Foreign Affairs Committee on Nov. 26th, 2009

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues. Good morning all. This is meeting number 42 of the Standing Committee on Foreign Affairs and International Development on Thursday, November 26, 2009. The orders of the day today include a return to our committee study of Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries.

As witnesses on our panel today we have, from Barrick Gold Corporation, Peter Sinclair, senior director, corporate social responsibility; from Goldcorp Inc., Dina Aloi, vice-president for corporate social responsibility; and from Kinross Gold Corporation, Mac Penney, director of government relations. As well, appearing from the law firm Fasken Martineau DuMoulin, we have Michael Bourassa, partner; Raymond Chrétien, partner and strategic advisor; and the Honourable James Peterson, counsel to that law firm.

We have invited the guests today to share the panel for the full two hours so as to accommodate as many questions as possible from our members. I invite each of you to make brief opening statements, and then we'll proceed to the first round of questioning.

I believe I have a point of order from Madame Lalonde.

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

Mr. Chair, I appreciate the presence here of these eminent counsels and lawyers this morning. They are top-notch lawyers from the mining companies in Canada. But we do not have on our side lawyers and experts who could disprove what they say much better than we could. I am not a lawyer or a specialist in this area. I will find myself in a position of presenting objections they will immediately tear to pieces. I will not be able to say that, as a committee, we have done all we could, as we hope to do, before we pass this bill. Mr. Chair, I am really sorry things are turning out this way, and I fear this will make this two-hour sitting much less valuable.

[The Chair, Conservative, Kevin Sorenson]

Madame Lalonde, let me just say a couple of things.

First of all, I think you're giving these lawyers way too much credit. I have sat with you on committee for many years, and I have a lot of confidence in your ability to question the witnesses and to find out. The idea, I think, of committee is to take in information and to ask questions. It is not necessarily to cross-examine and knock down every argument everyone brings. I have a lot of confidence in you.

Let me also say that we did try to bring in today someone from the other perspective. The Sierra Club was scheduled to come last Tuesday. They were fogged in, in Toronto, and just that morning I found out that they were unable to be here, so we reshuffled. We invited them today, and our understanding is that they could be here Thursday. Then last night we found out that they couldn't be here.

We do have others who want to appear Tuesday. We'll bring them in. On the other side of it, there will be those from the other perspective who will perhaps want to appear on Tuesday, and they may, again, be alone unless we find someone. We will try. We have tried. I know you'll do, as all our committee members do, a fine job.

Go ahead, Mr. Obhrai.

[Deepak Obhrai, Conservative, Calgary East, AB]

A point of order.

This is a democracy. We hear from everyone. You either like it or you don't.

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

That's my point. Thank you for supporting me.

[The Chair, Conservative, Kevin Sorenson]

We have had lawyers on the other side of the issue as well.

I'm just going to invite you to begin.

I'm sorry, go ahead, Madam Brown.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

A point of order, Mr. Chair.

I believe that the woman we heard from via video conference on Tuesday morning identified herself as a lawyer.

[The Chair, Conservative, Kevin Sorenson]

And there was the former environment minister and....

[Lois Brown, Conservative, Newmarket—Aurora, ON]

We are hearing from both sides.

[The Chair, Conservative, Kevin Sorenson]

Yes, that's correct.

Let's proceed. Usually I like to invite the ladies first.

[Mac Penney, Director, Government Relations, Kinross Gold Corporation]

We gave Ms. Aloi that option, sir, and she respectfully declined.

[The Chair, Conservative, Kevin Sorenson]

All right.

We'll have Mr. Penney.

[Mac Penney]

Mr. Chairman, honourable members, my name is Mac Penney, and I am with Kinross Gold Corporation. I'm joined here today by Dina Aloi, the vice-president of corporate social responsibility for Goldcorp, and by Peter Sinclair, a senior director of corporate social responsibility for Barrick Gold.

As representatives of three of Canada's largest international gold mining companies, we appreciate the opportunity to share with the committee some of our concerns with Bill C-300, a bill that we believe is trying to do a good thing but in a very bad way. As companies, we have a fundamental problem with this bill because it proposes a model for corporate social responsibility that, based on our experience in the field, we believe simply will not work.

