Canada’s mining industry is developing a plan for mandatory reporting of all resource company payments to government that is much like Amendment 1504, the U.S. law that mandates rules for transparent disclosure of mining company payments to government that was passed under the Dodd-Frank Act on Aug. 22 (ME online, Aug. 23).

The country’s two largest mining groups – the Mining Association of Canada and the Prospectors and Developers Association of Canada – have signed an agreement with two advocacy groups to develop a proposal for mandatory reporting rules that they hope will either be legislated or adopted by securities commissions across the country. The groups have made the case that greater transparency is both a boon to investors and critical in gaining broader social acceptance for global resource industries, Canada’s Globe and Mail reported.

Junior miners, in particular, could find it challenging to comply with the new regulations, PDAC executive director Ross Gallinger said. But the industry contends that the benefits of being transparent in their operations outweigh potential risks, he said.

Amendment 1504, passed by the U.S. Securities Exchange Commission (SEC) requires all resource companies listed on American stock exchanges to annually report all payments to governments on a project-by-project basis.

U.S.-based oil companies staunchly opposed the SEC rules, and the Canadian oil industry has taken a wait-and-see attitude toward the miners’ effort to fashion domestic regulations that would complement the U.S. move.

“The goal of the framework is to provide citizens of resource-rich countries with the tools they need to achieve accountable, responsible, and sound management of their natural resources,” Pierre Gratton, chief executive officer of the mining association, said. It would also provide investors with a more complete picture of companies’ operations and investment plans.

Gratton said mandatory reporting rules would build on voluntary efforts that the industry has undertaken in the Extractive Industries Transparency Initiative, and reflects a global trend toward a regulated approach. He said it is particularly important that Canada adopt such regulations, since the Toronto Stock Exchange and TSX Venture exchanges are home to so many the world’s publicly listed mining companies. In the past five years, 83 percent of the 11,000 public financings in the global mining industries were done on the TSX exchanges, the Globe and Mail reported.
The regulations would cover not only major producing companies but also junior miners listed in Canada that often have exploration properties in places like Africa, South America and Southeast Asia.

The associations are working with Publish What You Pay Canada and Revenue Watch Institute to develop the proposed rules, and say they have had quiet encouragement from federal government officials.

“Our hope is that we will mimic or exceed the type of regulations we see under Dodd-Frank,” said Claire Woodside, director of Publish What You Pay Canada.

The resource industry has faced criticism around the world, accused of fuelling corruption, despoiling the environment and undermining human rights, especially with indigenous populations. But Woodside said she is confident the transparency initiative amounts to more than a public relations exercise.