On December 9, 2013, the National Assembly of Québec passed an Act to amend the Mining Act (the “Amending Act”), further to the introduction of Bill 70 on December 5 by the Minister of Natural Resources, Ms. Martine Ouellet. The short delay within which this Bill was adopted with certain amendments, results from the application of a special legislative procedure, known in French as a “bâillon”. The Amending Act received royal assent on December 10, 2013.  

Bill 70 is the fourth attempt at overhauling the Québec mining regime since 2009, and the current government’s second attempt after the rejection of Bill 43 (“Bill 43”) by the opposition on October 30, 2013.

The Amending Act introduces a number of amendments to the Mining Act (the “Act”) and to a few other legislative and regulatory provisions. It borrows from a number of the provisions proposed by Bill 43 (see our June 21, 2013 bulletin on the subject), while introducing certain adjustments and new provisions.

This bulletin gives a non-exhaustive overview of the main changes that the Amending Act brings to Québec’s mining regime. After briefly discussing the objectives that are now specified in the Act, we will examine some of the substantive amendments introduced by the Amending Act with respect to mining rights, expropriation, the enhanced role of municipal authorities, the documents and information that must be provided to governmental authorities and those that must be made public, penal sanctions and coming into force, and then conclude with a few thoughts. 

The Preamble and Objectives

The Act (as amended) is now more specific in the description of its objectives, which should guide in the interpretation of its substantive provisions. Thus, a preamble has been added to the Act with the following considerations: (i) mineral resources present throughout Québec and constitute social wealth for present and future generations, (ii) the mining sector has helped forge Québec’s identity and should continue to be a source of pride, (iii) it is necessary to promote the optimal use of mineral resources in order to create as much wealth as possible for the people of Québec, (iv) it is necessary to engage in mineral development in a manner respectful of the environment, (v) it is necessary to promote development that is associated with Québec communities and integrated into their environment, and (vi) it is necessary to pursue sustainable diversification of the regions’ economies.

As well, the Act (as amended) specifies that it aims (i) not only to promote mineral prospecting, exploration and development, but also that it will seek to do so in conformity with the principle of sustainable development, while ensuring that Quebecers get a fair share of the wealth generated by mineral resources and taking into account other possible uses of the territory, (ii) to ensure that the exploitation of non-renewable resources benefit future generations and (iii) to develop homegrown expertise in mineral resource exploration, development and processing in Québec.

Consultation with Native Communities

The Amending Act adds a chapter to the Act concerning Native communities. These provisions stipulate that the Act must be construed in a manner consistent with the obligation to consult with Native communities and that consultation must be carried out separately by the Québec government if the circumstances so warrant. Moreover, taking account of the rights and interests of Native communities is now an integral part of reconciling mining activities with other possible uses of the territory and the Minister of Natural Resources (the “Minister”) must draw up, make public and keep up to date a Native community consultation policy specific to the mining sector.

Mining Rights

Mining Claims

The Act (as amended) now requires a claim holder to notify the owner, the lessee, the holder of an exclusive lease to mine surface mineral substances and the local municipality where the claim is located within 60 days after registering its claim. A claim holder must also notify the municipality and landowner of work to be carried out on its claim at least 30 days before performing the work.

Additionally, the it requires a claim holder to submit to the Minister, on each anniversary date of registration of a claim, a report of the work performed on the claim in the previous year. Moreover, the amount to be paid in order to obtain renewal of a claim at the end of its term when the minimum prescribed work has not been carried out now corresponds to twice the amount of the work required. Any excess amount spent on work during the term of a claim can only be applied to the six subsequent renewal periods (12 years in total). Holders of a mining lease or a mining concession will no longer be able to apply any work that is carried out in respect of a mining lease or a mining concession to renewal of claims.

Pursuant to the Amending Act, in the event the Minister terminates a claim to permit the use of a territory for public utility purposes, the indemnity payable to claim holders is limited to an amount corresponding to the amounts spent to perform all work that was reported to the Minister by the claim holder. Before the Amending Act was passed, the Minister had to expropriate a claim holder, entitling it to a compensation based on the actual value of the claim.

