Good afternoon, Mr. Chair and committee members. My name is Andrew Cheatle and I am the executive director of the Prospectors and Developers Association of Canada, often known as PDAC. Relevant to our discussions today, I am also a former CEO of a Canadian exploration and development company operating in Latin America, searching for minerals there.
On behalf of our board of directors and our members, thank you for the opportunity to speak with you today.
First, I'll provide a few brief words about the PDAC. We are a national association representing more than 8,000 members, of which 1,000 are corporate, that are involved in the mineral exploration and development industry and supply industry in Canada and around the world. Our membership includes mining companies, junior exploration companies, service companies, consulting firms, geoscientists, prospectors, miners, students, and the financial and investment sector, amongst others. We are well known for our annual convention that 25,000 people attend, from 130 countries, each year. During our convention, we address many of the issues being considered by this committee.
As you heard just now from Mr. Gratton of MAC, Canada's minerals industry is a recognized leader at home and abroad, renowned for our deep exploration and mining expertise, extensive experience, and ability to generate economic opportunities in the areas of the world in which we operate. Indeed, at the end of 2015, the value of Canadian mining assets abroad totalled over $171 billion Canadian, in 102 countries.
When it comes to exploration specifically, Latin America is indeed the top destination for Canadian exploration dollars and activity. In fact, 28% of all investment in Latin America comes from Canadian-headquartered companies. This is particularly important, because without exploration, mines do not get discovered and they do not get developed, and without mines, the economic benefits of mining, such as well-paid jobs, training, and other matters, do not reach the communities.
Mineral exploration is the vital first stage of the mineral development cycle. This is the stage during which prospectors or small exploration companies, such as the one I was CEO of, search for economic deposits that have the potential to be developed into producing mines. Exploration is a sequential process of information gathering using scientific and various other techniques to assess the mineral potential of any given area. However, what many people are not aware of is that many exploration programs never proceed beyond the preliminary or grassroots stage. The probability that an early exploration project will result in a mine is often considered to be one in 1,000. Consequently, these projects typically involve transitory activities that generally have a minimal footprint and no lasting environmental impact.
Several thousand exploration companies are currently operating in Canada and around the world in search of the next mine. The majority of these companies are Canadian, a testament to the decades of expertise that serves as Canada's foundation for its global leadership in the mineral sector. Our leadership extends beyond scientific, technical, and financial expertise to include leadership, as you've just heard from Pierre, in responsible social, environmental, and safety practices. With PDAC's “e3 plus”, the first-ever guidance developed to help companies achieve greater performance in responsible exploration, which includes guidance on early stakeholder engagement, MAC's towards sustainable mining initiative, and the individual efforts of Canadian companies, our industry has made tremendous strides in the area of responsible business conduct over the last several decades.
As the first set of boots on the ground, explorers set the tone for companies' interactions with their host communities. Whether companies are working mineral claims in northern Manitoba on the traditional territory of indigenous communities or in Sierra Leone or Chile, it is well understood by the vast majority of these companies that they are guests and must conduct their business responsibly. Government, industry, and other stakeholders recognize the importance of this, and I am very proud to say that we are very good at it.
However, despite our industry's efforts in doing things the right way, right from the start, we are before you today to discuss instances of conflict in Latin America. These instances represent exceptions and not the rule; nevertheless they warrant our close attention.
While the globalization of the Canadian mineral exploration industry has helped to improve the quality of life for many people around the world, it has also increased the risk of companies becoming directly or indirectly linked to various forms of conflict. Canadian companies operate in some of the most complex jurisdictions in the world: civil conflict, weak governance and rule of law, extreme levels of poverty, etc. Given these circumstances, challenges will continue to arise. This is the case for all companies, foreign or domestic, and yet Canadian companies remain the preferred investors by host governments and communities.
According to University of Ottawa Professor Paul Haslam, who testified before you just last week, most Canadian investments in Latin America have experienced no reported cases of community conflict and Canadian companies are significantly less likely to experience conflict than multinational firms based in other countries. This is a testament to our country’s legacy of responsible business conduct and world-recognized leading practices.
However, what remedies do exist when company-community conflict is alleged to have occurred, and what work remains? As an industry, we have been very engaged in how we can work with government, local communities, and civil society to improve relationships and reduce potential conflict. In addition, the Government of Canada has been active in its efforts to reduce conflict and promote respect for human rights abroad.
PDAC participated in the CSR round tables in 2006, endorsed the CSR strategy for the extractive sector in 2009, and strongly supported Canada’s enhanced CSR strategy in 2014. Truly a model of progress, Canada’s CSR strategy articulates a clear, multi-faceted approach to supporting responsible exploration and mining outside of Canada, with a role for companies, host states, and also home states. The 2014 strategy outlines the government’s expectation that Canadian companies will operate according to the highest ethical standards. The 2014 strategy also highlights the importance of technical assistance for host states, including support for countries to undertake land use planning, develop indigenous consultation policies, etc. It also reinforces access to remedy for communities.
Today, there are three key mechanisms through which communities outside of Canada can seek access to remedy. Two are non-judicial in nature. They are the office of the CSR counsellor and the national contact point, or NCP, system Canada established 40 years ago, when Canada became a signatory to the guidelines for multinational enterprises created by the Organisation for Economic Co-operation and Development, the OECD. The third is through our Canadian courts.
Despite these advancements, there have been renewed calls for the establishment of an ombudsperson for the extractive sector. We believe that prior to the creation of any new institution, the Government of Canada should firmly establish the facts regarding alleged community conflict, and that a rigorous analysis of the existing mechanisms for remedy should also be undertaken. This would undoubtedly help identify any real versus perceived gaps within the existing institutions through which communities can seek remedy, and also help outline opportunities for a path forward.
If the Government of Canada is to establish an ombudsperson, and in order to be effective, we strongly recommend that it carefully consider its design. The ombudsperson should apply to all sectors and be tasked with: reviewing allegations using joint fact finding to work to resolve conflicts; providing parties with access to mediation services; and protecting responsible companies and Canada’s reputation against frivolous or vexatious claims.
In addition to the above recommendations, PDAC remains committed to its view that the establishment of a multi-stakeholder advisory group is necessary. The mandate of this group would be to provide recommendations to government on the design and functions of the ombudsperson's office, and other options for how the Government of Canada could facilitate access to remedy.
The PDAC looks forward to continuing to participate in the dialogue around business and human rights and access to remedy that both supports Canada’s position as a global mining industry leader and reduces the potential for conflict.
Thank you very much. I would be very pleased to take your questions.