Foreign Affairs Committee on Nov. 26th, 2009

[Bob Rae, Liberal, Toronto Centre, ON]

Welcome, everyone. It's nice to see some old friends and new friends.

Mr. Peterson, on pages 6 and 7 of your Fasken Martineau presentation, you go down the list of all the things that are being done with respect to CSR. You've done a very good job today of doing what Lord Denning used to refer to as “parading the horrors” of what the potential consequences of legislation would be. Correct me if I'm wrong, but both the EDC and the International Finance Corporation have to take compliance with CSR into account before they make any financing decisions. The government--I think, Mr. Peterson, you may have been a member of the government at the time--insisted that the EDC take environmental compliance and environmental standards into account before making its financing decisions.

Madam Aloi spoke to the report of the ombudsman of the World Bank, which would seem to indicate that the World Bank has now created a process for compliance with CSR before making its financing and other decisions. The newspapers are filled with stories of activities of mining companies and allegations that are made by various individuals. The government has set up a counselling office that will now receive complaints, which will become very public and will become very significant matters of public concern.

You're already looking at a world in which many unfair things will be said about the companies that you represent and you're having to respond to them, and at the same time major international organizations as well as our own EDC are having to take into account specifically environmental regulations before they make financing decisions. I think you may be somewhat exaggerating the impact of the legislation if it were to become law even in its current form. It seems to me that your attempt to describe a huge gap between what the legislation sets out and what is in fact currently the case is really not that compelling. You are still going to face a serious set of issues that you're currently having to deal with.

You could say, we have these issues, other countries have these similar questions, but a lot of what you're describing seems to me is.... As much as I understand why you're doing it and your desire to make this bill just go away, it seems to me that you can't make CSR go away, and you can't make accountability go away, and you can't ask public institutions not to take CSR into account in making their decisions.

[The Chair, Conservative, Kevin Sorenson]

Mr. Bourassa.

[Michael J. Bourassa]

I'm happy to start with that.

I think, Mr. Rae, what you've described with some of those institutions, EDC or the IFC, are processes that of course every company would take seriously. Those institutions would have their due diligence processes to go through, CSR standards, and the companies would have the opportunity to respond. It's a process. It possibly even could be a remedial process.

With Bill C-300, the damage is that it's basically a complaint to a minister that elevates it to such a high level. Once a minister has received a complaint--and you can refer to some of the news in the last few days--the ramping up of that rhetoric is huge. These are all allegations against companies. They're serious allegations. These are not fact, and nobody is--

[Bob Rae, Liberal, Toronto Centre, ON]

I understand that.

[Michael J. Bourassa]

To add to what's in the newspapers now, to be able to say that that particular company is now subject to a complaint before a minister, elevates to a whole new level how it will be perceived in the rest of the world.

[Bob Rae, Liberal, Toronto Centre, ON]

As opposed to a complaint to a counsellor?

[Michael J. Bourassa]

This bill doesn't propose any sort of counsellor.

[Bob Rae, Liberal, Toronto Centre, ON]

No, there is a counsellor. The government has instituted one.

[Michael J. Bourassa]

Yes, there is a counsellor with the government, but I'm talking about the bill.

The counsellor process now probably needs to be further designed, but at least it's a remedial process. It's a mediated process in which both parties can come together to discuss the issue. It's a way to rectify a problem.

I don't see the bill as providing any opportunity to rectify a situation. A complaint is made. Either the company has been determined to be inconsistent or not inconsistent with a guideline or a CSR standard.

The point I want to make as well is that, given that it's elevated to a ministerial level, it will be used against those companies elsewhere. You had a witness from Argentina a couple of days ago. I looked at some of her submissions. She said that if this had been in effect when she was minister, she would have been able to use it.

Companies face very difficult situations in many countries. They have licences that could be subject to revocation or extinguishment. There's nothing better for some of these countries than saying you've been named—it's not even that you've been found to be inconsistent, but that you've been named—in a complaint. That can be used against Canadian interests, and it will be very damaging.

The point Mr. Raymond Chrétien makes is, in a situation in which a complain has been raised, how is our foreign affairs department able to work with those companies from that point forward? How can they help and collaborate and help them improve and possibly rectify the situation? These are very difficult situations; the companies take these very seriously. I think our foreign affairs department, instead of being there to help in a conciliatory manner and perhaps negotiate with the government or the communities and provide advice, would have to say, “Sorry, we can't touch this. You're subject to investigation.”

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Thank you.

Thank you very much to our witnesses.

It is our pleasure to welcome you this morning. I read the documents which--

[The Chair, Conservative, Kevin Sorenson]

Go very quickly, Mr. Patry.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Yes, fine.

My first comment is for Mr. Bourassa. You said you support scenario B. You know very well that the only thing the government gave us is a counsellor position without any power, an empty shell in the sense that the counsellor could not--

undertake a review with the express written consent of the parties involved.

It means it is an empty shell. I do not think your companies need any counsellor. They are very large companies.

You talked a lot about EDC. In any given country, what is the percentage of financing coming from EDC for any given project?

My other question is this. Are there any countries where you cannot operate a mine without having a partner? What happens then?

