On May 29, 2013, Martine Ouellet, Quebec Minister of Natural Resources, tabled Bill 43, which would partially replace the existing Mining Act. This is the third attempt to reform the Act, both of the earlier attempts by the previous Liberal government (Bill 79 in 2010 and Bill 14 in 2011) having died on the order paper.

Bill 43 includes measures to achieve certain objectives that the provincial government identified in its proposed new mining tax regime, which we discussed in our May 2013 Legal Update, such as the desire to have more ore processed in Quebec and to achieve greater transparency in mining operations. The other amendments contained in Bill 43 are very similar to those contained in the previous government’s Bill 14.

Highlights of Bill 43

Aboriginal communities

Bill 43 contains only one provision relating specifically to aboriginal communities, which simply states that the Act must be construed in a manner consistent with the obligation to consult aboriginal communities. This provision is lifted directly from Bill 14. No further guidance is provided, so that interested parties will have to rely on the courts’ interpretation of this obligation. The Bill also requires the Minister to consult aboriginal communities separately, having regard to all the circumstances; however, it fails to specify what those circumstances might be.

Mining claims

Like Bill 14, Bill 43 provides that a claim holder must give notice of its claim to the owner, the lessee of land in the domain of the State or the holder of an exclusive lease to mine surface mineral substances, within 60 days after registering the claim and in the manner prescribed by regulation. If the claim is on the territory of a local municipality, the claim holder must also inform the municipality of the work to be conducted at least 90 days before the work is to begin.

Bill 43 innovates by allowing mining claims to be acquired by purchase at auction as well as by staking and map designation. The mineralization index or the exploration target must meet criteria determined by the Minister before the Minister can put the claim up for auction.

Mining leases

Economic spinoff agreement

The Bill gives the Minister the power to require that when a mining lease is entered into, an agreement also be entered into with the lessee in order to maximize the economic spinoffs within Quebec of mining the mineral resources authorized under the lease.The Bill does not provide further details on the proposed content of such an agreement.

Environmental considerations

All mine development and operation projects will be subject to an environmental impact assessment.

The grant of mining leases will be subject to the issue of a certificate of authorization under the Environment Quality Act and the approval of a rehabilitation and restoration plan.

Economic spinoff monitoring and maximization committee

The lessee under a mining lease must form a monitoring committee, as Bill 14 also required. Under Bill 43, the committee will have the additional responsibility of maximizing economic spinoffs. The committee will monitor the work performed under the mining lease and endeavour to maximize jobs, contracts and other economic spinoffs for local communities.

The committee will have to be established within 30 days after the lease is issued and be maintained until all the work provided for in the rehabilitation and restoration plan has been completed. The lessee will determine how many members the committee will have and who they will be, provided there is at least one representative of the municipal sector, one representative of the economic sector and one member of the public, all from the region in which the mining lease is located. A majority of the committee members must be independent from the lessee.

Public interest criterion

The Bill gives the Minister the power to refuse an application for a lease or to terminate a lease at any time for public interest reasons. In case of termination of a lease, however, the Minister must grant the lessee a lease on another parcel of land or compensate the lessee for the loss suffered. For the same reasons and subject to the same conditions, the Minister may reduce the area of the parcel of land subject to the lease.

Lease to mine surface mineral substances - public consultation

A public consultation will be required for the grant of a peat lease or a lease to mine surface mineral substances that is necessary to carry on an industrial activity or to engage in commercial export. The Minister will decide on the adequacy of the consultation and may impose any additional measure. The Minister may also attach conditions to the lease to avoid conflicts with other uses of the territory and to follow up on comments received during the public consultation.

Limit on power of expropriation

Under the current Mining Act, the holder of a mining right or the owner of mineral substances may acquire by expropriation any property permitting access to or necessary for the performance of exploration work or mining operations, except in certain circumstances.

Bill 43 limits the use of expropriation. The parties must first try to reach agreement. Failing agreement and only where necessary for its mining operations, the holder or owner of the right may expropriate the property. Expropriation would accordingly no longer be available for the performance of exploration work and will continue to require government approval.

If the property to be acquired by expropriation is a family residence, when negotiating the expropriation, the holder of a mining right will have an obligation to provide financial support to the owner of up to 10% of the municipal valuation of the property. A residential building may not in any circumstances be moved or demolished until a mining lease is issued.

Rehabilitation and restoration measures

Bill 43 states that the Minister must make public the rehabilitation and restoration plan as submitted for approval and register it in the public register of real and immovable mining rights for public information and consultation purposes and as part of the environmental impact assessment and review procedure provided for in the Environment Quality Act.

