TORONTO (miningweekly.com) – One of the most searing indictments levelled against the mining industry is that it has consistently short-changed governments, particularly those in developing nations.
The industry’s failure to collectively address this accusation has caused lasting and deep damage to the public’s perception of mining; it has also allowed numerous governments – again, mainly in the developing world – to accrue earnings without having to declare them. At its worst, it has had the potential to facilitate corruption.
MAKING IT MANDATORY
In response, there is now a willingness among many in the Canadian mining sector to make transparent the payments made to governments at all levels.
The US already requires mandatory disclosure by mining companies of payments to government bodies under the Dodd-Frank Act, specifically Section 1504, while the European Union’s (EU’s) legislation in this regard is ongoing. The Extractive Industries Transparency Initiative has also helped point the way.
Canada is therefore keen to emulate and to build on the standards already coalesced. “Prime Minister Stephen Harper announced on behalf of the federal government that mandatory disclosure would be coming to Canada. The government has made statements suggesting that such legislation will be introduced in 2014 and on the books by 2015,” Norton Rose Fulbright associate Andrew Godfrey told Mining Weekly Online.
Godfrey specialises in securities law and mergers and acquisitions.
Importantly, the federal government now has some important waypoints marked out for it in the form of recommendations released on January 16 by Canada’s Resource Revenue Transparency Working Group.
The group comprises the Mining Association of Canada, the Prospectors and Developers Association of Canada, Publish What You Pay Canada and the Revenue Watch Institute.
The recommendations propose disclosure by mining companies listed on Canadian exchanges of all taxes paid to governments or government bodies on profit or production. The level of royalties paid should also be declared, as well as the listing of production entitlements, including both value and volume.
In addition, the recommendations call for the disclosure of any bonuses and dividends made to governments. Payments relating to infrastructure should also be reported if they are required by government law or contract.
Transport and terminal operations fees should be acknowledged too.
The threshold for declaration on a payment is recommended at over $100 000 for companies trading on the TSX, and $10 000 for companies trading on the TSX-V.
“The categories line up almost exactly as they do within the Dodd-Frank Act and EU legislation, except for transportation and terminal operations fees, which is a made-in-Canada addition,” Godfrey said.
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