Writing in the Canadian Institute of Mining Magazine, Macdonald-Laurier Institute author Dwight Newman says natural resource development companies need to fortify upcoming projects against changing laws governing their relationship with Aboriginals.

Governments’ constitutional duty to consult will continue to effect the laws that are on the books, says Newman, particularly in the wake of recently-released Supreme Court decisions on the subject.

“The challenges of mining are no longer just the physical challenges of getting minerals out of the ground”, writes Newman. “They involve, rather, sophisticated business strategy questions associated with developing legal and social expectations”.

Newman is the author of an MLI paper on the implications of the duty to consult, titled “The Rule and Role of Law: The duty to consult, Aboriginal communities, and the Canadian natural resource sector”.

He also authored an op-ed for the National Post that says the Supreme Court’s recent Tsilhqot’in decision will give Aboriginal groups more control over projects on lands to which they claim a title.

By Dwight Newman, August 2014

The question of aboriginal consultation and accommodation has probably kept many people in the mining sector awake at night over the last decade, following a trilogy of Supreme Court of Canada decisions that enshrined the duty to consult in 2004 and 2005. Though the rulings have raised the general awareness about the duty to consult, widespread misunderstandings persist about what it actually means.

Legally speaking, the duty to consult is a requirement on governments – federal or provincial, depending on the matter at hand – to consult affected aboriginal communities prior to making development decisions that could negatively impact their aboriginal rights or treaty rights and to appropriately consider these impacts. This applies even where there remains uncertainty on the scope of these rights. The duty to consult is a proactive duty on the part of relevant governments to make adjustments to decisions that may have a negative impact before any harm is done.

The most pervasive myths about the duty to consult are either that the courts have created a legal veto held by aboriginal communities in relation to development on their lands and/or that the duty to consult is going to lead to the blocking of all resource development. On the contrary, the courts have been consistent in stating that the duty to consult does not create a legal veto. Misinformation has also circulated within aboriginal communities that there is a legal protection for “free, prior and informed consent” in all circumstances and that has created misunderstandings.

The duty to consult does create an important set of protections for aboriginal communities. Where a resource development project might impact on aboriginal rights or treaty rights held by an aboriginal community, the government has to consult with that community in advance. The government must take all the information about the impacts on these rights from local groups, as distinct from general views from within the community, and possibly make appropriate adjustments to the project, which could include a refusal of permits in certain limited circumstances.

A refusal of permission for Taseko’s New Prosperity mine in B.C. will capture the headlines, but it is an exception. In fact, in many cases, aboriginal communities are keen to participate in resource development and need simply to be brought into the process for matters to move ahead harmoniously.

Although the duty to consult does not have all the implications some may think, it will undoubtedly mean changed business practices. For example, it would be a mistake for anyone in the mining sector to assume that because the duty to consult is ultimately a duty on governments, industry should therefore step out of the way.

The best results will often be achieved by implementing a business practice that develops relationships that rise above and beyond the strict requirements of the law. Some of the most recent fractious situations have been the result of companies relying on government to deal with every aspect of the duty to consult. The lawsuits that arose against the Ontario government by companies like Solid Gold and Northern Superior Resources in recent years speak to the fact that losses can occur when companies rely solely on government to deal with the duty to consult. If governments fail to do so, and delays result, there may be lost opportunities. Even if those lawsuits are resolved in some manner that responds to those losses, the business that mining sector people want to be in is not litigation but mining.

To stay ahead of the regulatory curve, companies need to realize that the duty to consult is not static but will continue to develop. The December 2012 decision of the Yukon Court of Appeal in the Ross River Dena Council case – on which the Supreme Court of Canada decided in late-2013 not to hear an appeal – is an example of how the duty to consult may cause further changes. That decision has forced the Yukon government to amend its mining legislation to move away from the long-standing free entry system. Proposed amendments will put the government in a position to make a discretionary decision about permission for exploration activities that were previously automatically permitted.

Although the move away from free entry is something that other jurisdictions like Ontario had already been doing, it speaks to an evolving environment in which the duty to consult may yet have bigger implications. While changes to free entry impact junior exploration companies, Canadian majors that have faced consultation issues on mining projects under the law of other jurisdictions like Guatemala and Chile have also discovered a changing regulatory environment. The Supreme Court of Canada’s latest recognition of aboriginal title in the Tsilhqot’in case also speaks to situations where consultation requirements will be elevated close to consent.

The challenges of mining are no longer just the physical challenges of getting minerals out of the ground. They involve, rather, sophisticated business strategy questions associated with developing legal and social expectations. It is important to keep developments like the duty to consult in perspective, but also to work in sophisticated ways with good, responsive business practices so as to move forward effectively in exploration and development.

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