In our experience, CSR requires a collaborative, flexible, and multi-faceted approach, which is antithetical to the model proposed in Bill C-300. The committee has already heard from the Department of Foreign Affairs and International Trade, Export Development Canada, the Canada Pension Plan, the Mining Association of Canada, the Prospectors and Developers Association of Canada, the Canadian Chamber of Commerce, and a number of legal experts who have spoken about the bill's many substantive deficiencies.

We agree with these submissions, which highlighted among other things the absence of due process, the lack of procedural fairness, the problem of extraterritorial application, constitutional deficiencies, duplication and confusion of rules and processes, the neglect of capacity building, lack of remediation, the impact of targeting Canadian companies, and the lack of consultation with the mining industry.

You will be relieved to know we do not intend to revisit all these points this morning, but we'll focus on some of the practical problems this bill will cause for Canadian companies that deal with CSR every day. Let me make three points to set the context for our presentations.

First, mining companies operate under a very high level of scrutiny and accountability. Mining itself is a very heavily legislated and regulated activity, subject to high levels of oversight by lawmakers, regulators, special interest groups, CSOs, and the media in both the developed and the developing world. Scrutiny and accountability are part of our operating reality.

Second, the companies appearing before you today and Canadian miners generally are recognized internationally as industry leaders in CSR. For us, CSR is a core competency, as important to the success of our business as operational efficiency and safety. CSR is vital to securing and maintaining our social licence to operate. Any member who wants to review our CSR records can consult our CSR reports, which are appended to our formal written submission to the committee.

You will find that our records provide concrete evidence that we agree that Canadian companies should be held accountable for their business practices in conduct abroad. We accept and support the promotion of sustainable development in international human rights, and our support goes well beyond good intentions and rhetoric.

Third, our comments today are based on our collective experience in meeting the complex social, legal, and environmental responsibilities and challenges that confront companies operating in many different countries at many different stages of development with different legal and political systems and different cultures and values. Collectively, we operate some 45 mines in 16 different countries on five continents and directly employ more than 36,000 people, so this is a business we know something about.

Based on that experience, we believe the relatively simplistic, one-dimensional, and punitive approach to CSR proposed by this bill will not work. We believe the bill to be fatally flawed in its conception and in its construction. We believe the bill is prejudicial and harmful in its effects, not only on and to Canadian mining companies but also to the countries and communities in which we operate. Critically, we do not believe the bill will achieve its stated objectives.

To illustrate these points and illustrate why, in our view, the bill is counterproductive, unamendable, and should not be passed into law, Peter will focus on the guidelines, which are at the heart of the bill, and how they will expose even the most socially responsible Canadian company to undue legal risk. I will touch briefly on the financing implications of the legislation, not only in terms of project financing, but the impact on the role of the EDC and the broader implications of the bill on Canada's status as a leader in resource finance. Dina will conclude by speaking to the unfair and unwarranted impact of this bill on the industry in general.

With that, Mr. Chair, I would ask Mr. Peter Sinclair to contribute to the conversation.

[Peter Sinclair, Senior Director, Corporate Social Responsability, Barrick Gold Corporation]

Good morning, everyone. My name is Peter Sinclair. I'm the senior director for corporate social responsibility for Barrick Gold. Just to give you a little bit about my background, I've spent the last 20 years working with communities in the developing world, most recently with the mining industry, but prior to that I worked for 15 years for international development and humanitarian aid NGOs.

I lived and worked in Africa for over seven years, in Rwanda, Ghana, Swaziland, and the Congo, and I've worked as a consultant with the World Bank, European Union, and NGOs such as World Vision.

Let me just start by reiterating that we agree with the objectives in the bill. No one would argue that Canadian companies should not apply the highest CSR standards, wherever they operate. However, we do not believe this bill will achieve that goal. It also has the potential to seriously harm the Canadian mining industry and the countries in which we invest.

As Mac indicated, I'd like to focus on just one practical problem with the bill: the guidelines the minister would use to assess the culpability of Canadian companies.

As you know, the intent is for the guidelines to be drafted within 12 months after the bill has been passed. The guidelines would incorporate publications by the IFC's voluntary principles on security and human rights, as well as unspecified international human rights standards.

