineral production. This development has two key implications: society will demand stricter environmental compliance, and the demand for critical minerals will surge. Countries with abundant critical minerals essential for renewable energy production will face increased interest on a global stage and heightened pressure to manage these resources responsibly.
- Indigenous communities and social responsibility
Respecting Indigenous rights and ensuring meaningful consultation with Indigenous communities has become increasingly critical in mining operations. This includes a recognition of Indigenous knowledge and land stewardship, early and ongoing engagement in a culturally appropriate manner, transparent and accessible information sharing, negotiating benefit-sharing arrangements, addressing concerns and offering accommodations, and dispute resolution with a view to long-term relationship building. Mining operators must engage in proactive dialogue, and integrate Indigenous interests into their development plans. Tailored legal advice on developing and negotiating agreements with Indigenous groups is often essential for securing project approvals and maintaining positive community relations.
- Geopolitics of mining
The current geopolitical landscape significantly impacts mining operations, trade policies, investment regulations, and mineral resource access. With increasing geopolitical risks and a rise in economic protectionism, causing disruptions such as supply chain instability, resource nationalism, new and increased tariffs, foreign investment scrutiny, and a broad range of security risks, participants in the mining sector must adeptly navigate these challenges. The growing resistance to globalization in various regions and the rapidly evolving geopolitical environment, highlight the importance of keeping clients informed about current developments and advising on effective strategies to mitigate the associated risks.
Conclusion
Staying informed about legal developments is essential for companies to thrive in this complex environment. By understanding key trends, risks and regulations, mining operations can better address environmental concerns, engage effectively with communities they are operating in, and successfully navigate cross-border transactions. Engaging legal experts and adapting strategies is vital to proactively assess regulatory changes and incorporate them into operational strategies to remain competitive and compliant in a rapidly shifting landscape.
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Adria Leung Lim is a partner at Aird & Berlis. Adria is committed to building long-standing relationships with her clients by keeping their interests top of mind and providing practical advice in a timely manner. She consistently works to strengthen her clients’ businesses and achieve their goals by providing effective solutions to their legal issues and negotiating complex transactions. Adria’s depth of knowledge in corporate and securities law has been established through acting on domestic and cross-border transactions for companies ranging from small start-ups to large public companies listed on the TSX and other international exchanges.
Adria is Co-Chair of the firm’s Capital Markets Group and Chair of the firm’s Mining Group. Her practice involves executing public offerings and private placement financings, mergers and acquisitions, go-public transactions, including reverse takeovers and initial public offerings, corporate reorganizations, and ongoing corporate and commercial matters. She advises on general securities compliance matters such as corporate governance, continuous disclosure and other regulatory matters. She advises clients across a variety of industries, including mining, life sciences and technology. She works on specialized transactions, including royalty and streaming transactions, and joint venture arrangements.