Canada: Bill 43 (Quebec Mining Act)

Last Updated: June 26 2013
Article by Martin Gagné

On May 29, 2013, Bill 43, entitled the Mining Act ("Bill 43"), was introduced in the Quebec National Assembly by the Minister of Natural Resources, Martine Ouellet.

Readers may remember the attempts made by the previous Liberal government to amend the current Quebec Mining Act (R.S.Q., c. M-13.1) (the "Act") through Bill 79 introduced in December 2009 and Bill 14 introduced in May 2011 ("Bill 14"), both of which died on the order paper.

Bill 43 represents the current provincial government's attempt to revise Quebec's mining regime while maintaining several provisions of the Act, often without modifications. We additionally note that amongst the amendments proposed by Bill 43, some are taken from Bill 14.

The following is a brief, non-exhaustive, overview of some of the amendments proposed by Bill 43.

Increased Role of Municipal Authorities

Through amendments to the Act respecting land use planning and development (Quebec), Bill 43 would allow regional county municipalities to identify in their land use plans certain territories that would be incompatible, or compatible on certain conditions to be set by the Minister of National Resources ("MNR"), with mining activities, subject to a certain governmental control by, in particular, the MNR.

Once such a territory is identified and made public in the prescribed manner, prospecting, mining exploration and mining operations regarding mineral substances forming part of the domain of the State and found therein would be prohibited in the case of a mining incompatible territory, whereas such substances in a conditionally mining compatible territory would be reserved to the State.

Bill 43 also provides that claim holders would be required to notify any concerned municipality (and landowner) that such right has been obtained and inform the municipality at least 90 days in advance of the work that will be carried out.

Environmental Considerations

Note firstly that according to the Explanatory Notes of Bill 43, obligations relating to the restoration of mine sites currently set out in regulations would be imported into Bill 43.

Notably, Bill 43 adds the approval of a mining rehabilitation and restoration plan and the issuance of the prescribed certificate of authorization under the Environment Quality Act (Quebec) ("EQA") to the prerequisites that would need to be met prior to obtaining a mining lease for a project (under the Act, before the start of mining activities in all cases, including mining leases). Such a rehabilitation and restoration plan, as submitted for approval, would be made public for information and public consultation purposes as part of the environmental impact assessment and review procedure prescribed by the EQA.

Bill 43 would require that a financial guarantee for the rehabilitation and restoration of a mining site be in an amount that corresponds to the expected cost of the contemplated rehabilitation and restoration work. Under the Act and the applicable regulation a financial guarantee must be in an amount equal to 70% of the estimated rehabilitation and restoration costs of the accumulation areas. Pursuant to Bill 43, payment of the financial guarantee would be made in three consecutive annual instalments. The first one, representing 50% of the applicable amount, would be payable within 90 days after receipt of approval of the plan and the two subsequent instalments, each representing 25% of the applicable amount, would be payable on the anniversary of the approval date.  Under the Act and the applicable regulation, the financial guarantee is paid by annual instalments spread over a greater number of years. Bill 43 contains transitional provisions regarding compliance with the proposed new requirements where a plan will have been approved before the coming into force of Bill 43. We also note that the total amount of the required financial guarantee would be made public.

According to Bill 43, in the case of an open-pit mine, the rehabilitation and restoration plan would have to include a backfill feasibility study.

Also, Bill 43 would require the commencement of rehabilitation and restoration work within 3 years after mining activities cease.

By introducing amendments to the Regulation respecting environmental impact assessment and review, Bill 43 would render the construction and operation of ore processing plants, as well as the development and operation of mines notwithstanding the nature of the mineral substance and the mine capacity, subject to the environmental impact assessment and review procedure set out in the EQA.

Uranium

Bill 43 introduces certain provisions applicable to the exploration for and mining of uranium, for example:

  • claim holders would be required to notify the MNR and the Minister of Sustainable Development, Environment, Wildlife and Parks of any discovery of mineral substances containing 0.05% or more of triuranium octaoxide and to take the safety measures prescribed by regulation and any other measure the MNR would impose;
  • any declaration by a holder of a mining right concerning such a discovery and exploration for uranium would be the subject of an entry by the registrar on the public register of real and immovable mining rights constituted at the Ministry of Natural Resources (the "Mining Register"); and
  • all drilling work conducted by the holder of a mining right while exploring for mineral substances containing uranium would require MNR authorization and submittal of a hydrogeological survey for such purpose.