At a previous hearing, we heard from Professor Janda, who clearly told the committee that these guidelines do not lend themselves easily to direct and literal incorporation into the bill. He believes, though, that this is just a drafting issue that can simply be worked through. However, anyone with a detailed knowledge of and experience with implementing the guidelines will know that it will require much more than artful drafting to transform the guidelines into hard and fast rules for the industry.

To use the analogy from a previous submission, from a legal perspective the difference between these publications and legally binding instruments is the same as that between a manual on safe driving and the Highway Traffic Act. The guidelines were designed for a particular purpose, to offer guidance to banks and companies to enhance their performance in the area of CSR. For this purpose, the guidelines are well suited, but they lack the clarity that legislation demands and cannot be shoehorned to further the legislative purposes of this bill. The proposed process fails to recognize that successful CSR policies and programs are context-specific and responsive to local conditions and priorities. This bill proposes a one-size-fits-all model that would have companies apply one set of rules in a thousand different situations.

Let me give you a practical example to help illustrate this. Community engagement is a key part of what we do as a mining company. There's an IFC guideline on community engagement that states, “The nature and frequency of community engagement will reflect the project's risk and adverse impacts on affected communities.”

A mining company does not engage with a community without taking on board its unique cultural, political, and social characteristics. This is a general principle of engagement and a critical part of best practice. No mining company today would argue against a well-tailored community engagement program, or they do so at their peril. However—and this is the key—while the principle of engagement is universal, the specifics are as varied as the communities in which we operate. To make a determination as to what is sufficient and appropriate requires a detailed understanding of the project and the local dynamics and a high degree of expertise in community engagement. This is not the type of determination that can be made by a minister's office.

Given how hard it would be to determine consistency with the guidelines, and without a fair, transparent, and well-resourced investigative process, even the most socially responsible companies could be exposed to unfair determinations. The consequence is clearly unintended but nevertheless real. Due to the additional risk posed by the bill, responsible companies may be deterred from investing in developing countries. This outcome would deprive developing countries of much-needed foreign investments and jobs.

Thanks very much for your attention. I'll now turn back to Mac, who will address the negative impacts this bill will have on any future financing for exploration and development projects.

[Mac Penney]

Thanks, Peter.

One of the many sanctions of the bill is the withdrawal of EDC financing. It's been said variously that this is a modest or a mild sanction. Somewhat paradoxically, however, proponents of the bill say that what makes this bill and the model approach to CSR superior to any alternative is that it has sanctions with real teeth. One of the toothy parts of the bill is meant to be the withdrawal of EDC financing.

I'd like to talk a little bit about the risk that creates for Canadian business, about how the way in which companies will actually operate to manage that risk will likely put the EDC on the sidelines for financing of Canadian projects overseas, and, paradoxically, how the bill in fact declaws itself because of the risk management strategy it will incent companies to follow.

The fact is that no extraction or development project or any joint venture between a Canadian company and another Canadian company, or between a Canadian company and a foreign company, can proceed without adequate and secure financing, and, in some cases, depending on the location, political risk insurance. Typically, Canadian companies will rely both on export development agencies, such as the EDC, and traditional commercial lenders, traditional banks, as sources for financing. The bill will clearly create a new financing risk by creating a sanction directly tied to one of those sources of financing, that being the Export Development Corporation. The severity of the risk will depend on a number of interrelated factors, such as the overall health of the credit markets and the creditworthiness of the companies involved. In constrained, risk-averse credit markets, such as those that our country and its businesses have experienced over the past year or so, access to credit agency financing becomes far more important and, in some cases, the most important source of financing, so loss of access or the threat of loss of access to this source of financing is a serious issue for business.

Because of these risks and uncertainties, Canadian mining companies and oil and gas companies overseas will find it difficult to rely on EDC financing for any of their projects. The risk created by this bill is that if we have EDC financing as part of a syndicate and we are found to be offside or inconsistent with these guidelines, which are yet to be developed, then we lose the financing. In that case, we're in trouble with our partners, and the project itself will be in trouble, because we don't have the secure financing to proceed.

To manage that risk, we'll have to turn elsewhere for financing, and the EDC may find itself riding the pine in terms of overseas development for Canadian mining going forward. The result is that either we'll have an investment that doesn't proceed at all, and Canada and the host country will be deprived of the value of that investment, or the project will be developed by a foreign competitor, or the project may proceed with the greater portion of its financing sourced outside Canada.