If all or part of a claim lies within a territory delimited by a regional county municipality (a “RCM”) as a mining-incompatible territory (we will come back to incompatible territories and their delimitation), that claim may only be renewed at the end of its term based on the work performed on such claim after the date  the territory was so delimited. The goal seems to be to refuse renewal where no such work has been performed on a claim during the indicated time. Thus, any excess amount for work performed on that claim or other claims nearby during a previous term or up to the date of such a delimitation may not be applied towards the renewal of such a claim. As well, such a claim may not be renewed by paying double the amount of the cost of the minimum prescribed work.

Finally, claim holders now have the obligation to declare to the Minister and the Minister of Sustainable Development, Environment and Parks (the “Environment Minister”) any discovery of mineral substances containing 0.1 % or more of triuranium octaoxide within 90 days of such a discovery.

Mining Leases

The Act (as amended) states that an application for a mining lease must be accompanied by a project feasibility study as well as a scoping and market study as regards processing in Québec. Holders of mining leases must then produce such a scoping and market study every 20 years. For processing, Bill 43 proposed the more burdensome feasibility study.

The Amending Act adds, as an additional condition for granting a mining lease, the issuance of the certificate of authorization under the Environment Quality Act. The Minister may nevertheless grant a mining lease if the time required to obtain the certificate of authorization is unreasonable.

A rehabilitation and restoration plan must be approved by the Minister before any mining lease can be granted. In the case of an open-pit mine, the plan must contain a backfill feasibility study. This last requirement does not apply to mines in operation as of December 10, 2013.

Moreover, the absence of the Minister’s approval of a concerned rehabilitation and restoration plan will not result in preventing the continuation of activities begun before the Amending Act was passed.

The Minister makes public and registers the plan in the public register of real and immoveable mining rights of the Ministry of Natural Resources (the “MNR”) as soon as such a plan is submitted for approval, for public information and consultation purposes as part of the environmental impact assessment and review procedure provided for in the Environment Quality Act and the Regulation respecting environmental impact assessment and review.

In fact, with the exception of metal mine development projects (other than rare earths) with production capacities of less than 2,000 metric tons per day (the “Projects Under 2,000 Tons”), all mine development projects are now subject to this environmental impact assessment and review procedure. Note that Bill 43 would have subjected all mine development projects, without any exception, to this procedure.

For the Projects Under 2,000 Tons, the Amending Act introduces a specific regime whereby an applicant, before submitting its application for a mining lease, must hold a public consultation in the region where the project is situated in the manner to be prescribed by regulation. The rehabilitation and restoration plan required for such a project must be accessible to the public at least 30 days before the consultation begins. Once the consultation is completed, the applicant must send a report on the consultation to the Minister and the Environment Minister. The Minister may impose additional measures if he finds that the consultation was not conducted in accordance with the regulatory requirements. The provisions of the Amending Act pertaining to this consultation will come into force at the same time as the coming into force of the next regulation whereby amendments will be made to the Regulation respecting mineral substances other than petroleum, natural gas and brine.

The Amending Act sets forth that the financial guarantee to be provided by a holder of a mining lease be for an amount that corresponds to the anticipated total cost of completing the work required under the rehabilitation and restoration plan. Note that this is already the case since August 22, 2013, date on which the Regulation to amend theRegulation respecting mineral substances other than petroleum, natural gas and brine came into force. We remind you that further to these amendments, the Regulation respecting mineral substances other than petroleum, natural gas and brine also provides for the payment terms of this guarantee as well as a transitional measure granting to a holder of a mining lease or a mining concession one year, from August 22, 2013, in order to start complying with the new requirements for the amount of the guarantee and its payment.

