The "free-entry" system under which prospectors are free to enter onto public lands to explore and acquire rights to minerals through staking has existed in Canada since the turn of the last century and has been integral to encouraging mineral exploration and maintaining a viable mining industry in Canada.
A 2012 judicial decision pertaining to the duty to consult with First Nations and legislative amendments adopted in Ontario and proposed in the Yukon, however, have called into question the future of the free-entry system in Canada.
In Ross River Dena Council vs. Government of Yukon, the Yukon Court of Appeal found that the Yukon government has the duty to consult with First Nations before a mining claim is granted or exploration work is commenced.
The decision puts at risk the traditional free-entry system, not only in the Yukon but in other jurisdictions such as British Columbia (which shares its court of appeal with the Yukon).
Consultation prior to granting a staked claim risks premature disclosure of prospective geological discoveries to a prospector's competitors before mineral tenure is secured and, thus, discourages prospecting.
In February of this year, the Yukon government filed an application for leave to appeal to the Supreme Court of Canada (SCC) seeking direction on when the duty to consult with First Nations arises in the context of mineral staking.
The Yukon government takes the position that the appropriate time for consultation is after granting a mineral claim, when the claimholder has some security of tenure, and the First Nation is able to better determine its potential adverse impact.
As the SCC assesses whether to hear the appeal, the Yukon government is also exploring with First Nations and industry how the Yukon's Quartz Mining Act can be amended to comply with the duty to consult, while maintaining a mineral tenure regime that rewards and encourages prospecting.
Key proposed amendments would require notification from claimholders prior to commencement of early-stage exploration programs to allow the Yukon government to consult with affected First Nations. Claimholders would be able to proceed with exploration 25 days after submitting notification, unless the chief of mining land use determines that additional time is required for consultation.
The Yukon proposals are not dissimilar to recent amendments to the Mining Act (Ontario) which included a requirement for mineral claimholders to consult with aboriginal groups prior to commencing substantive exploration work but not before their claim had been recorded.
Although Ontario's approach largely preserves the free-entry system, these amendments have been criticized, particularly by junior exploration companies, as imposing additional delays and expenses that threaten to redirect much needed mining capital to foreign jurisdictions with less burdensome regulatory structures.
If these developments in Ontario and the Yukon, for better or for worse, represent the new reality for the Canadian mining sector, future exploration programs will require more effective collaboration between industry and First Nations. However, it should be recognized that the duty to consult is an incremental one that is proportionate with the degree to which exploration activities may prejudicially affect aboriginal rights.
Accordingly, consultation at the early exploration stage should not require the same costs and time commitment as is associated with construction projects or operating mines. Indeed, over the past year several Ontario companies have entered into "interim" benefit agreements with affected First Nations respecting early-stage mineral exploration.
These agreements have been of modest scope and not nearly as expansive as impact benefit agreements commonly associated with larger projects. Yet, these interim contracts constitute critical evidence of the duty of consultation being met for the exploration programs in question.
Consultation and fostering strong relationships with First Nations is a long-term process. Laying the ground work earlier on, through exploration-stage consultation or interim benefit agreements, may give exploration companies more success in obtaining a social licence over the long term and reduce the likelihood of disputes with First Nations down the road. Ontario's amendments were, in part, justified on this basis.
While it remains to be seen whether these benefits from early-stage consultation will emerge, it is important to recognize that most mineral claims that are staked do not result in the discovery of a mine and therefore the impact of merely staking ground on Aboriginal lands will be quite minimal in practice.
Our governments and courts would do well to understand that any alternative to the traditional free-entry system must be proportionate with that reality. •
Fred Pletcher ([email protected]) is national chair of the mining group at the law firm of Borden Ladner Gervais LLP. Sonia Molodecky ([email protected]) is national co-chair of the firm’s Latin American services group.