In all these cases, the project would fall outside the ambit of this bill in terms of the sanctions, since there's no EDC financing involved. Therefore we have now sidelined the EDC, defanged the bill, and done nothing to advance CSR. We see this as being a peculiar paradox inside the legislation.

I would also say that the bill would offer some threat--and I wouldn't want to overemphasize, but I'll just table it for the committee's attention--to Canada's status as a world leader in global financing. Recently the Toronto financial services working group reported that listings on mines, energy, and minerals in Canada create and support 7,000 financial services jobs. They've recommended a pretty ambitious goal: that Canada should try to achieve 70% of world listings in this particular market share by the year 2015. By their estimates--and these estimates were done for them by the Boston Consulting Group--a 70% share in this area would create an additional 4,000 to 6,000 direct jobs, create 10,000 to 15,000 indirect jobs, and generate GD impact somewhere between $1 billion to $1.5 billion.

We suggest to the committee that the sentiments expressed in Bill C-300 actually run contrary to, and would actually conflict with, what we see as a pretty ambitious goal to leverage an area in which Canada definitely has a competitive advantage and expertise.

We think that rather than signing on to the Bill C-300 approach to financing, Canada would be better advised to subscribe to and support, as the EDC does, the Equator Principles. These are principles of financing that were agreed to by multilateral and traditional lenders. Some 40 major institutions representing lenders that provide 80% of global financing in the sector subscribe to these, and as companies, if we want financing to do these projects, we have to ensure that we comply with those guidelines. We think the multilateral approach is a far better approach in this area.

With that, I'll ask Dina to conclude our presentation.

[Dina Aloi, Vice-President, Corporate Social Responsibility, Goldcorp Inc.]

Thank you, Mac.

Honourable members, thank you for this opportunity to address you today.

I am Dina Aloi. I'm the vice-president responsible for corporate social responsibility for Goldcorp.

As background, I have a degree in rural sociology and I have a master's degree in anthropology. I became involved in the mining industry and joined Goldcorp after 15 years of working on human rights and international development issues with NGOs. My dedication to these important issues is unchanged, and I'm pleased to have the opportunity to bring my experience to a company where my commitment to human rights is mirrored.

This committee has repeatedly heard the rhetorical question: if it's true that Canadian mining companies conduct their operations in accordance with the highest standards of corporate social responsibility and are held to account for their mining practices abroad, why are they opposed to this bill? Our comments today will answer that question. The short answer is Bill C-300 will not actually get at companies that operate with low CSR standards, but will, instead, do serious harm to responsible Canadian companies. In all of our submissions today, we want to outline how and why this bill will harm responsible Canadian mining companies.

This bill does nothing to improve CSR or build capacity in foreign countries, something that we believe is critical to long-term success. This bill would create a new adversarial complaint and investigation process that is sure to be exploited by traditional opponents of mining. It would also expose responsible Canadian mining companies to stigma and reputational damage from a poorly conceived investigation process through a ministerial office ill-equipped for this purpose.

In order for the committee to understand why this bill is so harmful, it's critical for the committee to understand the environment in which we operate globally. Our industry is often confronted with false allegations of misconduct in countries in which we operate. Regardless of merit, once made, allegations have lasting impacts on our industry's reputation. In my experience, evidence that proves an allegation is false, or a retraction of a false allegation, is often ignored.

For example, an extraordinarily serious claim was made that a Canadian mining company was involved in the murder of 50 artisanal miners in Tanzania, all of whom were said to have been buried alive. At the request of an NGO, these claims were extensively investigated by credible independent sources, including the World Bank. The company acquired the property in 1999, three years after the incident was alleged to have occurred. In 2002, the ombudsman of the World Bank undertook to assess these allegations. A comprehensive investigation into these allegations was made and they were found to be completely without foundation. Although it was completely cleared, and indeed the ombudsman was highly critical of the lack of accountability of the NGOs that made the allegations, these serious and extraordinary allegations continue to be made against this Canadian company, including at these committee hearings.