Holders (lessees) of a mining lease must now establish a monitoring committee within 30 days after the lease is issued. Such a committee’s mission is to foster the involvement of the local community in the project as a whole. Although the holder determines the manner in which members are chosen and the number of representatives, a majority of the committee members must be independent from the holder and include at least one representative of the municipal sector, one representative of the economic sector, one member of the public and, if applicable, one representative of a Native community consulted by the government with respect to the project. All must be from the region in which the mining lease is granted. The committee must be maintained until all the work provided for in the rehabilitation and restoration plan has been completed.

Pursuant to the Amending Act the Québec government is granted the power to require, when granting a mining lease and on reasonable grounds, that the holder maximize economic spinoffs within Québec of mining the mineral resources authorized under such lease.

Mining Concessions

A grantee must commence mining operations within five years from December 10, 2013. As is the case for a holder of a mining lease, a grantee may be required by the government, on reasonable grounds, to maximize the economic spinoffs within Québec of mining the mineral resources authorized under the concession. It must also, within three years of commencing mining operations and every 20 years thereafter, send the Minister a scoping and market study as regards processing in Québec.

Expropriation

Pursuant to the Amending Act, use of expropriation by a holder of a mining right or by an owner of mineral substances is restricted to the conduct of mining operations. A holder of a mining right who wishes to purchase a residential immovable or an immovable used for agricultural purposes and situated on farm land must pay the costs of the professional services required to negotiate the purchase agreement, up to an amount representing 10% of the value of the immovable as entered on the municipal property assessment roll. Under no circumstances may a residential immovable be moved or demolished before the mining lease is issued.

Enhanced Role of Municipal Authorities

The Amending Act also amends an Act respecting land use planning and development (the “Planning Act”) such that each RCM is granted the power to delimit, on its land use and development plan for its territory, any mining-incompatible territories. Pursuant to the Amending Act, these territories are defined as being those in which the viability of activities would be compromised by the impacts of mining activities. The government policy direction on how to delimit these territories has not yet been drawn up and the stated intention of the Minister is to proceed with this exercise in collaboration with, amongst others, the associations representing the Québec mining industry and those representing the municipal sector.

Where an RCM does not comply with this policy direction, the Minister may send the Minister of Municipal Affairs, Regions and Land Occupancy (“Minister of Municipal Affairs”) an opinion, with reasons, to that effect. As part of the process already provided for in the Planning Act whereby the Minister of Municipal Affairs is required to give an opinion as to consistency of an amendment to a land use and development plan of a RCM with government policy directions, the Minister of Municipal Affairs must, if it receives an opinion, with reasons, from the Minister, issue an opinion, also with reasons, indicating that the proposed amendment is inconsistent, with government policy directions and may, in such opinion, demand that the amending regulation be amended, in which case the RCM may make an amendment. Unlike Bill 43, the Amending Act does not grant a more specific power (has sometimes been called a “veto right”) to the Minister as regards delimitation of mining-incompatible territories made by a RCM.

Pursuant to the Amending Act, mineral substances forming part of the domain of the State and found in a parcel of land on which a claim may be obtained and that is included in a delimited mining-incompatible territory is withdrawn from any mining activity as of the moment such territory is shown on the maps kept at the office of the registrar. This provision will only come into force once the government passes an order in council to that effect. Until these territories are delimited, the withdrawal from mining activities applies, as of December 10, 2013, to any mineral substance forming part of the domain of the State and found in an urban perimeter shown on these maps. However, the Amending Act provides to a certain extent for recognition of vested rights by specifying that this rule does not apply to substances contemplated by a mining right obtained prior to December 10, 2013.

We note that anAct establishing the Eeyou Istchee James Bay Regional Government and introducing certain legislative amendments concerning the Cree Nation Government, which is scheduled to come into force on January 1, 2014, gives the Regional Government of Eeyou Istchee James Bay jurisdiction over the same territory as that of the Municipality of James Bay (from which Category II lands shall continue to be excluded), this regional government being entitled to affirm its jurisdiction over areas attributed to a RCM in respect of that territory. If it chooses to do so in relation to a land use and development plan within the meaning of the Planning Act, the Municipal Affairs Minister may, in collaboration with this regional government, establish government policy directions specific to the concerned territory which will take into account the particularities of that territory.

