Making Claims: Improving Accountability in the Mining Sector

The mining sectors in Canada and the United States, worth hundreds of Billions of dollars, are guided by significantly different legal and regulatory frameworks. Despite this difference, there is not very much evidence that there are significant differences in the environmental and human rights performance of Canadian and American mining companies. However, evidence tells us that legal rules (statutes and precedents) that enable foreign nationals to make legal claims against multinational mining companies for their social and environmental impacts are the most effective ways of promoting greater accountability in the industry.

THE MINING SECTOR IS VERY LARGE

To a layperson, it is surprising how large the Canadian and American mining sectors are. They are huge Global players active in almost every country around the world and active with every kind of product that comes to mind. The American mining industry contributes over $624 billion to the US GDP and employing over 1.3 million Americans (National Mining Association). The US mining sector includes over 1,100 US mining companies owning or operating approximately 8,000 mining properties in over 100 countries.

The Canadian mining industry is a massive global player and contributes over $97 billion in gross domestic product (GDP) and employs over 700,000 Canadians (directly and indirectly). The mining industry also accounts for 19% of Canada’s total domestic exports. Canadian mining assets totaling $165 billion outside of Canada and Canadian mining companies own or have an interest in 8,251 mining properties in 102 countries (Mining Association of Canada).

DIFFERENT REGULATORY AND LEGAL ENVIRONMENTS

Given the significant global operations, there can be an area of concern for what kind of protections there are for human rights issues and environmental issues. One could be interested to see if the regulatory frameworks influence mining company behaviour in substantial ways.

In the United States, mining companies are accountable to the Alien Tort Claims Act (ATCA) (1) which allows foreign nationals to bring claims against American companies for human rights abuses committed abroad. One high profile case was the Wiwa v. Royal Dutch Petroleum Co. case. Nigerian nationals made claims against Royal Dutch Shell for its involvement in human rights abuses in the 1990s. The case resulted in a settlement of $15.5 million. Shell agreed to establish a trust fund for the benefit of the plaintiffs. This was a very important outcome, to say the least, for the residence involved.

Important to note here though, there is some uncertainty to what the future holds for the strength and continued efficacy of the ATCA (2). In the landmark case of Kiobel v. Royal Dutch Petroleum Co., the US Supreme Court ruled that the ATCA did not apply to conduct that occurred outside the US, which limited the scope of the law’s application. This important, regrettable, precedent could signal a drift away from accountability.

Canada does not have extraterritorial laws that allow foreign nationals to sue Canadian corporations in Canadian courts for human rights abuses and environmental damage that happen outside of Canada. Instead, there’s the difficult and expensive path of precedent-setting controversies and decisions. But some of this worked!

Canada has faced several high-profile controversies over the human rights and environmental impacts of its mining activities in foreign countries that finally lead to some decisions. The famous HudBay Minerals controversy involved human rights violations and environmental damage in HudBay’s operations in Guatemala. The company was sued in Canada by Guatemalan nationals. In 2013, the case became the first to be heard under the Canadian “duty of care” doctrine (Canda Business Corporations Act). As an extremely important precedent for people impacted by Canadian-owned mines all over the world, the Canadian court ruled that the case could proceed in Canada, even though the alleged abuses took place in Guatemala.

Other examples of Canadian mining companies facing scrutiny for human rights and environmental concerns include Barrick Gold in Tanzania and Goldcorp in Mexico. In both cases, local communities alleged that the companies were responsible for environmental damage and human rights abuses related to their mining operations.

The specific impact of these legal and regulatory frameworks on human rights and environmental impacts is next to impossible to track. Assessing the record of American and Canadian companies is cluttered with interceding issues like foreign countries’ regulatory contexts. The specific minerals being mined are associated with specific environmental impacts. Cobalt is associate child labour more often that copper mining. Specific company conduct, local environmental sensitivities and myriad other issues are variable.  

There is, however, something very clear to look at here. The evidence tells us that enabling foreign nationals to make claims directly against multinational mining companies is a critical step toward accountability.

This helps immensely when, so often, companies operate in countries with weaker legal and regulatory frameworks, where they may be less accountable to local governments for their social and environmental impacts. Legal rules in the country of the head office that allow for legal action from foreign nationals can be a powerful tool to ensure greater accountability. Simply, getting ourselves to a situation where claims can be made against responsible entities by the people and places directly affected.

MEASURES OUTSIDE OF LEGAL CLAIMS

Another arena of difference between Canadian and American legal postures toward mining is in the are of international agreements.

In contrast, Canadian law does not provide for similar legal remedies for human rights abuses committed by Canadian corporations operating overseas. However, Canadian mining companies are subject to the Extractive Sector Transparency Measures Act (ESTMA), which requires them to publicly report on their payments to foreign governments, as well as the Canadian government’s Corporate Social Responsibility Strategy for the Extractive Sector, which includes guidelines for responsible business conduct.

Canadian mining companies are also subject to Canadian anti-corruption laws, such as the Corruption of Foreign Public Officials Act (CFPOA).

The full picture of legal framework that guides the mining sectors for Canada and US includes a number of international agreements to which both countries are parties.

• International Labour Organization (ILO) Conventions:
• Extractive Industries Transparency Initiative (EITI):
• Kimberley Process Certification Scheme (KPCS):

To its credit, Canada signed onto several additional mining-related international laws and agreements that the US has not. Some examples include: The International Covenant on Economic, Social and Cultural Rights (ICESCR); The United Nations Convention on the Law of the Sea (UNCLOS); The Convention on Biological Diversity (CBD); The Minamata Convention on Mercury; The Kimberley Process Certification Scheme (KPCS).