In the case of an open pit mine, the rehabilitation and restoration plan must include a backfill feasibility study.

Rehabilitation and restoration work must begin within three years after mining activities cease. However, the Minister may exceptionally require that the work begin within a shorter period, or authorize one or more extensions. The first extension may not exceed three years and additional extensions may not exceed one year.

Financial guarantee

The Bill requires the holder of a mining right who conducts exploration work or mining operations (including with respect to mine tailings) to provide a financial guarantee covering the anticipated cost of all of the work provided for in the rehabilitation and restoration plan to the extent and in accordance with the standards prescribed by regulation.

Such work must include the rehabilitation and restoration of accumulation areas, geotechnical soil stabilization, the securing of openings and surface pillars, water treatment and road-related work.

A holder of a mining right who conducts exploration work must provide the guarantee to the Minister before the work begins. In the case of mining operations (including with respect to mine tailings) and a person operating a concentration plant, the guarantee must be paid in three instalments, with the first instalment of 50% of the total amount of the guarantee being made within 90 days after approval of the plan is received and the second and third instalments of 25% each being made on the anniversary of the approval date of the plan. This is what the government proposed earlier in the draft regulation we discussed in our February 2013 Legal Update.

Municipalities

The Bill also amends the Act respecting land use planning and development to allow municipalities to delimit any mining incompatible territory or any conditionally mining compatible territory in their land use and development plan. In the first case, the mineral substance will be withdrawn from prospecting, mining exploration and mining operations. In the second case, the Minister will determine any conditions and obligations that may be imposed on the holder of the mining right.

For example, municipalities may withdraw certain zones from mining operations and the developer will then have to negotiate with each of them. Bill 14 also provided for such powers to be given to municipalities. However, the power delegated to municipalities for the management of mining on their territory is more restricted than it would appear at first sight. In fact, Bill 43 provides that this power remains subject to government policy direction to be defined at a future date. Although these proposed provisions appear at first sight to grant significant powers to municipalities for the management of mining activities on their territory, the proposed amendments to the Act respecting land use planning and development specify that the Minister of Natural Resources will have ultimate responsibility for deciding whether or not to allow mining activities to be conducted on a specific part of the territory. The Minister will thus be able to request amendments to a plan in order to revise a municipality’s delimitation of a mining compatible territory or a conditionally mining compatible territory.

Mineral processing provisions

One of the significant changes introduced by the Bill is that no mining lease may be granted until an ore processing feasibility study has been conducted.

As for mining companies that already have a mining lease, the Bill provides for the obligation to produce an ore processing feasibility study when the lease is renewed.

The same obligation will apply to the mining claim holder before the mining operations begin and every 20 years thereafter.

Information obtained from holders of mining rights to be public

Subject to certain restrictions on access to information under the Act respecting Access to documents held by public bodies and the Protection of personal information, documents and information obtained by the Minister from the holders of mining rights would be made public.

The following documents and information will be published for all mining leases, mining claims and operating leases for surface mineral substances:

  • the quantity and value of the ore extracted during the previous year;
  • the royalties paid during the previous year;
  • any agreement entered into between a holder of a mining lease or a mining concession and a community; at first sight this would appear to cover agreements in principle and impact benefit agreements between mining companies and aboriginal communities;
  • the rehabilitation and restoration plan approved by the Minister; and
  • the total amount of the financial guarantee required.

The lessee of a mining lease will have to submit a report each year indicating the quantity and value of the ore extracted during the previous year, failing which a penal sanction may apply.

More severe penalties

The Bill provides for much more severe penalties for offences, with fines of up to $6 million.

Provisions relating to uranium

Bill 43 includes rules regarding the exploration and discovery of uranium. Like Bill 14, it provides that:

  • the holder of a mining right must take the safety measures prescribed by regulation and any other measure the Minister may impose;
  • the claim holder must report to the Minister of Natural Resources and the Minister of Sustainable Development, Environment, Wildlife and Parks any discovery of mineral substances containing 0.05% or more of triuranium octaoxide within 60 days after the discovery;

However, three additional obligations have been added to Bill 43:

  • a claim holder must notify the municipality and the landowner that he has acquired his right.
  • all drilling work done by the holder of the mining right while exploring for mineral substances containing uranium must be authorized by the Minister; and
  • a hydrogeological study must be submitted to the Minister in connection with such drilling work.

Provisions relating to oil, natural gas, brine and underground reservoirs

The provisions relating to oil, natural gas, brine and underground reservoirs contained in the existing Act are to be maintained in a separate act to be known as the Mining Act (Petroleum, Natural Gas, Brine and Underground Reservoirs).