What impact all of this will have on mining projects located in territories that fall under the jurisdiction of the Regional Government of Eeyou Istchee James Bay, whose council will be controlled by the Cree National Government (new name of the Cree Regional Authority), remains to be seen.

Documents and Information to Be Provided and Public Documents and Information

Under the Amending Act, a lessee or grantee of a mining lease or a mining concession, on each anniversary date of such lease or concession, must send the Minister a report showing the quantity and value of ore extracted during the previous year, the duties paid under the Mining Tax Act and the overall contributions paid during same period, as well as any other information as determined by regulation.

The documents and information obtained by the Minister from holders of mining rights for the purposes of the Act are now public. However, reports on exploration work in relation to amounts beyond the allowances that may be claimed under the Mining Tax Act are an exception, such information remaining confidential for five years.

Once a year, the Minister will make public the quantity and value of the ore extracted during the previous year, as well as the “royalties” and overall “contributions” paid by the holder in that period.

The meaning of “royalties” and of “contributions” are not specified. Are we to understand that “royalties” means the duties paid under the Mining Tax Act contemplated by the annual report described above and that, as an example, contributions or amounts paid under an agreement with a Native community form part of the “contributions”? In this last regard, we would mention that the amendments to the Act introduced by the Amending Act, in addition to not providing, as did Bill 43, for agreements with communities being made public, expressly states that the data found in agreements with Native communities is not public and can only be used for statistical purposes.

Moreover, contrary to Bill 43, the Amending Act does not expressly introduce an obligation of a holder to transmit to the Minister any agreement concluded with a community. On the other hand, the Minister’s power to compel the disclosure of documents by anyone seeking a mining lease has been significantly broadened, now encompassing any document or information relating to a mining project. Are we to understand that the Minister can, by this provision, require, the disclosure of agreements with Native communities to the Minister?

The rehabilitation and restoration plan as well as the total amount of the financial guarantee covering these works are also public.

Penal Sanctions

As was the case with Bill 43, the fines for many of the offences set forth pursuant to the the Amending Act are substantially higher than those provided for prior to its assent, up to six million dollars for a corporation and one million dollars for an individual in the case of one offence.

The Minister may now revoke a mining lease or a mining concession if the holder commits certain offences provided for in the Act, including a contravention to standards prescribed by regulation for the financial guarantee. While a number of offences can lead to a revocation of the lease, the list is now more limited than what was proposed in Bill 43.

Coming Into Force

Save for certain exceptions, the provisions of the Amending Act came into force on December 10, 2013, the day it was assented to. Some, however, will only come into force when the first regulation amending the Regulation respecting mineral substances other than petroleum, natural gas and brine comes into force, while other provisions will only come into force on a date determined by the government. We have referred in passing to some of these exceptions.

Conclusion

It should first be emphasized that the Amending Act was the subject of a consensus of the three main parties represented at Québec’s National Assembly and of a certain acceptance by the Québec associations representing the interests of the mining industry, those representing the municipal sector and environmental groups. However, although the Québec mining regime may appear to be more certain and predictable, grey areas remain and several parameters need to be specified, such as the next regulation that will amend the Regulation respecting mineral substances other than petroleum, natural gas and brine, as well as the government policy directions on mining-incompatible territories and the Native community consultation policy. Additionally, certain concerns could be raised with respect to the possibility that further restrictions, inspired or not by the provisions of Bill 43 that did not make it into the Amending Act, might be introduced by legislative, regulatory or other means. For now, it could therefore be considered that the Amending Act is a work that has been started but that is not yet completed.

While it is hoped that the Amending Act represents a step forward, notably in reference to concerns on the status of Québec as an attractive mining jurisdiction, only time will tell if the provisions introduced by the Amending Act adequately and sufficiently addresses such concerns.

In summary, properly measuring the impact  of the amendments will be largely determined by the quality of their implementation. To be seen over the coming months, even the coming years…