I have two further examples of untrue allegations that, if this bill were in effect, would likely have ended up on the minister's desk and had to have been investigated. We were recently accused by a Canadian NGO of organizing a coup. We were also accused of contaminating water in another country with a chemical we didn't even use. Both allegations were completely false. If they had been subject to this bill and investigated by the crown, they would have been provided with false credibility, causing undue harm and alarm with our stakeholders and shareholders, our employees and our community partners, and it would have harmed our corporate reputation.

At this point, it's easy to accuse Canadian mining companies operating abroad of all manner of unethical and outrageous behaviour. Correcting the record, however, is very difficult. You may ask then, if we're already operating in an environment in which complaints get made and can live on in perpetuity, why would the complaints process under this bill cause us particular concern?

To be unfairly accused by an individual or an NGO in a press release or a blog causes harm. This harm is of an entirely different magnitude when this complaint is investigated by the minister of the crown, which suggests that the complaint has some merit, and, under this bill, requires an investigation by our own government.

The bill does provide a mechanism for the minister to dismiss a complaint without investigation if it is determined to be false, frivolous, vexatious or made in bad faith. However, for a serious accusation coming from a remote foreign country, it is impossible to conceive that a minister could dismiss the complaint without an investigation and the expenditure of resources. Equally troubling is that this bill does not contemplate any consequences whatsoever for an individual or organization that makes frivolous, vexatious, or untrue allegations, or which does so repeatedly. At best, a retraction from the minister will be printed in the Gazette many months later, not a widely read publication in many circles, after the harm is done, which will go entirely unnoticed.

The relationship between Canadian mining companies and host countries relies on mutual respect. This would be seriously strained through the complaints and investigation process. Canadian companies operating abroad strive to build respectful relationships with local stakeholders and the governments of the host countries. Weakening these positive relationships will only harm our competitiveness in the mining industry and our ability to influence non-Canadian companies to adopt high standards of CSR. Our non-Canadian competitors, many of whom operate at lower CSR standards, would be more than happy to take advantage of a decline in our reputation as good corporate citizens and to dislodge us from our assets abroad.

I want to emphasize that the Canadian mining industry is not afraid of scrutiny when it comes to being held to account for the way in which we operate at home and abroad, but we are concerned by this bill because it will damage us even as we operate at the highest global standards of corporate social responsibility. Each of the companies presenting today is fully committed to operating in an environmentally and socially responsible manner, to protecting human rights, and to making a positive difference in the communities in which we operate. As Mac said, we support the objectives of this bill, and we take seriously the demands and the complexities of corporate social responsibility. We expect to be and are held accountable. What we do not expect is to be subject to legislation that harms us, irrespective of how we conduct ourselves.

Thank you very much for listening to our submissions today.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much to all three of you.

We'll move now to the Honourable James Peterson. Again, we welcome you back to the Hill and to our committee.

[James Peterson, Counsel, Fasken Martineau DuMoulin LLP]

Mr. Chairman and honourable members, thank you very much. It's indeed a pleasure to be here. I had the privilege of serving some 23 years, and also as Minister of International Trade. I am now very pleased to be counsel to Fasken Martineau. With me today are two of my colleagues, Raymond Chrétien and Michael Bourassa.

Before joining Fasken's as a partner and strategic advisor, Raymond Chrétien served with great distinction in Canada's public service for 38 years. He was Canadian ambassador to France, the United States, Belgium, Mexico, and the Democratic Republic of Congo. He served as Associate Under-Secretary of State for External Affairs from 1988 to 1991.

Michael Bourassa is the coordinator and co-leader of our firm's Global Mining Group. He is also a director of the Prospectors and Developers Association of Canada and sits on the executive committee of the mining law section of the International Bar Association.

For the past five years, Fasken's has been recognized by the International Who's Who of Business Lawyers, a publication based in London, England, as the number one law firm in the world for mining. It is without question that Canadian companies must operate in a responsible and accountable manner. The federal government has been working with companies on this aim for several years. In 2005, the then Liberal government, of which I was a part, commissioned a report from this very committee. It instigated a consultative process that culminated in the release by the federal government last March of Building the Canadian Advantage.

The intentions behind Bill C-300 are laudable, as they focus on corporate social responsibility. We submit, however, that the bill is flawed in its construction and highly prejudicial to Canada's mining sector. As many of you know, mining and exploration are very important to our economy. They comprise 5% of our GDP, employ 351,000 Canadians, and in 2008 the industry paid $11.5 billion in taxes and royalties to the three levels of government. The industry also contributes significantly to R and D. In 2006, mining companies invested $648 million in Canada in R and D alone.