Native Communities

Bill 43 provides that it must be construed in a manner compatible with the obligation to consult Native communities, which the MNR would consult separately, having regard to all the circumstances.

Note that Bill 43 provides that a holder of a mining lease or a mining concession would have the obligation to submit to the MNR any agreement entered into with a "community" and that such an agreement would be made public. In the absence of a more specific definition of "community", the question can be asked as to whether these provisions would apply to agreements between a holder of a mining lease or a mining concession and one or more Native communities, such as agreements pertaining to impacts and benefits.

Bill 43 also provides for prohibition of expropriation of land used for Native cemeteries.

Expropriation

Bill 43 restricts recourse to expropriation by a mining right holder only for the purposes of conducting mining operations. A holder of a mining right seeking to purchase a family residence would have to pay the costs of the professional services required to negotiate the purchase agreement, up to a maximum amount representing 10% of the property's value as entered on the municipal assessment roll. Moving or demolishing a family residential immovable would not be allowed prior to the issuance of a mining lease.

Mining Rights

Bill 43 introduces several other amendments pertaining to mining rights, including the following:

  • Mining Leases
    • An application for a mining lease would be accompanied not only by a survey of the parcel of land involved and a report by a qualified engineer or geologist describing the nature, extent and probable value of the deposit (already requirements of the Act), but also by a project feasibility study and an ore processing feasibility study;
    • When granting such a lease, the MNR would be entitled to require execution by the lessee of an agreement for the purposes of maximizing the economic spinoffs within Quebec of mining the mineral resources authorized under the lease;
    • The establishment of an economic spinoff monitoring and maximization committee would be required of the lessee. The committee would be maintained until completion of all rehabilitation and restoration work. Its members would be chosen in the manner determined by the lessee, who would also set the number of representatives for the committee. The majority would have to be independent from the lessee and the committee would have to include at least one representative from each of the municipal and economic sectors and one member of the public, all from the region in which the mining lease would be granted. This committee would monitor the work performed under the mining lease and would endeavour to maximize the economic spinoffs (including jobs and contracts) for local communities. It could bring to the MNR's attention, and submit recommendations to the MNR concerning, any matter relating to the mining operations that could call for government action;
    • Bill 43 adds the following to the conditions that need to be met by a lessee for renewal of a mining lease: the provision of an ore processing feasibility study and compliance with the Mining Tax Act (Quebec) ("MTA"), in addition to compliance with Bill 43; and
    • On each anniversary date of a mining lease (or a mining concession), the lessee (or the grantee) would have to submit to the MNR, among other things, a report showing the quantity of ore extracted during the previous year, its value and certain other specified information.
  • Mining Concessions
    • All mining concessions would be governed by Bill 43 upon its coming into force, regardless of the former legislation under which any such concession was granted;
    • The grantee of a mining concession would be required to commence mining operations within five years from the date of coming into force of Bill 43; and
    • The grantee would be required to submit to the MNR an ore processing feasibility study before beginning mining operations and every 20 years thereafter.  The MNR would be empowered to require at such times that an agreement be entered into for the purpose of maximizing the economic spinoffs similar to that described above regarding mining leases.
  • Claims
    • The MNR would be entitled to grant claims by auction and would be required to do so when the mineralization index or the exploration target meets the criteria determined by the MNR, who would notably set the conditions for the auction;
    • The filing of a staked claim or map designation notice of a claim would have to be accompanied by a plan of the work to be performed in the year following registration of the claim and such a plan would also need to be submitted to the MNR on each anniversary date of the registration of the claim, as well as a report on the work performed under the plan in the previous year;
    • Notwithstanding the prescribed minimum cost of work on a claim is not performed or reported within a term of the claim (two years) or is not sufficient for its renewal, the claim holder would be allowed to renew the claim by paying the MNR an amount equal to twice the prescribed minimum cost or, if applicable, twice the difference between the prescribed minimum cost and the cost of the work performed (under the Act, such payment is equal to the prescribed minimum cost or, if applicable, the difference between such prescribed minimum cost and the cost of the work performed);
    • Amounts spent by a claim holder (or with the holder's consent, by a person who has made a promise to purchase registered in the Mining Register) during the term of a claim in excess of the prescribed minimum cost (as well as excess amounts accumulated as at the date of coming into force of Bill 43) would be applicable to renewal of claims for up to six subsequent renewal terms (two years each). Such excess amounts would also be applicable towards the renewal of other claims held by the same holder (or claims on which the holder has made a promise to purchase registered in the Mining Register), provided the parcel of land that is the subject of the renewal application is included within a 3.5 kilometres radius measured from the geometrical centre of the parcel of land subject to the claim in respect of which excess amounts were spent (under the Act, the radius is 4.5 kilometres). The provisions of the Act which provide for a similar application of the cost of work on a mining lease or a mining concession for the purpose of renewing claims in proximity are not reproduced in Bill 43; and
    • The report on work that a claim holder would be required to submit when renewing a claim would have to include work for which an exploration allowance or a pre-production development allowance could be claimed under the MTA whether or not any such allowance would actually be claimed.
  • Leases to Mine Surface Mineral Substances
    • An applicant for a peat lease or for a lease that is necessary to carry on an industrial activity or to engage in commercial export would be required to hold a public consultation after submitting its application;
    • The MNR would be empowered to refuse a lease application, and also to terminate a lease or reduce the area of the land covered by the lease, for public interest reasons. In the case of such a termination, the MNR would have to compensate by granting a lease on another parcel of land or if not, to indemnify the holder for the loss suffered; and
    • A reserve to the State would be established for public development purposes consisting of 5% of the area of any parcel of land covered by a lease (the Act provides for this for mining leases and mining concessions on lands in the domain of the State, provision that is also reproduced in Bill 43).

