The modern way to regulate the mining industry

headlineimage-adapt-1460-high-bc_mine_spill_080714-1439236421450

This recent story about Miningwatch Canada attempting to sue the Mount Polley Mining Corporation and the British Columbia Government, has caught my attention. Their claim is that “it has now been over two and a half years since the Mount Polley disaster happened and yet, despite clear evidence of violations of Canadian laws, no charges have been brought forward by any level of government.” Indeed, last year the company has been allowed to resume operations at the site. Effectively, Miningwatch are using a private prosecution to goad the state into action – and the state is responding by trying to get the case stopped.

There are a few things about this that are interesting. The first is that for many actors in the field, the best way to increase pressure on mining companies to improve their practices is through the courts. There is a steady drip drip of stories of mining companies headquartered in the developed world being sued for the behaviour of legally separate (but often wholly owned) subsidiaries in developing countries. This is obviously not the case for Mt Polley – a Canadian mine being sued in Canadian courts – but this shift to the courts is telling. Acacia and Vedanta are being sued in UK courts (and as I pointed out on twitter, UK lawyers meeting their clients in Zambia in the Vedanta case was last week were subject to some pretty serious hassling) and Hudbay is being sued in Ontario courts. Monterrico Metals settled out of court before a verdict was reached in 2011. My own research shows that these cases are being “very attentively watched” by the industry.

One particularly interesting (for me, at least) finding from my research was that these cases often draw on the voluntary standards mining companies have adopted. Unlike the Miningwatch Canada/Mt Polley case above, these are often civil suits based on the tort of negligence. In essence, those suing the mining companies are accusing the companies of being negligent in their behavioiur. In order to establish what is negligent, the cases need to establish a ‘standard of care’ – a standard against which the mining companies can be said to have been negligent. In the past, this was often done using internal company policies. Now, however, with many companies signing up to international voluntary standards it’s these standards that are being used to establish standards of care. If mining companies have signed up to standards, and the courts establish that following these standards would have avoided the human rights abuses companies are being sued for, then the companies will have been negligent. The financial penalties of this can be enormous – just look at BP. BHP Billiton is hoping to sign a $1.55bn agreement with the Brazillian federal prosecutors to avoid $47.5 billion civil suit following the Sanmarco tailings disaster, having already settled with federal and state governments. All of a sudden, the vague sounding pledges of voluntary CSR and environmental standards have teeth.

In my own research, these cases, amongst a range of other pressures, are creating a new regulatory landscape for mining companies. Courts, bringing together hard and soft regulation, increasingly appear to be a modern way to regulate the mining industry.

Photo of Mt Polley disaster from Al Jazeera

Samarco tailings disaster: this changes everything?

The recent collapse of a tailings dam at the Samarco project in Brazil has caught widespread attention. It was clearly truly awful and exposed, in connection with the Mt Polley dam failure last year, a key weakness in the the mining sector’s efforts to clean up its act. A good source to read on this is Saleem Ali’s blog over at The Conversation. One quote that caught my attention however was this tagged on to the bottom of an interview with Stuart Kirsch about his book on the OK Tedi mine published last year:

 

“the response to the Brazilian disaster suggests that the default assumption now seems to be that corporations are responsible for their environmental impacts, at least when they are caused by sudden events. This is very different than the way BHP dragged its feet for more than a decade after the problems downstream from the Ok Tedi mine became well-known”

 

The times, they are a changin’. What BHP could get away with 10 years ago it can’t now. The mining industry needs to up its game. This strikes me as very similar to Hevina Dashwood’s argument that in the 1990s the mining industry found itself thoroughly out of step with a new discourse of sustainable development. The industry was forced to up its game or lose influence and investment.

 

Of particular note is that this was no frontier cowboy junior operation, this project was co-operated by two of the worlds largest mining companies. Companies that really should know better. The usual excuses do not apply. If these two companies can’t build a facility that doesn’t dump sixty million cubic meters of down a valley, wiping a village off the map, killing at least 13 people, and destroying a river, who can? What hope does the mining industry have when its leading lights cause these kind of catastrophes?

 

These questions may explain quite how many press releases the ICMM has put out in the last few weeks, a remarkable 5 since the beginning of December, including, importantly, a global tailings management review. If nothing else, the industry needs to be seen to be taking this issue seriously. However, if history is anything to go by (and, in all honestly, it may not be) the industry will drag its feet. I think more than any other issue, if the mining industry fails to get tailings management right, it will never stop being the global whipping boy for environmental mismanagement.

Mt. Polley triggers Canadian soul-searching on how to regulate the mining industry

Dead in the water?

The Mount Polley catastrophic tailings spill of last summer in western Canada has led to a new round of news stories, discussion and debate in Canada about how to regulate their mining industry.

The Mount Polley spill was one of the worst mining spills in the history of Canadian mining and raises questions of whether the current ‘light touch’ regulatory regime really works. Search warrants for Imperial Metals were carried out last week following the report from an independent panel which found evidence of design flaws but said it could not conclude anything about management culpability.

Particularly damaging for advocates of self regulation, the Mining Association of Canada refuses to release details of the self-assessment the Imperial Metals gave itself before the spill, no doubt because it shows they gave themselves a clean bill of health. The report was effectively just about the paperwork and not whether the plans were actually being followed and not checked by independent parties.

The consequences of this investigation could be very wide ranging and affect mining worldwide with increased requirements for third-party verification and more stringent tailing management in coming years. Industry commentators in Canada are already working hard to argue that regulators should not overreact.

One take home from all of this: CSR in the extractive sector starts with effective environmental management. Without this, CSR is dead in the water.

Image from CBC.