Canadian mining companies have exported their expertise to all comers of the globe, and Canada is now the world leader in the global mining sector. In 2008, over 75% of the world's exploration and mining companies were headquartered in Canada, operating in 100 countries around the world. As Mac Penney has indicated, Canada has emerged as a centre of mining finance globally.

The Boston Consulting Group reported that we now have a leading concentration of expertise required to finance mining, metals, and energy in Canada. Financing mining in Canada employs 7,000 financial sector people. Core to this activity are our stock exchanges. Of the world's public mining companies, 57% are listed on the TSX or the TSX Venture Exchange. Along with Vancouver, Toronto constitutes the world's largest source of equity capital for mining companies undertaking exploration and development.

Canadian mining companies, including the juniors, employ many Canadians and engage numerous industries and service providers in support of our international mining activities. These include equipment manufacturers, contractors, consultants, accountants, financial legal advisors, and our financial institutions.

There are 3,140 Canadian goods and services firms supplying our mining sector. We have centres of mining excellence across the country, in Bathurst, Quebec City, Montreal, Val d'Or, Rouyn-Noranda, Sudbury, North Bay, Timmins, Toronto, Mississauga, Yellowknife, Saskatoon, Edmonton, Kelowna, Kamloops, and Vancouver.

In conclusion, given the importance of mining to Canada, and given the country's leadership and expertise in mining activities abroad, we submit that a primary focus of the Canadian government and the Ministry of Foreign Affairs and International Trade, in particular, should be promoting our mining industry, both domestically and internationally, and working collaboratively with Canadian companies to continually enhance CSR standards.

Thank you.

Raymond.

[Raymond Chrétien, Partner and Strategic Advisor, Fasken Martineau DuMoulin LLP]

Mr. Chair, distinguished members of the committee, it is a pleasure to appear again before this committee. This is the first time since I left the public service in 2003.

Here are a few comments on the subject on the order of the day. Like other witnesses already said, Canadian mining companies should be accountable and they should thus act responsibly throughout the world. But the concern my colleagues and I share is that this bill takes a punitive approach rather than a multilateral one, based on cooperation. I would like it better if the bill were designed to help the resource industry improve its performance in the area of corporate social responsibility and, by the same token, improve the competitive advantage of Canada in the world in the area of mining.

Mining in developing countries is often accompanied by unpredictability and difficulty, especially if a company is operating in a weak governance zone. In such uncertain environments, CSR challenges can arise and do arise. If passed, this bill could deter companies from working in less stable developing countries. This bill, in my view, does not provide companies with any opportunity to address and remedy an issue without immediately being subject to a complaint, possible investigation, and sanctions.

If responsible Canadian companies are deterred from investing abroad, it could negatively impact important foreign development opportunities. In my time serving as Canada's ambassador to a number of developing countries that have mining sectors, including, inter alia, Mexico and the Democratic Republic of the Congo, I've observed many times that Canadian mining companies very often contributed to improved health, education, and infrastructure in those countries. They were thus welcomed and well regarded for such investments.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

We'll go to Mr. Bourassa.

[Michael J. Bourassa, Partner, Fasken Martineau DuMoulin LLP]

Thank you, Raymond.

Mr. Chairman, ladies and gentlemen, my name is Michael Bourassa. It's a privilege to be here today.

I feel very strongly about this issue. Canada has excelled in international exploration and mining. We are recognized by our competitors for that success. I'm concerned that this bill could jeopardize Canada's continued competitive position, might do very little for improved accountability in the CSR realm, and could harm economic activity in Canada and in developing countries.

The Honourable Jim Peterson has told you about Canada's strength and leadership in the global mining sector. In order for the Canadian mining industry to remain successful, companies need to be able to compete in the global market. If passed, Bill C-300 will undermine the competitive position of Canadian companies. It could cause an exodus of mining companies from Canada and could potentially render Canada a less attractive jurisdiction for mining investment.