But Canada tying itself to more agreements does not give the whole picture. There are signals from US industry that human rights and environmental priorities are emerging: In 2010, the International Council on Mining and Metals (ICMM), a global industry association that includes American mining companies, released a set of 10 principles for sustainable development that include commitments to transparency, stakeholder engagement, and responsible environmental practices. (ICMM website). The U.S. State Department’s Bureau of Economic and Business Affairs has highlighted the importance of responsible business practices in the mining sector and has supported initiatives to promote transparency and accountability, including through the Voluntary Principles on Security and Human Rights. (U.S. State Department website)

These agreements tip the scales toward improving information, commitments, voluntary efforts, advocacy and promoting best practices. There is room to point out that legal and regulatory frameworks of both countries have led some mining companies claiming that they are adopting more responsible business practices, including environmental and social impact assessments, community engagement, and transparency. Some Canadian mining companies have established partnerships with local communities to address social and environmental concerns. Similarly, some American mining companies have implemented sustainability initiatives and adopted more responsible mining practices. Can this lead to improved corporate behaviour. The specific impacts are not quantified.

HudBay’s website says it well “We strive to treat the people in our host communities with the dignity and respect that they deserve. Our commitment is underpinned by the policies, procedures, and the numerous voluntary codes to which we adhere.”

We can anticipate the usual shortcomings from self-regulations and voluntary measure. These are limited and problematic because they don’t hold companies accountable and don’t give people and places recourse to make claims against head offices.

REAL ACCOUNTABILITY STARTS WITH REAL ACCOUNTABILITY

In the business of accountability, singing on to international agreements and self-regulatory are not enough. This is an abundance of highly mediocre enforcement in countries with weaker legal and regulatory capacities. The huge power imbalance between mining companies and affected communities is itself a significant barrier to transparency.

A very big complement to the agreements and regulation push for greater accountability, would be to allow foreign nationals to make claims directly against Canadian and American multinational mining companies. By holding these companies accountable for their actions, both legally and financially, there is a greater likelihood of improved environmental and human rights performance in the mining industry. The rest is filler.

Canadian and US mining companies are colossal in size and have operations that reach around the world. It is important that there continues to be an emphasis on accountability and fairness for people and places directly affected. Allowing for legal claims against companies by foreign nationals (regardless of where incidents took place) can work alongside strengthening legal and regulatory frameworks. This will lead the way toward improved accountability. Better accountability means better human rights and environmental performance.

Endnotes:

• The Alien Torts Law significantly influenced the business strategies of American mining companies because they can be held liable for human rights abuses and environmental damage in foreign countries. There is some evidence that at least some specific improvements in environmental and human rights performance may be in part due to ATCA. Some examples:
• In 2004, Newmont Mining established a sustainability framework that included a commitment to stakeholder engagement, responsible environmental practices, and transparency, and an external review process to assess its sustainability performance and made its sustainability reports publicly available. (Newmont Mining website)
• Freeport-McMoRan, implemented a number of sustainability initiatives, including the development of a social and environmental management system, the establishment of community grievance mechanisms, and the adoption of transparency and anti-corruption policies and a public commitment to the United Nations Global Compact and the Extractive Industries Transparency Initiative. (Freeport-McMoRan website)
• In 2010, the International Council on Mining and Metals (ICMM), a global industry association that includes American mining companies, released a set of 10 principles for sustainable development that include commitments to transparency, stakeholder engagement, and responsible environmental practices. (ICMM website)
• The U.S. State Department’s Bureau of Economic and Business Affairs has highlighted the importance of responsible business practices in the mining sector and has supported initiatives to promote transparency and accountability, including through the Voluntary Principles on Security and Human Rights. (U.S. State Department website)

• NOTE: There are a few important examples of when ATCA was used successfully by foreign residence against American mining companies
• Wiwa v. Royal Dutch Petroleum Co.: In this case, the Ogoni people of Nigeria sued Royal Dutch Shell and its subsidiary for human rights abuses, including extrajudicial killings, torture, and crimes against humanity, allegedly committed in connection with the companies’ oil drilling activities in the region. The case was settled for $15.5 million in 2009.
• Doe v. Unocal: In this case, Burmese villagers sued Unocal (now Chevron) for human rights abuses committed by the Burmese military in connection with the construction of a natural gas pipeline in Myanmar. The plaintiffs alleged that Unocal provided logistical support and funding to the military, which committed forced labor, rape, and murder against the villagers. The case was settled for an undisclosed amount in 2005.
• Romero v. Drummond: In this case, the families of three Colombian coal miners who were allegedly murdered by paramilitary groups sued Drummond, a US coal mining company, for aiding and abetting the killings by providing financial support and other assistance to the paramilitaries. The case was settled for an undisclosed amount in 2011.
• Presbyterian Church of Sudan v. Talisman Energy: In this case, Sudanese villagers sued Talisman Energy, a Canadian oil company with operations in Sudan, for aiding and abetting the Sudanese government in committing war crimes, crimes against humanity, and genocide in the region. The case was settled for $25 million in 2004.

Bibliography

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• National Mining Association. (2020). Mining powers America, from the fuels that feed our energy grid to the metals that carry power to our homes and businesses. Retrieved from https://nma.org/
• Natural Resources Canada. (2021). Canadian Mining Assets. Retrieved from https://www.nrcan.gc.ca/mining-materials/publications/22502
• United Nations. (2011). Guiding Principles on Business and Human Rights. Retrieved from https://www.ohchr.org/documents/publications/guidingprinciplesbusinesshr_en.pdf
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