The Regulatory Landscape
Ambitious targets require faster processes
In Québec, governments come and go, but pro-mining attitudes remain. Like its North American neighbors, Québec’s mining code and legal framework offer investors and miners a stable environment that is (almost) free of geopolitical fluctuations. But like its neighbors, that legal framework often leads to extended permitting guidelines, and evermore stringent environmental regulations, two factors that can constitute investment barriers. And with the US leading the drive to overcome China’s dominance in the critical minerals space, leaders in Canada’s mining industry have called for federal and provincial measures resembling the Inflation Reduction Act for the country to accelerate mine-building timelines. As said by Claude Bélanger, COO copper North America and Philippines at Glencore, who operates the Raglan Mine in Québec: “It takes 10 years to bring a mine into production. Permitting has become a moving target, and for investors, predictability is key. Without predictability in the permitting process, it is hard to assess the costs of a project.
Permitting challenges and growing uncertainties
The federal government hopes to unveil a plan by the end of 2023 to streamline permitting for mining projects as the US and its allies push to accelerate the production of critical minerals in North America. Indeed, timescales for mining projects are long, too long compared with North America’s Asian counterparts, and are reducing the ability of the sector to respond to supply shortages and price fluctuations. In short, the success of the green transition will demand on government’s ability to shorten permitting processes, while maintaining high standards. Frank Mariage, partner at mining law firm Fasken, said: “If we want to succeed in the energy transition and address national security issues (being less dependent on Chinese minerals), we are going to have to make decisions to fast-track projects.”
Québec’s stumble from the fifth to the eighth spot on the Fraser Institute’s 2022 Annual Survey of Mining Companies was mostly due to growing uncertainties around the legal system. Throughout the province, miners expressed dismay over the lack of clarity regarding protected areas (in James Bay, the Cree and authorities discussed a memorandum of understanding to ensure the creation of a system of protected areas that will cover 30% of Cree territory by 2030) and changing environmental regulations notably.
The near-term will be defined by the ability of both the federal and Québec government and miners to work jointly to reduce the decade needed between exploration and production. In other words, streamlining the process will be key, and Québec is making strides in that direction for firms willing to step up their ESG standards. The Québec government is currently developing a special office that will reduce permitting times by 40% for critical mineral development projects that meet such criteria. These new initiatives could be the answer to meet the world’s growing need for minerals while respecting the ESG standards that make Québec a world-class mining jurisdiction. Josianne Beaudry, partner at Lavery, shared: “What we hear in the industry is the difficulty at the permitting level to bring a mine into production. What could simplify things would be to centralize that process, for entrepreneurs both within and outside Québec.”
"There is room to accelerate projects and remove some of the regulatory barriers that are a bit cumbersome from an industry perspective, and there is a clear desire by the federal and provincial governments to streamline the regulatory process."
Louis-Nicolas Boulanger, Partner - Business Law Group, McCarthy Tétrault LLP
Preserving linguistic heritage
A year after the enactment of Québec’s new French language law, it is safe to say that authorities have leaned towards helping with compliance, rather than firing fines. So far in 2023, legal industry experts have not noticed that Bill 96, “An Act respecting French, the official and common language of Québec”, represented a threat to foreign investments in Québec, but recognize that with the unprecedented flow of foreign direct investment seen in late 2022/early 2023, the Bill could represent a challenge: “The recent legislation on the French language will be burdensome for foreign companies that will have to draft some of their agreements in French. This will be complicated for Australians and other foreigners” explained René Branchaud, partner at Lavery.
Could the language barrier for foreigners turn into an opportunity for Québec’s mining industry? The province’s linguistic heritage is certainly key to its touristic success, but for Maïté Blanchette Vézina, Minister of Natural Resources and Forest, Québec Government, it could turn into an asset for the industry: “We are the only French-speaking province in North America. We continue to work with foreign companies to help them, but we ask them to work in French. We see our French heritage as a strength and as a comparative advantage, not as a constraint.”
Québec remains one of the safest jurisdictions for miners to operate in, but is at a turning point. The direction that the federal and provincial governments will take to streamline permitting processes while keeping in consideration local stakeholders’ demands will determine the province’s ability to bring the commodities the world needs out of the ground, in time.
Image by Leonid Andronov at Adobe Stock