The bill will apply only to Canadian companies that operate in developing countries. As such, Canadian companies will find themselves at a disadvantage compared to their competitors. Let me provide you with a hypothetical example. A Canadian company and a foreign company are both interested in acquiring a mine that has had some historical community relations issues. The Canadian company has a strong corporate social responsibility program and known successes working with local communities and governments to remedy such problems. However, the Canadian company would be subject to a bill that is retroactive in its application and is non-remedial in nature. If the Canadian company acquires the mine, it could immediately become subject to a complaint, possible investigation, and sanctions, including the loss of financing. The foreign competitor would not face the same risks and uncertainties. The competitive disadvantage to the Canadian company is obvious.

The bill could also disadvantage Canada as a mining investment jurisdiction of choice. So many mining companies headquarter and list in Canada because of the country's vast expertise in this sector. This is an expertise that is actively promoted by most provinces and the federal government. For example, over the past four years, I've attended an international mining conference in Vancouver, and every year the Premier of British Columbia has remarked that mining is the most important industry in that province. Quebec also actively promotes itself as a jurisdiction of choice for mining investment and is ranked, in a 2009 survey, as the top jurisdiction in the world for encouraging mining investment. Newfoundland and Labrador, Alberta, New Brunswick, Manitoba, Saskatchewan, and Ontario are all highly ranked.

If this bill becomes law, every Canadian company, or any company contemplating setting up in Canada, will have to undertake a serious risk- and cost-benefit analysis to decide whether to locate here.

[Raymond Chrétien]

Thank you very much, Michael.

In addition to some of the concerns just noted by Michael Bourassa, this bill would also place an investigative burden, a huge one, on the Minister of Foreign Affairs and the Minister of International Trade, a burden that could create severe financial pressures for those ministries.

How could a minister investigate multiple complaints in countries abroad without incurring significant costs and without establishing a new agency just for that purpose? The present department of external affairs is simply not equipped to deal with the challenges of this bill.

This bill could also cause diplomatic pressures for Canada. A Canadian mining company's ability to work with its own government to remedy a situation would be impaired. Often in situations that arise currently, our ambassadors, our trade commissioners, liaise with host governments and provide guidance to Canadian companies. But once a complaint is filed, the role of our foreign service would change from a collaborative problem-solving mode to that of investigator. A Canadian mining company would be cut loose and left to fend for itself. We would be doing a disservice to our citizens abroad and to our own economic interest.

Also, investigations abroad have the potential to strain relations with other sovereign states. In my view, this bill is simply not workable. A minister may be placed in the highly awkward diplomatic situation of carrying out investigations in the absence of consent or trying to duplicate the efforts of a host country. This, in my view, would impact Canada's relationship and influence with other countries, especially those with whom Canada is working to advance CSR.

[The Chair, Conservative, Kevin Sorenson]

Mr. Bourassa.

[Michael J. Bourassa]

I would like to conclude by describing two different scenarios. The current economic environment in Canada in our successful mining sector is embodied in the following invitation to mining companies and investors: “Come to Canada, or stay in Canada, because we have developed mineral centres of excellence, and we'll help you obtain financing and provide you with technical support.”

Let's look at scenario A if Bill C-300 is passed. In addition to the invitation that I just mentioned, we'd be saying to them: “However, if you have a CSR problem, or if you have in the past, you could be the subject of complaints to the Government of Canada. If you are named in a complaint, you will not be given an opportunity to remedy or resolve your problems. The government will not work to help you to improve your performance. Instead, they could investigate you for your activities and you would be subject to serious sanctions, including the loss of financing and damage to your reputation.”

Let's look at the alternative, scenario B, one that is currently proposed by the government. In addition to the invitation I mentioned at the beginning of this conclusion, we'd be saying: “The government will help you when CSR difficulties arise by offering mediation and support and possibly by offering capacity-building expertise in the areas of the world that are having difficulties.”

Which scenario is going to result in a stronger and more vibrant industry for Canada? Which scenario is going to achieve higher CSR standards? Which scenario is going to result in more economic activity in Canada and developing countries?

Our respectful submission is that the collaborative approach proposed is the best option. This bill is well intentioned, but in our submission it's unworkable and will do significant harm to Canada's investment climate and Canadian mining companies.

Thank you very much for giving us the opportunity to present today. We'd be happy to take any questions you have.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much to all our witnesses.

We'll move into the first round of questioning. We'll go to Mr. Rae.