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If Canada wants to keep the investment community interested in the country’s natural resource sector it should find ways to better manage the red tape posed by regulatory regimes in this country.
As part of its Top 10 Business Issues with Legal Implications for 2012, Borden Ladner Gervais LLP cites the need to keep foreign investors interested in Canada’s Far North and specifically the need to address aboriginal consultation requirements and environmental regulations as potential hurdles.
In particular, Adam Chamberlain, the national leader and a partner in the climate change group at BLG, cited the special regulatory environment in Nunavut as an area with its own unique challenges. “You’re dealing with a regulatory framework that is substantially different than anywhere else in the country,” says Chamberlain.
He notes that Nunavut is the only territory that exists because of a modern land claim agreement. “It is distinct in that regard, and the processes that have been created and the different layers of regulatory requirements are different than you would find elsewhere.”
The regulator in Nunavut, the Nunavut Impact Review Board, was created pursuant to an article in the Nunavut land claims agreement. “In most provinces the province would be the regulator for environmental assessment with the federal government also involved. In Nunavut it’s the Nunavut Impact Review Board and it involves the federal government as well,” says Chamberlain.
There are several projects in the works for Canada’s north that face this review process, including an iron mine proposed by Baffinland Iron Mines Corp. Its Mary River Project is one of the largest mining developments currently planned in Canada, and considered the most significant development ever planned above the Arctic Circle.
“Just getting the materials up to the mine to prepare it to be built will require literally dozens of containers,” says Chamberlain. “Things like building a camp for the workers to live in have to be done from scratch. There are no deep-water ports in Nunavut, but if you’re going to build a mine like the Mary River mine they will have to build a deep-water port. This is all high risk — clients will only come if there is a significant upside to it.”
There has also been much discussion about the possibility of offshore oil exploration in Nunavut. In August 2010, a specialized ship from the German Federal Institute for Geosciences and Natural Resources that performs seismic testing to determine if there are oil and gas reserves below the offshore areas was scheduled to conduct testing near Nunavut. The ship was booked by the Canadian government to perform the testing in Lancaster Sound near Baffin Island.
The testing was scheduled to go ahead, but at the last minute the organization representing the Inuit of Baffin Island brought an application and was successful in getting an injunction from the Nunavut court preventing the testing from going ahead. Local communities argued they weren’t adequately consulted and they had concerns about the potential risk to wildlife in the area.
“The ship was a day or two away from the area when the court made its decision. By the time an appeal could have been filed the water would have been frozen solid,” says Chamberlain, adding the example provides “a bit of a warning” that appropriate consultation must be undertaken in all future projects.
For the rest of this article, please go to the Canadian Lawyer website: http://www.canadianlawyermag.com/3999/taming-regulatory-red-tape-key-to-investments-in-north.html