Land claims a barrier to investment in British Columbia

October 7, 2013

A recently released report from the Fraser Institute found that uncertainty about displaced land claims and government use policies make British Columbia too risky for many mining investors.

The report, “British Columbia’s Mining Policy Performance” suggests the British Columbia and federal governments should settle outstanding aboriginal land claims in the westernmost province to eliminate the uncertainty that prevents industry from investing.

“Miners must have confidence in the stability, predictability, and transparency of the policy environment in which they operate,” said Kenneth P. Green, senior director of the Fraser Institute’s Centre for Natural Resources. “If BC’s government wants to attract mining investment to the province, it should push ahead to settle land and resource ownership disputes in a timely manner.”

For investors, the lack of certainty compounds the significant risks that are inherent in mineral resource exploration and development projects. It is estimated that only one out of 5,000 projects can mature into a mine.

“All levels of government must find a way to resolve aboriginal land claims and the consultation process, to find a way to make it work better than it does at present,” Green said in a release posted on the Fraser Institute website.

“The federal government can work to clarify the duty of mining companies to consult with aboriginal groups, and find ways to improve the consultation process. Determining which practices have had the most success, and encouraging wider adoption of those practices, might be a helpful step.”

Other major barriers identified in the study include uncertainty around land being shifted into parks and wilderness areas, environmental regulations that may not be consistent, and duplicate federal and provincial responsibilities for mine project reviews.

One concern arising from uncertainties discussed in the report is the potential for miners to favor brownfield areas where aboriginal, land use and regulatory issues are settled. That would mean fewer opportunities for exploration companies to identify new mineral deposits to support the BC economy in the future.

Lead author Alana Wilson, Fraser Institute senior economist, said the survey shows the lasting effects of abrupt policy changes on deterring mining investment, such as the British Columbia government’s retroactive ban on mining in the Flathead Valley in 2010.

“While B.C. is no longer viewed as hostile to mining, sustained efforts are needed in resolving disputed land claims, providing finality on the two-zone land system, and building investor confidence in being able to develop deposits in a predictable and timely manner,” Wilson said.
The study is derived in part from the Fraser Institute’s annual global survey of mining companies in 96 jurisdictions around the world. Just more than half of respondents represented exploration companies while 20 percent represented producer companies with more than US$50 million in annual revenue.

Unresolved aboriginal land claims were cited as a ‘strong’ deterrent by 33 percent of respondents, while uncertainty over protected areas was cited as a barrier by 25 percent.

Uncertainty concerning environmental regulations was cited as a barrier by 23 percent. Regulatory duplication — such as uncertainty about overlapping environmental assessment processes and unstable tax systems — was cited as a barrier by 16 percent.


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