Public Information

In addition to requiring more, sometimes more specific, information and documents of a holder of mining rights or an owner of mineral substances, Bill 43 states that documents and information obtained by MNR from holders of mining rights for the purposes of Bill 43 would be made public in the manner deemed appropriate by the MNR. For example, in addition to the documents and information referred to elsewhere in this bulletin, a rehabilitation and restoration plan approved by the MNR, as well as, once a year for each mining lease, mining concession and lease to mine surface mineral substances, the quantity and value of the ore extracted and the royalties paid during the previous year would be made public by the MNR. In this regard, it is to be additionally mentioned that Bill 43 does not replicate the provision of the Act limiting access to certain documents and information without the consent of the holder of the mining right or owner of the mineral substances.

Revocation of Mining Rights

In addition to reasons similar to those set in the Act, Bill 43 would allow the MNR to revoke a mining lease or mining concession in the case of non-compliance by the holder with the terms of its agreement on economic spinoffs or with the MTA and, in the case of a mining right, where the holder was found guilty, in the preceding five years, of an offence under Bill 43 or any statute which applies to the holder's mining activities or the regulations under such statutes.

Fines

Fines for offences under Bill 43 would be substantially higher than is the case under the Act. In addition, on an application made by the prosecutor and submitted with the statement of offence, the court would be empowered to impose on the offender, a further fine equal to the financial benefit realized by the offender as a result of the offence, even if the maximum fine for the offence would be imposed (maximum fines under Bill 43 of up to $6,000,000).

Bill 43 provides that the MNR would maintain a register of information concerning convictions under Bill 43 and pursuant to regulations.  The register would set out the prescribed information pertaining to each conviction and the information therein would be public.

Conclusion

Bill 43 would replace the Act, with the exception of certain of its provisions concerning petroleum, natural gas, brine and underground reservoirs. In addition the Act will continue to have effect insofar as it is necessary for the purposes of such provisions and those of any other Act that provides for their application.  In this regard, Bill 43 would change the title of the Act in order to distinguish it from Bill 43.

Mining activities in Quebec, whether it be exploration, project development, extraction, and even ore transformation, will no doubt be affected by the adoption of Bill 43.

In the wake of its introduction, certain groups have taken various positions in its regard or with respect to some of its provisions. It will be interesting to see what comes of the consultations and work of the parliamentary commission which will examine Bill 43 in more detail, bearing in mind that the Quebec Government has announced its objective of adopting Bill 43 in the fall of 2013.

www.fasken.com

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