Lexpert Special Editions

Lexpert Global Mining 2015

The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.

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Page 13 of 39

14 LEXPERT | 2015/16 | WWW.LEXPERT.CA THE HISTORY OF the extractives industry has been undeni- ably marred by incidents of corruption, exploitation and unsustain- able practices. is history has created a distinct set of obstacles for today's mining companies currently seeking to invest in international development opportunities. ese obstacles can include powerful local opposition, intense scrutiny of development and operational activities, and media portrayal of project proponents as foreign enti- ties having little regard for the environment and the communities in which they operate. In Latin America in particular, many projects have been halted or derailed by discontented communities and stakehold- ers unwilling to support proposed projects. However, many Canadian mining companies increasingly recognize the importance of build- ing trust through commitments to sustainable development, inter- national standards and best practices, and through implementation of programs that engage local communities in long-term social and eco- nomic development initiatives. ese forward-looking companies are devot- ing substantial resources to fulfilling their corporate social responsibility (or "CSR"), and in doing so are providing lasting and meaningful economic and social growth to affected stakeholders. Few Canadian industries have as much of an international presence as the Canadian mining industry, and Latin America is a clear example. According to the McGill Research Group Investigating Canadian Mining in Latin America (MICLA), roughly 75 per cent of all mining companies worldwide are head- quartered in Canada, and nearly 60 per cent of the world's publicly traded mining companies are listed on the Toronto Stock Exchange. 1 In Latin America alone, according to MICLA data, Canadian mining companies are working to develop between 1,200 and 1,500 mining projects each year. 2 e North-South Institute's research shows that mining investments in Latin America account for more than half of all Canadian mining investments worldwide. 3 While Latin America can offer attractive investment opportunities for Canadian mining companies, mining activities in the region also involve a significant amount of development and operational risk. A history of political instability, a legacy of conflict and repression, and misdistribution of economic benefits are all factors that have fuelled local communities' scepticism of foreign investors in Latin America, oen leading to fervent local opposition to development projects. Several projects have suffered costly disruptions due to such opposition, and on occasion have even been completely abandoned. Notoriously, the community of Tambogrande in northwestern Peru successfully opposed the development of a copper and gold open pit mine by Manhattan Minerals Corp. Although the Canadian miner had reportedly been granted government approval of the project – which proposed the relocation of an estimated 8,000 residents – local opposition, rooted in concerns for the area's agricultural livelihood, pressured the Peruvian government to cancel the proposed mine in 2003, aer nearly a decade of opposition. Failing to provide the local community with guarantees that their long-term agricultural and ir- rigation concerns were being addressed ultimately proved to be a ma- jor obstacle to the success of the project. Likewise, and as recently as spring of this year, protests at the proposed Tia Maria Mine in Peru, which reportedly led to violence and several deaths and culminated in the Peruvian government issuing a state of emergency and Southern Copper Corp. announcing a 60-day pause on the project, have further illustrated that local opposition exposes mining companies to sub- stantial project risk. 4 Tailored corporate social responsibility policies and sustainable de- velopment practices help build the social support needed to acquire the necessary social licence to develop and operate. A strong commitment to sustainable development is an essential component of good corporate social responsibility. Sustainable de- velopment was defined in 1987 in the Brundtland Report by the World Commission on Environment and Development (WCED) as "development that meets the needs of the present without com- promising the ability of future generations to meet their own needs." 5 With rising international concerns for the environment, the WCED urged the adoption of sustainable development as a guiding prin- ciple for all relevant actors. In turn, this has motivated stakeholders worldwide to advocate for higher practice standards and account- ability from the extractives industry. Impacted communities are now more than ever seeking to secure long-term economic growth and to limit environmental liabilities, and they do so by assessing whether a mining company has both the wherewithal to competently bring the proposed project to fruition, and the integrity to operate within a culture of fairness, transparency and according to international sustainability standards. is summer, the United Nations Human Rights Committee re- leased a report criticizing Canada's failure to monitor the human rights conduct of Canadian resource companies operating overseas. e report calls for increased oversight, and highlights the pressing need for Canadian mining companies with overseas projects to con- tinue to cra unique approaches, and implement proven strategies that meet or exceed global human rights standards in the absence of a legal framework that provides legal remedies to victims. e mining sector is progressively addressing these concerns through the emer- gence of CSR strategies that enhance community relations and seek to rebuild the mining industry's reputation. In the mining sector, cor- porate social responsibility is generally accepted to mean "a company's BY KAREN MACMILLAN AND KHALED ABDEL-BARR, LAWSON LUNDELL LLP Moving Towards Sustainable Development: How Canadian Mining Companies Are Leading By Example "Canadian miners are demonstrating that meaningfully engaging local communities and increasing transparency and accountability throughout the project development process both contribute to sustainable long-term growth of the economy and development of the communities impacted by the mineral activity."

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