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Canada’s miners, watchdogs agree revenue transparency plan

Source: Thomson Reuters Foundation - Fri, 17 Jan 2014 11:22 AM
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Capstone Mining Corporation's Minto Mine is pictured in Minto, Yukon August 21, 2012. REUTERS/Chris Wattie
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LONDON (Thomson Reuters Foundation) – A group representing the Canadian mining industry and transparency watchdogs published a set of recommendations to bring greater transparency to the payments that Canada’s publicly listed mining companies make to the governments of the countries in which they operate.

The framework broadly recommends that Canada follows the lead of the United States and the European Union, both of which have recently signed laws which mandate that oil, gas and mining companies be forced to annually publish the payments that they make to governments.

 “Transparency of payments to governments will highlight the financial contributions and benefits that come from resource development,” Ross Gallinger, executive director of the Prospectors & Developers Association of Canada (PDAC), said in a statement.

The group of signatories, known as the Resource Revenue Transparency Working Group, consists of Publish What You Pay-Canada  (PWYP-Canada), the U.S.-based Revenue Watch Institute and Canada’s two mining associations, the Mining Association of Canada(MAC) and the Prospectors and Developers Association of Canada (PDAC).

About 3.5 billion people live in countries with extensive oil, gas or mineral reserves, but poor governance and corruption mean many of them do not benefit from the wealth created by their extraction.

Transparency campaigners and a number of Western governments have pushed for greater transparency in the extractive sector so that citizens of resource-rich countries can better hold both their governments and extractive companies to account.

“In Canada, we have been able to work with industry to find common ground through a unique collaboration, which I hope provides a model for future cooperation,” Claire Woodside, director of transparency watchdog PWYP-Canada said in a statement.

“Canada now has the opportunity to take this common ground and create a robust payment reporting standard that will see Canada take a much stronger lead on global transparency efforts,” Woodside added.

Prior to the Group of eight (G8) meeting in Northern Ireland last summer, Canada’s Prime Minister Stephen Harper pledged to push forward mandatory reporting requirements for the country’s oil, gas and mining companies.

However, while Canadian oil companies were invited to join the working group, they declined to do so and consequently the recommendations refer solely to creating greater revenue transparency within Canada’s mining industry.

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The working group’s recommendations explicitly recognise extractive transparency laws passed in the United States and the EU and are intentionally similar.

“A global standard is critical for this type of disclosure to create a level playing field for companies,” Pierre Gratton, president and CEO of MAC, said in a statement.

“It is also essential to ensure this data is consistently reported between countries for it to be truly useful to communities who wish to use it to hold their governments accountable for the responsible use of mineral revenues,” he added.

As is the case with the U.S extractive transparency laws, the working group recommended that Canada’s laws should be governed by securities regulators. Unlike the U.S., each Canadian province and territory has its own securities regulator so the laws will need to be harmonized across the country. However, the federal government in Ottawa has already pledged to help smooth the progress of the law’s implementation.

Similar to the laws already passed in the U.S. and EU, the Canadian recommendations call for payments to be disaggregated on a project-by-project level (as opposed to a country-by-country level) and for there to be no exemptions from the reporting requirement.

While the U.S. and European laws require their oil, gas and mining companies to publish payments that exceed $100,000 or euros respectively, the Canadian recommendations call for all public companies to disclose payments above C$100,000 but also for venture issuers (a more junior form of listed company) to disclose payments above C$10,000.

Almost 60 percent of the world’s mining companies are listed on Canadian stock exchanges and mining accounts for about 10 percent of Canada’s foreign investment, much of it flowing to development work in Latin America, Africa and Asia.

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