Canada is global mining, pure and simple. Over 50 percent of the world’s mining companies are based in Canada and Canadian mining companies explore, develop and produce in over 100 countries.
In many of these countries, a Canadian company is the largest single taxpayer. In Tanzania, for instance, Toronto-based Barrick Gold paid just over $30 million to the government in 2010-11 for production at four different mines. In Mongolia, Vancouver-based Turquoise Hill Resources has already paid $1.1 billion to the government as it develops the massive Oyu Tolgoi copper mine.
Regrettably, this type of payment information is unavailable in many countries. Money flows into government coffers (or doesn’t) and is often lost before governments can transform it into public investments like education programs, hospital equipment, water systems or roads.
Today, the Canadian mining industry, Publish What You Pay—Canada, and the Revenue Watch Institute recommended that companies traded on Canadian exchanges should no longer keep their payments secret—and that new laws should compel their disclosure. This is the first time that the mining industry in any country has elaborated publicly on strong rules that the industry as a whole should abide by.
These rules, if implemented as recommended, will subject Canadian companies to the same or even higher standard to which oil, gas, and mineral companies will be subject under recent European Union and United States law. Companies would have to annually disclose how much they pay national and subnational governments on a project-by-project basis. And there would be no exemptions for the over 2,000 companies covered by the rules.
The Mining Association of Canada and the Prospectors and Developers Association of Canada should be commended for taking a proactive approach and embracing payment transparency fully. These industry associations, along with the members they represent, have recognized that not only does transparency improve Canadian companies’ reputations and help generate a social license to operate, but that it can help build trust with local communities and authorities and reduce corruption, improving the business environment for all. This information will provide citizens with tools they need to hold their governments and decision-makers accountable for the management and use of resource revenues. Furthermore, it will allow governments and communities that are owed a share of revenues to determine whether they are receiving their entitlements.
The working group is now moving into its next phase, trying to convince Canadian federal and provincial governments to adopt its recommendations in legislation or regulation. Prime Minister Stephen Harper has already committed Canada to mandatory disclosure rules that cover the extractive sector. The working group will now begin discussions with federal and provincial legislators, officials and securities regulators on how these rules can be incorporated into securities regulation just as they are in the US and EU.
The Canadian mining industry has taken a lead on this issue, committing itself to binding disclosure rules that could unlock billions of dollars for development. However, to date, the Canadian oil and gas industry associations have remained largely silent. While Canadian rules will cover both industries, the working group’s experience over the past year has shown us that collaboration between industry and civil society can be constructive and produce better results than fighting against what is fast becoming a global standard for transparency. Collaboration can also lead to an agreement that satisfies both industry’s need to minimize accounting burdens and citizens’ needs for useful and accurate information. Our hope is that the Canadian oil and gas industry will also support the strong rules already endorsed by Canadian miners.
Andrew Bauer is an economic analyst at the Revenue Watch Institute.