The unknown cost of green mining – by Crae Garrett (The Lawyers Weekly – April 15 2016)

Caution needed until impact of new environmental assessment processes becomes clear

During the current global business cycle, the Canadian mining sector has been very much at the forefront of the market volatility and resultant uncertainty. More recently, an additional element of change on the socio-political front looks set to add to that uncertainty, at least in the short to medium term.

The Canadian federal government has indicated it intends to introduce new environmental assessment processes for major projects.

While the vast majority of public commentary and press coverage has centered around how this may affect two major pipeline projects currently under consideration, and while there is not much detail available regarding what form these new processes will take, it is worth remembering that the scope of the underlying regulatory regime already in place that will likely provide the legal structure for the assessment process (the Canadian Environmental Assessment Act) also extends to major mining projects.

As such, mine developers and producers should be just as mindful as their counterparts in the energy sector of the potential ramifications of the new direction federal policy appears to be taking and of the potential impact on their project economics.

Change may bring advantages and/or disadvantages, but undeniably change brings uncertainty and uncertainty is difficult to price. So what is known so far?

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