By Joel McKay
A decision that forced miners out of southeast B.C.’s Flathead Valley last year continues to reflect poorly on the industry, experts say.
The Association of Mineral Exploration BC (AME BC) said last month that it was “appalled by the lack of due process” the government showed in compensating mining companies that had invested millions in the region prior to transforming it into a de facto park.
Gavin Dirom, president and CEO of AME BC, believes the provincial government circumvented its own expropriation rules when it announced a memorandum of understanding (MOU) with the State of Montana to protect the Flathead from mining projects.
“It’s disappointing to see a lack of due process and transparency,” Dirom said. “This is a political decision and that goes against the public land-use plan.”
The decision to protect the valley, which is often referred to as the Serengeti of North America for its large mammal populations, sent several mining companies reeling last year.
Vancouver-based Eastfield Resources (TSX-V:ETF), MAX Resource Corp. (TSX-V:MXR) and Cline Mining (TSX:CMK) had projects in the area.
Last summer, the companies told Business in Vancouver they had yet to receive any money for their land despite the fact that the MOU laid out a July deadline for compensation (see “No compensation for Flathead miners ahead of July deadline” – issue 1080; July 6-12, 2010).
Last month, the province signed an agreement with Montana and two privately owned environmental groups to compensate miners.
According to the agreement, the Nature Conservancy of Canada and U.S.-based Nature Conservancy have agreed to fork out $9.4 million to protect the Flathead and compensate miners.
AME BC has said the estimated value of “sunk costs” in payments made to government in the region was approximately $17 million.
The organization also believes the area holds some $7 billion worth of undeveloped resources.
“Receiving a fraction of sunk costs is like winning the lottery jackpot, having the lottery corporation change its rules and only refunding the cost of the lottery ticket to you,” AME BC chair Mona Forster said in a release.
Dirom said the government had little or no dialogue with miners before the decision was made, and is similar to a 2008 ban on uranium mining in the province.
Both decisions, Dirom believes, reflect poorly on B.C.’s ability to attract mining investment.
“It hinders us from being a great jurisdiction,” Dirom said.
Earlier this month, the Fraser Institute released its annual survey of the best mining jurisdictions around the world.
B.C. ranked 36th out of 79 regions thanks to ongoing concerns about the security of land tenure in the province.
Fred McMahon, the study’s co-author, said decisions like the Flathead continue to scare miners away.
“If there’s instability in the past and the possibility of instability in the future, they’ll remember because it could happen again,” McMahon said.
He pointed to the now infamous Windy Craggy decision the government made in the 1990s, which blocked the development of a highly prospective copper deposit in northwestern B.C.
“I keep expecting some year to get no comments about Windy Craggy but this wasn’t the year … that tells you how long the memories are,” he said.
But Margaret MacDiarmid doesn’t see it that way.
As B.C.’s tourism, trade and investment minister, MacDiarmid believes B.C. remains a top destination for mining investment, and the Liberal government has been very supportive of the industry over the years.
When asked why private environmental organizations were compensating miners and not the government, MacDiarmid said it was “not unusual” and that it was important to move forward.
“I think people are happy the funding is available,” MacDiarmid said.
Victoria has no plans to contribute to the compensation, she said, adding that the Flathead needed to be protected.
“The environmental value here, it’s absolutely pristine and a one-of-a-kind area in the world,” MacDiarmid said.
She also said the government does not believe it circumvented B.C.’s expropriation act.
“If we had seen it that way we would have used the act,” she said. “This is one of those things where we’re going to agree to disagree in how we look at it.”