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OTTAWA — HudBay Minerals Inc. is making its first big bet overseas with a $1.5-billion copper mine in Peru. As its engineers work on mine construction, the Toronto-based company’s accountants are proceeding with a related project – preparing to lay out, under contentious new U.S. securities regulations, precisely what revenues it pays to federal and local governments in the South American country.
While U.S.-listed resource companies like HudBay face such mandatory transparency reporting, companies listed only in Canada do not. Now, the mining industry is leading a charge in this country to adopt similar rules.
It’s a move that is dividing Canada’s mining and oil companies, and raises questions about whether payments to first nations should be also be made public.
And the federal government is now endorsing the adoption of mandatory reporting for both mining and energy companies, though Natural Resources Minister Joe Oliver cautioned Sunday that it will have to be done in collaboration with the provinces, which have jurisdiction over resources royalties and securities law.
“We believe we can play a leadership role with this initiative, but we have to do it within the framework of our Constitution,” Mr. Oliver said in an interview.
“It’s one of those instances where it makes good sense from a profitability point of view to be good corporate citizens.”
Revenue transparency will help both the company and the local communities in Peru to identify the beneficial economic impact that mining is having – or should be having – in the country, David Clarry, HudBay’s vice-president for corporate social responsibility, said in an interview.
Under regulations mandated by the U.S. Congress, the Securities and Exchange Commission requires all resources companies listed on U.S. stock exchanges to reveal what they pay to governments on a project-by-project basis, part of a global effort to increase transparency and to reduce corruption in the global energy and mining sectors.
Even as oil companies and the U.S. Chamber of Commerce fight the SEC regulations in court, the Canadian mining industry has joined with two non-governmental organizations to lobby for mandatory “publish what you pay” rules in this country. Later this month, the four partners – the Mining Association of Canada, the Prospectors and Developers Association of Canada, Revenue Watch International and Publish What You Pay Canada – will release a detailed proposal for provincial securities regulators in Canada to enforce transparency provisions for the mining sector, including project-by-project payments to all governments, whether domestic or foreign.
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