WASHINGTON (Thomson Reuters Foundation) - Canadian mining companies have reached a draft agreement to disclose what they pay to governments for the right to extract gold, coal and other minerals, anti-poverty activists and an industry group said.
The agreement, due for release later this week once final details have been ironed out, would be a major expansion of transparency in the extractive industries and would start to bring Canada into line with standards now taking shape in the United States and the European Union.
“Three-quarters of all transactions in the mining sector have occurred in Canada. If you want to capture transactions, the Canadian market is essential,” said Andrew Bauer, economic analyst at Revenue Watch Institute, one of the parties in the talks.
Campaigners say requiring companies to reveal what they pay governments in the oil, gas and mining sectors will increase accountability for how natural resource wealth is used by countries and will help combat corruption. About 3.5 billion people live in resource-rich countries worldwide, yet many are desperately poor, too often because government officials siphon off resource money into personal accounts.
Financial transparency is high on the agenda for G8 leaders from major industrial countries meeting next week in Northern Ireland as a way to tackle poverty in times of constrained development aid budgets.
Canada’s tentative agreement comes a few days before a vote in the EU parliament, expected on Wednesday, on its extractive industry transparency law. The United States already has adopted regulations for any oil, gas and mining company with publicly listed securities to disclose their government payments starting in 2014, though the petroleum industry is leading a challenge to the law in court.
Ben Chalmers, vice president of sustainable development at the Mining Association of Canada, which is party to the pact, said it made “good business sense” for the Canadian industry to align itself with transparency and good governance.
“Often the industry is challenged to prove the value it brings to community. So to have a framework for disclosing what revenues we provide to the governments allows us to show our contribution and contribute to building governance capacity in general,” Chalmers told Thomson Reuters Foundation.
GOOD CORPORATE CITIZENS
The draft agreement, struck by the Mining Association of Canada (MAC) and the Prospectors and Developers Association of Canada with Revenue Watch and Publish What You Pay Canada, will be released by June 15, and then is open for public comment. It covers issues such as the size of a mining project that must be disclosed and how the payment information will be released.
MAC and PDAC’s boards plan to vote on the final measure in November. These industry groups represent big names in the industry, including Barrick Gold, Shell Canada Energy, Vale and Xstrata, as well as thousands of small private companies.
Additionally, the pact essentially is a set of recommendations that must be implemented in the 10 Canadian provinces and three territories since Canada has a federal system for securities regulation. The transparency concept has the backing of Ottawa, which has pledged to help implement it.
“We believe we can play a leadership role with this initiative, but we have to do it within the framework of our Constitution,” Natural Resources Minister Joe Oliver told the Globe and Mail on Sunday.
“It’s one of those instances where it makes good sense from a profitability point of view to be good corporate citizens.”
PDAC did not immediately respond to requests for comment on the draft agreement, which was reached in principle last Friday. Mining accounts for about 10 percent of Canada’s foreign investment, much of it flowing to development work in Latin America, Africa and Asia.