[Michael J. Bourassa]

I think the question was directed to me. There was a series of questions there.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

It's to anyone.

[Michael J. Bourassa]

I'll take perhaps the first part of it. I think one part dealt with the counsellor and one dealt with EDC percentage of financing. Maybe one of the companies can talk about that. I think the last point was dealing with....

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Do you have any partners in some other countries, and what would be the consequences with the partnerships that you have in some other countries?

[Mac Penney]

Just speaking for ourselves, we currently have three different financial arrangements with the EDC. Two are specifically related to projects; one is a general environmental line of credit.

In terms of partnerships in other countries, we have joint venture arrangements with one other Canadian mining company in one of our mines. Also, in our Kupol mine in Russia, the autonomous government of the Chukotka region is a 25% equity holder in the project, and we own the other 75%.

As I said, we have a joint venture partner. It happens to be Barrick, at Round Mountain, which is a mine in Nevada in the United States.

Our concern for joint venturing under the bill with respect to the EDC issue or the financing issue generally is that when you enter into a joint venture partnership, the partners agree to take on certain financial responsibilities for the development and operation of the project. If one of our partners knew that we had exposure to EDC financing that was at risk, they would likely not be very happy about it. They would not be happy with the thought that there was a possibility that, halfway through the development of the $2 billion project, if something happens and we are found to be operating in a manner inconsistent with guidelines, the EDC is required to pull either its financing, its credit, or in some cases its political risk insurance.

That would cause tremendous complications for the partnership. We've now lost our financing. We could end up being sued by our partner, which would not be the case we'd want to be in. It would also make other mining companies look twice and look hard at Canadian mining companies as potential partners for joint venture developments.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Penney.

I'm going to have to cut you off there. We will have a second round today, hopefully.

Ms. Lalonde, you have the floor.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

We will share our time.

[The Chair, Conservative, Kevin Sorenson]

Ms. Deschamps.

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Good morning, ladies and gentlemen.

First, I want to tell you I am impressed to be addressing such a panel of experts. I will dare make my comments anyway.

I do not think anybody here is against mining companies. But personally, if there is one thing I am against, it is impunity. The situation is somewhat uncomfortable. For several weeks now, we have been examining Bill C-300. We hear many individuals and NGOs who talk to us about horrible things happening in Africa, in South America, and the Philippines. Whether we like it or not, we can relate very much to this evidence. It is not like it is anything new for the Standing Committee on Foreign Affairs and International Trade to make this kind of investigation. As early as 2005, it looked into this issue.

Its 14^th report was entitled “Mining in Developing Countries and Corporate Social Responsibility”. The government responded to the report, and here is what it had to say, “Consequently, issues of the type raised by the Committee are likely to increase in both intensity and volume in the coming years--”.

We are in 2009, just before 2010, and we are still debating this same issue. Since 2005, we had extensive consultations over a period of two years, and the result was a report with a number of recommendations. A wide consensus emerged between members of the civil society, experts, and people from mining companies.

Do you think we could design a bill that would include these recommendations from the report resulting from roundtables? Would that be better than Bill C-300? I gather from what you said that this bill is--

[Michael J. Bourassa]

Thank you.

I guess the question really relates to what's currently on the table with Building the Canadian Advantage as compared to Bill C-300. I think that's what it comes down to.

I just think the current bill is not workable. I don't know how you could even make amendments to make it workable without having to make drastic changes to the bill and make it a completely new bill. If you're talking about putting in some form of counsellor or ombudsman, you'd have to frame that in terms of abilities to do certain things. Of course, there would be expenditures relating to that, which you can't do with a private member's bill.

Fundamentally, the way the bill is now, having the complaints go to a minister under that whole process--that part's not amendable, from our point of view. We are completely against that.

In terms of Building the Canadian Advantage, which is what the government has put on the table, we think it's a very workable situation. It's a good start. It provides lots of other things besides the counsellor. It talks about centres of excellence and about programs to build some of the capacity within the countries where some of the Canadian companies are operating.

From our point of view, Building the Canadian Advantage is a far better approach. We think it will result in better practices. It will be better for the industry and better for CSR standards.

[Raymond Chrétien]

I would like to supplement Michael Bourassa's answer.

Ms. Deschamps, you are right to raise the issue of the accountability of big mining companies. They should be held to account for what they do, and they should be perfect in terms of their corporate social responsibility. But let me tell you about some of my concerns about this bill. The situation we would find ourselves in is this.

Canada has a Department of Foreign Affairs and International Trade one of the main goals of which is to promote Canada's interests abroad, including commercial and economic interests. All our trade commissioners and embassies are working very hard toward this goal. If this bill becomes law, another section in this department would be established and it would do the exact opposite, that is investigating companies we should instead be assisting under the department's mandate.

If this bill is put into force, I wonder if the legislation on the foreign affairs department should not be amended. I do not know if you are interested, but I would like to explain what would in fact happen, should a serious complaint be made to our Minister of Foreign Affairs. I would really like to explain that to you.

[Francine Lalonde, Bloc, La Pointe-de-l'Île, QC]

My turn?

[The Chair, Conservative, Kevin Sorenson]

Yes.